Important legal notice

61996C0233

European Court reports 1998 Page I-05759

Opinion of the Advocate-General

A - Introduction

1 The present case concerns a flat-rate reduction in EAGGF (1) financing contested by the applicant. The defendant Commission justifies that reduction by pointing to the fact that, in the context of intervention purchasing, the national authorities had accepted unlawful multiple tenders (group tenders or interconnected tenders). (2) These may be of a speculative nature. If, for example, very large quantities of beef and veal are offered for sale into intervention, it becomes necessary to reduce those quantities by application of a coefficient. (3) Since the tenderers endeavour to continue to sell the whole of their meat into intervention inflated tenders are lodged for speculative purposes. If a tenderer speculates that a specific reduction coefficient will be laid down, he offers a correspondingly higher quantity for sale into intervention. If it then turns out that the coefficient laid down is not as high as the tenderer assumed, the tenderer must deliver into intervention more meat than he actually has available. If he is unable to perform his contract with the intervention agency as to 85% or 95%, he loses in whole or in part the security deposited in respect of the total amount. (4)

2 If, however, the tenderer splits his original tender into several smaller ones which are made in the name of nominees, the risk of losing the security payment is reduced. If he is unable to deliver the full quantity tendered for, in the case of several smaller tenders he is at least in a position to honour certain of them in such a way that he does not lose the security payment. It is true that in respect of the remaining tenders which he is then no longer in a position to honour the security payment will be retained. However, that security is not calculated on the total amount of all the tenders instigated by him but only on the smaller amount in each case. The amount of the security lost is thus smaller and is often exceeded by the profit achieved.

3 A clear consequence of this, in the Commission's view, is that the lodging of multiple tenders favours speculation because the effect of the security deposit is lessened.

4 Speculative tendering for pretended larger quantities, according to the Commission, runs counter to the purpose of intervention, which is, for example by intervention buying-in, to stabilise the market and prevent or mitigate any substantial fall in prices (5) where market prices fall below a certain level. Regulation No 859/89 (6) introduced a tendering procedure. (7) Under that tendering procedure prices and quantities are established on the basis of the tenders received. (8)

5 Speculative tenders which, as demonstrated, are favoured by the lodging of multiple tenders make it difficult, according to the Commission, to operate intervention successfully. Since more meat is offered than is actually on the market, buying-in prices and quantities determined on the basis of tenders received can no longer be established in accordance with the actual market situation. Speculative tenders thus prevent the Commission from obtaining a precise overview of the market situation. For that reason it may almost certainly be presumed that, as a result of the speculative tenders and the multiple tenders favouring them, more meat is bought in by the intervention agencies at higher prices. In that connection it must also be borne in mind that the lodging of several tenders allows speculation as to the price. The buying-in of excessive quantities causes the EAGGF to incur higher costs than is necessary in order to support the market.

B - Facts and legal provisions

6 By this application the Kingdom of Denmark seeks the annulment of the Commission decision disallowing, in respect of the Kingdom of Denmark's expenditure for 1991 and 1992 incurred in the buying-in of beef, the sum of DKK 26 867 909 (hereinafter `the Decision'). (9) The disallowance of that expenditure is contained in Annex I to the Decision. The amount disallowed corresponds to a flat-rate correction of 2% of 1991 and 1992 expenditure.

7 In its Summary Reports (10) the Commission justifies that reduction on the ground that the Kingdom of Denmark did not check whether multiple tenders had been submitted.

8 This point would have been easy to ascertain since, as the Commission points out, 17 tenders lodged in one tendering procedure originated from only seven sources. One particularly large group alone was the source of eight tenders at eight different prices. By matching names, addresses, fax numbers, security deposits and payments, the EAGGF was able to establish for each tendering procedure it examined that many of the individual tenders originated from the same source. It was also evident from the invoices submitted that payment was to be made to other companies. The Danish authority must therefore, according to the Commission, have been aware of the conduct of the tenderers from the beginning.

9 The approach of the competent Danish authority was therefore, in the Commission's view, not compatible with the Community rules and discriminated against participants who had observed the rules.

10 In the applicant's view, however, all the rules concerning intervention were observed. It made sure that each natural or legal person registered as a company did not submit more than one tender per category in response to each invitation to tender. The checks carried out by the Danish authorities involved ascertaining whether the tender came from a company registered with them. There was no reason at that time to carry out more thorough checks.

11 The provision which underlies this dispute is contained in Article 9 of Regulation No 859/89, paragraph 1 of which provides: `Tenderers may take part in the invitation to tender only if they undertake in writing to comply with all the provisions relating to the tender concerned.' (11)

12 Paragraph 2 provides: `Interested parties may participate in the invitation to tender issued by intervention agencies of the Member States in which this is opened either by lodging a written tender against a receipt or by any other written means of communication accepted by the intervention agency, with advice of receipt; they may submit one tender only per category in response to each invitation to tender.' (12)

13 The distinction between the concepts of `tenderer' and `interested party' is, in the Commission's view, of significance in this connection. According to the Commission, it follows from the difference in wording that interested parties are not to be equated with tenderers. `Interested parties' are not only those persons who lodged tenders in the course of their economic activities. That concept embraces a much wider class of persons. It is not therefore only the individual tenderer, that is to say the person who actually lodges the tender, who is prohibited from lodging more than one tender. The prohibition covers all persons tendering in respect of the same quantity of meat.

14 On the other hand, the applicant, taking a narrow view, is of the opinion that the concepts of `tenderer' and `interested party' are interchangeable since there is no discernable difference between them. Neither the preamble nor the text of the regulation itself provides any clarification of the concept of `tenderer'. It should therefore be taken to mean any independent natural or legal person submitting a tender in response to an invitation to tender. The prohibition in the last phrase of Article 9(2) confines itself to specifying that the person acting as tenderer may submit only one tender.

15 The fact that this provision covers other persons than the tenderer is, the applicant submits, apparent only on a reading of Article 11(3) of Commission Regulation (EEC) No 2456/93 of 1 September 1993 laying down detailed rules for the application of Regulation No 805/68 as regards the general and special intervention measures for beef, (13) which was not yet in force at the material time. That provision is as follows: `Interested parties may submit only one tender per category in response to each invitation to tender. The Member States shall ensure that tenderers are independent of each other in the terms of their management, staffing and operations. Where there are serious indications to the contrary or that tenders are not in line with economic facts, tenders shall be deemed admissible only where the tenderer presents suitable evidence of compliance with the second subparagraph. Where it is established that a tenderer has submitted more than one tender, all the tenders from that tenderer shall be deemed inadmissible.'

16 Since the applicant, unlike the Commission, was of the opinion that the last phrase of Article 9(2) was fully complied with in the context of the tendering procedure operated by it, it ultimately referred the matter to the Conciliation Body. (14) According to the applicant, the Conciliation Body concluded that it could not state with any certainty that the conduct of the Member States was in breach of the regulation. The Conciliation Body ruled that in any event it had been considered necessary to clarify the rules contained in Regulation No 2456/93 and that the Commission had failed to react before 1993.

17 The Commission points out in that connection that, in contrast to the national authorities, it did not at first have this information available to it. Since the tenders were forwarded to it anonymously, it became aware of the irregularities only in the context of the checks carried out in 1992, and it alerted the Kingdom of Denmark forthwith.

18 In its decision the Commission confirmed the 2% reduction proposed in each of its Summary Reports, whereupon the applicant in July 1996 brought these proceedings before the Court in which it sought:

- the annulment of the decision (15) in so far as it means that the following expenditure of the Kingdom of Denmark cannot be financed by the Guarantee Section of the EAGGF: DKK 26 867 909 in respect of intervention purchases of beef and veal during the financial years 1991 and 1992;

- an order that the Commission pay the costs of these proceedings.

C - Opinion

Meaning and purpose of the last phrase of Article 9(2)

19 First, the applicant claims that the Commission has misconstrued the last phrase of Article 9(2). That provision, it argues, merely requires every natural or legal person applying to the intervention agency as a tenderer to submit one tender only. Regulation No 859/89 is silent on any connections between individual tenderers which may need to be borne in mind. The last phrase of Article 9(2) merely governs the number of tenders. Nothing is said concerning the characteristics of the tenderers. The number of tenders was checked in Denmark. The national authority verified whether each individual tenderer was a registered legal person. Whether the individual undertakings which submitted tenders may have belonged to the same group of undertakings was not verified in Denmark since there was no necessity and also no legal basis for doing so.

20 The applicant states that, in accordance with the Court's case-law, it is for the Commission, in the context of the clearance of the accounts of the EAGGF, to show that a Member State had contravened Community rules. The Commission, as demonstrated by the applicant, was not able to adduce such proof. Moreover, the applicant points out that rules which may have financial consequences for the Member States must be clearly and precisely formulated.

21 According to the case-law of the Court, `only refunds granted and intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets are to be financed by the EAGGF'. (16) In that connection, it is for the Commission to prove the existence of an infringement of the rules governing the common organisation of the agricultural market. (17)

22 Moreover, in regard to the requirements which the formulation of provisions must satisfy, the Court has held: `Since a rule whose breach inevitably entails financial consequences must be sufficiently clear and precise, the Commission was not entitled to rely on the terms of subheading ... as a basis for imposing, at the time of the clearance of the EAGGF accounts, an interpretation which was not dictated by the normal meaning of the words used'. (18)

23 Accordingly, it must be examined whether the terms in which the last phrase of Article 9(2) of Regulation No 859/89 is couched satisfies these requirements and whether they allow of a construction of the kind placed on them by the Commission. In that connection, it would appear appropriate to examine first the manner in which the Commission seeks to interpret the last phrase of Article 9(2). The pleadings mainly speak of `multiple' tenders. Those cannot be tenders submitted by one and the same tenderer under one name, for such tenders are not lawful in Denmark either. As it is also clear from the pleadings, the Commission is also not challenging every kind of connection between the individual tenders. For example, it states that, where a person operates two independent slaughterhouses, each of them may submit a tender. As the Commission explained at the hearing, in its view only tenders relating to the same quantity of meat are unlawful under the last phrase of Article 9(2). Where, therefore, an interested party offers his meat not only himself but also through the intermediary of nominees, that, according to the Commission, is in breach of Community provisions and must be prohibited by the authorities of the Member States.

24 The Commission points out that, according to the Court's case-law, a provision is not merely to be construed literally but also in accordance with its meaning and purpose. (19) Accordingly, the Commission contends that the provision at issue in these proceedings would be deprived of its purpose if it were possible to submit several tenders via nominees, thus circumventing the prohibitory provision.

25 The intervention scheme, the Commission contends, is jeopardised, as has been demonstrated, by the practice in regard to intervention buying-in in Denmark. By the buying-in of excessive quantities greater costs arise, it is submitted, than are necessary in order to support the market. Moreover, equality of access for all interested parties required under Article 6(6) of Regulation No 805/68, as amended by Regulation No 571/89, is not guaranteed.

26 The last phrase of Article 9(2) of Regulation No 859/89 must therefore, the Commission contends, be interpreted according to its meaning and purpose in such a way that intervention measures cannot be frustrated. If tenders relate to the same quantity of meat they are in reality only from one single tenderer. Such tenders are therefore unlawful.

27 In the Commission's view, this conclusion also follows from the wording. It should be said on this point that a difference in wording as between paragraphs 1 and 2 of Article 9 could certainly point to a difference in meaning. It could be inferred from this that it is not sufficient to check whether the person who in actual fact submits the tender only submits a single one, that is to say, whether in each case an independent (legal) person participates in the procedure. Thus the term `interested party' could be understood as meaning a person interested in selling his meat into intervention. As has been seen, that person does not necessarily have to be the same person as the tenderer, that is to say, the person who actually submits the tender. If, for example, the meat is offered via nominees, in that case there is only one interested party but several tenderers. But if one looks at the way in which those two concepts are used in other regulations dealing with intervention measures for beef and veal, it may be seen that the abovementioned distinction is not always adhered to. Thus, for example, the first recital in the preamble to Regulation (EEC) No 2271/90, (20) provides that `tenderers should only be allowed to submit a single tender ... for each category in response to each invitation to tender'. Moreover, the German version of Article 11(3) of Regulation No 2456/93, which replaced Article 9 of Regulation No 859/89, uses the terms `Interessant' [interested party] and `Bieter' [tenderer] in connection with the submission of tenders. (21)

28 Thus, no further conclusions may be drawn from the distinction between `tenderer' and `interested party' in Article 9.

29 However, it is more instructive to have regard to the provisions which preceded those at issue in the present proceedings. Thus, in 1990 it was made possible to submit several tenders at different prices. Under Regulation (EEC) No 1282/90 (22) the last phrase of Article 9(2) received the following formulation:

They may submit more than one tender, at different prices, for each category in response to each invitation to tender.

31In the applicant's view that regulation only governs the number of tenders which the tenderer may submit. That number was further reduced because the administration had been overwhelmed by the number of tenders. The purpose of Regulation No 2271/90 was therefore, according to the applicant, to lighten the administration's workload by reducing the number of tenders. This purpose was achieved in Denmark. The requirements of the `new' version of the last phrase of Article 9(2) of Regulation No 859/89 were thus met.

32What is more, however, it is clear that after repeal of the provision in Regulation No 1282/90 the tenderer may no longer submit several tenders in respect of the same quantity of meat. The meaning and purpose of the provision here at issue in the last phrase of Article 9(2) is thus that several tenders may not be submitted in respect of a specific quantity of meat. That provision would become meaningless if it could readily be circumvented by recourse to nominees.

33The applicant must also have been aware of that fact when it received the tenders. On the one hand, it is true of any rule that it becomes meaningless if it is circumvented, for example, as is maintained here, by virtue of the fact that the same meat is offered by several persons. On the other hand, the applicant was aware of the aim and object of intervention. To that extent it must also have been aware of the fact that it runs counter to the purpose of intervention if multiple tenders are submitted in respect of the meat available on the market.

34Moreover, the Court has held that, even in cases where, viewed objectively, Community law is incorrectly applied as a result of an interpretation adopted in good faith by the national authorities, costs incurred in that connection must, under Articles 2 and 3 of Regulation (EEC) No 729/70, (23) be borne by the Member States. (24) That strict interpretation of the conditions under which expenditure is to be borne by the EAGGF is necessary in view of the objectives of Regulation No 729/70. Since the management of the common agricultural policy must ensure equality between traders in the Member States, the national authorities of a Member State may not, by the expedient of a wide interpretation of a given provision, favour traders in that State to the detriment of those in other Member States where a stricter interpretation is applied. (25)

35Admittedly, the applicant rightly points out that the last phrase of Article 9(2) is silent as to who the individual tenderers are and the manner in which individual tenderers are to structure their relationships one to another. This, however, is not essential. It follows from the meaning and purpose of the last phrase of Article 9(2) that it is prohibited to offer meat by way of nominees. The applicant cannot rest content with the assertion that it is under no obligation under the terms of Article 9 to examine possible connections between individual tenderers. That merely goes to the question as to the manner in which observance of a prohibitory provision such as that contained in the last phrase of Article 9(2) can be monitored.

36In this connection it is also irrelevant that during the preparation of Regulation No 859/89 the Commission proposed the addition of further details concerning the types of tenderers who would be accepted, but those details were not included in the regulation. The applicant infers from this that the regulation was specifically intended not to define individual tenderers more precisely. Again, it follows, according to the applicant, that no further restrictions can be imposed on the term `tenderer' other than that a tenderer should be a single, independent, natural or legal person under national law.

37Even if it were possible to draw this conclusion from those circumstances this would not alter the fact that in the light of the meaning and purpose of the last phrase of Article 9(2) the involvement of nominees is prohibited.

38Accordingly, it is necessary to concur with the Commission's submission that the last phrase of Article 9(2) also prohibits tenders which, whilst coming from different legal persons, are made in respect of the same meat, with the result that the tenders may be assumed to have been submitted by nominees.

Monitoring obligation on the part of the Member State

39In the Commission's view, the reduction made in the context of the clearance of accounts is justified on the ground that the applicant did not ensure compliance with that provision.

40It is clear that in Denmark tenders are examined only to see whether they originate from different legal persons. No further examination was undertaken. In what follows it will now be considered whether on that basis the applicant may be said to have failed to observe a provision of Community law, since the Commission has mentioned no actual example where tenders were in fact submitted by nominees.

41However, the Commission is unable to adduce such proof because in this respect the applicant carried out no checks at all. The only check made was whether the tenders were from independent (legal) persons. Thus, the Commission has no information before it for examining the specific circumstances. Admittedly, the Commission may also carry out its own checks. However, under the Court's case-law 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. As the Court went on to point out, `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. ... 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'. (26)

42Thus, since in the context of the clearance of EAGGF accounts the Commission is dependent upon information provided by the Member States, it is not possible for it here to give a specific example of an infringement under the tendering procedures. The Commission is able - and required - merely to show that the applicant failed to examine all the criteria necessary for the purposes of compliance with the relevant provision. That the Commission has done.

43The Kingdom of Denmark has moreover stated that there may have been a certain amount of speculation in order to limit the risk of forfeiting the security payment.

44In connection with the question whether there is thus shown to be an infringement of Community law by the applicant, a matter also to be considered is whether the applicant was required to carry out any additional checks. In that connection reference should be made to Regulation No 729/70. In the recitals in the preamble to that regulation it is stated, inter alia, `Measures must be taken to prevent ... any irregularities'. (27) The eighth recital states: `Community expenditure must be made subject to close supervision. In addition to supervision carried out by Member States on their own initiative, which remains essential, provision should be made for verification by officials of the Commission and for it to have the right to enlist the help of Member States'.

45Article 8 of the regulation, which reflects these recitals, provides in paragraph 1 thereof:

`The Member States in accordance with national provisions laid down by law, regulation or administrative action shall take the measures necessary to:

- satisfy themselves that transactions financed by the fund are actually carried out and are executed correctly;

- prevent and deal with irregularities;

- recover sums lost as a result of irregularities or negligence.

46Under the Court's case-law, it is for the national authorities to monitor precise compliance with Community provisions. (28) The extent of this obligation on the Member States in regard to the financing of the EAGGF was decided by the Court in its judgment in Exportslachterijen van Oordegem. In that judgment it was held in regard to Article 8(1) of Regulation No 729/70:

`That provision, which expressly lays down in that specific area the obligations imposed on Member States by Article 5 of the Treaty defines, the Court has said, the principles according to which the Community and the Member States must ensure the implementation of Community decisions on agricultural intervention financed by the Fund and combat fraud and irregularities in relation to those operations (BayWa, cited above, paragraph 13).

That article thus imposes on the Member States the general obligation to take the measures necessary to satisfy themselves that the transactions financed by the Fund are actually carried out and are executed correctly, even if the specific Community act does not expressly provide for the adoption of particular supervisory measures (Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraphs 16 and 17).' (29)

47It follows that an obligation on the part of Member States to carry out checks may subsist even if such a requirement is not expressly provided for in the relevant provision.

48Thus the question arises whether in the specific case now before the Court the applicant was required to carry out further checks, that is to say whether the Member State ought to have or could have done more, and if so what?

49As the Commission has stated, the disadvantage for the Fund arises out of the fact that the submission of several tenders by an interested party by means of nominees encourages the submission of speculative tenders. Yet if one has regard to the Commission's action against speculative tenders as such, it might be queried whether the applicant was required to take any further steps.

50In order to prevent speculative tenders whereby, in anticipation of a specific reduction coefficient, tenders are made in respect of a greater quantity of meat than is available, (30) a security payment was introduced under Article 10(1) to ensure that `tenders are bona fide and that the conditions laid down are complied with'. (31) That means that in that connection the Member States are merely obliged to ensure that the appropriate amount of security is deposited. They do not have to check whether the individual tenderer has offered more beef than is in his possession.

51In the present case, however, there was a further provision to be considered which could not be circumvented. An interested party desirous of selling his meat into intervention could not submit more than one tender. That followed from the underlying rationale of intervention. It is true that that idea was only subsequently given concrete shape in Regulation No 2456/93. (32) However, that does not alter the fact that prior to this there must already have been awareness of that idea.

52Thus, it is clear that the applicant ought to have carried out further checks in order to establish whether the tenders submitted were in fact from the same tenderer. That is particularly the case in the light of the clear indications, already alluded to, of interconnections between individual tenderers. Even if it could not with certainty be concluded from those interconnections that there was an infringement of the last phrase of Article 9(2), the indications were however of such a nature as to necessitate more precise checks, and that was the sole decisive factor.

53The applicant submitted that monitoring of that kind could not be carried out since there was no time during the tendering procedure to carry out extensive checks. The applicant also states, however, that the checks introduced by Regulation No 2456/93 were carried out in Denmark. Those checks were undoubtedly intended to prevent the involvement of nominees. (33) The applicant cannot therefore claim that the checks that were required before the adoption of the 1993 regulation were not possible due to lack of time. In the present case this duty arose out of the rationale underlying intervention long before the provision was enacted in Regulation No 2456/93. The important factor in that connection is that the Member State should check whether in fact tenders are being made in respect of different quantities of meat. The manner in which it carries out those checks is for it to decide. This does not need to be expressly regulated by the Commission. Accordingly, the Commission cannot be said, contrary to the applicant's submission, to be seeking to apply Regulation No 2456/93 retroactively to the facts of the present case.

54It must therefore be held that the applicant ought to have carried out further checks but failed to do so.

Proof of loss occasioned to the EAGGF - burden of proof

55It now falls to examine whether a reduction in the context of the clearance of accounts, as applied by the Commission, was justified on the facts. In the applicant's view that is not the case since the Fund suffered no loss.

56In order to answer that question regard must be had to the Court's case-law on proof of loss and the burden of proof in the context of the clearance of EAGGF accounts. Thus the Court has stated that only refunds granted and intervention undertaken in accordance with the Community rules within the framework of the common organisation of agricultural markets are to be financed by the EAGGF. (34) Finally, the Court went on, 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. (35)

57In that connection, a question arises as to the requirements which the Commission's submission with regard to the occasioning of financial loss must satisfy. Under the Court's case-law, in cases where it cannot be established to what extent a national measure incompatible with Community law has led to an increase in the expenditure under a budgetary heading of the EAGGF, the Commission has `no choice' but to disallow all the expenditure in question, and not merely a certain percentage of it. (36)

58There may be a case of that kind here since, precisely because the necessary checks were not made, the Commission was unable to establish to what extent the applicant's conduct has occasioned loss to the EAGGF. It may only be speculated hypothetically what costs would not have been incurred if the applicant had carried out the proper checks.

59Conversely, in a case in which the Commission called in question the correctness of figures notified by a Member State, the Court held: `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 ... 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.' (37)

60That case is admittedly not directly comparable with the present case since the Commission is not alleging that the figures communicated to it by the applicant are incorrect. The point is rather that the figures could have been different if the applicant had carried out adequate checks. In this case also, however, the Commission has not merely submitted that the EAGGF suffered loss. Rather it showed that the applicant had infringed Community law and the manner in which it had done so. It has set out, furthermore, how that may have favoured speculative bids by tenderers. It has explained, finally, that that may have given rise to an erroneous appraisal of the market and thus to excessive buying-in of beef, possibly at increased prices. Thus, in any event, it has adduced credible evidence that it was possible for loss to have been incurred by the EAGGF.

61A more extensive evidentiary obligation cannot be imposed on the Commission since the abovementioned grounds for easing the burden of proof also subsist in this case. Nor can it be ruled out beyond doubt that the applicant's conduct jeopardised the functioning of the common organisation of the market.

62It is therefore for the applicant - as is apparent from the judgment cited in point 56 - to show that the conduct alleged against it did not lead to an increase in expenditure in the context of the EAGGF. The applicant submits that the Commission is not dependent on tenders for sale into intervention forwarded by the Member States but has other possibilities available to it for obtaining information on the prevailing market situation.

63In that connection the applicant refers to Commission Regulation (EEC) No 610/77 of 18 March 1977 on the determination of prices of adult bovine animals on representative Community markets and the survey of prices of certain other cattle in the Community. (38) Under that regulation the Commission receives all the information necessary to enable it to assess the market situation. In this regard, it should be noted that this means the information needed in order to determine the prices recorded on the representative markets of the Community. The respective levels of prices on the markets are important for deciding whether it is appropriate to implement intervention measures. This is not the case as regards the determination of prices and quantities in the context of intervention. These are determined, pursuant to Regulation No 571/89, on the basis of the tenders received. (39)

64It follows that these figures relating to tenders have at least a part to play in the appraisal of the market and the determination of prices and quantities which are bought in. Thus it cannot be precluded that excessive bids could give rise to an erroneous assessment.

66 The applicant submits moreover that the tendering procedure is by definition speculative and that it cannot therefore reflect the true situation on the market. It justifies this assertion by the fact that the slaughter date is subsequent to the submission of tenders. When the undertakings submit tenders, they do so in relation to the meat which they can obtain on the market in the days that follow. The purpose of intervention is however to withdraw from the market meat which is currently with the tenderer and cannot be disposed of on the normal market. So, for example, a cattle breeder must be able to assess even before the slaughter date the quantity of meat which he intends to, or must, sell into intervention. In that case it is not a question of buying meat which he will still be able to obtain in the days that follow.

67 Since the Commission has thus at least adduced credible evidence that the applicant's conduct may have occasioned loss to the EAGGF, it is for the applicant to show that this was not the case.

68 To distribute the burden of proof in that manner in the present case also appears to be reasonable against the background of other judgments of the Court in regard to clearance of accounts. Thus in cases where the Community rules make payment of aid conditional on the observance of certain formalities relating to proof or checks having been observed, the Court has held that aid is not granted in conformity with Community law if those preconditions are not observed. The expenditure incurred in connection therewith could not be charged to the EAGGF even if it was clear that there had been no substantive irregularity.

69 Likewise, in connection with the observance of formalities, the Court has held: `In view of the essential nature of the formalities which were not complied with and of the fact that it was not possible to check that the time-limit within which the products were to be exported was observed, and in view, therefore, of the probability of losses, or even fraud, to the detriment of the Community budget, the amount disallowed by the Commission, which was limited to 2% of the expenditure involved, cannot be regarded as excessive and disproportionate.' Thus, even the mere likelihood of losses may be used as a criterion for the purpose of the assessment. Such likelihood also subsists in the present case in the light of the abovementioned factors and the absence of checks.

70 The sole matter to be determined is therefore whether the applicant is able to prove, on the basis of its submissions, that no loss was incurred by the EAGGF. The applicant submits, first, that it is for the Commission to show that a loss was incurred. That, as is demonstrated above, is not correct.

71 The applicant also cites examples in order to show that the alleged multiple tenders give tenderers no advantage. As for the examples cited by the Commission in order to show that multiple tenders encourage speculation and lead to an erroneous assessment of the market, the applicant submits that it is possible to think not only of examples where the splitting of a single tender is to the tenderer's advantage since it reduces the risk of losing the security. It claims that it is also possible to think of examples where a single tender is to the tenderer's advantage.

72 It cannot be excluded that, if certain types of speculation and various reduction coefficients were assumed, it would also be possible to think of examples where a single tender would have been more advantageous for the tenderer. This does not however invalidate the Commission's assertion that the splitting of a tender into several smaller tenders reduces the risk of losing the security deposit. Even if that particular risk could not, as such, be reduced, the amount of the security retained could still be reduced.

73 Thus it is clear that the applicant has been unable to refute the Commission's argument concerning financial loss incurred by the EAGGF.

Possibility of a flat-rate calculation of the financial loss

74 The applicant, however, also challenges the flat-rate calculation of the financial loss undertaken by the Commission. Since there is no connection between that calculation and any loss, what is concerned here, the applicant submits, is a penalty for which there must be an express legal basis. No such basis is, however, apparent.

75 In that connection, it should be said that the applicant is incorrectly assuming that no connection with a loss can be established. As demonstrated above, a loss to the EAGGF cannot be ruled out. The applicant submits also that in this case it is possible to make a precise calculation, so that the Commission does not have to have recourse to a flat-rate calculation. It is impossible to agree with the applicant on this because, as has already been shown, it is possible only to speculate hypothetically on what costs may not have been incurred. Moreover, it is sufficient to refer to the Court's case-law in regard to cases in which the Commission does not disallow the total expenditure affected by the infringement but endeavours to establish the financial consequences of the unlawful action by means of calculations. These calculations are based on an assessment of the situation which would have prevailed on the market in question had it not been for the infringement. In such cases, the Court has gone on to hold, it is for the Member State to show that the conditions for obtaining the financing refused by the Commission are fulfilled. Thus, in this case it is for the applicant to show that the Commission's assessment is erroneous. As demonstrated above, it has been unable to do so.

(Reference should be made to point 76 et seq. of the Opinion of 24 March 1998 in Case C-209/96 United Kingdom v Commission regarding the methods for making the flat-rate calculation and the guidelines which the Commission has laid down in this regard.)

Infringement of Article 190?

76 Finally, the applicant submits in addition that the Commission's decision must be annulled because it contravenes Article 190 of the EC Treaty. It maintains that the decision is inadequately reasoned since the reason for disallowing the expenditure is not apparent from it. In this regard, reference should be made to the Court's case-law according to which decisions concerning the clearance of accounts do not require detailed reasons if the country concerned was closely involved in the process by which the decision came about and is therefore aware of the reason for which the Commission considers that it must not charge the sums in dispute to the EAGGF. In the present case, the reasons for the Commission's decision to disallow the expenditure are contained in the two Summary Reports. Moreover, the Commission, after carrying out its investigations in 1992, informed the applicant of its complaints. Denmark was thus informed of the grounds for disallowing the expenditure.

77 Accordingly, the objections raised by the applicant against the Commission's decision cannot succeed.

Costs

78 Under the first subparagraph of Article 69(2) of the Rules of Procedure of the Court the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party's pleadings.

D - Conclusion

79 I therefore propose that the Court should:

(1) dismiss the application;

(2) order the Kingdom of Denmark to pay the costs.

(1) - That is to say the European Agricultural Guidance and Guarantee Fund.

(2) - This problem is also at least partly in issue in Cases C-209/96 United Kingdom v Commission [1998] ECR I-5655, C-232/96 France v Commission [1998] ECR I-5699, C-238/96 Ireland v Commission [1998] ECR I-5801 and C-242/96 Italy v Commission [1998] ECR I-5863.

(3) - The relevant provision is to be found in Article 11(3) of Commission Regulation (EEC) No 859/89 of 29 March 1989 laying down detailed rules for the application of intervention measures in the beef and veal sector (OJ 1989 L 91, p. 5).

(4) - Article 13(4) of Regulation No 859/89.

(5) - Fourth recital in the preamble to and Article 5 of Council Regulation (EEC) No 805/68 of 27 June 1968 on the common organisation of the market in beef and veal (OJ, English Special Edition 1968 (I), p. 187).

(6) - Cited in footnote 3.

(7) - Third recital in the preamble to and Article 7 et seq. of Regulation No 859/89.

(8) - Second recital in the preamble to Council Regulation (EEC) No 571/89 of 2 March 1989 amending Regulation (EEC) No 805/68 on the common organisation of the market in beef and veal, repealing Regulation (EEC) No 1302/73 and extending Regulation (EEC) No 4132/88 (OJ 1989 L 61, p. 43).

(9) - Commission Decision 96/311/EC of 10 April 1996 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1992 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund and in respect of certain expenditure for 1993 (OJ 1996 L 117, p. 19).

(10) - Document VI/320/94 and Document VI/6355/95.

(11) - Emphasis added.

(12) - Emphasis added.

(13) - OJ 1993 L 225, p. 4.

(14) - Established by 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).

(15) - See footnote 9.

(16) - Case C-48/91 Netherlands v Commission [1993] ECR I-5611, paragraphs 13 and 14, with further references.

(17) - Netherlands v Commission (cited in footnote 16, paragraph 18, with further references); Case C-281/89 Italy v Commission [1991] ECR I-347, paragraph 19, with further references; Case 347/85 United Kingdom v Commission [1988] ECR 1749, p. 16; judgment in Case C-55/91 Italy v Commission [1993] ECR I-4813, paragraph 13, with further references.

(18) - Case 349/85 Denmark v Commission [1988] ECR 169, paragraph 16.

(19) - Case C-283/91 Contarini [1992] ECR I-6359, paragraph 14, and Joined Cases C-296/93 and C-307/93 France and Ireland v Commission [1996] ECR I-795, paragraph 21.

(20) - Commission Regulation of 1 August 1990 amending Regulation No 859/89 (OJ 1990 L 204, p. 45).

(21) - This distinction is also reflected in the English version, which speaks of `interested parties' and `tenderer'.

(22) - Commission Regulation of 15 May 1990 amending Regulation No 859/89 (OJ 1990 L 126, p. 31).

(23) - Council Regulation (EEC) No 729/70 of 21 April 1970 on the financing of the common agricultural policy (OJ, English Special Edition 1970 (I), p. 218).

(24) - Article 3(1) of Regulation No 729/70 provides: `Intervention intended to stabilise the agricultural markets, undertaken according to Community rules within the framework of the common organisation of agricultural markets, shall be financed under Article 1(2)(b)'.

(25) - Case 11/76 Netherlands v Commission [1979] ECR 245, paragraphs 8 and 9.

(26) - Netherlands v Commission (cited in footnote 16, paragraph 11).

(27) - Seventh recital.

(28) - Netherlands v Commission (cited in footnote 16, paragraph 11), Case C-366/88 France v Commission [1990] ECR I-3571, paragraph 20, Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraph 17 and Joined Cases 146/81, 192/81 and 193/81 BayWa [1983] ECR 1503, paragraph 26.

(29) - Case C-2/93 Exportslachterijen van Oordegem [1994] ECR I-2283, paragraphs 17 and 18.

(30) - Article 10 of Regulation No 859/89.

(31) - Third recital in the preamble to Regulation No 859/89.

(32) - Third recital in the preamble to Regulation No 2456/93.

(33) - Third recital in the preamble and the second sentence of Article 11(3).

(34) - Netherlands v Commission (cited in footnote 16, paragraph 14) with further references.

(35) - Netherlands v Commission (cited in footnote 16, paragraph 16) and United Kingdom v Commission (cited in footnote 17, paragraph 14).

(36) - Case C-50/94 Greece v Commission [1996] ECR I-3331, paragraph 26, Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraph 32 et seq., and United Kingdom v Commission (cited in footnote 17, paragraph 13).

(37) - Netherlands v Commission (cited in footnote 16, paragraph 17).

(38) - OJ 1977 L 77, p. 1.

(39) - Second recital in the preamble to Regulation No 571/89 (cited above in footnote 8).

(40) - Case 327/85 Netherlands v Commission [1988] ECR 1065, paragraph 25.

(41) - Case C-49/94 Ireland v Commission [1995] ECR I-2683, paragraph 22.

(42) - See points 55 to 73.

(43) - Judgment in Case 347/85 United Kingdom v Commission (cited in note 17 above, paragraphs 14 and 15).

(44) - Judgment in Case 347/85 United Kingdom v Commission (cited in footnote 17, paragraph 60).