CELEX: 61999CJ0133
Language: en
Date: 2002-06-06 00:00:00
Title: Judgment of the Court (Fifth Chamber) of 6 June 2002. # Kingdom of the Netherlands v Commission of the European Communities. # EAGGF - Clearance of accounts - 1995 financial year - Aid for processing of skimmed milk into casein and caseinates. # Case C-133/99.

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61999J0133

Judgment of the Court (Fifth Chamber) of 6 June 2002.  -  Kingdom of the Netherlands v Commission of the European Communities.  -  EAGGF - Clearance of accounts - 1995 financial year - Aid for processing of skimmed milk into casein and caseinates.  -  Case C-133/99.  

European Court reports 2002 Page I-04943

SummaryPartiesGroundsDecision on costsOperative part
Keywords

1. Agriculture - Approximation of laws - Directive 83/417 - Rules concerning the placing on the market within the Community of certain lactoproteins (caseins and caseinates) intended for human consumption - Absolute prohibition - Absence(Council Directive 83/417, Art. 2)2. Community law - Principles - Interpretation - Conception of Community law as a coherent whole3. Agriculture - Common organisation of markets - Milk and milk products - Aid for processing of skimmed milk into casein and caseinates - Concept of finished product - Residues of finished products - Exclusion(Commission Regulation No 2921/90, Arts 1(1) and (3)) 

Summary

 $$1. It follows from Article 2, first indent, of Directive 83/417 on the approximation of the laws of the Member States relating to certain lactoproteins (caseins and caseinates) intended for human consumption, that those lactoproteins may only be marketed within the Community if they conform to the definitions and rules laid down in that directive and its annexes. Nevertheless, Article 2 provides, in its second indent, that where products do not satisfy the criteria laid down in the annexes. Member States are to take all the necessary steps to ensure that those products are named and labelled in such a way that the buyer is not misled as to their nature, quality or use. It therefore follows from the wording of Article 2 of Directive 83/417 that that provision does not lay down an absolute prohibition on the marketing within the Community of caseins and caseinates that do not meet the requirements of that directive, but rather is limited to indicating certain criteria as well as an alternative solution for the case where those criteria have not been satisfied.( see paras 27-29 )2. Article 2 of Directive 83/417 on the approximation of the laws of the Member States relating to certain lactoproteins (caseins and caseinates) intended for human consumption cannot serve as a basis for a legal prohibition which, given the conception of Community law as a coherent whole, would influence the common organisation of agricultural markets.( see para. 30 )3. It is clear from the wording of Article 1(1) and (3) of Regulation No 2921/90 on aid for the production of casein and caseinates from skimmed milk that aid is granted for the production of a finished product from certain basic products, the processing of which took place on a single day. The accumulation over several days and the reprocessing of residues of an already finished product clearly does not meet that definition, since it does not constitute production from basic products.That interpretation is supported by the method of calculating the amount of aid, which already takes account of the existence of a certain percentage of residues and under which aid could not be granted a second time for the reprocessing of residues.( see paras 41-42 ) 

Parties

In Case C-133/99,Kingdom of the Netherlands, represented by M.A. Fierstra and N. Wijmenga, acting as Agents,applicant,supported byFrench Republic, represented by R. Abraham and C. Vasak, acting as Agents,intervener,vCommission of the European Communities, represented by T. van Rijn, K.-D. Borchard and C. van der Hauwaert, acting as Agents, with an address for service in Luxembourg,defendant,APPLICATION for partial annulment of Commission Decision 1999/187/EC of 3 February 1999 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1995 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (OJ 1999 L 61, p. 37), in so far as it excludes the applicant Member State from Community financing in the sum of NLG 39 182 606 by way of aid for the processing of skimmed milk into casein and caseinates,THE COURT (Fifth Chamber),composed of: P. Jann (Rapporteur), President of the Chamber, D.A.O. Edward, A. La Pergola, M. Wathelet and C.W.A. Timmermans, Judges,Advocate General: J. Mischo,Registrar: H.A. Rühl, Principal Administrator,having regard to the Report for the Hearing,after hearing oral argument from the parties at the hearing on 22 November 2001, at which the Kingdom of the Netherlands was represented by J.S. van den Oosterkamp, acting as Agent, and the Commission by T. van Rijn,after hearing the Opinion of the Advocate General at the sitting on 15 January 2002,gives the followingJudgment 

Grounds

1 By application lodged at the Court Registry on 17 April 1999, the Kingdom of the Netherlands brought an action under the first subparagraph of Article 173 of the EC Treaty (now, after amendment, the first subparagraph of Article 230 EC) for the partial annulment of Commission Decision 1999/187/EC of 3 February 1999 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1995 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (OJ 1999 L 61, p. 37, hereinafter the contested decision), in so far as it excludes the applicant Member State from Community financing in the sum of NLG 39 182 606 by way of aid for the processing of skimmed milk into casein and caseinates.2 By order of the President of the Court of 20 January 2000, the French Republic was granted leave to intervene in support of the form of order sought by the Kingdom of the Netherlands.The legal framework3 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) determines the expenditure incurred by the Member States chargeable to the Guarantee section of the European Agricultural Guidance and Guarantee Fund (EAGGF) and the conditions for granting such financing. Under Article 5(2) of that regulation:The Commission, after consulting the Fund Committee referred to in Article 11,(a) shall decide:- at the beginning of the year, on the basis of the documents referred to in paragraph 1(a), on an advance payment for the authorities and bodies not exceeding one third of the credits entered in the budget;- during the year, on additional payments intended to cover expenditure to be borne by an authority or body;(b) shall, before the end of the following year, on the basis of the documents referred to in paragraph 1(b), make up the accounts of the authorities and bodies.4 Regulation No 729/70 was amended by Council Regulation (EC) No 1287/95 of 22 May 1995 (OJ 1995 L 125, p. 1). Its Article 5, as amended, now provides:1. Member States shall at regular intervals transmit to the Commission the following information concerning the accredited paying agencies and coordinating bodies referred to in Article 4 and relating to transactions financed by the Guarantee Section of the EAGGF:(a) statements of expenditure and estimates of financial needs;(b) annual accounts, accompanied by the information required for clearance and an attestation regarding the integrality, exactitude and veracity of the accounts transmitted.2. The Commission, after consulting the Fund Committee:(a) shall decide on monthly advances against the allocations of expenditure effected by the accredited paying agencies. Expenditure for October shall be attributed to October if it is effected from 1 to 15 October and to November if it is effected from 16 to 31 October. Advance payments shall be made to the Member State not later than the third working day of the second month following that in which the expenditure is effected.Additional advances may be made, the Fund Committee being informed at the next consultation;(b) shall, before 30 April of the year following the financial year concerned, on the basis of the information referred to in point (b) of paragraph 1, clear the accounts of the paying agencies.The accounts clearance decision shall cover the integrality, exactitude and veracity of the accounts submitted.The decision shall not prejudice the adoption of a subsequent decision pursuant to point (c);(c) 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.The Commission shall evaluate the amounts to be excluded having regard in particular to the degree of non-compliance found. The Commission shall take into account the nature and gravity of the infringement and the financial loss suffered by the Community.A refusal to finance may not involve expenditure effected prior to twenty-four months preceding the Commission's written communication of the results of those checks to the Member State concerned. However, this provision shall not apply to the financial consequences:- of irregularities as referred to in Article 8(2);- concerning national aids, or infringements, for which the procedures referred to in Articles 93 and 169 of the Treaty have been initiated.3. Detailed rules for the application of this Article shall be adopted in accordance with the procedure laid down in Article 13. Those rules shall cover in particular the attestation of the accounts referred to in paragraph 1 and the procedures relating to the decisions referred to in paragraph 2.5 The general rules for granting aid for skimmed milk processed into casein and caseinates were laid down in Article 11 of Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organisation of the market in milk and milk products (OJ, English Special Edition 1968 (I), p. 176), as well as Council Regulation (EEC) No 987/68 of 15 July 1968 laying down general rules for granting aid for skimmed milk processed into casein or caseinates (OJ, English Special Edition 1968 (I), p. 262). The detailed rules for the application of those provisions were laid down in Commission Regulation (EEC) No 756/70 of 24 April 1970 on granting aid for skimmed milk processed into casein and caseinates (OJ, English Special Edition 1970 (I), p. 201), repealed and replaced by Commission Regulation (EEC) No 2921/90 of 10 October 1990 on aid for the production of casein and caseinates from skimmed milk (OJ 1990 L 279, p. 22).6 Article 1 of Regulation No 2921/90 provides:1. Aid shall be granted to producers of casein and caseinates only if these products- have been produced from skimmed milk of Community origin or raw casein extracted from milk of Community origin,- meet the composition requirements of Annex I, II or III,- are packaged as stipulated in Article 3.2. Aid shall be paid on the basis of a written application to the competent authority stating:(i) the producer's name and address,(ii) the quantity of casein or caseinates covered by the application and its quality,(iii) the relevant production batch numbers.3. For the purposes of this Regulation a production batch must consist of products of identical quality made on the same day. However, where the total production of casein and caseinates of the establishment concerned during the previous calendar year did not exceed 1 000 tonnes, the production batch may consist of products made during the same calendar week.7 Article 2(3) of Regulation No 2921/90 provides:3. Aid shall be granted at the rate applicable on the day of production of the casein or caseinates.8 In the light of the disparities between the laws of the Member States as regards the composition and manufacture of caseins and caseinates intended for human consumption, which are such as to hinder the free movement of those products, the Community legislature established certain rules regarding the composition of those products and their labelling. On the basis of Article 100 of the EEC Treaty (following amendment, Article 100 of the EC Treaty, which in turn became Article 94 EC), Council Directive 83/417/EEC of 25 July 1983 on the approximation of the laws of the Member States relating to certain lactoproteins (caseins and caseinates) intended for human consumption (OJ 1983 L 237, p. 25) was adopted.9 Article 2 of Directive 83/417 provides that:The Member States shall take all the necessary steps to ensure that:- the products defined in the Annexes may be marketed only if they conform to the definitions and rules laid down in this Directive and the Annexes thereto, and- products which do not satisfy the criteria laid down in the Annexes are named and labelled in such a way that the buyer is not misled as to their nature, quality or use.10 In Annexes I and II to Directive 83/417, the standards applicable to the elements making up, respectively, edible caseins and caseinates are laid down in detail. No reference is made to aluminium ammonium sulphate (AAS) in those Annexes.The procedure for clearing accounts11 In October 1995, following consultation with the competent Netherlands authorities, the Commission's Unité de coordination de la lutte antifraude (Unit for the Coordination of Fraud Prevention, UCLAF) carried out inspections of the Netherlands undertaking DMV Campina in connection with the manufacture and sale of certain types of caseinates eligible for production aid under Regulation No 2921/90.12 As a result of those inspections, UCLAF found that, since, first, certain caseinates contained AAS and, second, a caseinate called EMST had not been produced in accordance with the conditions laid down by Regulation No 2921/90, the aid relating to those caseinates had been paid unlawfully. UCLAF pointed out, in particular, that the use of AAS was prohibited by Directive 83/417.13 In the consultations which then took place between the parties, the Netherlands authorities maintained that Regulation No 2921/90 did not prohibit the use of AAS in the production of caseinates, since Directive 83/417 was not applicable in that context, and that the production of EMST had been carried out in accordance with Regulation No 2921/90.14 Since it was not satisfied with those explanations, the Commission informed the Netherlands Government, by letter of 21 January 1998, that it intended to propose corrections to the expenditures declared in that connection.15 The Kingdom of the Netherlands then made an application for formal conciliation. The Conciliation Body stated, in its report of 16 July 1998, that it was not entirely clear that the legal arguments of the Commission's services regarding the use of AAS were well founded. As regards the production of EMST, the Conciliation Body stated that it had some difficulty in understanding the concern of the Commission services that the payment of aid for that caseinate would create serious risks of speculation and fraud for much greater quantities of casein and caseinates. It recorded that, in the end, it had not found it possible to reconcile the divergent positions of the parties in the case.16 On 12 January 1999, the Commission adopted its summary report on the results of audits for the clearance of accounts for the Guarantee Section of the EAGGF for 1995 (hereinafter the summary report). It noted two irregularities, the first relating to the unauthorised use of AAS in the production of caseinates and the second relating to the production of EMST from casein production residues. On those grounds, the Commission, in the contested decision, imposed corrections for 1995 of NLG 32 746 529 in respect of the production of caseinates containing AAS and NLG 6 436 077 in respect of the production of EMST.The correction of NLG 32 746 529 in respect of the production of caseinates containing AAS17 As regards the contested correction relating to the use of AAS in the production of caseinates, the Netherlands Government put forward four pleas in support of its application to annul the contested decision in part. In its first plea, it claimed that the Commission acted in breach of Regulation No 2921/90 in basing the correction on failure to meet requirements under Directive 83/417 which are not provided for by that regulation. In the alternative, it contended that the requirements of Directive 83/417 had also been met. By its second plea, the Netherlands Government alleged an infringement of Article 5(2)(c) of Regulation No 729/70, as amended by Regulation No 1287/95, as well as of the principles of cooperation in good faith, consultation and the preventive approach agreed between the Commission and the Member States. By its third plea, it alleged a failure to observe the principle of legal certainty in so far as, according to it, the national authorities could reasonably consider that it was not necessary to comply with the terms of Directive 83/417 in order to implement Regulation No 2921/90. By its fourth plea, it claimed a failure to observe the requirement to provide a statement of reasons.The first plea18 By its first plea, the Netherlands Government claimed that, by requiring that the terms of Directive 83/417 be met in order for the aid in question to be granted, the Commission acted in breach of Regulation No 2921/90.19 According to that government, supported on this point by the French Government, Regulation No 2921/90 does not require reference to Directive 83/417. The legal basis and purpose of the two pieces of legislation are different: while Regulation No 2921/90, based on Article 43 of the EEC Treaty (now, after amendment, Article 37 EC), seeks to achieve objectives defined within the context of the common agricultural policy, in particular the stabilisation of the price of lactoproteins with a view to their export to third countries, Directive 83/417, based on Article 100 of the EEC Treaty, seeks to approximate the national laws relating to the conditions for marketing, within the Community, caseins and caseinates intended for human consumption, in order to remove barriers to trade. Directive 83/417 therefore cannot limit the scope of Regulation No 2921/90.20 Moreover, the Commission has itself admitted that Regulation No 2921/90 has no connection with Directive 83/417. In fact, in 1997 it presented a proposal to amend that regulation, by which it sought to bring its provisions and those of Directive 83/417 into line, for the future, by linking the allocation of aid to the express condition of compliance with the requirements of that directive. That proposal was then superseded, in 1998, by a contrary proposal which required that, for purposes of technical monitoring, the granting of aid should not be linked to the condition that the requirements of Directive 83/417 be satisfied. Both those proposals met with objections from the Member States, and the Commission finally withdrew them.21 According to the Commission, that plea is unfounded. The connection between Regulation No 2921/90 and Directive 83/417 is necessary, because the unity of Community law requires that a product which may not be marketed within the common market may not be granted production aid either.22 That interpretation follows from the very purpose of the system of aid, which seeks to make the competitive position of Community producers comparable to that of producers in third countries. And where a product cannot be marketed within the Community, there can be no inequality of competitive position as against producers in third countries and there is thus no reason to make a grant of aid.23 The Commission confirms that it presented two proposals in turn for amending Regulation No 2921/90, but it maintains that the first proposal, the object of which was to link the granting of aid to the express condition that the terms of Directive 83/417 be met, did not aim to create a new obligation but merely to clarify the obligation already in the legislation. That was confirmed by the second proposal, which laid down a derogation from the provisions of Directive 83/417 as regards the grant of aid.24 In that regard, it should be pointed out, first, that Regulation No 2921/90 subjects the grant of the aid in question to a number of conditions. Those conditions are set out in Article 1(1) of that regulation and concern production using products of Community origin, certain composition requirements and packaging. With respect to the composition requirements, Article 1(1), second indent, of Regulation No 2921/90 refers to Annexes I, II and III to the same regulation. Those annexes set maximum or minimum content or prohibit the presence of certain elements in the products in question. It is common ground that AAS is not referred to, either to require or to prohibit its presence in caseins and caseinates.25 Second, Regulation No 2921/90 does not refer to Directive 83/417 and does not even mention it. It is therefore necessary to consider whether that directive nevertheless lays down, for the reasons given by the Commission, additional obligations for the granting of the aids at issue.26 The Commission argues, in particular, that Directive 83/417 prohibits the addition of AAS to caseins and caseinates marketed within the Community and that that express statutory prohibition influences all the other fields of Community law, so that aid for the production of caseins and caseinates containing AAS must be considered unlawful. The Commission is thus relying on a view that Community law forms a coherent whole, regardless of the field of law involved, and regardless of the specific objectives of each of the laws concerned.27 In that connection, it is true that it follows from Article 2, first indent, of Directive 83/417 that caseins and caseinates intended for human consumption may only be marketed within the Community if they conform to the definitions and rules laid down in that directive and its annexes. AAS is not among the components and additives authorised by the annexes to that directive.28 Nevertheless, Article 2 of Directive 83/417 provides, in its second indent, that where products do not satisfy the criteria laid down in the annexes, Member States are to take all the necessary steps to ensure that those products are named and labelled in such a way that the buyer is not misled as to their nature, quality or use.29 It therefore follows from the wording of Article 2 of Directive 83/417 that that provision does not lay down an absolute prohibition on the marketing within the Community of caseins and caseinates that do not meet the requirements of that directive, but rather is limited to indicating certain criteria as well as an alternative solution for the case where those criteria have not been satisfied.30 In those circumstances, Article 2 of Directive 83/417 cannot serve as a basis for a legal prohibition which, given the conception of Community law as a coherent whole, would influence the common organisation of agricultural markets.31 As the Advocate General made clear in paragraphs 56 and 57 of his Opinion, even if it were determined that the undertaking DMV Campina used the designation edible caseinate in breach of Article 2, second indent, of Directive 83/417, such an infringement, although it should be subject to penalties by the Member States, would not have repercussions on the eligibility of the product at issue for production aid.32 As to the statement by the Commission that the first proposal to amend Regulation No 2921/90 in order to link the granting of aid to the express condition that the terms of Directive 83/417 be met merely confirms an already existing rule of law, suffice it to note that, even if the as yet unrealised intentions of the legislature were an admissible basis for the interpretation of an existing provision, such a proposal rather suggests that there was previously no such link between Regulation No 2921/90 and Directive 83/417. The second proposed amendment, which, in contrast, envisages an express derogation from the terms of Directive 83/417, cannot be considered a confirmation of such a legal position either.33 The plea by the Netherlands Government alleging that the Commission infringed Regulation No 2921/90 in basing its decision on requirements that were not laid down by that regulation, must therefore be upheld. Consequently, the contested decision must be annulled in so far as it has imposed a correction of NLG 32 746 529 in respect of the production of caseinates containing AAS.The second, third and fourth pleas34 Since the Court has upheld the first plea of the Netherlands Government, it is no longer necessary to examine the other pleas of that government.The correction of NLG 6 436 077 in respect of the production of EMST35 As regards the contested correction in respect of the methods of production of EMST, the Netherlands Government has put forward four pleas in support of its application to declare void parts of the contested decision. By its first plea, it alleges that the Commission disregarded the fact that the EMST had been produced in compliance with the provisions of Regulation No 2921/90. By its second plea, it states that the Commission failed to observe the principles of cooperation in good faith, consultation and the preventive approach agreed between the Commission and the Member States. By its third plea, it alleges a failure to observe the principle of legal certainty. Finally, by its fourth plea, it alleges a failure to observe the requirement to provide a statement of reasons.The first plea36 In its first plea, the Netherlands Government contends that the Commission disregarded the fact that the EMST was produced in compliance with the requirements of Article 1(1) and (3) of Regulation No 2921/90.37 Article 1(1) of that regulation provides that, in order to be granted aid, caseinates must be produced from skimmed milk or raw casein. That was the case in this instance, since the EMST was produced from residues formed during the production of caseinates, which are collected over several days or several weeks and which constitute semi-finished products. Before being transformed into EMST, those residues have to go through the entire production process for caseinates. At the time of their collection, they therefore do not yet constitute finished caseinate.38 As regards Article 1(3) of Regulation No 2921/90, which requires that a production batch must consist of products of identical quality made on the same day, that condition is also satisfied even if the residues are collected over several days before being processed into caseinates on a given day. In fact, the verb made used in Article 1(3) should be understood in the sense of prepared. The idea underlying that provision is merely to define clearly the day of production within the meaning of Article 2(3) of that regulation, since that article lays down that the rate of aid will vary daily, and thus to avoid one batch being made up of products to which differing rates of aid apply. However, the definition of the day of production is not the problem in this instance.39 According to the Commission, the applicable legislation was infringed because the residues formed during the production of caseinate already constitute the finished product and not a semi-finished product. The method used by DMV Campina, which consists in accumulating residues over several days or several weeks, in order to reprocess them and put them forward as caseinate eligible for aid, does not comply with Article 1(1) and (3) of Regulation No 2921/90. In those circumstances, a production batch is not produced from skimmed milk or raw casein, but rather from caseinate, and it is not composed of products of identical quality made on the same day.40 Moreover, according to the Commission the existence of residues during the production of caseinates is already taken into account in advance when calculating the amount of the aid. In fact, 5% of the aid is in respect of residues, which is very generous given that, in modern plants such as those of DMV Campina, the true percentage does not normally exceed 2%. It follows that the undertaking concerned has in fact received aid twice for the same product.41 As to those submissions, it is clear from the wording of Article 1(1) and (3) of Regulation No 2921/90 that aid is granted for the production of a finished product from certain basic products, the processing of which took place on a single day. The accumulation over several days and the reprocessing of residues of an already finished product clearly does not meet that definition, since it does not constitute production from basic products.42 That interpretation is supported by the method of calculating the amount of aid, which already takes account of the existence of a certain percentage of residues. As the Advocate General pointed out in paragraph 104 of his Opinion, it would not be consistent with that approach to grant aid a second time for the reprocessing of residues.43 It follows from this that the first plea of the Netherlands Government, relating to the conformity of the production process for EMST with Article 1(1) and (3) of Regulation No 2921/90, is not well founded and cannot, therefore, be upheld.The second, third and fourth pleas44 By its second plea, the Netherlands Government claims that the Commission, by refusing to consider EMST eligible for aid, failed to observe the principles of cooperation in good faith, consultation and the preventive approach agreed between the Commission and the Member States. Those principles follow from Article 5(2)(c) of Regulation No 729/70, as amended by Regulation No 1287/95. Although that provision is not applicable to 1995 but only to the following financial years, it merely gives concrete expression to the principles already previously applicable. The Commission, it claims, has acted in breach of those principles by not taking account of the critical report by the Conciliation Body and by not seeking to enter into a dialogue in good faith with the Netherlands authorities, but remaining silent on the arguments put forward by those authorities.45 By its third plea, alleging a violation of the principle of legal certainty, the Netherlands Government also claims that the Commission failed to enter into any dialogue, pointing out that the competent Netherlands authorities had already informed the Commission, in particular by letter of 2 Feburary 1993, of their interpretation of Regulation No 2921/90 as regards the production of EMST and that the Commission had not, at the time, put forward any objections in that regard.46 By its fourth plea, the Netherlands Government submits that the Commission acted in breach of the requirement to provide a statement of reasons for the contested decision, inasmuch as it was impossible to determine, on the basis of the grounds of that decision, what reasons had led the Commission to adopt its decision or to understand its reasoning.47 The Commission disputes the charge of a lack of cooperation in good faith and of consultation. It maintains that, throughout the procedure, which lasted three and a half years, it responded to all the main points raised by the Netherlands authorities, as evidenced by the voluminous correspondance which was exchanged and the summary report. The allegation of breach of the requirement to provide a statement of reasons is therefore unfounded. On the contrary, the Netherlands authorities had been closely involved in the preparation of the contested decision. The agreed preventive approach, which exists to deal with irregularities in inspections, is not intended for a case such as that in question, where aid was paid in breach of the applicable provisions. It cannot therefore be claimed that the Commission has refused a dialogue in good faith on the ground that it reached the conclusion that the criticisms of the Conciliation Body were not justified and that it therefore decided to retain its view of the matter.48 As regards the preliminary information on the method of production of EMST, the letter from the Netherlands authorities of 2 February 1993 described the production process in only a very general manner, without specifying that the product was collected over several days or several weeks before being reprocessed. As soon as it was informed of how that process actually functioned, the Commission contacted those authorities.49 As regards those pleas, which it is appropriate to consider jointly, the importance of the correspondance exchanged and the recourse to the conciliation procedure show that the parties had been properly informed of their respective positions and that they had attempted to reconcile their differences of view. The fact that no consensus emerged as a result cannot be blamed on the Commission, since referral to the Conciliation Body does not deprive the Commission of the right to adopt a definitive decision relating to the clearance of accounts.50 On that ground, and for the reasons set out in detail in paragraphs 119 to 121 and 123 to 127 of the Opinion of the Advocate General, the Commission cannot be charged with having failed to observe the principles of cooperation in good faith, consultation, the agreed preventive approach and legal certainty, as well as the requirement to provide a statement of reasons. It follows that the second, third and fourth pleas concerning EMST must also be dismissed. 

Decision on costs

Costs51 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. Each party asked that the other be ordered to pay the costs. Since the Commission was unsuccessful in its submission with respect to the sum of NLG 32 746 529 and the Kingdom of the Netherlands was unsuccessful in its plea with respect to the sum of NLG 6 436 077, the Commission must be ordered to pay five sixths of the costs and the Kingdom of the Netherlands one sixth of the costs. Under the first subparagraph of Article 69(4) of the Rules of Procedure, the French Republic, which intervened in these proceedings, is to bear its own costs. 

Operative part

On those grounds,THE COURT (Fifth Chamber)hereby:1. Annuls Commission Decision 1999/187/EC of 3 February 1999 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1995 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund, in so far as it excludes the Kingdom of the Netherlands from Community financing in the sum of NLG 32 746 529 by way of aid for the processing of skimmed milk into casein and caseinates;2. Dismisses the remainder of the action by the Kingdom of the Netherlands;3. Orders the Commission of the European Communities to pay five sixths of the costs and the Kingdom of the Netherlands to pay one sixth of the cost;4. Orders the French Republic to bear its own costs.