1 By application lodged at the Court Registry on 1 February 1991, the Government of the Kingdom of the Netherlands brought an action under the first and third paragraphs of Article 173 of the EEC Treaty for the partial annulment of Commission Decision 90/644/EEC of 30 November 1990 on the clearance of the accounts presented by the Member States in respect of expenditure for 1988 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund.
2 With a view to achieving an improved balance on the market in cereals and controlling growth, Council Regulation (EEC) No 1579/86 of 23 May 1986 amending Regulation (EEC) No 2727/75 on the common organization of the market in cereals (OJ 1986 L 139, p. 29) introduced, with effect from 1 July 1986, a co-responsibility levy which is collected by the competent national bodies and paid to the European Agricultural Guidance and Guarantee Fund (EAGGF). The levy is payable in respect of cereals produced in the Community where they undergo first processing, are bought into intervention or are exported in the form of grain.
3 It is apparent from the papers before the Court that during its investigation aimed at ascertaining whether the co-responsibility levy in the cereals sector had been correctly applied and paid in full by the Member States for the 1987/88 marketing year, the Commission found a discrepancy between the quantities of cereal subject to the co-responsibility levy and the levy actually collected in the Netherlands. It is also common ground that in order to carry out those calculations the Commission relied essentially on statistical data from various sources. It thus used both the figures communicated to Eurostat by the Member States and data produced by private bodies, as well as figures which it obtained directly from the Member State concerned.
4 The Netherlands Government disputed the statistical method thus chosen by the Commission and produced fresh figures which, however, were rejected by the Commission as inaccurate. In view of that disagreement, the accounting department of the Netherlands Ministry of Agriculture, Nature and Fisheries was charged, with the approval of the Commission, with conducting a systematic inquiry in order to ascertain whether the co-responsibility levy in the cereals sector had been collected and paid to the intervention agency in full.
5 According to that inquiry, the calculations carried out by the Commission had also proved to be inaccurate, if only on the basis of the statistical method alone. The Commission therefore corrected its figures, so that the discrepancy between the balance suggested by the Commission and that suggested by the Netherlands Government was reduced to HFL 708 540, which is the amount at issue in these proceedings.
6 In support of its application, the Kingdom of the Netherlands relies on two submissions alleging first, breach of the provisions implementing the Treaty, including, in particular, Council Regulation (EEC) No 729/70 on the financing of the common agricultural policy (OJ, English Special Edition 1970 (I), p. 218) and Commission Regulation (EEC) No 1723/72 of 26 July 1972 on making up accounts for the EAGGF (OJ, English Special Edition 1974, (III) European Agricultural Guidance and Guarantee Fund, p. 109), and misuse of powers, and secondly, breach of the principle of care and any other general principle of law recognized by the Community legal order.
7 By orders of 19 June 1991 the United Kingdom and the French Republic were granted leave to intervene in support of the submissions of the Kingdom of the Netherlands.
8 Reference is made to the Report for the Hearing for a fuller account of the facts, the procedure and the pleas and arguments of the parties, which are mentioned below only in so far as is necessary for the reasoning of the Court.
9 Before examining the pleas put forward, it is appropriate to recall the legal background to the dispute.
10 The procedure for clearing EAGGF accounts is conducted by the Commission on the basis of the figures in the annual accounts and of the documents required for making up the balance sheets, forwarded by the Member States in accordance with Article 5 of Regulation No 729/70. However, the Commission may gather other evidence and also exercise such supervision as it may consider necessary, including on-the-spot inspections, pursuant to Article 9(1) of Regulation No 729/70.
11 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, does not involve any systematic supervision by the Commission, which moreover would in practice be impossible for it to carry out (see Case 349/85 Denmark v Commission [1988] ECR 169, paragraph 19). 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.
12 It follows that the Commission operates on the basis of figures communicated by the Member States which it can verify by means of inquiries in order to be able to confirm or deny their accuracy, as the case may be.
13 The objective of decisions of the Commission concerning the clearance of accounts presented by the Member States in respect of expenditure financed by the EAGGF is to determine whether it may be accepted that the expenditure was incurred by the national authorities in accordance with Community provisions (see Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraph 9).
14 Thus, as the Court has already observed, only refunds granted and intervention undertaken in accordance with the Community rules within the framework of the common organization of agricultural markets are to be financed by the EAGGF (see, in particular, Case 11/76 Netherlands v Commission [1979] ECR 245, paragraph 8, Joined Cases 15/76 and 16/76 France v Commission, paragraph 10, and Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 11).
15 It is also clear 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 particular, Case 347/85 United Kingdom v Commission, cited above, paragraph 12).
16 Finally, 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 for which a Member State can be held responsible, it is for that State to show that the conditions for obtaining the financing refused by the Commission are fulfilled (see Case 347/85 United Kingdom v Commission, cited above, paragraph 14).
17 The Commission is required not to demonstrate exhaustively that there are irregularities in the data submitted by the Member States but to adduce evidence of serious and reasonable doubt on its part regarding the figures submitted by the national authorities. The reason for this mitigation of the burden of proof on the Commission is that, as pointed out above (paragraph 11), it is the State which is best placed to collect and verify the data required for the clearance of EAGGF accounts; consequently, it is for the State to adduce the most detailed and comprehensive evidence that its figures are accurate and, if appropriate, that the Commission' s calculations are incorrect.
18 It follows from the foregoing that in the event of a dispute it is for the Commission to prove that the rules of the common organization of the agricultural markets have been infringed and, once it establishes such an infringement, the Member State concerned must then, if appropriate, demonstrate that the Commission committed an error as to the financial consequences to be drawn from it (see Case C-281/91 Italy v Commission [1991] ECR I-347, paragraph 19).
19 It is in the light of all those principles that the pleas put forward by the Kingdom of the Netherlands must be examined.
20 According to the Netherlands Government, the Commission has infringed Articles 5 and 9 of Regulation No 729/70 in that it cleared the EAGGF accounts solely on the basis of statistical data to which those provisions make no reference and without taking account of the documents forwarded for that purpose by the Netherlands authorities in pursuance of Article 5 of that regulation or carrying out the inspections and inquiries provided for in Article 9. The Netherlands Government maintains that in those circumstances the Commission was not justified in correcting the figures communicated by the Netherlands authorities on the ground that they did not correspond with the statistical data.
21 The Commission justifies its use of statistics, first of all, by the need to clear the agricultural accounts of all the Member States on the basis of effective and uniform criteria. That result can be achieved only by statistical means. The Commission considers that the methods used to supervise expenditure, whereby the beneficiaries can be identified and the conditions in which financing was granted can therefore be verified, cannot be applied to revenue inspection, in that the accounts indicate only the operators who have paid the levy but do not identify those who may have avoided paying it. Accordingly, the true state of affairs can only be established by the statistical method complained of. Secondly, the Commission points out that the statistical data in question are based on objective factors which can be verified, apart from those relating to producers' own consumption and sales between producers, which, however, it disregarded in calculating the quantity subject to the levy. Lastly, the Commission maintains, it is unable to use other methods for the clearance of the accounts because it does not have sufficient financial and material resources to check all the transactions carried out in the Member States.
22 Regard being had to those arguments, there are a number of factors which should be borne in mind. First, the co-responsibility levy in the cereals sector, described in Article 4(4) of Regulation No 2727/75 as amended by Regulation No 1579/86, "shall be regarded as one of the intervention measures designed to stabilize agricultural markets and shall be allocated to the financing of costs in the cereals sector". Moreover, it follows from Article 3(1) in conjunction with Article 1(2)(b) of Regulation No 729/70 that intervention measures intended to stabilize the agricultural markets fall within the scope of that regulation.
23 Second, there is nothing either in the preamble to or in the provisions of Regulation No 729/70 to indicate that there should be any difference in the procedure for clearing the accounts depending on whether it relates to expenditure to be financed by the EAGGF or revenue to be collected by that body. On the contrary, the final subparagraph of Article 5(1) clearly shows that it applies to all transactions financed by the Guarantee Section, including intervention measures intended to stabilize the markets, of which the co-responsibility levy forms part.
24 Third, in view of their nature and their objectives, statistical data are inevitably approximate and, accordingly, reflect the actual state of affairs only with a limited degree of precision. According to the Commission, the margin of error specifically attributable to the use of such data was considerably reduced in the present case by the corrections which it made on the basis of the comparisons between the data from different sources which it received and the discussions which it held on that subject with the national authorities. In that regard, the Netherlands Government was right to observe, without being contradicted by the Commission, that all the data used by the Commission were derived from the figures of the Netherlands authorities. The comparison of data from the same source cannot be regarded as a guarantee of objectivity. As regards the discussions with the Netherlands authorities, it should be noted that, as the Commission acknowledged at the hearing, they were limited to the differences between its own figures and those of the Netherlands authorities drawn up according to the statistical method. Thus the exchanges of views which took place could not significantly correct the margin of error inherent in the use of approximate data.
25 Fourth, as regards the Commission' s argument that it was unable for financial reasons to have recourse to other methods of supervision, it should be observed that in adopting Regulation No 729/70 the Council was aware of the limits of a procedure such as that for clearing EAGGF accounts. In providing that the procedure was to be carried out on the basis of the annual accounts presented by the Member States and of the documents required for making up the balance sheets, while allowing the Commission to have recourse to other methods, such as on-the-spot inspections, the Council' s intention was that the Commission should have access to reliable data that only certain bodies, such as the national authorities, can provide and should be able to compare, by any means, the figures so obtained from the Member States with other data, in such a way as to be able to confirm or deny their accuracy.
26 Fifth, recourse to statistics on its own cannot be regarded as a uniform criterion for verifying the transactions chargeable to the EAGGF carried out in the Member States, since each State uses a different accounting method for such transactions. Suffice it to note, in that regard, that, as is apparent from the papers before the Court, the accounting method employed in the Netherlands for exports is noticeably different from that employed in other Member States. The statistics drawn up by the Netherlands authorities cannot therefore be compared with those produced by other Member States or by the Commission.
27 It clearly follows from the system introduced by Regulation No 729/70, and in particular from Articles 5 and 9 thereof, that the Council specifically intended to establish a uniform procedure in regard to all the Member States for the clearance of agricultural accounts, which consisted in relying on a common basis of evaluation, namely the annual accounts presented by each of those States and the documents required for making up the balance sheets. As Article 9 of the regulation indicates, the Commission is not required to adopt an automatic or uniform approach to the inspection and verification of the figures forwarded by the Member States. The Court has stated (see Case 214/86 Greece v Commission [1989] ECR 367) that although it is not the duty of the Commission to check the lawfulness of each intervention measure when it is carried out, it is entitled to use the power of inspection conferred on it by Article 9 at any time and in particular when it receives information which causes it to doubt the effectiveness of the national checks.
28 Accordingly, the statistical method can be used by the Commission only as one of the indirect means of verification indicated in Article 9(1) of Regulation No 729/70. In any event, however, that method, which is not sufficiently reliable to serve as a basis for the clearance of the accounts in respect of agricultural expenditure charged to the EAGGF, cannot replace the method provided for in Article 5, namely examination of the "annual accounts, accompanied by the documents required for making up the balance sheets". Consequently, the Commission is not entitled to correct the figures communicated by the Member States on the sole ground that they are inconsistent with the statistical data in its possession.
29 In a second plea, which is closely linked to the first, the applicant argues in effect that since the Commission, when clearing the accounts, relied essentially on statistical data, Decision 90/644 is unlawful. In its view, the Commission was not entitled to hold the Netherlands responsible for the improper management of EAGGF intervention measures on the sole ground that the figures provided by the national authorities were not the same as the Eurostat statistics, which by nature are only approximate figures. In view of the fact that an administrative and supervisory system designed to ensure the correct application of the co-responsibility levy is in place in the Netherlands, the Commission should, in order to be able to correct the accounts presented by the Netherlands Government, have shown proof of the inaccuracy of the figures presented by the Netherlands authorities. Since Decision 90/644 contains no reasoning which bears on that point, it follows that the Commission has failed to resort to all the methods provided for in Regulation No 729/70 of inspecting the accounts presented by the Netherlands, in particular inspections on the spot and comparisons of the books or other accounting documents, in breach of its duty of care.
30 In response to that argument, the first point to note is that, contrary to the applicant' s claim, the Commission is not required to refer in support of its conclusions to individual cases in which it has found that the levy was not collected, failing which it cannot demonstrate the existence of a breach of the rules and correct the accounts. It can justify its doubts by relying on the examination of the annual accounts and the documents required for making up the balance sheets or on information not specifically identified which it has obtained in the course of inspections carried out in the Member State concerned.
31 It cannot be inferred from Case C-8/88 Germany v Commission [1990] ECR I-2321 that the absence of individual cases in which the Commission has found a breach of the Community rules is sufficient to establish that the supervisory system set up by a Member State satisfies the requirements of those rules.
32 On the contrary, as the Court stated in paragraph 42 of that judgment, the fact that the Commission has identified individual cases in which it found that the relevant agricultural rules were not complied with merely constitutes one factor among others in support of its allegation regarding the effectiveness of the Member State' s system of supervision and inspection.
33 Similarly, as is clear from paragraph 44 of the judgment, the converse fact that the Commission has not adduced any evidence relating to individual cases in which the agricultural rules were not complied with does not mean in any way that the supervisory system existing in the Member State concerned guarantees the correct application of those rules. However, those individual cases constitute an additional factor which may substantiate the Commission' s criticisms regarding the effectiveness of the Member State' s supervisory system.
34 Secondly, it is necessary to consider whether the data which the Commission had taken from the Eurostat statistics satisfy the conditions of objectivity and accuracy laid down in order to serve as a basis for the clearance of EAGGF accounts.
35 In that regard, it should be emphasized that in paragraph 4.2.2.2.3 of the summary report, the Commission set out the reasons which in its view justified adopting the statistical method for the purpose of clearing EAGGF accounts in the cereals sector. It states, in particular, that each statistic used in the study corresponds to the actual state of affairs in the Member State and has been communicated by that Member State to the Community statistical service. In other words, in the Commission' s view, the statistical data which it used in clearing the accounts is based on accurate figures since they were produced and communicated by the Member States. Accordingly, the value of the statistics should be similar to that of the annual accounts communicated by the Member States. The Commission also points out that the Netherlands Government itself conceded that the figures which it had initially presented for the purpose of clearing the accounts for 1988 contained errors.
36 In the present case it is common ground that there is an appreciable difference between the figures produced by the Netherlands for the clearance of the accounts and those which it sent to Eurostat, even though the latter figures include an inevitable margin of error peculiar to statistics. As the Commission has emphasized, without being contradicted by the Netherlands, the data which the Netherlands Government communicates to Eurostat are sent more than a year after the transactions to which they relate and can therefore be checked and corrected before being communicated to Eurostat. The Court shares the Commission' s view that the difference between the two categories of figures mentioned above was sufficient to create reasonable and serious doubt concerning the accounts presented by the Netherlands in connection with the clearance of EAGGF accounts for the marketing year in question.
37 It is none the less appropriate to ascertain whether the Netherlands took any steps to demonstrate the inaccuracy of the financial consequences which the Commission had drawn from the discrepancy between the different figures communicated by the Netherlands Government. As pointed out above (in paragraph 4), following meetings between Netherlands officials and officials of the Commission, the Netherlands Government had instructed the accounts department of the Netherlands Ministry of Agriculture, Nature and Fisheries to carry out a systematic inquiry in order to ascertain whether the co-responsibility levy in the cereals sector had been collected and paid to the competent agency in full. The results of that inquiry confirmed the accuracy of the last figures produced by the Netherlands.
38 By way of reply, the Commission states that the real purpose of that inquiry was not to ascertain whether the co-responsibility levy in the cereals sector had been collected in full in the Netherlands but simply to establish that the Netherlands system had allowed and continued to allow the levy to be collected properly. Moreover, the inquiry was limited to reviewing the books and accounting documents of undertakings and public and private bodies in the Netherlands. However, it is common ground that fraudulent operations are not entered in the books or accounts of undertakings.
39 With regard to those arguments, it is appropriate to examine the supervisory system established in the Netherlands to guarantee the collection of the co-responsibility levy on cereals. As the Netherlands Government stated on that point in its pleadings and at the hearing, without being contradicted by the Commission, the Netherlands authorities set up a system for the registration of all undertakings which might be subject to the levy, administered by the Hoofdproduktschap voor Akkerbouwprodukten (Central Production Board for Agricultural Produce). For the year in question, that body and the inspection unit of the Netherlands Ministry of Agriculture, Nature and Fisheries checked 90% of the books of all the processing undertakings so registered.
40 The inquiry subsequently conducted by the abovementioned ministry consisted in reviewing and checking those figures once again and was not in any way confined to an assessment of the inspection carried out in that regard by the financial authorities of the Hoofdproduktschap voor Akkerbouwprodukten. It also covered the periodic declarations of the registered undertakings concerning the quantities processed, if any, as well as the question whether those declarations and the certificates relating to exempt quantities had been properly dealt with by the authorities. Lastly, the inquiry consisted in establishing that the undertakings had complied with the levy, by carrying out on-the-spot inspections and appraising the structure and operation of the Netherlands administrative and supervisory organization.
41 The conclusion must be drawn from the inquiry conducted by the authorities of the Netherlands Ministry of Agriculture, Nature and Fisheries, as described in the papers before the Court, and taking account of the circumstances of the case and the time which elapsed between the events and transactions in respect of which supervision was exercised, that such supervision was carried out sufficiently exhaustively and systematically to dispel the doubts referred to by the Commission.
42 As for the claim that fraudulent operations are not entered in the documents, it must be acknowledged that while this argument is not without logic it is common ground that the supervision of activities and transactions which have already taken place can only be carried out on the basis of existing documents, by checking and comparing them. As the Commission has acknowledged, moreover, the validity of the statistics which it produced itself is based on the fact that they can almost all be verified by reference to the documents. Lastly, if it were shown that certain fraudulent operations were not detected by the Netherlands authorities, there would be no greater likelihood of detecting them by taking account of statistical figures based on the very data compiled by those authorities.
43 Consequently, it must be concluded that the Netherlands has demonstrated to the requisite legal standard that the consequences drawn by the Commission from the doubts raised by the differences between the various figures supplied by the Netherlands Government are incorrect.
44 Commission Decision 90/644 must therefore be declared void in so far as it did not charge the sum of HFL 708 540 to the EAGGF.