CELEX: C1999/204/45
Language: en
Date: 1999-07-17 00:00:00
Title: Case C-130/99: Action brought on 15 April 1999 by the Kingdom of Spain against the Commission of the European Communities

17.7.1999             EN                    Official Journal of the European Communities                                        C 204/23
Pleas in law and main arguments                                        The applicant claims that the Court of Justice should:
                                                                       — annul Commission Decisions 99/186/EC (1) and
Breach of Article 10 of Directive 91/676                                   99/187/EC (2) of 3 February 1999 as regards the financial
                                                                           adjustments imposed on the Kingdom of Spain, and
The Italian Republic has not fulfilled the obligation specifically
provided for by Article 10 of Directive 91/676 regarding the           — order the defendant to pay the costs.
preparation and submission to the Commission of a report in
respect of the period between 20 December 1991 and 20
December 1995, that is to say the four years following
notification of the directive, containing the information out-         Contentions and principal arguments adduced in support
lined in Annex V to the directive.
                                                                       The Kingdom of Spain contests:
Breach of Article 5 of Directive 91/676
                                                                       — the Commission decision of 3 February 1999 excluding
Article 5(1) requires Member States to establish action pro-               from Community financing certain expenditure incurred
grammes in respect of designated vulnerable zones within a                 by the Member States (199/186/EC), and
two-year period following the initial designation of such zones
or within one year of each additional designation following            — the Commission decision of 3 February 1999 on the
the four-yearly review of the situation provided for by                    clearance of the accounts presented by the Member States
Article 3(4).                                                              in respect of the expenditure for 1995 of the guarantee
                                                                           section of the European Agricultural Guidance and Guaran-
The Italian authorities have not yet drawn up one or more                  tee Fund (1999/187/EC),
action programme which are complete, consistent, coherent
and directed towards the attainment of the specific objectives         as regards the financial adjustments imposed in the following
of the directive within a four-year period, in breach of the           sectors:
express provisions of Article 5.
Breach of Article 6 of Directive 91/676                                (a) Arable crops
The Commission considers that the Italian Republic has also            — PTE 1 471 398 749 corresponding to 5 % of the expendi-
breached the requirement laid down by Article 6 of the                     ture incurred by the Autonomous Community of Aragon
directive in not monitoring fully and correctly the nitrate                in relation to certain matters relating to on-the-spot checks
concentration in freshwaters for the purpose of identifying                in respect of applications for area-linked aid managed by
contaminated waters with a view to designating vulnerable                  the said Autonomous Community.
zones.
                                                                           The minimum percentage to be achieved for checks,
                                                                           namely checks corresponding to 5 % of the applications
(1) OJ 1991 L 375, 31.12.1991, p. 1.                                       submitted, must be achieved at Member State level, not at
                                                                           provincial level and not at Autonomous Community level,
                                                                           as provided in Article 6(3) of Commission Regulation
                                                                           (EEC) No 3887/92 (3). The Autonomous Community of
                                                                           Aragon carried out adequate checks in accordance with
                                                                           the Community legislation and both the percentage of
                                                                           controls undertaken and the areas checked exceed Com-
                                                                           munity requirements. In fact, a total of 3 024 files (7,4 %
                                                                           of all applications) were checked using a criterion similar
                                                                           to that of tele-detection (at least 80 % of the cultivated area
Action brought on 15 April 1999 by the Kingdom of Spain                    included in the control zone). In terms of area checked, the
against the Commission of the European Communities                         total covered was about 11 500 hectares (8,7 % of the
                                                                           total area for which applications were submitted).
                        (Case C-130/99)
                                                                           The cases of alleged laxity found during in situ inspections
                                                                           carried out by EAGGF inspectors must be assessed in their
                        (1999/C 204/45)                                    proper perspective.
An action against the Commission of the European Communi-              — PTE 215 011 390: the financial adjustment imposed by
ties was brought before the Court of Justice on 15 April 1999              the Commission is based on the fact that Spain did not
by the Kingdom of Spain, represented by Mónica López-Monis               take the necessary steps, either in administrative checks or
Gallego, Abogado del Estado in the State Office for Proceedings            on-the-spot checks, to verify the plausibility of the yield
before the Court of Justice, with an address for service in                forecasts declared and the accuracy of the actual yields
Luxembourg at the Spanish Embassy, 4-6 Boulevard E. Servais.               obtained.
 ---pagebreak--- C 204/24               EN                   Official Journal of the European Communities                                       17.7.1999
    However, Commission Regulation No 334/93 (4) contains              — PTE 5 754 750 215: corresponding to 5 % of the expendi-
    no provision whatsoever imposing a clear, precise and                  ture declared in 1996 for the marketing years up to
    unconditional obligation on the Member States to deter-                1994/1995 in respect of production aid for olive oil and
    mine reference yields for non-food production.                         costs of setting up the olive oil register, as for previous
                                                                           years.
(b) Beef and veal premiums                                                 In both cases, the financial adjustment is based on alleged
                                                                           deficiencies in control procedures and, specifically, delay
                                                                           in action taken to set up the olive oil register and the
— PTE 1 393 983 000 corresponding to 1994 and 1995, as                     central data base.
    a result of a flat-rate adjustment of 2 %, 5 % and 10 % of
    the premiums paid in respect of animals of the bovine
    species, on the basis of the percentage of checks achieved             Spain contests each of the comments made by the EAGGF
    in the various provinces.                                              and cannot accept the assertion that the system for
                                                                           the management of production aid in Spain displays
                                                                           deficiencies which undermine its general effectiveness
                                                                           or key components of the control system. Moreover,
(c) Milk and dairy products                                                monitoring is not an end in itself but a means of avoiding
                                                                           damage. Only if damage is sustained is it logical to
                                                                           withhold from Member States the sums which the latter
— PTE 4 484 785 615 (PTE 3 129 240 958 for an excedence
                                                                           has paid out in advance. Nevertheless, the figures obtained
    of 55 707 tonnes of milk, which amount was increased by                following the compilation by the Olive Oil Agency of
    1 355 544 657 PTE in respect of default interest).                     the corresponding data from the olive oil undertakings
    This is a financial adjustment for 1994, but the amount                operating in the marketing year concerned and of which
    was separated out from the 1994 clearance of accounts                  verification in situ was possible by the joint mission to
    and included in the figures for 1995.                                  Spain carried out by Commission Directorates-General VI
                                                                           and XX from 2 to 4 June 1997 clearly establish that the
    Article 3(4) of Regulation (EC) No 536/93 (5) laying down              aid paid during the marketing year falls short of the total
    provisions on the application of the additional levy in the            oil and spirits produced, which rules out any fraud in that
    milk and milk products sectors gives a direct instruction              sector, eliminates any possibility of risk for the Community
    to the purchaser, and not the Member State, to pay the                 budget and removes the basis for the financial adjustment
    amount due in respect of the levy and the accrued interest.            imposed.
    Therefore, if the State acts with due diligence by seeking
    from the purchaser, in the appropriate manner, through
    both administrative and domestic judicial channels, the
    undertakings required by that provision, the Commission
    cannot ask it to make up for defective fulfilment of
    financial obligations by the purchaser, by virtue of the           (e) Wine
    provisions of Article 8 of Regulation (EEC) No 729/70 (6).
    The Member State’s obligation towards the Community
    consists in diligently requiring the debtors to pay such           — PTE 424 652 236 (adjustment of 2 % of the expenditure
    levies, in accordance with domestic law, and to pay the                declared by Spain in 1995 in respect of definitive abandon-
    same to the Commission. The additional levy system does                ment of wine-growing areas in respect of which no
    not impose on Member States the obligation to pay specific             regularisation measures have been taken) and
    sums, but merely to pay over the amount collected, and
    also any amounts which, through negligence, have not
    been collected. The Commission declines to apply
    Article 8(1), third subparagraph, and (2) of Council Regu-         — PTE 305 986 443 (adjustment corresponding to a regular-
    lation No 729/70, asserting that the sole basis of the                 ised and productive area of 4 338 hectares during the
    Member State’s obligation is Article 15(4) of Regulation               three-year period in which marketing is prohibited).
    (EEC) No 1546/88 (7). On the basis of that assertion, it also
    contends that the rule laid down in the judgment of the                The Commission had known about the action taken by
    Court of Justice of 21 September 1983 in Joined Cases                  Spain in an effort to remedy the irregular situation
    205 to 215/82 Deutsche Milchkontor and Others v                        regarding wine-growing areas without planting rights by
    Germany [1983] ECR 2633 is not applicable.                             transferring rights from abandoned plantations without a
                                                                           grant since 1992. In addition, the proposed reform of the
                                                                           common market organisation in this sector contemplates
                                                                           a regularisation process which is merely a transposition of
(d) Olive oil                                                              the scheme applied in Spain. The adjustment made in
                                                                           respect of wine in the clearance of accounts for 1995 is
— PTE 4 317 179 696 for 1994 and 1995: reflecting a                        not based on any aid granted or embarked upon
    flat-rate adjustment of 5 % of the expenditure for both                improperly but on the Commission’s view that the process
    years in relation to the 1993-94 marketing year and                    for regularisation of the situation of wine-growing areas
    subsequent year and 10 % of the expenditure for 1992-93                without planting rights which is being applied in certain
    and previous years, and the same percentage of the                     Spanish regions did not conform with Community legis-
    expenditure incurred in respect of setting up of the olive             lation. Such action by Spain, even if not in fact consonant
    oil register, and                                                      with Community legislation, bears no relation whatsoever
 ---pagebreak--- 17.7.1999              EN                     Official Journal of the European Communities                                          C 204/25
     to any aid granted, for which reason the Commission has             (4) Commission Regulation (EEC) No 334/93 of 15 February 1993
     no legal basis for taking action, having relied exclusively             laying down detailed implementing rules for the use of land set
     on grounds of expediency and immediacy, in the context                  aside for the provision of materials for the manufacture within
     of clearance of the accounts of the EAGGF Guarantee                     the Community of products not primarily intended for human or
                                                                             animal consumption (OJ L 38 of 16.2.1993, p. 12).
     Section, applying a financial adjustment to the expenditure         (5) Commission Regulation (EEC) No 536/93 of 9 March 1993 laying
     incurred by Spain in the sector in question. The fact is that,          down detailed rules on the application of the additional levy on
     where necessary, it is open to the Commission to challenge              milk and milk products (OJ L 57 of 10.3.1993, p. 12).
     action taken by a Member State by means of an action                (6) Council Regulation (EEC) No 729/70 of 21 April 1970 on the
     before the Court of Justice for failure to fulfil obligations.          financing of the Common Agricultural Policy (OJ, English Special
                                                                             Edition 1970 (1), p. 218).
                                                                         (7) Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying
                                                                             down detailed rules for the application of the additional levy
(f) Flax                                                                     referred to in Article 5c of Regulation (EEC) No 804/68 (OJ L 139
                                                                             of 4.6.1988, p. 12).
— PTE 40 359 739 (aid for fibre flax): for the marketing year            (8) Commission Regulation (EEC) No 1164/89 of 28 April 1989
                                                                             laying down detailed rules concerning the aid for fibre flax and
     to which the adjustment was applied, the Community rules                hemp (OJ L 121, 29.4.1989, p. 4).
     did not expressly mention minimum quantifies of seed,
     but merely referred to the carrying out of normal culti-
     vation work (Article 4(a) of Commission Regulation
     1164/89) (8).
(g) Failure to observe time-limits for payment
— PTE 3 362 203 596 (payments made outside the time-                     Action brought on 16 April 1999 by the Commission
     limits laid clown by the Community legislation): the                of the European Communities against the Portuguese
     Kingdom of Spain considers that, since the requisite                                               Republic
     procedures for accepting or rejecting expenditure have not
     been completed, the normal procedure is to separate the                                        (Case C-131/99)
     sums in question and exclude them from the clearance of
     accounts until a later date.
                                                                                                    (1999/C 204/46)
     In general, breach of the following principles of Com-
     munity law:                                                         An action against the Portuguese Republic was brought before
                                                                         the Court of Justice on 16 April 1999 by the Commission of
     — the principle of a right to the hearing: this principle           the European Communities, represented by Francisco de Sousa
         has been infringed in relation to all the adjustments           Fialho, of its Legal Service, acting as Agent, with an address for
         contested in the application. It was formally observed,         service in Luxembourg at the office of Carlos Gómez de la
         but in practice the Commission’s replies are confined           Cruz, also of its Legal Service, Wagner Centre, Kirchberg.
         to repetition of the same points, without contradiction
         or rebuttal of the arguments put forward;
                                                                         The applicant claims that the Court of Justice should:
     — lack of evidence of the wrongful action imputed to the
         Member State: the Commission based the adjustments              — Declare that, by not bringing into force or informing the
         either on indicia or suspicions, or on data which had                Commission of all the laws, regulations and administrative
         been rebutted or corrected by the Spanish authorities;               provisions necessary to comply fully with Article 3(1)
                                                                              and Annex I, points 1.3 and 3.2, of Council Directive
     — the principle of sound administration;                                 84/360/EEC (1) of 28 June 1984 on the combating of air
                                                                              pollution from industrial plants, the Portuguese Republic
     — the principle of appropriateness of the penalty: this                  has failed to fulfil its obligations under Article 16 of that
         principle was infringed in particular with regard to                 directive and the third paragraph of Article 189 of the EC
         olive oil production aid. It is not permissible to refuse            Treaty;
         to refund the aid paid in advance merely because
         certain data bases have not been finalised; such action         — Order the Portuguese Republic to pay the costs.
         can only be based on a duly substantiated lack of
         checking which has been detrimental to the Com-
         munity budget;                                                  Contentions and principal arguments adduced in support
     — in the alternative, breach of the principle of pro-
         portionality.                                                   Under the third paragraph of Article 189 (now, after amend-
                                                                         ment, Article 249) of the Treaty, a directive is binding on the
                                                                         Member State to which it is addressed as regards the result to
(1) OJ L 061 of 10 March 1999, p. 34.                                    be achieved. Although the prescribed period expired on 30
(2) OJ L 061 of 10 March 1999, p. 37.                                    June 1987 (see Article 16 of the directive and Article 392 of
(3) Of 23 December 1992 laying down detailed rules for applying          the Accession Treaty), the Portuguese Republic has not yet
    the integrated administration and control system for certain         adopted all the provisions needed to ensure that its domestic
    Community aid schemes (OJ L 391 of 31.12.1992, p. 36).               law fully complies with the directive, since: