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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Spain v Commission (Agriculture) [2001] EUECJ C-375/99 (13 September 2001) URL: http://www.bailii.org/eu/cases/EUECJ/2001/C37599.html Cite as: ECLI:EU:C:2001:444, Case C-375/99, [2001] ECR I-5983, EU:C:2001:444, [2001] EUECJ C-375/99

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JUDGMENT OF THE COURT (Fifth Chamber)

13 September 2001 (1)

(EAGGF - Clearance of accounts - Expenditure for 1996 and 1997 - Public storage of bovine meat)

In Case C-375/99,

Kingdom of Spain, represented by M. López-Monís Gallego, acting as Agent, with an address for service in Luxembourg,

applicant,

v

Commission of the European Communities, represented by J. Guerra Fernández, acting as Agent, with an address for service in Luxembourg,

defendant,

APPLICATION for the partial annulment of Commission Decision 1999/603/EC of 28 July 1999 excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), (OJ 1999 L 234, p. 6), in respect of the financial adjustment imposed of 5% of certain expenditure declared by Spain under tariff headings 2111 (technical expenditure), 2112 (financial expenditure) and 2113 (other expenditure), corresponding to the sector for public storage of bovine meat,

THE COURT (Fifth Chamber),

composed of: A. La Pergola, President of the Chamber, D.A.O. Edward, P. Jann (Rapporteur), S. von Bahr and C.W.A. Timmermans, Judges,

Advocate General: L.A. Geelhoed,

Registrar: R. Grass,

having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 6 March 2001,

gives the following

Judgment

1. By application lodged at the Court Registry on 7 October 1999 under the first paragraph of Article 230 EC, the Kingdom of Spain requested the partial annulment of Commission Decision 1999/603/EC of 28 July 1999 excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), (OJ 1999 L 234, p. 6, hereinafter the contested Decision), in respect of the financial adjustment imposed of 5% of certain expenditure declared by Spain under tariff headings 2111 (technical expenditure), 2112 (financial expenditure) and 2113 (other expenditure), corresponding to the sector for public storage of bovine meat.

   Legal framework

2. Article 5(2)(c) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970(I), p. 218), as amended by Council Regulation (EC) No 1287/95 of 22 May 1995 (OJ 1995 L 125, p. 1), states:

   The Commission, after consulting the Fund Committee,

   ...

   (c) shall decide on the expenditure to be excluded from the Community financing referred to in Articles 2 and 3 where it finds that expenditure has not been effected in compliance with Community rules.

   Before a decision to refuse financing is taken, the results of the Commission's checks and the replies of the Member State concerned shall be notified in writing, after which the two parties shall endeavour to reach agreement on the action to be taken.

   If no agreement is reached, the Member State may ask for a procedure to be initiated with a view to mediating between the respective positions within a period of four months, the results of which shall be set out in a report sent to and examined by the Commission, before a decision to refuse financing is taken.

   The Commission shall evaluate the amounts to be excluded having regard in particular to the degree of non-compliance found. The Commission shall take into account the nature and gravity of the infringement and the financial loss suffered by the Community

   ...

3. Article 8(1) of Commission Regulation (EC) No 1663/95 of 7 July 1995 laying down detailed rules for the application of Council Regulation (EEC) No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section (OJ 1995 L 158, p. 6) provides:

   When, as a result of any enquiry, the Commission considers that expenditure was not effected according to Community rules, it shall communicate to the Member State concerned its findings, the corrective measures to be taken to ensure future compliance, and an evaluation of any expenditure which it may propose to exclude pursuant to Article 5(2)(c) of Regulation (EEC) No 729/70 ...

4. Commission Decision 94/442/EC of 1 July 1994 setting up a conciliation procedure in the context of the clearance of the accounts of the European Agricultural Guidance and Guarantee Fund (EAGGF), Guarantee Section (OJ 1994 L 182, p. 45) set up a Conciliation Body (hereinafter the Conciliation Body) to consider matters referred to it by a Member State which has received notification from the Commission that expenses declared under the EAGGF must be adjusted. Under Article 2(2)(1) of Decision 94/442:

   A request for conciliation is admissible only where the financial adjustment recommended by the Commission in respect of a budget heading:

   either,

   - exceeds ECU 0.5 million; or

   - represents more than 25 % of the Member State's total annual expenditure under the budget heading concerned.

   Facts

5. On 12 June 1998, the Commission sent the Spanish authorities a notification pursuant to Article 8 of Regulation No 1663/95. It stated that enquiries carried out in Spain by its services between 20 and 24 January 1997 in the sector of public storage of beef had revealed that vital checks on weight, classification, presentation and temperature had not been conducted with the rigour required by Community legislation. It stated that, consequently:

   ... in the clearance of the accounts for the financial years 1996 and 1997, it is proposed to apply a flat-rate adjustment of 5% of the amounts declared by the Kingdom of Spain under tariff headings 2111 (technical expenditure), 2112 (financial expenditure) and 2113 (other expenditure). This adjustment relates to purchase and stocks of forequarters delivered into intervention when the corresponding hindquarters are not part of an intervention scheme.

   The value of the adjustment shall be calculated when the Spanish authorities have provided the information requested in paragraph 1 of the annex to this letter.

   ...

6. The Commission invited the Spanish authorities to file a request for conciliation in accordance with Decision 94/442 if they wished to do so.

7. On 28 July 1999 the Commission adopted the contested Decision.

   The first plea

8. In its first plea the Spanish Government claims that the adoption of the contested Decision infringed its rights of defence and the principle of legal certainty.

9. It submits that, since the Commission's notification of 12 June 1998 did not indicate the amount of the suggested financial adjustment, it was not possible for it to know whether the conditions laid down in Commission Decision 94/442 for seeking intervention by the Conciliation Body had been satisfied. It claims that it was also denied the possibility of bringing the matter before that body.

10. The Spanish Government points out that under the notification of 12 June 1998, the adjustment was to apply to tariff headings 2111, 2112 and 2113. It states that, since the expenditure declared under tariff heading 2113 was negative, it considered that the Commission would not take that tariff heading into account. However, the financial adjustment applied by the contested Decision was calculated taking into account only the expenditure under tariff heading 2113 alone relating to the purchase of beef, and not the total amount of expenditure declared. The amount of this adjustment was therefore far higher than that which would have resulted from a strict application of the wording of the notification of 12 June 1998 and largely exceeded the threshold for referral to the Conciliation Body.

11. The Commission submits that at the time of the notification of 12 June 1998 its services were unable to calculate the financial adjustment exactly because in order to do that they needed information which was then only available to the Spanish authorities. The Spanish authorities, on the other hand, were in a position to carry out the mathematical operation described in the notification.

12. The Commission observes that, concerning tariff headings 2111, 2112 and 2113, the notification of 12 June 1998 expressly limited the adjustment to purchase and storage. In its pleadings, it states that, in accordance with the notification, the adjustment for the three headings was calculated only on the basis of expenditure related to purchase and storage. In response to a question posed by the Court, however, the Commission set the record straight. It acknowledged that while it had only taken into account expenditure related to purchase and storage in order to calculate the adjustment under headings 2112 and 2113, for the purposes of the adjustment under heading 2111 it also took into account expenditure related to sales. In any case the error was of negligible financial effect, namely a supplementary adjustment of approximately ESP 57 278.

13. It must be observed at the outset that only intervention undertaken in accordance with the Community rules in the framework of the common organisation of agricultural markets is to be financed by the EAGGF (see Case C-247/98 Greece v Commission [2001] ECR I-1, paragraph 7, and Case C-278/98 Netherlands v Commission [2001] ECR I-1501, paragraph 38).

14. It must be emphasised that whilst it is for the Commission to prove that an infringement of the rules on the common organisation of the agricultural markets has occurred (see Greece v Commission, cited above, paragraph 7, and Netherlands v Commission, cited above, paragraph 39), the burden of providing such proof has been defined by the Court having regard to the fact that it is the Member State which is best placed to collect and verify the data required for the clearance of EAGGF accounts (Greece v Commission, cited above, paragraphs 8 and 9, and Netherlands v Commission, cited above, paragraphs 40 and 41).

15. The complaints raised by the Spanish Government against the procedure by which the Commission adopted the contested Decision must be examined in the light of those considerations.

16. Article 8(1) of Regulation No 1663/95 states expressly that when the Commission considers that expenditure was not effected according to Community rules, it shall communicate to the Member State concerned an evaluation of any expenditure which it may propose to exclude from Community financing. That term should be interpreted, as should its equivalent in the different language versions, as meaning that it is not necessary to state a particular figure for the value of the expenditure in question and that it is sufficient to provide the elements necessary in order to calculate that value at least approximately.

17. That literal interpretation is supported by the fact that, as mentioned above, it is the Member State which is best placed to collect and verify the data required for the clearance of EAGGF accounts.

18. In the present case, the notification that the Commission sent to the Kingdom of Spain on 12 June 1998 set out the flat-rate percentage of the proposed adjustment, 5%, as well as the tariff headings to which that adjustment would be applied, namely headings 2111, 2112 and 2113. It also expressly stated that the adjustment would relate to purchase and stocks of forequarters delivered into intervention when the corresponding hindquarters are not part of an intervention scheme.

19. Contrary to the Spanish Government's submissions, the latter information identifies exactly which expenditure is to be taken into consideration under the relevant tariff headings. Moreover, it was all the more clear because the checks referred to by the Commission in its notification concerned compliance with Community provisions relating to public storage of bovine meat.

20. It also seems that the information contained in the notification of 12 June 1998 was enough to allow the Spanish Government, to whom the information relating to the expenditure in question was available, to calculate, at least approximately, the amount of the proposed adjustment.

21. The finding that the information contained in the notification of 12 June 1998 was sufficient to allow the Spanish Government to determine the scale of the financial effects resulting from the proposed adjustment and to arrange its defence in due time is not invalidated by the fact that the Commission, as it acknowledged in its reply to the question raised by the Court, incorrectly calculated the adjustment under tariff heading 2111 on the basis of all expenditure declared. In any case an error of such limited financial implications would not affect the discretion of the Spanish authorities as to whether it was appropriate to refer the matter to the Conciliation Body.

22. It follows that the Spanish Government was in a position to determine whether the conditions of referral to the Conciliation Body described in Article 2(2) of Decision 94/442 were satisfied.

23. Therefore, the argument alleging infringement of the rights of the defence and the principle of legal certainty must be rejected.

    The second plea

24. In its second plea the Spanish Government submits that the contested Decision was adopted in breach of the principle of equal treatment.

25. It submits that the deficiencies complained of in its case are similar to those found in the United Kingdom of Great Britain and Northern Ireland and in the Federal Republic of Germany, whereas the sanctions taken against those Member States were less severe.

26. In that respect, it must be observed first of all that each case must in principle be assessed separately to determine whether, when the Member State in question carried out operations financed by the EAGGF, it acted in accordance with the requirements of Community law and, if it failed to do so, to what extent (Case C-242/97 Belgium v Commission [2000] ECR I-3421, paragraph 129).

27. That does not mean that a Member State is not authorised to plead breach of the principle of equal treatment. However, it may do so only if the cases it cites are at least comparable as regards all the elements which characterise them, including, in particular, the period during which the expenditure was incurred, the sectors concerned and the nature of the irregularities complained of (Belgium v Commission, cited above, paragraph 130).

28. Next, it should be borne in mind that the Court has consistently held that prohibited discrimination can arise only where comparable situations are treated differently, unless such treatment is objectively justified (see, in particular, Belgium v Commission, cited above, paragraph 131).

29. In the present case the summary report relating to the results of checks in the clearance of accounts under the Guarantee Section of the EAGGF in accordance with Article 5(2)(c) of Regulation No 729/70 concerning public stocks of bovine meat, tobacco, failing to comply with time-limits for payment, public storage of cereals, fruit and vegetables, arable crops, the statement of insurance (SOI), meat and fish (document VI/4777/99) shows that the deficiencies found in the Kingdom of Spain were of a different nature and seriousness to those found in the United Kingdom and in the Federal Republic of Germany. It follows that, for the reasons put forward by the Advocate General in paragraphs 46 and 47 of his Opinion, the situations were not comparable.

30. The argument alleging breach of the principle of equality of treatment must therefore be rejected.

31. Having regard to all of the above considerations, the Kingdom of Spain's application must be rejected.

    Costs

32. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Commission has applied for costs, the Kingdom of Spain, which has been unsuccessful, must be ordered to pay the costs.

On those grounds,

THE COURT (Fifth Chamber)

hereby:

1. Dismisses the application;

2. Orders the Kingdom of Spain to pay the costs.

La Pergola Edward Jann von Bahr Timmermans

Delivered in open court in Luxembourg on 13 September 2001.

R. Grass A. La Pergola

Registrar President of the Fifth Chamber

---

1: Language of the case: Spanish.