Italian Republic v Commission of the European Communities.
Date: 1999-10-28
6 As the Court has already observed, only intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets is to be financed by the EAGGF (see Case C-48/91 Netherlands v Commission [1993] ECR I-5611, paragraph 14). In that context, it is for the Commission to prove an infringement of the rules on the common organisation of the agricultural markets (see Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 16; Case C-281/89 Italy v Commission [1991] ECR I-347, paragraph 19; Case C-55/91 Italy v Commission [1993] ECR I-4813, paragraph 13; and Case C-48/91, cited above, paragraph 18). Accordingly, the Commission is obliged to give reasons for its decision finding an absence of, or defects in, inspection procedures operated by the Member State in question (Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraph 23).
7 The Member State, for its part, cannot rebut the Commission's findings by mere assertions which are not substantiated by evidence of a reliable and operational supervisory system. If it is not able to show that they are inaccurate, the Commission's findings can give rise to serious doubts as to the existence of an adequate and effective series of supervisory measures and inspection procedures (see, to that effect, Case C-8/88 Germany v Commission, cited above, paragraph 28).
48 Although the offsetting system is indeed based on the principle of financial neutrality inasmuch as the total of the levies collected must be equivalent to the total of the reimbursements paid, as is evident from Article 6(2) of Regulation No 1358/77 and from the case-law of the Court of Justice (see Case 121/83 Zuckerfabrik Franken v Hauptzollamt Würzburg [1984] ECR 2039, paragraph 26), that balance must be achieved at Community level and not at the level of the Member State or the undertaking concerned (see Case C-242/96 Italy v Commission [1998] ECR I-5863, paragraph 118).
49 Traders who pay the levy are not, moreover, necessarily the same as those who receive the reimbursement. The latter thus include specialised traders who are not liable for the levy. Moreover, even in the case of manufacturers, the two amounts, fixed according to the manufacturing quota allocated to them and the duration of storage respectively, do not automatically coincide (see Case C-242/96 Italy v Commission, cited above, paragraph 119).
50 That is why the Member States must introduce adequate inspection procedures in order to check whether the storage costs eligible for reimbursement have actually been incurred. The absence of such procedures, or any deficiencies therein, could allow certain traders to obtain reimbursement for fictitious costs, which would obviously lead to distortions of competition, to the detriment in particular of traders in other Member States where the control system does conform to the requirements of the Community rules (see Case C-242/96 Italy v Commission, cited above, paragraph 120).
72 As regards the concurrent application of an analytical correction and a flat-rate correction, it is settled case-law that additional expenditure resulting from national measures which are liable to compromise the equality of treatment of traders in the Community and thus to distort competitive conditions between the Member States cannot be financed by the EAGGF and must in any event be borne by the Member State concerned (see, in that connection, the judgment in United Kingdom v Commission, cited above, paragraph 12).
77 As for the applicant's argument that, in determining the analytical correction, the Commission wrongly took as its basis all the amounts already paid, including those paid during periods prior to the date on which approval could, if necessary, have been withdrawn, it need only be observed that the Commission may charge to the EAGGF only sums paid in accordance with the rules laid down in the various sectors of agricultural production, including any sums already recovered by the deadline for the year in question (see Case C-242/96 Italy v Commission, cited above, paragraph 122).
78 With regard to the Commission's failure to observe the 20% `threshold' below which it is its policy not to require withdrawal in calculating the corrections on which it has decided, it should be observed that the Italian Government raised that argument for the first time at the hearing. Since the facts underlying it were already known at the stage of the written procedure, it must be rejected as out of time and therefore inadmissible (see Case C-55/91 Italy v Commission, cited above, paragraph 40; Case C-323/96 Commission v Belgium [1998] ECR I-5063, paragraph 38; and Case C-54/95 Germany v Commission [1999] ECR I-35, paragraph 28).
95 Next, responsibility for the harvest estimates lay exclusively with the producers and the Member State, since producers alone have the necessary figures and Member States have a duty, under the fourth paragraph of Article 7 of Regulation No 3929/87, to adopt any effective control measures necessary to ensure the accuracy of those declarations.
96 Finally, the Commission had no choice but to calculate any risk to the EAGGF on the basis of the wine remaining in storage. While it is conceivable that there may  not automatically be any connection between the quantities stored and the quantities of undistilled wine, it was difficult to make the calculation on any other basis.  In any case, the Italian Government was unable to supply evidence of actual errors in the calculations.
120 In that connection, it need only be observed that if, because of the inadequacy of the checks which Member States are required to carry out, losses during storage dating back to previous years were taken into account in the 1993 financial year, the Member State concerned must assume responsibility for the financial consequences thereof. It is after all clear from Articles 1 and 3 of Regulation No 147/91 that a stock report must be drawn up at the end of each EAGGF accounting year. Moreover, the Italian Government has been unable to prove that those losses did indeed date back to previous years. It cannot rebut the Commission's findings by mere assertions which are not substantiated by evidence of a reliable and efficient supervisory system (see, in that connection, Germany v Commission, cited above, paragraph 28).
131 It should be observed first of all that where the Commission, instead of rejecting all the expenditure in question, 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, the burden of proving that those calculations are not correct rests on the Member State (see United Kingdom v Commission, cited above, paragraph 15).
132 The Member State, for its part, cannot rebut the Commission's findings by mere assertions which are not substantiated by evidence of a reliable and efficient supervisory system (see Germany v Commission, cited above, paragraph 28), such as the introduction of reforms or the determination of the regional authorities to provide better preparation for inspectors.