Italian Republic v Commission of the European Communities.
Date: 1993-10-06
6 The system of the additional levy, as introduced by Article 5c of Regulation No 856/84, is intended to reduce production in the milk sector. Under that system, the Community authorities fix the maximum quantity which may be produced in the Community as a whole and then allocate it amongst producers in the Member States by giving each of them a quota known as "reference quota". If the producer exceeds that quota, he has to pay an additional levy, which constitutes a penalty.
13 As regards the burden of proof, it should next be pointed out that, as far as the financing of the common agricultural policy is concerned, it is first for the Commission to prove an infringement of the rules of the common organization of the agricultural markets. Once such an infringement has been established, the Member State concerned must then, if appropriate, demonstrate that the Commission committed an error as to the financial consequences to be attributed to it (see, in particular, Case C-281/89 Italy v Commission [1991] ECR I-347, paragraph 19).
22 It follows from the foregoing considerations that the checks carried out by the Commission in the seven Italian regions to which this complaint relates were systematic and that, consequently, the conclusions which they reached could be generalized to all the regions in which they were carried out. Given that, as indicated in the preceding paragraph, shortcomings were uncovered at most of the farms, including those which had been checked by the Italian administration itself, there is no reason to consider that the irregularities found in those checks were not committed in other farms in the regions concerned.
31 In this connection, it must be pointed out in the first place that, under the system laid down by Regulation No 729/70, the Commission plays merely a role complementary to that of the Member States. According to the eighth recital in the preamble to that regulation, in addition to supervision carried out by Member States on their own initiative, which remains essential, provision should be made for verification by officials of the Commission and for it to have the right to enlist the help of Member States (see Case C-366/88 France v Commission, paragraph 20).
32 The complementary nature of those two types of supervision also emerges from Article 9(2) of Regulation No 729/70, from which it appears that the purpose of on-the-spot inspections performed by the Commission is to establish whether the checks carried out by the Member States were accurate.
55 First, the inspections carried out by the Commission disclosed an absence of supervision by the Italian authorities of the aid which it granted. Since that was liable to result in major irregularities, the Commission is entitled in a case such as this to disallow certain expenditure incurred by the Member State in question (see Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraph 21).
56 Secondly, as the Court has already intimated, the obligation for Member States to recover sums unduly paid to traders by way of aid from the EAGGF stems from Article 8 of Regulation No 729/70. That provision is regarded as expressing, as regards the financing of the common agricultural policy, the duty of general diligence imposed by Article 5 of the EEC Treaty. Article 8(1) imposes on Member States an obligation to recover sums lost as a result of irregularities or negligence (see Case C-34/89 Italy v Commission [1990] ECR I-3603 and Case C-28/89 Germany v Commission [1991] ECR I-581, paragraph 31). Furthermore, Article 8(2) provides that, in the absence of total recovery, the financial consequences of irregularities or negligence attributable to administrative authorities or other bodies of the Member States are to be borne by them.
67 It must be observed in this connection that EAGGF financing of expenditure incurred by national authorities is governed by the rule that only expenditure incurred in conformity with the Community rules is to be charged to the Community budget. Consequently, once it discovers the existence of an infringement of Community provisions in payments effected by a Member State, the Commission is required to correct the accounts presented by that Member State. Where the Commission did not carry out the correction due in respect of a previous year, but tolerated the irregularities on grounds of fairness, the Member State does not acquire any right to demand to the same position to be taken with regard to the irregularities with respect to the following financial year by virtue of the principle of legal certainty or the principle of protection of legitimate expectations.
69 By the same token, the complaint alleging that the Commission was late in responding cannot be accepted. The Court has consistently held (see, in particular, Case 349/85 Denmark v Commission [1988] ECR 169) that, in the absence of any sanction attaching to the failure by the Commission to comply with the time-limit laid down by Article 5(2)(b) of Regulation (EEC) No 729/70 for taking a decision on the clearance of the accounts as regards expenditure financed by the EAGGF, that time-limit cannot be regarded as mandatory, provided that the interests of the Member State are not impaired. Consequently, the duration of that period, even if it is very long, does not cause the Community to incur liability, unless it is the outcome of negligence on its part. In this case, the Italian Republic has not proved such negligence.