Kingdom of Spain v Commission of the European Communities.
Date: 2004-10-07
63. In those circumstances, the Commission is not required to submit, in respect of financial years 1997 and 1998 at issue in the present case, any other evidence of the absence of the register of olive cultivation and the computerised database apart from that which it gathered for that purpose in respect of financial years 1995 and 1996 (see Case C-130/99 Spain  v Commission , cited above, paragraphs 137 to 139). It was incumbent upon the Member State concerned to establish that since those financial years it has indeed put in place the register of olive cultivation and the computerised database (see to that effect Case C‑332/01 Greece  v Commission  [2004] ECR I‑0000, paragraph 61).
66. Secondly, as regards the Spanish Government’s argument that the Community budget suffered no loss, it should be noted that 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-349/97 Spain  v Commission , cited above, paragraph 146).
67. 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 (Case C-349/97 Spain  v Commission , paragraph 147).
73. As regards the rate of 5% applied by the Commission in order to calculate the adjustment in respect of aid for olive oil production, it should be pointed out, on the one hand, that the register of olive cultivation and the computerised database are fundamental aspects of the Community system for checking aid. Until those aspects are operational it is justified in principle to impose the 10% adjustment rate provided for by the Commission guidelines, as set out in its document No VI/5330/97 (see Greece  v Commission , cited above, paragraph 70).
76. On the other hand, as to the assertion by the Spanish Government that a system of other forms of checking aid for olive oil production was put in place, in particular checks on the mills, it is sufficient to observe that the Court has consistently held that where a regulation lays down specific measures of supervision, the Member States must apply them and it is unnecessary to examine the merits of their view that another system of supervision is more effective (see Case C-54/91 Germany  v Commission  [1993] ECR I-3399, paragraph 38, and Case C-130/99 Spain  v Commission , paragraph 87).
81. As regards the position taken by the Spanish Government in Case C-374/99 Spain  v Commission , cited above, suffice it to say that the arguments raised by the Spanish Government in that case related only to financial years 1994 and 1995, whereas the present case relates to financial year 1996. At any event, in paragraph 36 of the judgment relied on the Court rejected all of the Spanish Government’s arguments against the adjustments applied with regard to aid for the consumption of olive oil.
93. The Commission is bound, in its relations with the Member States, to respect the conditions it has imposed on itself by implementing regulations. However, the Member States cannot, in their relations with the Commission, adopt purely formalist positions, when it is clear from the circumstances that their rights were fully protected. Where the document in question, in the present case the letter of 3 November 1997, informs the government concerned fully about the Commission’s reservations and the adjustments which will probably be made in relation to the sector in question, so that it can fulfil the warning function given to written communications by Article 5(2)(c) of Regulation No 729/70 and the first subparagraph of Article 8(1) of Regulation No 1663/95, the mere omission, in that document, of a reference to Regulation No 1663/95 cannot be regarded as a breach of an essential formal requirement (see to that effect Case C-170/00 Finland  v Commission  [2002] ECR I-1007, paragraph 34).
102. It should be pointed out that Article 3(4) of Regulation No 536/93 makes purchasers and producers liable to pay interest, as from 1 September of each year, to the competent body in case of late payment of the additional levy and also that Article 5(2) of that regulation makes Member States responsible for deducting interest paid from the applications for reimbursement of expenditure on milk and milk products submitted to the EAGGF (Case C‑130/99 Spain  v Commission , paragraph 101, and Case C-148/01 Greece  v Commission  [2003] ECR I-5883, paragraph 52).
104. In paragraph 101 of Case C‑130/99 Spain  v Commission , the Court also held that the fact that certain sums due remain unpaid, or have been paid belatedly, does not of itself constitute failure to fulfil obligations placed on the Member States by Community law.
106. However, according to the first subparagraph of Article 8(2) of Regulation No 729/70, the Commission may apply an adjustment where it is able to show that the EAGGF suffered a loss as a result of a negligent failure, attributable to the national authorities, to recover the disputed sums (see, to that effect, Case C-130/99 Spain  v Commission , paragraph 102).
133. It is appropriate to bear in mind, first, that the management of EAGGF financing is principally in the hands of the national administrative authorities responsible for ensuring that the Community rules are strictly observed. That system, based on trust between national and Community authorities, does not involve any systematic supervision by the Commission, which moreover would in practice be quite unable to carry it out. Only the Member State is in a position to know and determine precisely the information necessary for drawing up EAGGF accounts since the Commission is not close enough to obtain the information it needs from the economic operators (Case C-238/96 Ireland  v Commission [1998] ECR I-5801, paragraph 30, and Case C-118/99 France v Commission  [2002] ECR I-747, paragraph 37).
134. Articles 2 and 3 of Regulation No 729/70 allow the Commission to charge to the EAGGF only sums paid in accordance with the rules laid down in the different agricultural sectors (see, in particular, Case C-197/90 Italy  v Commission  [1992] ECR I-1, paragraph 38, and France v Commission , cited above, paragraph 38).
152. In accordance with the objective and the scheme of Regulation No 3887/92 it is therefore appropriate to interpret the second subparagraph of Article 6(3) of that regulation as meaning that both the initial and the additional checks must be carried out whilst there is still evidence of arable crops or of set-aside on the areas which have been the subject of payments under Regulation No 1765/92 and, at any event, during the current year.
153. For the sake of efficiency, it is appropriate to carry out checks on the areas down to arable crops before the harvest and on the areas subject to set-aside before that requirement ends, which is 31 August of the current year. At any event, the later the checks the more likely it is that the Commission may reasonably conclude that those checks do not offer the expected level of assurance that the applications are in order and the risk of losses for the EAGGF is significant.
156. With regard to the Spanish Government’s third argument, it should be pointed out that, as the Court has already noted in paragraph 76 above, the Court has consistently held that where a regulation lays down specific measures of supervision, the Member States must apply them and it is unnecessary to examine the merits of their view that another system of supervision is more effective (see Germany  v Commission , paragraph 38, and Case C-130/99 Spain  v Commission , paragraph 87).