French Republic v Commission of the European Communities.
Date: 2002-01-24
37 In that regard, it is appropriate to bear in mind, first, that the management of EAGGF finances 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).
38 Second, 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).
39 Third, where it proves impossible to establish with certainty the extent to which a national measure 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 (Case C-50/94 Greece v Commission [1996] ECR I-3331, paragraph 26).
40 Finally, 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, the burden of proving that those calculations are not correct rests on the Member State (Ireland v Commission, cited above, paragraph 37).
44 Second, the Commission was right not to take into consideration the percentage of irregularities found in following years.
45 In the first place, not only does such a method fail to provide a firm basis for calculation, it is also quite conceivable that, following the observations made by the Commission, there was no repetition of those irregularities in subsequent years.
49 It must therefore be concluded that the inadequate quality of the on-the-spot checks gives rise to serious doubts concerning the establishment of an adequate and effective set of supervisory measures and inspection procedures for the purposes of Article 6 of Regulation No 3887/92 (see, in particular, to that effect, Case C-46/97 Greece v Commission [2000] ECR I-5719, paragraph 58), such as to justify applying a flat-rate correction of the kind provided for by the Belle Report.
50 Moreover, where, instead of disallowing all the expenditure affected by the infringement, the Commission has endeavoured to establish rules for treating irregularities differently, depending on the extent of the shortcomings in the checks and the degree of risk to the EAGGF, it is for the Member State to show that those criteria are arbitrary and unfair (see, to that effect, Case C-28/94 Netherlands v Commission [1999] ECR I-1973, paragraph 56). Since the French Government has not done so, its argument on this point must be rejected.
53 As far as that argument is concerned, the Court observes that it is settled case-law that the extent of the duty to state the reasons on which a decision is based, laid down in Article 190 of the EC Treaty, depends on the nature of the act in question and on the context in which it was adopted (see Netherlands v Commission, cited above, paragraph 81).
54 In the particular context of the preparation of decisions relating to the clearance of accounts, the statement of reasons for a decision must be regarded as sufficient if the Member State to which the decision was addressed was closely involved in the process by which it came about and was aware of the reasons for which the Commission took the view that it should not charge the sum in dispute to the EAGGF (Netherlands v Commission, cited above, paragraph 82, and Case C-242/97 Belgium v Commission [2000] ECR I-3421, paragraph 95).
61 On that point, it is sufficient to recall that the Court has already held, in paragraph 38 of Italy v Commission, cited above, that, where Community rules authorise payment of aid only on condition that certain formalities relating to proof or supervision are observed, aid paid in disregard of that condition is not in accordance with Community law and the related expenditure may not therefore be charged to the EAGGF.