Important legal notice

61998C0277

European Court reports 2001 Page I-08453

Opinion of the Advocate-General

I - Introduction

1 By an application of 20 July 1998, lodged at the Court Registry on 21 July 1998, the French Government is seeking the partial annulment, in accordance with Article 173 of the EC Treaty (now, after amendment, Article 230 EC), of Commission Decision 98/358/EC of 6 May 1998 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1994 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF). (1) These levies became payable when milk quotas were exceeded. For further details, see point 43 et seq. below.

2 The French Government was informed of the contested decision on 15 May 1998. The French Republic is being asked to repay a total of FRF 114 387 058, distributed as follows between the different milk years:

milk year 1985/86: FRF 642 358

milk year 1988/89: FRF 14 466 984

milk year 1989/90: FRF 38 756 717

milk year 1991/92: FRF 60 520 999

3 The French Government contends that the negative corrections are in breach of Community law, in particular Articles 2, 3, 5 and 8 of Council Regulation (EEC) No 729/70 of 21 April 1970 on the financing of the common agricultural policy. (2) The sums in question are the result neither of irregularities nor of negligence within the meaning of Regulation 729/70, and will not be payable until an enforceable judgment has made it possible to recover them.

4 The French Republic is asking the Court of Justice:

- partially to annul the relevant part of Commission Decision 98/358/EC of 6 May 1998 in so far as it applies `negative corrections' in respect of sums the recovery of which is the subject of proceedings before the competent national courts.

5 The Commission is asking the Court:

- to dismiss the application;

- to award costs against the applicant.

6 The Spanish Government has intervened in the proceedings in support of the French Government. By order of the President of the Court of 17 December 1998 the Kingdom of Spain was granted leave to intervene. No hearing has taken place in the course of the proceedings.

II - The relevant legislation

(1) Supplementary levy for milk

7 Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organisation of the market in milk and milk products. (3)

Article 1 introduces the following additional article into Regulation No 804/68:

`Article 5c

The levy system shall be implemented in each region of the territory of the Member States in accordance with one of the following formulas:

Formula A

- A levy shall be payable by every milk producer on the quantities of milk and/or milk equivalent which he has delivered to a purchaser and which for the 12 months concerned exceed a reference quantity to be determined.

Formula B

- A levy shall be payable by every purchaser of milk or other milk products on the quantities of milk or milk equivalent which have been delivered to him by a producer and which, during the 12 months concerned, exceed a reference quantity to be determined.

- The producer liable to the levy shall pass on the burden in the price paid to those producers who have increased their deliveries, in proportion to their contribution to the purchaser's reference quantity being exceeded.

3. Subject to paragraph 4, the sum of the reference quantities referred to in paragraph 1 may not exceed a guaranteed total quantity equal to the sum of quantities of milk delivered to undertakings treating or processing milk or other milk products in each Member State during the 1981 calendar year, plus 1%.

The guaranteed total quantity shall be as follows:

5. The levies referred to in this Article shall be regarded as intervention measures designed to regulate agricultural markets and shall be allocated to the financing of expenditure in the milk and milk products sector.

6 to 8 ...'

8 Council Regulation No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector, (4) as amended by Council Regulation (EEC) No 1305/85 amending Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector.

According to Article 9 of the regulation:

`Article 9

3. ...

Where one or other of those quantities is exceeded, the amount of the levy collected corresponding to the amount of the excess recorded shall be paid over to the Community.'

9 Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68. (6)

Articles 15 and 19 of the regulation are relevant in this case. They read as follows:

`Article 15

- in cases where formula B is applied, for all producers taken together, the quantities of milk or milk equivalent purchased during the first half of the year; the statement shall also indicate the quantities bought by the buyer during the first half of the year, expressed as a percentage of the buyer's annual reference quantity.

- in cases where formula B is applied, and separately for all producers;

- the total quantity of milk or milk equivalent purchased during the 12-month period concerned,

- the quantities, if any, of milk or milk equivalent which exceed the annual reference quantity of the buyer concerned.

3. ...

Article 19

(a) to ensure collection of the levy, in particular inspection measures and measures ensuring that interested parties are aware of the penal or administrative sanctions to which they will be subject if they fail to comply with the provisions of this Regulation;

(b) ...

3. Member States shall transmit to the Commission:

- at the end of each of the 12-month periods concerned, all relevant information concerning the implementation of the provision referred to in the second indent and, in respect of the first 12-month period, before 1 February 1986,

- within three months of the end of each of the periods concerned, the information specified in Article 15(1) and (2),

(2) General rules on financing the common agricultural policy

10 In accordance with Article 5c(5) of Regulation No 856/84 (see point 7 above), the levies imposed for exceeding milk quotas are to be regarded as intervention measures designed to regulate agricultural markets. Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy applies generally to the agricultural markets:

`Article 1

It shall comprise two sections:

- the Guarantee Section;

- the Guidance Section.

(a) ...

(b) intervention intended to stabilise the agricultural markets.

3. ...

Article 3

3. ...

Article 4

The Member States shall ensure that those credits are used without delay and solely for the purposes laid down.

3. The authorities and bodies shall at least once a year draw up reports and a summary of accounts relating to the expenditure referred to in paragraph 1. ...

Article 5

(a) shall decide: ...

(b) shall, before the end of the following year, on the basis of the documents referred to in paragraph 1(b), make up the accounts of the authorities and bodies.

3. ...

(Articles 6 and 7)

Article 8

- 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.

The Member States shall inform the Commission of the measures taken for those purposes and in particular of the state of the administrative and judicial procedures.

The sums recovered shall be paid to the paying authorities or bodies and deducted by them from the expenditure financed by the Fund.

3. ...'

11 Council Regulation (EC) No 1287/95 of 22 May 1995 amending Regulation (EEC) No 729/70 on the financing of the common agricultural policy. (7)

The above regulation amended the second subparagraph of Article 8(2) of Regulation (EEC) No 729/70 to read as follows:

`The sums recovered shall be paid to the accredited paying agencies and deducted by them from the expenditure financed by the Fund. The interest on sums recovered or paid late shall be paid into the Fund.'

In addition, Article 5 was reworded, and Article 5(2)(c) inserted as follows:

`Article 5

(a) ...

(b) ...

(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.

III - Submissions of the parties

(1) The French Government

12 Relying on Regulation No 729/70, as amended by Regulation No 1287/95, as well as the Court's case-law, the French Government contends that, in the process of clearing the accounts, (8) the Commission can exclude only expenditure incurred as a result of the irregular or negligent application of Community law. As regards Article 8(2) of Regulation No 729/70, the French Government maintains that the amounts at issue in Decision 98/358 are the result neither of irregularities nor of negligence.

13 The French Government points out that the additional milk levy was introduced by Regulation No 856/84, (9) which inserted an Article 5c into the basic Regulation No 804/68, as well as by Regulations Nos 857/84, 1371/84 (10) and 1546/88. The intention was to peg milk production at the level of the reference quantities assigned to the Member States. A Member State's reference quantity is the total of all the individual reference quantities, according to Article 5c of Regulation No 804/68, as amended by Regulation No 856/84.

14 In France, the way in which the system of reference quantities, commonly known as the quota system, operates is that a reference quantity is first assigned to the purchasers of milk. (11) The purchasers are then responsible for assigning individual reference quantities to the producers. For each milk year, which lasts from 1 April to 31 March of the following year, a comparison is drawn up between the reference quantity and the actual quantity of milk produced. At the end of each milk year, the Office national interprofessionnel du lait et des produits laitiers (ONILAIT) informs every purchaser both of the final quantity of milk available to it and the extent to which this tallies with the actual quantity produced, that is to say, where necessary, whether the total of the individual reference quantities has been exceeded. The amount of the supplementary levy is determined on the basis of any excess, and it is payable by the purchaser. ONILAIT notifies the purchaser of the supplementary levy and issues a demand for payment, which the purchaser can challenge before the administrative courts. The sums charged to the French State as a result of Decision 98/358 are the subject of administrative actions which are still pending. Final judgment has yet to be delivered in all those cases.

15 The sums at issue cannot, however, be treated as if they stemmed from irregularities identified when checks were carried out. The supplementary levy is not part of the regular revenue of the Community budget. It has to be paid only where the Member State's total guaranteed quantity has been exceeded. Before the system of additional levies, applicable in the milk sector from 1992, (12) was introduced, only the sums collected by the Member States were taken into account. The Commission also makes a distinction between the situation before and after 1992.

16 To avoid any misunderstanding, the French Government notes that it too considers that the sums will be payable as soon as they are able to be collected on the basis of an enforceable judgment. But Regulation No 729/70 does not permit the Commission to charge to a Member State sums which that State is not in a position to collect.

17 Citing Article 8(1) of Regulation No 729/70, the French Government takes the view that even if there are irregularities, the Member States are required only to inform the Commission of those irregularities, where court proceedings are pending. In addition, the Commission's setting of a deadline for the collection of the sums in question is contrary to the principles of sound administration as reflected in Article 8 of Regulation No 729/70.

18 It is in any event a fact that the Commission has, on several occasions, amended the rules governing the recovery of sums which are the subject of legal proceedings. As of May 1993, the effect of the Commission's internal administrative procedures was artificially to freeze the sums: that was the result of the court proceedings and the setting of a time-limit for paying over the sums collected for the milk years 1988/89 to 1992/93 at 30 June of the next milk year.

19 Paradoxically, the result of that practice was that the Commission refused later payments from ONILAIT, despite being entitled to them. In the light of the existing difficulties, the Commission created, in 1994, an item in the accounts under the heading `legal proceedings excluded from the clearance of accounts'. In the absence of explanatory documents, the French authorities complied with the relevant instructions provided by word of mouth. According to the instructions given, only those sums for which a reservation had been entered in earlier clearances of accounts and those relating to milk years for which the accounts had not yet been cleared, needed to be entered under that heading.

20 There was a lack of coherence and transparency in the administration of items in the accounts relating to legal proceedings. That approach was not consistent with the principles of sound administration.

21 The French Government goes on to explain the system for recovering claims arising out of a public-law obligation. On completion of the administrative procedure, the director of ONILAIT is, for example, authorised to issue an enforceable order, which can be challenged in the administrative courts. Interfering with that procedure would be contrary to the principle of the separation of powers, which is a general principle of Community law, flowing from the common constitutional traditions of the Member States.

22 The French Government then cites the Court's judgment of 21 September 1983 in Cases 205/82 to 215/82, (13) paragraph 31 of which states:

`Where the rules and procedures applied by the national authorities in the recovery of Community aids are the same as those which they apply in comparable cases concerning purely national financial benefits, there is in principle no reason to assume that those rules and procedures are contrary to the national authorities' duty under Article 8 of Regulation No 729/70 to recover sums irregularly granted and that consequently they reduce the effectiveness of Community law ...'

23 In addition, the French Government again submits that the need for an efficient system, as emphasised by the Commission, is guaranteed in France. Of all the Member States with significant levels of milk production, France has exceeded its quota on the fewest occasions. Moreover, the sums in question are not unusually high and are, after all, the subject of only 11 court actions.

(2) The Commission

24 The Commission first draws attention to the origin and method of operation of the milk quota system. In that context, France opted for formula B, in accordance with Article 5c of Regulation No 804/68, that is to say for the levy to be imposed on purchasers. (14) Pursuant to Article 15(4) of Regulation No 1546/88, purchasers have to pay the levy within three months of the end of every 12-month period. Pursuant to Article 19(1)(a) of that same regulation, the Member States must take the additional measures necessary `to ensure collection of the levy'. According to the second subparagraph of Article 9(4) of Regulation No 857/84 as amended by Regulation No 1305/85 `the amount of the levy collected corresponding to the amount of the excess recorded shall be paid over to the Community'.

25 Collection of the levy plays a key role in the milk quota system. That it is collected promptly and in full is therefore crucial to the operation of the system. The levy is, for example, fundamentally different from an aid scheme.

26 The Commission further submits that the French Government relies incorrectly on Article 8(2) of Regulation No 729/70. These are not `sums lost as a result of irregularities or negligence' within the meaning of Article 8(1). The legal basis for their payment is in fact to be found in Article 15(4) of Regulation No 1546/88.

27 If the total guaranteed quantity has not been exceeded in a milk year, the Member States do not have to pay a levy to the Community. If, however, the total guaranteed quantity is exceeded, the additional levy has to be paid over to the Community. The amount of the levy is determined on the basis of the information provided by the Member States pursuant to Article 19(3) of Regulation No 1546/88. The Member State is required to ensure that all the levies due are collected. The Member States can be exempted only in cases in which it is established that the sums cannot be collected, but there has been no negligence on the part of the Member State concerned.

28 The fact that a purchaser challenges the amount of the levy imposed on him has no bearing on the obligation of the Member State, vis-à-vis the Community, to take responsibility for the whole amount of the levies due. The outcome of an individual legal action can affect the responsibility of the Member State only if, as a result, the figure for the total quantity delivered has to be amended. Until that happens, the Commission can rely on the data provided by the national authorities. That in no way interferes with the separation of powers. The clearance of accounts affects only the relationship between the Community and the Member State; it has no impact on the relationship between the person liable for the levy and the Member State concerned.

29 As regards its earlier practice on the clearance of accounts, the Commission concedes that it allowed a certain degree of flexibility in relation to pending legal proceedings. However, the Member States were aware of this approach, which was to their benefit. But a Member State cannot rely on the maintenance of a practice in order to challenge the sums being taken into account at a later juncture. That would be tantamount to the Member State no longer being required to collect the levies. It would also mean that the Commission was never entitled to impose a time-limit.

30 The mere fact that certain sums have not been collected over a period of between 6 and 12 years shows that the French authorities did not exercise the necessary diligence.

31 Finally, the Commission's change in practice has not affected the financial situation of the Member States. The inclusion of negative corrections in a clearance of accounts means that the sums subsequently collected are channelled to the national budget. But if they cannot be collected, they are borne by the Community budget, provided they are not attributable to negligence on the part of the Member State. The Member State is therefore treated in the same way as if Article 8(2) of Regulation No 729/70 were being applied.

32 The imposition of a time-limit, finally, is legally justified not on the basis of Regulation No 729/70, but by the obligation to pay the total amount of the levies and not simply the amount collected. In the Commission's view, the French authorities failed to take all necessary measures to ensure collection of the levy.

33 In the case of irregularities within the meaning of Article 8(2) of Regulation No 729/70, the Commission is authorised to assume, if certain levies are not collected, that they cannot be collected, and to decide whether they are to be borne by the Member State or the Community budget. There is all the more reason to take that approach in this case.

(3) The Spanish Government

34 The Spanish Government first draws attention to the legal basis of the additional milk levy. (15) In the context of the EAGGF (16) clearance of accounts, none of those provisions permit charges to be imposed in respect of levies which it has not been possible to collect because of pending legal proceedings. It is the producers or purchasers who are liable for the levy. The obligation of the Member States in relation to the Community consists in demanding payment with the requisite diligence in accordance with domestic law and paying it over to the Community.

35 The Commission's approach is contradictory: on the one hand, it includes the additional milk levy in the general framework of EAGGF-funded expenditure and deducts from that the levies not yet paid by the Member States; on the other, it disputes the applicability of the second subparagraph of Article 8(1) and Article 8(2) of Regulation No 729/70 and refers merely to the Member States' obligation under Article 15(4) of Regulation No 1546/88; equally, it contests the applicability of the principles of the Deutsche Milchkontor (17) judgment.

36 The problem can be resolved only if the Member State's obligations in relation to the Community in the context of the imposition of the additional levy are defined. The Commission's approach can be endorsed only if the Member State has an obligation to pay in relation to the Community - independent of the obligation of the producer or purchaser to pay. Only subject to that condition, can the Commission offset its annual debt in relation to the Member State (reimbursement by the EAGGF of the payments disbursed by the Member State) with its claim against the Member States arising out of the supplementary milk levy.

37 In the view of the Spanish Government, the Member States are under no independent obligation to pay; they are simply required to pay over to the Commission the sums collected or the equivalent of sums which have not been collected as a result of negligence. A Member State can only be under an obligation to pay in relation to the Community if it has actually collected the levy.

38 The Commission's demand that levies, which have not been collected because legal proceedings remain pending, be paid over, implies that it interprets the obligation to pay as a specific obligation attaching to the Member States. That would be a third obligation, additional to the obligations of the Member States diligently to collect the levies and then pay over those monies to the Commission. But it has to be assumed - and the Commission acknowledges this between the lines - that the Member State is not required to pay over to the Community sums other than those which it has collected from the persons liable for the levy.

39 As it is not possible to identify an explicit legal basis establishing a specific obligation to pay incumbent on the Member State, the question arises whether the Commission's approach may be justified for reasons inherent in the system. In that connection, however, the Spanish Government contends that the Community's financial interests have not been damaged. The Community has not incurred any expenditure. Nor is the Member State affording the individual an advantage not permitted under Community law.

40 The need for the system to operate efficiently, cited by the Commission, is not furthered by the Commission's approach. Requiring the Member State to make a payment does not influence the progress of the court proceedings.

41 The judgment in Deutsche Milchkontor (18) is applicable to the obligations of the Member States. A Member State cannot be accused of negligence in connection with collecting levies, simply because legal proceedings are taking longer than would have been desirable. The bringing of legal proceedings cannot be equated with the failure to impose levies, at least where the aim of those proceedings is to collect the levies plus interest.

42 In Spain, the person liable for the levy could challenge it before the courts in the same way as it could a tax demand under national law.

IV - Analysis

43 The additional milk levy was introduced in the form applicable to this case, in 1984, by Regulation No 856/84 (see point 7 above). As early as 1977, Regulation (EEC) No 1079/77 (19) introduced a co-responsibility levy to correct, for the first time, an imbalance between supply and demand on the market in milk products. Even then, the market was in structural surplus. (20) Despite this `original' co-responsibility levy, milk supplies continued to increase, (21) with the result that the Community legislature introduced the `additional milk levy', which has given rise to this case, initially for a five year period, which was subsequently extended to nine years. When that special provision expired, a revised and tighter (22) model of an `additional levy in the milk sector' was introduced, with effect from 1 April 1993, by Regulation No 3950/92, (23) that is to say for the period after the years material to this dispute.

44 The feature of the additional milk levy which has given rise to this dispute is that it is left to the Member States to select formula A or B to collect the levy. Under formula A, a milk producer who exceeds his reference quantity has to pay the levy, while, under formula B, the purchaser, that is in principle the dairy, pays a levy in respect of the quantities of milk delivered in excess of a reference quantity. But the purchaser passes the levy to be paid on to the producers who have increased their deliveries. (24) The French Republic opted for formula B.

45 The additional milk levy could therefore be described as a levy `at the source' of milk production. Liability for the levy arises when the quantity of milk produced exceeds an established reference quantity. Given that, under the provision introducing the additional milk levy, Article 5c(1) of Regulation No 856/84, `an additional levy payable by producers or purchasers of cows' milk shall be introduced', it is clear who is under an obligation to pay. That obligation to pay is also in principle an obligation under Community law, to be administered - like all of the Community's agricultural legislation - by the Member States. Determining the individual reference quantities, which, once they are exceeded, trigger liability for the levy, is, consequently, also a matter for the Member States - in the light of the requirements of Community law.

46 There is in any event an upper limit, set out in Article 5c(3) of Regulation No 804/68, as amended by Regulation No 856/84. According to that provision, the sum of the individual reference quantities referred to in paragraph 1, that is to say the reference quantity of the producers or of the purchasers, depending on the formula selected, may not exceed a `total guaranteed quantity' of the Member State. The `total guaranteed quantity' is basically determined by reference to milk production in a reference year (1981 or 1983), (25) and, in that connection, the total guaranteed quantity of the Member States may not, in turn, exceed a total guaranteed quantity at Community level. In order to ensure this, it was necessary to lay down `total guaranteed quantities' for each Member State, and that was done in the second subparagraph of Article 5c(3) of Regulation No 804/68, as amended by Regulation No 856/84.

47 A degree of flexibility was provided for by establishing a `Community reserve'; (26) moreover, in the context of the `additional levy in the milk sector' introduced in 1992, (27) this was subsumed in the total guaranteed quantities of the Member States.

48 Article 5c(5) of Regulation No 804/68, as amended by Regulation 856/84, contains a theoretical classification of the additional milk levy. According to that provision, the levies referred to in Article 5c are to be considered as `intervention measures designed to regulate agricultural markets'. In addition, it stipulates the use to which the monies are to be put, stating that they are `to be allocated to the financing of expenditure in the milk and milk products sector'. Article 9(4) of Regulation No 857/84, as amended by Regulation No 1305/85 (see point 8 above), contains further rules in this regard.

49 The fact that the levy is classified as an intervention measure to regulate the agricultural markets means that it can be included in the Commission's annual clearance of accounts in relation to the Member States on the financing of the common agricultural policy.

50 Article 1(1) of Regulation No 729/70, the basic regulation on the financing of the common agricultural policy, provides that the European Agricultural Guidance and Guarantee Fund forms part of the budget of the Communities. It basically divides the Fund into the Guarantee Section and the Guidance Section. In accordance with Article 1(2), the Guarantee Section is to finance, inter alia, `intervention intended to stabilise the agricultural markets'. (28) Article 3 of the regulation stipulates that intervention intended to stabilise the agricultural markets, undertaken according to the Community rules within the framework of the common organisation of the agricultural markets, is to be financed. By defining the additional milk levy in Article 5c(5) of Regulation No 804/68, as amended by Regulation No 856/84, in the context of the organisations of the market in milk and milk products, as an intervention measure intended to stabilise the agricultural markets, the Community legislature assigned it, for accounting purposes, to the European Agricultural Guidance and Guarantee Fund.

51 The fact that the Fund usually takes responsibility for expenditure advanced by the Member States in the form of the intervention measures intended to stabilise the agricultural markets, whereas the additional milk levies constitutes revenue, is merely an accounting detail, given that the additional levy is treated as negative expenditure. Once the additional levy has been defined as an intervention measure intended to stabilise the agricultural markets and, consequently, assigned to the European Agricultural Guidance and Guarantee Fund, its further administrative and budgetary treatment follows from that basic classification, which derives from the relevant provisions.

52 It has also to be borne in mind that the additional milk levy falls within the context of the common organisation of the market in milk and milk products, with the consequence that an intervention measure for milk basically applies, and the further consequence of guaranteed prices for milk and milk products. (29) Only the surplus milk produced in excess of the fixed reference quantity is subject to the additional levy. To an extent, then, it falls outside the framework of the guaranteed prices. The additional milk levy can therefore also be construed as one less expense.

53 Pursuant to Article 4(1) of Regulation No 729/70, the Member States are to designate the authorities and bodies which they shall empower to effect the payments in respect of the levy at issue. Pursuant to Article 4(2), the Commission is to make available to Member States the credits necessary to make the payments. Pursuant to Article 4(3), the bodies and authorities in the Member States are to draw up reports and a summary of accounts at least once a year.

54 Pursuant to Article 5(2)(b) of Regulation 729/70, the Commission is to make up the accounts of the authorities and bodies, on the basis of the documents referred to in paragraph 1, before the end of the following year. Pursuant to Article 5(2)(c) of Regulation No 729/70, as amended by Regulation No 1287/95, the Commission is to decide on the expenditure to be excluded from Community financing where it finds that expenditure has not been effected in compliance with Community rules.

55 On the basis of the abovementioned provisions, the Commission adopted Decision 98/358 at issue, as is clear from the first, second and fifth recitals of the decision. According to the ninth recital:

`Whereas corrections are necessary in respect of the supplementary levies for milk for the milk years 1985/1986 to 1992/1993 which are still outstanding because of legal disputes between buyers/producers and the competent authorities of certain Member States; whereas these negative corrections for France, [Belgium, Luxembourg, United Kingdom and the Netherlands] amount to FRF 114 387 058; whereas the Commission nevertheless reserves the possibility to re-examine the corrections made under this clearance of accounts if, following the outcome of the legal proceedings, amounts are considered not to be due or to be non-recoverable.'

56 These are the grounds for the contested part of the Decision, the legality of which is the subject-matter of these proceedings. We have therefore to consider whether the Commission was entitled to apply the negative corrections in relation to the supplementary milk levy.

57 Since the Decision at issue was specifically based on Regulation No 729/70, the first step is to seek to identify a legal basis for the negative corrections in that regulation. The French Government rightly cites in this connection Article 8 of Regulation No 729/70. Article 8(1) sets out the obligations of the Member States: they are, namely, to take, in accordance with national provisions laid down by law, regulation or administrative action, the measures necessary to satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly; to prevent and deal with irregularities; and to recover sums lost as a result of irregularities or negligence. According to the second subparagraph of Article 8(1), the Member States are required to inform the Commission of the measures taken for those purposes, `in particular of the state of the administrative and judicial procedures'.

58 Article 8(2) then apportions the financial consequences if, as a result of the irregularities or negligence, total recovery has not been possible. In principle, the Community bears the financial consequences unless the irregularities or negligence are attributable to administrative authorities or other bodies of the Member States. In that case, it is the Member State which must bear the financial consequences.

59 As regards the recovery procedures, the second subparagraph of Article 8(2), as amended by Regulation No 1287/95, provides that the sums recovered are to be paid to accredited paying agencies and deducted by them from the expenditure financed by the Fund. The interest on sums recovered or paid late is to be paid into the Fund.

60 The French Government contends that, since neither irregularities nor negligence have been laid at the door of the French authorities, the supplementary levies as yet to be collected cannot be charged to the French Republic. As far as the legal proceedings which remain pending are concerned, the abovementioned provision requires only that the French Republic provide information.

61 Viewed in the light of Article 8 of Regulation No 729/70, that line of argument carries conviction.

62 However, the Commission disputes the application of Article 8 to the facts of the case and points out that the Member States' obligation to pay the supplementary levies derives from Article 15(4) of Regulation No 1546/88. As set out in point 9 above, Article 15(4)(1) provides:

`The purchasers referred to in paragraphs 1, 2 and 3 shall pay any levy amount due to the competent agency within three months following the end of each 12-month period.'

63 But Article 15(4)(1) makes specific provision only for the purchaser's duty to pay as the person liable for the supplementary levy. It says nothing about the way in which pending legal proceedings are to be handled in the context of the clearance of accounts. The Commission's argument could, however, be construed to the effect that - since the deadline by which the person liable for the levy is required to pay it is clearly stated - it has to be assumed that, as of that deadline, the Member State can be considered already to have collected the monies or, if it has not, it must bear the consequences. However, it remains unclear whether the Member State has to act as guarantor in this way because it is presumed that negligence or irregularities can be imputed to it or because, once the time-limit for payment accorded to the person liable for that payment has expired, the Member State is deemed to have a specific obligation to pay in relation to the Community.

64 The Commission's contention that, in its view, the criterion selected is comparable to that of Article 8 of Regulation No 729/70 supports the first of the two possibilities. The Commission may also be understood to be implying that, after proceedings lasting 12 years, it has to be assumed that the Member State has not exercised the necessary diligence. That argument suggests that, in the final analysis, the Commission is accusing the Member State of irregularities and is therefore entitled to apply the negative corrections.

65 It is, however, hard to identify irregularities, since the second subparagraph of Regulation No 729/70 specifically provides only for a duty to furnish information where proceedings are pending. The duration of just one set of proceedings would then have to be deemed to constitute negligence. That raises particular difficulties if, in the context of national court proceedings, these cases are not unusually prolonged as compared with purely national litigation. Provided the proceedings are being properly conducted, the time they take - however inconvenient in the individual case - cannot be held to constitute negligence or irregularities on the part of the Member State. So long as, in accordance with the judgment in Deutsche Milchkontor, (30) the national courts and the national authorities apply the `same rules and procedures' (31) when collecting levies as those which they apply in comparable cases concerning purely national financial benefits, it cannot in principle be assumed that this is incompatible with the obligations incumbent on the authorities of the Member State pursuant to Article 8 of Regulation No 729/70. Apart from the fact that the proceedings have been inconveniently protracted, the Commission has adduced nothing to show that the national authorities have been in breach of their obligation to the Community.

66 Therefore, the only question is whether the obligation on the Member States to pay over to the Community budget the supplementary milk levy that has been or is to be collected is an independent obligation, which stands alone from the obligation to pay attaching to the person liable for the payment. The Commission has not cited a legal basis for that. A legal basis is, however, discernible in the second subparagraph of Article 9(4) of Regulation No 857/84, as amended by Regulation No 1305/85. According to that provision, as referred to in point 8 above:

`Where one or other of those quantities is exceeded, (32) the amount of the levy collected corresponding to the amount of the excess recorded shall be paid over to the Community.'

67 That form of words suggests that where a Member State's total guaranteed quantity (33) is exceeded, the Member State is automatically under an obligation to pay over to the Community the levies in question.

68 The very fact that a total guaranteed quantity was introduced could argue in favour of that approach. It is an independent target, separate from the individual reference quantities. Although it represents the total of all the individual reference quantities and can therefore at the same time be considered to be the upper limit of these individual reference quantities, it has its own significance in relation to the Community.

69 In the context of the rules on the common organisation of the market in milk and milk products, the total guaranteed quantity has yet another function, however. As I mentioned above, (34) it indicates the total volume of milk production for which a Community price guarantee is assured.

70 The dominant factors here are the regulatory function of the price guarantee, on the one hand, and the upper limit of the reference quantities to be allocated by the Member State, on the other. The mere fact that there is a total guaranteed quantity for each Member State does not therefore necessarily imply that, if it is exceeded, that Member State is under a specific obligation to pay.

71 A number of factors also support that approach also. Firstly, neither Regulation No 856/84 nor Regulation No 857/84 in its original version mention an obligation incumbent upon the Member States to pay over levies if the total guaranteed quantity is exceeded.

72 The abovementioned second subparagraph of Article 9(4) of Regulation No 857/84 was first introduced by Regulation No 1305/85 for the purpose of determining the use to which the levy could be put for two years. The Member States were permitted to use the monies to finance the `milk annuity' within the meaning of Article 4(1)(a) of Regulation No 857/84. (35) On the basis of that provision therefore, it can certainly not be assumed that the amount of the levy to be paid to the Community, equivalent to the excess production that has been established, has obligatorily to be paid in all cases in which the total guaranteed quantity is exceeded.

73 There is another rather pragmatic point to be made here, namely that the Commission's accounts are drawn up on the basis of the information provided by the Member States. (36) But so long as proceedings are pending before the courts, it is not possible to furnish definitive information on whether the total guaranteed quantity has been exhausted or exceeded.

74 Consequently, there are many factors to indicate that the Member States' obligation to pay is an obligation that derives from the original obligation, under Community law, of the milk producers or purchasers towards the Community.

75 Significantly, Article 15(4) of Regulation No 1546/88, which the Commission cites as the legal basis for the Member States' obligation to pay, mentions only that the purchasers have to pay any levy due to the competent agency. Consequently, that provision makes no direct reference to the alleged obligation of the Member States to pay. Since that provision was not adopted until 1988, it does not regulate the period between the introduction of the additional milk levy in 1984 and the adoption of this provision, cited as the legal basis for the alleged obligation incumbent on the Member States.

76 Furthermore, the Commission's own conduct argues against the Member States being under a specific obligation to pay. For several years, in the context of the clearance of accounts, the Commission has entered reservations in relation to pending legal proceedings. As the Commission rightly points out - apart from possibly creating a situation of legitimate expectation - that approach does not in itself create rights. But it does suggest that the Commission did not act on the basis that the Member States are under a specific obligation to pay. Had that been its approach, there was no point in waiting.

77 We have also to return to the grounds the Commission gives in the contested decision. The statement that: `the Commission nevertheless reserves the possibility to re-examine the corrections made under this clearance of accounts if, following the outcome of the legal proceedings, amounts are considered not to be due or to be non-recoverable', indicates that the Commission itself considers the outcome of the legal proceedings to be significant in relation to the Member States' obligation to pay.

78 That confirms, as is quite clear from the relevant Community provisions, that, under Community law, the producer or purchaser of the milk is obliged to pay the levy, and the Member States' obligation to pay derives from the obligation incumbent on the purchaser or producer.

79 The obligation is provided for in the basic regulation (37) and confirmed in the subsequent regulations. (38) Even the system of additional levies in the milk sector, which has been in force since 1992 and is therefore not material to this case because of the period of time at issue, retained the basic principle that the producer or purchaser is liable for the levy. (39)

80 The Commission's final argument concerns the need for an efficient system, in the sense that the levies have immediately to be collected from the persons liable for them and responsible for the overproduction, but the system's efficiency is not necessarily enhanced by making the Member States liable for payment. This concerns the authorities' conduct in relation to the persons liable for the levy. In so far as legal proceedings remain pending, it is, however, clear that the national authorities - in France, ONILAIT - have already demanded payment of the outstanding levies and are maintaining that position before the administrative court, as the proceedings would otherwise have been terminated.

81 As it has also to be assumed that the existence of Member States' obligation to pay in relation to the Community depends on the original obligation to pay incumbent on the producers or purchasers, the Member State cannot be charged sums on which an enforceable decision has yet to be taken. The complaint of the French Government must therefore be upheld.

V - Costs

82 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 been unsuccessful, it must be ordered to pay the costs. In accordance with Article 69(4) of the Rules of Procedure, the Member States which intervene in the proceedings are to bear their own costs. The Kingdom of Spain must therefore bear its own costs.

VI - Conclusion

83. In the light of the foregoing considerations, I propose that the Court should:

(1) annul Commission Decision 98/358/EC of 6 May 1998 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1994 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF) in so far as it applies to the French Republic negative corrections in the amount of FRF 114 387 058 in respect of supplementary levies for milk for the 1985/86 to 1992/1993 milk years;

(2) order the Commission to bear its own costs and to pay those of the French Republic;

(3) order the Kingdom of Spain to bear its own costs.

(1) - Decision 98/358/EC (OJ 1998 L 163, p. 28).

(2) - OJ English Special Edition 1970(I), p. 218.

(3) - OJ 1984 L 90, p. 10.

(4) - OJ 1984 L 90, p. 13.

(5) - Council Regulation No 1305/85 of 23 May 1985 amending Regulation No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1985 L 137, p. 12).

(6) - Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1988 L 139, p. 12).

(7) - OJ 1995 L 125, p. 1.

(8) - See Case C-197/91 FAC v Aimer [1993] ECR I-2639, paragraph 16, and the Opinion of Advocate General Fennelly of 14 March 1996 in Case C-50/94 Greece v Commission [1996] ECR I-3331, I-3354, point 51.

(9) - Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organisation of the market in milk and milk products (OJ English Special Edition 1968(I), p. 176).

(10) - Commission Regulation (EEC) No 1371/84 of 16 May 1984 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1984 L 132, p. 11).

(11) - The term `purchaser' is defined as follows in Article 12(e) of Regulation No 857/84:

`Purchaser: an undertaking or grouping which purchases milk or other milk products:

- to treat or process them, or

- to sell them to one or more undertakings treating or processing milk or other milk products.'

(12) - See Council Regulation (EEC) No 3950/92 of 28 December 1992 establishing an additional levy in the milk and milk products sector (OJ 1992 L 405, p. 1), which abolished the previously applicable milk quota system with effect from 1 April 1993. See Article 13 of the regulation.

(13) - Deutsche Milchkontor v Federal Republic of Germany (hereinafter: `Deutsche Milchkontor') [1983] ECR 2633.

(14) - For the definition of `purchaser', see Article 12(e) of Regulation No 857/84 (cited in footnote 12 above).

(15) - See Regulation No 804/68 as amended by Regulation No 856/84 and Regulation No 857/84.

(16) - European Agricultural Guidance and Guarantee Fund.

(17) - Joined Cases 205/82 to 215/82 (cited in footnote 14 above).

(18) - Joined Cases 205/82 to 215/82 (cited in footnote 14 above).

(19) - Council Regulation (EEC) No 1079/77 of 17 May 1977 on a co-responsibility levy and on measures for expanding the markets in milk and milk products (OJ 1977 L 131, p. 6).

(20) - See the first and second recitals of Regulation No 856/84.

(21) - See the third recital of Regulation No 856/84.

(22) - See the second recital of Regulation No 3950/92 (cited in footnote 13 above).

(23) - See above, footnote 13.

(24) - See, in regard to the above, Article 5c of Regulation 804/68 as amended by Regulation No 856/84 (see point 7 above).

(25) - See Article 5c(3) of Regulation No 804/68, as amended by Regulation No 856/84, and the fifth, eighth and ninth recitals of Regulation No 856/84.

(26) - See Article 5c(4) of Regulation No 804/68, as amended by Regulation No 856/84.

(27) - See the fourth recital of Regulation No 3950/92.

(28) - See Article 1(2)(b) of Regulation No 729/70.

(29) - See Articles 2 to 5 and 6 to 12 of Regulation No 804/68.

(30) - Joined Cases 205/82 to 215/82 (cited in footnote 14 above).

(31) - Joined Cases 205/82 to 215/82 (cited in footnote 14 above), paragraph 31.

(32) - That is to say the total guaranteed quantities referred to in Article 5c(3) of Regulation No 804/68 and the `total' of the reference quantities for direct sales under Article 6(2) of Regulation No 857/84.

(33) - For the sake of simplicity, I shall refer only to the total guaranteed quantity and not the total of the reference quantities for direct sales.

(34) - See point 52 above.

(35) - Article 4(1)(a) of Regulation No 857/84 provides:

`(1) in order to complete the restructuring of milk production at national or regional level or at the level of the collecting areas, the Member States may in connection with the application of formulas A and B:

(a) grant to producers undertaking to guarantee to discontinue milk production definitively compensation paid in one or more annual payments.'

(36) - Article 5(2)(b) of Regulation No 729/70 (see point 10 above).

(37) - See Article 5c of Regulation No 804/68 as amended by Regulation No 856/84.

(38) - See Article 9(1)(a) of Regulation No 857/84 as well as Article 9(1) of that regulation as amended by Regulation No 1305/85 and the third recital of Regulation No 1546/88.

(39) - See the ninth recital of Regulation No 3950/92.