Important legal notice

61987C0258

European Court reports 1989 Page 03359

Opinion of the Advocate-General

++++

Mr President,

Members of the Court,

A - Introduction

1 . The joined cases on which I am here giving my Opinion relate to disputes arising out of the clearance of accounts concerning the European Agricultural Guidance and Guarantee Fund, Guarantee Section ( EAGGF ), in respect of the 1983, 1984 and 1985 financial years . The Italian Republic contests the decisions of the Commission relating to the clearance of accounts for the years in question .

2 . By its application in Case 258/87, the applicant seeks a declaration that the Commission' s decision of 19 June 1987 on the clearance of the accounts presented by the Italian Republic in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1983 is void . ( 1 ) By its applications in Cases 337 and 338/87 it seeks a declaration that the Commission' s decisions of 18 August 1987 on the clearance of accounts for 1984 and 1985 are void in part . ( 2 )

3 . These applications are directed against the refusal to allow to be charged to the EAGGF expenditure relating to sales of skimmed-milk powder in public storage, the conversion of oranges and lemons and special carry-over premiums in the fisheries sector . More precisely, the following items are involved :

( a)sales of skimmed-milk powder in public storage :

( i)in Case 258/87 : LIT 6 905 742 049 and LIT 1 350 568 120 for 1983,

( ii)in Case 337/87 : LIT 1139 642 880 and LIT 1 720 264 000 for 1984,

( iii)in Case 338/87 : LIT 2 024 919 600 and LIT 6 305 824 900 for 1985;

( b)the conversion rate for the conversion of oranges and lemons :

( i)in Case 258/87 : LIT 2 824 069 for 1983,

( ii)in Case 337/87 : LIT 5 515 101 163 and LIT 1 080 936 168 for 1984,

( iii)in Case 338/87 : LIT 567 423 720 and LIT 34 814 210 for 1985;

( c)special carry-over premium in the fisheries sector :

( i)in Case 258/87 : LIT 101 983 620 for 1983,

( ii)in Case 337/87 : LIT 155 417 885 for 1984,

( iii)in Case 338/87 : LIT 196 711 020 for the 1985 financial year .

6 . More specifically, the applicant claims that the Court should :

in Case 258/87 :

( i)declare void Commission Decision No 87/368 of 19 June 1987, in so far as it disallows from EAGGF financing the amounts of LIT 6 905 742 049, LIT 1 350 568 120, LIT 2 824 069 and LIT 101 983 620 ( that is in total LIT 8 361 117 858 ) in the clearance of the accounts presented by the Italian Republic for expenditure incurred in 1983 or, on the basis of grounds set out, such lesser sums as may be held to be correct;

( ii)order the defendant to pay the costs;

in Case 337/87 :

( i)declare void Commission Decision 87/468 of 18 August 1987, in so far as it disallows from EAGGF financing the amounts of LIT 1 139 642 880, LIT 1 720 264 000, LIT 5 515 101 163, LIT 1 080 936 168 and LIT 155 417 885 ( that is in total LIT 9 611 362 096 ) in the clearance of accounts presented by the Italian Republic for expenditure in 1984 or, on the basis of the grounds set out, such lesser sums as may be held to be correct;

( ii)order the defendant to pay the costs;

in Case 338/87 :

( i)declare void Commission Decision No 87/469 of 18 August 1987 in so far as it disallows from EAGGF financing the amounts of LIT 2 024 919 600, LIT 6 305 824 900, LIT 567 423 720, LIT 34 814 210 and LIT 196 711 020 ( that is in total LIT 9 129 693 450 ) in the clearance of accounts presented by the Italian Republic for expenditure in 1985 or, on the basis of the grounds set out, such lesser sums as may be held to be correct;

( ii)order the defendant to pay the costs .

( i)dismiss the applications as unfounded;

( ii)order the applicant to pay the costs .

8 . As far as the facts and arguments of the parties are concerned, reference is made to the Report for the Hearing . I will mention the facts only to the extent necessary for the reasoning in support of my proposal for a decision .

B -Analysis

I -The sales of skimmed-milk powder held in public storage

( a ) Marking of the sacks

9 . Only in respect of 1983 is there disagreement on the reimbursement of expenditure relating to sales of skimmed-milk powder in public storage on account of the marking of sacks under Article 15 of Commission Regulation No 368/77 of 23 February 1977, ( 5 ) and Article 7 of Commission Regulation No 443/77 of 2 March 1977 . ( 6 ) Those articles provide : "the skimmed-milk powder shall be delivered by the intervention agency in sacks marked with one or more of the following indications in letters not less than 1 cm high : 'to be denatured ( Regulation ( EEC ) No 368/77 )' , ... 'to be denatured ( Regulation ( EEC ) No 443/77' , ..."

10 . The defendant disallowed the amount of LIT 6 905 742 049 on the ground that there had not been proper compliance with the obligations arising from Article 15 of Regulation No 368/77 and Article 7 of Regulation No 443/77 . The defendant states that the suspicion that the marking had not been carried out arose first of all from the fact that no request for the costs relating to marking to be taken into account had been made . The investigations which were carried out as a result confirmed this suspicion . During a mission in May 1986, the Italian authorities explained that the marking had not been carried out because it had already been effected by the German authorities . Where the skimmed-milk powder originated in German intervention agencies, the sacks bore, in accordance with Article 2(2 ) of Regulation No 2254/82, ( 7 ) the words "latte scremato in polvere ad uso zootecnico in Italia ".

11 . By a telex message dated 17 June 1986, ( 8 ) the defendant requested the applicant to provide information on the problem of marking during a bipartite meeting fixed for 26 June 1986 . The telex message was not formally transmitted but is said to have been handed personally to an official of the Italian Ministry of Agriculture . The applicant observes that that telex message was only a draft . ( 9 ) It adds that, in the event that it was transmitted, the view should be taken that that transmission could in any event only have taken place after 23 June 1986, since the telex message of 23 June 1986 ( No 260224/3-G4 ), ( 10 ) containing the items on the agenda of the bipartite meeting to be held on 26 June 1986, still stated expressly that a separate telex message would follow as regards the labelling of skimmed-milk powder in public storage .

12 . On 17 June 1986, the defendant adopted, in pursuance of Article 1(3 ) of Regulation No 1723/72 ( 11 ) as amended by Regulation No 422/86, ( 12 ) a decision addressed to the Member States fixing at 15 July 1986 the expiry of the period of time for the transmission of additional information needed for the clearance of accounts for 1983 . That decision was notified to the Member States on the following day .

13 . On 26 June 1986, ( 13 ) immediately after the bipartite meeting, additional detailed and itemized information was requested as regards the expenditure to be reimbursed under Regulations Nos 368/77 and 443/77 . In that letter there was no mention of the problem of the marking of sacks .

14 . In the telex message of 8 July 1986 ( No 280005/3-G4 ), ( 14 ) summarizing the results of the bipartite negotiations of 26 June 1986, it was stated, as regards the marking of sacks of powdered milk, that the written reply which had been promised was still awaited .

15 . In the summary report of 15 August 1986 on the results and checks in respect of the clearance of accounts for 1983, ( 15 ) it is stated ( 16 ) that the sacks of skimmed-milk powder leaving the intervention agency were not marked . After providing detailed explanations on the problems relating to supervision of the denaturing and analyses, the report mentions, at point ( c ), ( 17 ) the marking requirement and states the relevant legal basis . In conclusion it states that the expenses relating to denatured skimmed-milk powder which has been subject to permanent supervision without analyses and to skimmed-milk powder, whether denatured or not, incorporated in animal feedingstuffs elsewhere than at the place of storage may not be reimbursed . ( 18 ) Since the information enabling exact figures to be given of the amounts disallowed had not yet been communicated, the amounts declared pursuant to Regulations Nos 368/77 and 443/77 were not covered by the clearance of accounts, so as not to delay clearance as a whole . In the amendment to the summary report of 15 October 1986, ( 19 ) the amounts declared under Regulations Nos 368/77 and 443/77 were still provisionally left out of account .

16 . In another telex message of 17 October 1986, ( 20 ) the defendant requested precisely specified information in order to apply Regulations Nos 368/77 and 443/77 . However, the problem of the marking of the sacks was no longer mentioned at all . In reply to that telex message, the applicant drafted a memorandum ( 21 ) dated 27 October 1986 giving the information requested and stating furthermore that the prescribed marking had been carried out whenever the product physically left the place of storage .

17 . On the basis of information supplied in the mean time, the defendant again amended the summary report on 12 November 1986 . ( 22 ) In that document it decided to disallow the amounts declared of LIT 6 905 742 049 on account of the absence of marking and LIT 1 350 568 120 on account of the failure to carry out analyses . Those figures formed the basis for the decision which was taken on 19 June 1987 against which the application is directed .

18 . The applicant considers that the expiry on 15 July 1986 of the period prescribed for the provision of additional information as regards the clearance of accounts for 1983 cannot be applied to the questions concerning the marking of sacks . It is of the opinion that the deadline was tacitly annulled, which it maintains is clear from the telex message of 8 July 1986 and the summary report of 15 August 1986 as well as the document amending it dated 15 October 1986 .

19 . The defendant replies that the period of time expiring on 15 July 1986 is a prescription period . It adds that precise details were given of the additional information necessary to calculate the amounts which could be reimbursed and that the substantive decision was adopted as soon as the summary report was established on 15 August 1986 . In its view, what remained was merely to determine what quantities of skimmed-milk powder had been denatured at the place of storage and what quantities denatured elsewhere .

20 . The answer to the question whether the expenses were properly disallowed, on account of the absence of marking, from the amounts to be reimbursed, depends on whether a period of time expiring on 15 July 1986 was validly fixed, whether that period is a prescription period and, if so, whether that period was extended, either expressly or by implication .

21 . First of all, it is necessary to start from the fact that, in accordance with Article 1(2 ) of Regulation No 1723/72, the documents needed for the annual clearance of accounts must reach the Commission by not later than 31 March in the year following that during which the expenditure in question was paid . In respect of the 1983 financial year, the requisite documents ought therefore to have been communicated to the Commission by 31 March 1984 .

22 . The negotiations which ensue with regard to each clearance of accounts traditionally give rise to a lively exchange of information and opinions between the Member State and the Commission . In the past, these negotiations were sometimes carried on over a period of several years . In view of the need to arrive at a definitive conclusion, without however arbitrarily excluding certain items, Regulation No 422/86 added to Article 1 of Regulation No 1723/72 the following paragraph 3 :

"Additional information may be forwarded to the Commission up to a deadline to be fixed by the Commission, taking into account in particular the amount of work necessary to supply the information concerned . In the case of failure to submit the aforementioned information within the period fixed, the Commission shall take its decision on the basis of those elements of information in its possession at the deadline, except in cases where the late submission of information is justified by exceptional circumstances ."

23 . On this legal basis which was adopted in February 1986, the defendant, on 17 June 1986, adopted the decision whereby additional information regarding the clearance of accounts for 1983 was to be transmitted not later than 15 July 1986 . ( 23 ) The applicant in its arguments does not, moreover, contest that a period of time was validly prescribed . According to the applicant it was agreed, during the negotiations relating to a deadline, that the expiry of the period could not predate the completion of the usual negotiations . However, although the period of time was fixed on 17 June 1986, the negotiations were arranged for 26 June 1986 and did indeed take place on that date . The period expired only three weeks later, that is on 15 July 1986 . The manner in which the period of time was fixed cannot therefore be open to criticism .

24 . As regards the marking of sacks, the choice of date was also not unreasonable . More than three years after the end of the financial year to which the clearance of accounts related, the applicant knew, at the latest by the time of the mission in May 1986, that there was uncertainty as to the actual extent of the markings which had been carried out .

(b) Failure to carry out analyses of the denatured skimmed-milk powder

"1. Denaturing or direct incorporation of the skimmed-milk powder in accordance with the first and second indents of Article 6(1) shall take place within four months ...

In the case of denaturing by direct incorporation in accordance with the second indent of Article 6(1), the costs of the supervision of this operation shall be borne by the undertaking concerned. These costs shall be fixed at a flat rate of two units of account per tonne of skimmed-milk powder and, in the case of permanent on-the-spot supervision, shall not be less than 30 units of account per day of supervision.

41Article 6, to which reference is made in Article 16, provides in this connection:

"1. A tenderer may not take part in the invitation to tender unless he gives a written undertaking:

(i) to denature the skimmed-milk powder, or have it denatured, in accordance with one of the formulas set out in Section 1 of the annex and with the prescriptions set out in Section 3 thereof, at a denaturing centre approved in accordance with Article 7;

or

(ii) to denature the skimmed-milk powder by incorporating it directly in a feedingstuff under the conditions laid down in Article 8 and in accordance with Sections 2 and 3 of the said annex.

Paragraph 3 of the annex is entitled:

"General prescriptions concerning denaturing and incorporation."

Subparagraph D thereof states:

"The products to be added to skimmed-milk powder, as given in the formulas in Section 1, must be distributed in a uniform manner so that in two individual samples of 50 g, drawn at random from a 25 kg package, there is contained - by chemical determination - the same results as above within tolerable error limits set by the method of analysis used.

The provisions adopted pursuant to Council Directive 70/373/EEC of 20 July 1970 on the introduction of Community methods of sampling and analysis for the official control of feedingstuffs, shall apply for purposes of control of denaturing."

II - The conversion rate for the processing of oranges and lemons

"For the purposes of this regulation, the time when a transaction is carried out shall be considered as being the date on which occurs the event, as defined by Community rules ... in which the amount involved in the transaction becomes due and payable."

"(a) in the case of oranges: on 1 October of the marketing year in which the fruit is sent for processing;

(b) in the case of lemons:

(i) on either 1 June and 1 December of the marketing year ...,

(ii) on 1 December of the marketing year where the fruit is eligible for supplementary financial compensation."

III - The special carry-over premium in the fisheries sector

81As is already apparent from a reading of the recitals in the preamble to Regulation No 2204/82, the special carry-over premiums for anchovies and sardines are in the last analysis to inure to the benefit of producers. Thus Article 2 of the regulation states: "The special carry-over premium shall be granted only in respect of sardines and anchovies which ... have been caught by a member of a producers' organization." It is the Member State which is responsible for ensuring observance of the Community requirements. That is why in the recitals it is stated that: "... the special carry-over premium cannot be paid until the Member States have established that all the relevant conditions have been fulfilled."

8281. Moreover, Article 4(1) of Regulation No 2204/82 requires Member States to introduce a system of supervision. If they do not comply with that obligation they cannot ask the Community to reimburse their expenditure. Their liability is in the nature of a surety obligation since it is only when all Community requirements have been fulfilled that aid may be reimbursed by the European Agricultural Guidance and Guarantee Fund, Guarantee Section.

8382. That comprehensive responsibility of the Member State, which remains at the same time free to choose the means which it uses to ensure observance of Community requirements, justifies, in cases of manifest irregularities giving rise to criminal proceedings on the part of a producers' organization, disallowing reimbursement of the premiums allegedly based on deliveries made by that organization. Even if non-compliance with its obligations cannot be alleged against the processing undertaking it is nevertheless the case that the Member State has not complied with the supervisory obligations falling within its sphere of responsibility. Consequently, the application cannot succeed in so far as it seeks the annulment of the defendant's decision in relation to the special carry-over premiums excluded from reimbursement.

Costs

C - Conclusion

"(1) Commission Decisions 87/368 of 19 June 1987, 87/468 of 18 August 1987 and 87/469 of 18 August 1987 on the clearance of the accounts presented by the Italian Republic in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1983, 1984 and 1985 are declared void in so far as they disallowed from EAGGF financing the amounts of:

(i) LIT 1 350 568 120 for the 1983 financial year,

(ii) LIT 1 720 264 000 for the 1984 financial year, and

(iii) LIT 6 305 824 900 for the 1985 financial year.

(2) For the rest, the application is dismissed.

( 3)The parties shall bear their own costs .

(*) Original language : German .

( 1 ) OJ 1983, L 195, p . 40 .

( 2 ) OJ 1987, L 262, pp . 23 and 35 .

( 3 ) OJ, English Special Edition 1970, p . 218 .

( 4 ) JO 1972, L 186, p . 1 .

( 5 ) Commission Regulation No 368/77 of 23 February 1977 on the sale by tender of skimmed-milk powder for use in feed for pigs and poultry ( OJ 1977, L 52, p . 19 ).

( 6 ) Commission Regulation No 443/77 of 2 March 1977 on the sale at a fixed price of skimmed-milk powder for use in feed for pigs and poultry and amending Regulations ( EEC ) Nos 1687/76 and 368/77 ( OJ 1977, L 58, p . 16 ).

( 7 ) Commission Regulation No 2254/82 of 13 August 1982 laying down detailed rules for the transfer to the Italian intervention agency of skimmed-milk powder held by the intervention agencies of other Member States ( OJ 1982, L 240, p . 9 ).

( 8 ) Annex 1 to the defence .

( 9 ) Annex 16 to the reply .

( 10 ) Annex 15 to the reply .

( 11 ) Commission Regulation No 1723/72 of 26 July 1972 on making up accounts for the European Agricultural Guidance and Guarantee Fund, Guarantee Section ( OJ 1972, L 186, p . 1 ).

( 12 ) Commission Regulation No . 422/86 of 25 February 1986 amending Regulation ( EEC ) No 1723/72 on making up accounts for the European Agricultural Guidance and Guarantee Fund, Guarantee Section ( OJ 1986, L 48, p . 31 ).

( 13 ) Annex 17 to the reply .

( 14 ) Annex 18 to the reply .

( 15 ) Annex 3 to the application .

( 16 ) See p . 67 of the summary report .

( 17 ) See p . 68 of the summary report .

( 18 ) See ( d ) at p . 69 .

( 19 ) Annex 4 to the application .

( 20 ) Annex 6 to the application .

( 21 ) Annex 7 to the application .

( 22 ) Annex 5 to the application .

( 23 ) Decision C(86 ) 1067 final, Annex 2 to the defence on p . 37 .

( 24 ) See p . 67 .

( 25 ) Annex 12 to the application .

( 26 ) Paragraph 1 of the annex .

( 27 ) Paragraph 2 of the annex .

( 28 ) See Articles 1 and 2 of Council Directive 70/373/EEC of 20 July 1970 on the introduction of Community methods of sampling and analysis for the official control of feeding stuffs ( OJ, English Special Edition 1970 ( II ), p . 535 ).

( 29 ) Commission Regulation No 208/70 of 4 February 1970 ( OJ, English Special Edition 1970 ( I ), p . 74 ).

( 30 ) Commission Regulation No 2972/75 of 12 November 1975 ( OJ 1975, L 295, p . 16 ).

( 31 ) Council Regulation No 878/77 of 6 April 1977 ( OJ 1977, L 106, p . 27 ).

( 32 ) Council Regulation No 3398/81 of 27 November 1981 ( OJ 1981, L 344, p . 1 ).

( 33 ) Council Regulation No 1223/83 of 20 May 1983 ( OJ 1983, L 132, p . 33 ).

( 34 ) Council Regulation No 855/84 of 31 March 1984 ( OJ 1984, L 90, p . 1 ).

( 35 ) Council Regulation No 1035/72 of 18 May 1972 ( OJ, English Special Edition 1972 ( II ), p . 437 ).

( 36 ) Council Regulation No 2601/69 of 18 December 1969 ( OJ, English Special Edition 1969 ( II ), p . 586 ).

( 37 ) Council Regulation No 1035/77 of 13 May 1977 ( OJ 1977, L 125, p . 3 ).

( 38 ) Council Regulation No 1343/73 of 15 May 1973 ( OJ 1973, L 141, p . 1 ).

( 39 ) See Commission Regulation No 1733/81 of 29 June 1981 ( OJ 1981, L 172, p . 36 ) in respect of the 1981/82 marketing year, and Commission Regulation No 2507/83 of 3 September 1983 ( OJ 1983, L 248, p . 12 ), in respect of the 1983/84 marketing year .

( 40 ) Commission Regulation No 1045/77 of 18 May 1977 ( OJ 1977, L 125, p . 23 ).

( 41 ) Council Regulation No 1154/78 of 30 May 1978 ( OJ 1978, L 144, p . 5 ).

( 42 ) Commission Regulation No 1562/85 of 7 June 1985 ( OJ 1985, L 152, p . 5 ).

( 43 ) Regulation ( EEC ) No 1134/68 of the Council of 30 July 1968 laying down rules for the implementation of Regulation ( EEC ) No 653/68 on conditions for alterations to the value of the unit of account used for the common agricultural policy ( OJ, English Special Edition 1968 ( II ), p . 396 ).

( 44 ) See Article 7 bis of Regulation No 208/70 added by Regulation No 2972/75 .

( 45 ) See Article 9 in conjunction with Article 1 of Regulation No 1045/77 .

( 46 ) See the sixth recital in the preamble to Regulation No 1562/85 .

( 47 ) See Council Regulation No 850/81 of 1 April 1981 ( OJ 1981, L 90, p . 1 ), Regulation No 3398/81 ( OJ 1981, L 344, p . 1 ), Council Regulation No 1051/82 of 4 May 1982 ( OJ 1982, L 123, p . 1 ), Council Regulation No 1207/82 of 18 May 1982 ( OJ 1982, L 140, p . 51 ) and Council Regulation No 1668/82 of 28 June 1982 ( OJ 1982, L 184, p . 19 ).

( 48 ) See the 10th indent of paragraph 1 of Annex VII to Regulation No 1051/82 .

( 49 ) See Regulations Nos 3398/81, 1051/82, 1207/82 and 1668/82 .

( 50 ) See Article 22 of Regulation No 1562/85 .

( 51 ) See Council Regulation No 2204/82 of 28 July 1982 ( OJ 1982, L 235, p . 7 ), and Commission Regulation No 3138/82 of 19 November 1982 ( OJ 1982, L 235, p . 9 ).

( 52 ) Judgments of 25 November 1987 in Case 342/85 Italy v Commission (( 1987 )) ECR 4677 and of 25 November 1987 in Case 343/85 Italy v Commission (( 1987 )) ECR 4711 .