Kingdom of Spain v Commission of the European Communities.
Date: 2003-05-08
45. It should be made clear first of all that the EAGGF finances only intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets (see, in particular, Case C-278/98  Netherlands  v Commission  [2001] ECR I-1501, paragraph 38, and Case C-263/98  Belgium  v  Commission  [2001] ECR I-6063, paragraph 35).
46. It should be noted in this connection that it is for the Commission to prove an infringement of the rules on the common organisation of the agricultural markets (see 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-253/97  Italy  v  Commission  [1999] ECR I-7529, paragraph 6). The Commission is therefore obliged on each occasion to give reasons for its decision finding an absence of, or defects in, inspection procedures operated by the Member State in question (see Case C-8/88  Germany  v  Commission  [1990] ECR I-2321, paragraph 23).
146. As is made clear in paragraph 45 of the present judgment, the EAGGF finances only intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets. The Commission is not required to prove that there has been a loss but may simply adduce sound evidence of such loss. For those difficult cases where the extent of the losses cannot be ascertained precisely, the losses to the Community funds must be determined by an evaluation of the risk to which they are exposed by the deficiency in the controls (see to that effect Case C-238/96  Ireland  v  Commission  [1998] ECR I-5801, paragraph 31).
147. Although it is for the Commission to prove that the rules of the common organisation of the agricultural markets have been infringed, once it has established such an infringement it is for the Member State to demonstrate, if appropriate, that the Commission made an error as to the financial consequences to be attached to that infringement. The Member State must then adduce the most detailed and comprehensive evidence possible that its figures are accurate and, if appropriate, that the Commission ' s calculations are incorrect.
204. As regards the consequences of the fact that Tragsa should be regarded as part of the Spanish administration, the Court has allowed an exception to the application of the directives on the award of public works contracts, the so-called   " in-house providing"  exception, which relates to contracts made by a contracting authority with certain public organisations that are linked to itself. The limits on that exception were clarified in particular in Case C-107/98  Teckal  [1999] ECR I-8121, paragraph 50, and Case C-94/99  ARGE Gewässerschutz  [2000] ECR I-11037, paragraph 40. It is clear from those judgments that in the absence of an express exception it is sufficient in principle, for a public works contract to exist, that the contract has been concluded between a local authority on the one hand and a person legally separate from the latter on the other hand. The only case where it is otherwise is where, at the same time, the local authority exercises over that person control similar to that which it exercises over its own departments and where the person carries out most of its activity with the authority or authorities which own it.
205. That is so in the present case. Under Article 88(4) of Law No 66/97 of 30 December 1997 Tragsa, being an instrument and a technical service of the Spanish administration, is required to implement, itself or using its subsidiaries, only work entrusted to it by the general administration of the State, the autonomous communities or the public bodies subject to them. Under Article 88(1) and (2), Tragsa is a State company and the autonomous communities may invest in it by acquiring shares in its capital.
226. It is clear from paragraph 52 of the judgment in Case C-45/97  Spain  v  Commission  [2000] ECR I-5333, which refers to Article 12(6) in its original version, that the competent authority is required to take into consideration the seriousness of the infringement concerned and is thus obliged to comply with the principle of proportionality. In paragraph 54 of the same judgment the Court held that Article 12(6) as amended by Regulation No 643/93 merely lays down the criteria which, in the Commission ' s view, should guide application of the principle of proportionality in the event of the prescribed penalties being imposed. In the new version of that provision the penalty of withdrawal of approval applies only where the quantity in respect of which consumption aid had been improperly applied for exceeds the checked quantity for which entitlement to aid has been recognised by at least 20%.
270. As regards the prior requirement to show that the Community budget might incur a serious loss, it should be noted that, as is clear from paragraph 146 above, the Commission is not required to prove that there has been a loss but may simply adduce sound evidence of such loss ( Ireland  v  Commission , cited above, paragraph 29).
4. The principle of proportionality
273. The Court has consistently held that so far as the amount of the financial correction is concerned, the Commission may refuse to charge to the EAGGF even the whole of the expenditure in question if it finds that there are no adequate control procedures (see Case C-242/97  Belgium  v  Commission  [2000] ECR I-3421, paragraph 122).