Hellenic Republic v Commission of the European Communities.
Date: 1996-07-04
6 The Court has held (Case 349/85 Denmark v Commission [1988] ECR 169, paragraph 19) that until the accounts have been duly cleared, the Commission is required by Article 2 of Regulation No 729/70 to refuse to charge to the EAGGF refunds which have not been granted in accordance with the Community rules. That obligation does not disappear merely because the accounts are cleared after the expiry of the period prescribed in Article 5 of that regulation. No penalty is imposed for failure to comply with that time-limit, which may therefore be regarded, having regard to the nature of the decision on the clearance of the accounts, the essential purpose of which is to ensure that expenditure incurred by the national authorities is in accordance with the Community rules, as a merely formal limit, save where the interests of a Member State are affected.
9 On this point, it must first be noted that the Court has held (see, in particular, Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 60) that decisions concerning the clearance of accounts do not require detailed reasons if the government concerned was closely involved in the process by which the decision came about and is therefore aware of the reason for which the Commission considers that it must not charge the sums in dispute to the EAGGF.
11 The Court has also held (United Kingdom v Commission, paragraph 14) that when the Commission refuses to charge certain expenditure to the EAGGF on the ground that it was incurred as a result of breaches of Community rules imputable to a Member State, it is for that State to show that the conditions for obtaining the financing refused by the Commission are fulfilled.
12 In the present case, it follows from the findings in the summary report that animal feed was managed by KYDEP in implementation of a State monopoly with the costs incurred, in particular the losses on sales of those products, being completely covered by the State budget. According to the Commission, selling below cost constitutes an illegal national aid which, if the products are exported, is added to the Community refund. The effect of that lowering of the cost price of the feed was such that in a normal situation, without any national aid, the products could not have been exported, because of their high price.
26 The Court observes that, according to its case-law (United Kingdom v Commission, paragraph 13), where it proves impossible to establish with certainty the extent to which a national measure which is incompatible with Community law has caused an increase in the expenditure entered under a budgetary item of the EAGGF, the Commission has no choice but to disallow all the expenditure in question.
27 When the Commission refuses to charge certain expenditure to the EAGGF, on the ground that it was incurred as a result of breaches of Community rules imputable to a Member State, it is for that State to show that the conditions for obtaining the financing refused by the Commission are fulfilled (United Kingdom v Commission, paragraph 14). According to paragraph 15 of that judgment, the same considerations apply where the Commission, instead of rejecting all the expenditure affected by the infringement, has endeavoured to establish the financial impact of the unlawful action by means of calculations based on an assessment of what the situation on the relevant market would have been if the infringement had not occurred. In such a case, the burden of proving that those calculations are not correct rests on the State seeking to have the disallowance annulled.
28 If, then, in its function of clearing the accounts the Commission, instead of refusing the entire expenditure, endeavours to draw up rules to differentiate according to the degree of risk posed to the EAGGF by different levels of defective supervision, the Member State must show that those criteria are arbitrary and unfair. Since the Greek Government has not produced such proof, its arguments on this point must be rejected.
39 In so far as the Greek Government claims that it was objectively impossible to comply with the prescribed time-limits, it must be observed that while the Court accepts that a Member State may plead that it was absolutely impossible to implement a Community decision properly (judgment in Case 213/85 Commission v Netherlands [1988] ECR 281, paragraph 22), the Member State must in any event submit the problems linked with such implementation in good time to the appropriate institution for consideration. In such cases, the institution and the Member State must, by virtue of the rule imposing on the Member States and the Community institutions a duty of genuine cooperation which underlies, in particular, Article 5 of the EC Treaty, work together in good faith with a view to overcoming the difficulties while fully observing the Treaty provisions (see, inter alia, the judgment in Case C-348/93 Commission v Italy [1995] ECR I-673, paragraph 17).
40 With respect to the register of olive cultivation, it was not until its letter of 28 December 1988, that is, after the expiry of the period laid down by Regulation No 3453/80, that the Greek Government submitted to the Commission a programme of trials for establishing the register. The representative of the Greek Government confirmed at the hearing that the difficulties in establishing the register were not notified to the Commission until after the expiry of the prescribed period. The fact that after that date the Commission assisted the Greek Government in its efforts to fulfil its obligations cannot, in those circumstances, prove that it was absolutely impossible to establish the register by the required date, since the Greek Government has not put forward any argument relating to the period before 31 October 1988.