C-61/90

* Original language: Danish. 1 — See in particular the judgments: — in Case C-281/87 Commission v Greece [1989] ECR 4015 concerning instructions from Greece to KYDEP to purchase inferior-quality durum wheat from the 1982 harvest; the Hellenic Republic has failed to fulfil — in Case C-35/88 Commission v Greece [1990] ECR I-3125 concerning the Greek Government's its obligations under Community law, in influence on KYDEP's activities on the market in feed grain; particular Regulation (EEC) — in Case C-32/89 Greece v Commission [1991] No 2727/75 on the common organ- ECR I-1321 concerning the Greek Government's conclusion of programme contracts with KYDEP ization of the market in cereals, 2 the relating to the export of common and durum wheat relevant implementing regulations and and Kydep's placing durum wheat into intervention on instructions from the Greek Government; and Articles 93 and 5 of the EEC Treaty. — in Case C-110/89 Commission v Greece [1991] ECR I-2659 concerning measures preventing the export of maize except by KYDEP. 2 — OJ 1975 L 281, p. 1.

I - 2426

COMMISSION v GREECE

The Hellenic Republic contends that the scheme in relation to Community rules Court should dismiss the application. other than those contained in Article 92 from being assessed under the procedure provided for in Article 169 . . .

Admissibility

The Court, in its judgment in that case, rejected the Greek objection of inadmissi- bility on the following grounds: However, there is another problem with regard to the admissibility of the case, on which the Court must decide. The back- ground to it is that two of the heads of claim which the Commission has put ' . . . the Court has consistently held that the forward in its application do not appear in appropriate procedure for obtaining a its reasoned opinion. On the other hand declaration that the rules of the common both these grounds of complaint were organization of the markets have been mentioned in the Commission's formal infringed is the procedure for a declaration initial letter. The Greek Government has against Member States under Article 169 of not referred to this fact during the the Treaty. Although, according to that proceedings and has not therefore used it as case-law, Article 93(2) of the Treaty set up a ground for claiming that the case should a procedure specifically adapted to the be dismissed. special problems created by State aid with regard to competition in the common market, the existence of that procedure in no way prevents the compatibility of an aid The Court has several times had occasion to 3 — Sec note 1. express its views on the importance and

I - 2427

O P I N I O N OF MR GULMANN — C A S E C-61/90

requirements of the prior administrative mentioned in the initial letter since it is proceedings in cases brought in pursuance expressly required that the reasoned opinion of Article 169 of the Treaty. and the application must be founded on the same grounds and submissions.

5 — Mr Advocate General Van Gerven said : . . . The assertion that the residence requirement is a disguised form of discrimination is to my mind a development of that It may be concluded from the case-law that argument which, moreover, may be regarded as having been raised by implication in the reasoned opinion, all the it is not sufficient for a fact to have been more so since the Netherlands Government did not claim an infringement of the rights of the defence on this point. I therefore consider that the argument as to a disguised 4 — Commission v Netherlands [1991] ECR I-5816. discrimination is admissible . . . .

I - 2428

COMMISSION v GREECE

It is hard for me to sec that there may be an independent procedural ground requiring the Court to take upon itself of its — the purpose of the administrative own motion the sometimes quite difficult procedure is to define the subject-matter task of examining the initial letter, the of the dispute and to indicate to the reasoned opinion and the application with a Member State the factors enabling it to view to investigating whether the application prepare its defence; and represents an extension on one or more points of the subject of the dispute as defined during the administrative procedure. The factual and legal basis on which the — the opportunity for the Member State Court must decide the case is in all circum- concerned to submit its observations on stances the one put forward during the the points of view expressed in the initial proceedings before the Court. 7 letter during the administrative procedure constitutes an essential guarantee required by the Treaty, observance of which is a condition for the legality of the action for a State's failure to comply with its obligations under the Treaty. 6 7 — One might also ask, with some justification, why the Court's (Tiny of review should be greater when it is dealing with actions for failure to fulfil obligations under the Treaty than in applications for a declaration that a Commission decision in a competition case is void.

As far as I am aware, however, this question has never been examined by position to assess whether a defect in the the Court of its own motion. A declaration that a Commission decision is void on the ground that the Commission's statement of objections does not correspond 6 — Judgment in Case 31/69 Commission v Italy [1970] to the subsequent decision seems thus to have been made ECR 25. Cf. also the judgments in Case 51/83 solely after a claim to that effect by the undertaking Commission v Italy [1984] ECR 2793 at paragraphs 4 and concerned. My view is that the two situations have so 5 and in Case 274/83 Commission v Italy [1985] much in common that it may seem difficult to explain why ECR 1077 at paragraphs 19 and 20. they should not be dealt with in the same way.

The first complaint is not contained in the conclusions of the Commission's reasoned opinion, nor is it expressly referred to in that opinion. On the other hand, the In so far, then, as the Court chooses to opinion contains in point 4 a reference to come to a decision of its own motion on point 1.8 of the initial letter, which does this question, my view is that both refer to that fact. complaints should be rejected.

I - 2430

COMMISSION v GREECE

Substance directly or indirectly to adopt various measures and on the other hand by wholly or partially covering KYDEP's losses in this respect. The Greek authorities' intervention on the market in cereals

The various measures, aimed at disposing of cereals on the export market, were adopted, The Commission claims in this case that the according to the Commission, in so-called Hellenic Republic intervened through 'programme contracts' containing overriding KYDEP on the market in cereals contrary guidelines as to how various consignments to the common organization of the market of wheat were to be disposed of. in cereals.

KYDEP, that is, the Central Office for the According to the information given by the Management of National Products, is a Commission there were two types of national association of regional cooperatives programme contracts. for cereals, vegetables and animal feed- ingstuffs. Its main functions are to buy up, store and sell its members' products and to operate as a Community intervention agency for certain agricultural sectors. The first main type consisted of contracts entered into between the Greek authorities, KYDEP and private traders.

—· to a considerable extent they contain a decision on the legal questions arising in Whilst it was a characteristic of the this case; programme contracts I have just described that the traders obtained credit from KYDEP, which was re-financed by the Greek agricultural banks, other contracts provided that financing was to be effected — they constitute a solid basis for assessing by the commercial banks granting loans to the relationship between the Greek auth- the traders subject to approval by the orities and KYDEP; and National Bank of Greece, which in turn had received the approval of the Ministry of Economic Affairs. 8 — they contain a probative assessment of certain of the factual circumstances which are the subject of this case.

The second main type of programme contracts aimed at laying down the framework for processing and export carried out by KYDEP itself, with the State The legal assessment of the case is simple, granting KYDEP a given subsidy per kg of since it follows from the Court's case-law flour exported. that, if the Member States intervene as described in the Commission's application, these are serious infringements of Community law.

The Commission also claims that the Greek Government, contrary to Community law, instructed KYDEP to deliver 340 000 The Court declared most recently, in its tonnes of wheat into Community inter- judgment in Case C-l 10/89 Commission v vention in 1982, whilst the government Greece, 9which concerned obstacles to the covered KYDEP's losses incurred thereby. export of maize, that:

regulated solely by the instruments provided concerning expenditure chargeable to the for in those organizations. In particular, in EAGGF or to a case of failure to fulfil obli- sectors covered by a common organization gations under the Treaty. of the market, and a fortiori when that organization is based, as in the present case, on a common price system, Member States The instances of intervention described are can no longer take action through unilateral contrary to the common organization of the measures affecting the machinery of price- market in cereals from the very fact that formation as established under the common they take place in circumstances organization .. . ' (paragraph 21). exhaustively regulated by the common organization of the market. In practice such intervention involves serious and illegal disturbances, as regards organization of the market, of price formation mechanisms, of On the basis of that understanding of the the special intervention system and of the meaning of the common organizations of regulation of trade. the markets, the Court, in its judgment in Case C-32/89 (paragraphs 17 and 18 and 20 to 22) 10 gave judgment as to whether the The Court's case-law shows that there is no Commission had been justified in refusing necessity in a case such as this to show that to recognize certain expenditure as the instances of national intervention in chargeable to the EAGGF. The Commission question constitute infringements of specific had contended that that was justified rules of the relevant organization of the inasmuch as programme contracts had been market. It is sufficient to show that the concluded on the Greek market in cereals, intervention is a contravention of the basic by which the Greek authorities controlled principles of the organization of the market. KYDEP's activities and made good its deficit and because the Greek authorities had instructed KYDEP to deliver a As far as the relationship between the consignment of wheat into Community Hellenic Republic and KYDEP arc intervention. concerned, the previous judgments give a picture of KYDEP as a body through which, in the material period and in several ways, the State has intervened on the market in cereals and cereal products and which was controlled and partially financed The case dealt with the same, or similar, by the State. In the judgment in Case instances of intervention as those covered by C-32/89 the Court stated: this case and the Court agreed with the Commission that they were contrary to the common organization of the market in 'In view of the foregoing, the Greek auth- cereals. orities must be held to have controlled KYDEP's operations and made good its deficits during the period with which the present proceedings are concerned' (paragraph 17). The legal assessment must naturally be identical, whether in relation to a case The period dealt with in that judgment 10 — See note 1. corresponds to the relevant period in this

11 — In that extract the Court is referring to an internal (3) a programme contract entered into in memorandum of 6 June 1985 from the board of KYDEP which is also produced as an annex in this case, cf. Annex 1984/85 between the Greek authorities, IV to the application.

I - 2434

COMMISSION v GREECE

The existence of a fourth programme the latter's export of the processed wheat contract is still denied by the Hellenic and to the agreements by which KYDEP Republic, although it seems that no new was itself to undertake to process and evidence has been produced in that respect. export the wheat. It may therefore be accepted in this case too that a fourth programme contract was concluded.

In its application the Commission claims In Case 32/89 the Court also found it that a number of programme contracts of proved that the Hellenic Republic had made the first type were concluded in the period good KYDEP's deficit resulting from the 1982 to 1986. These agreements concerned conclusion of these four programme partly common wheat processed into flour contracts (paragraphs 14 to 17). There is no by the millers, partly durum wheat information available in this case providing processed into pasta or meal. The contracts any basis for altering that conclusion. for processing and export of wheat by KYDEP itself were, according to the Commission, carried out in respect of the 1984, 1985 and 1986 harvests.

However, the Commission has claimed in its pleadings that the Greek authorities concluded other programme contracts and intervened on other occasions on the market in cereals in the period 1982 to 1986. The Commission has not been able to produce the programme contracts which it claims were concluded. It has, however, been able to produce a series of documents from which it thinks it possible to deduce It is therefore necessary to consider whether that they did in fact exist. In addition the the Commission has adduced sufficient Greek Government produced during the evidence of such further instances of inter- oral procedure, at the Court's request, vention. documents which are also of importance for evaluating the evidence.

In a number of cases the Commission has the programme contracts by which KYDEP sought to discharge the burden of proof itself undertook to export. which rests upon it by substantiating that KYDEP has claims against the Hellenic Republic concerning the period in question, as appears from KYDEP's accounts. However, my view is that the existence of claims by KYDEP against the Hellenic Republic is not in itself a sufficient ground for assuming that programme contracts have been concluded.

On page 40 of the report reference is made to two claims against the State in respect of But that having been said, it must be added programme contracts concluded with the that in other respects the evidence in the Ministry of Economic Affairs concerning case shows clearly enough that the wheat from 1982 and 1983 for Commission is right in thinking that the DR 4 208 976 152 and DR 139 575 642 Greek authorities, at any rate in the period respectively. These claims are considerably from 1982 to 1985, intervened extensively, in excess of the amount which the contrary to Community law, on the market acknowledged programme contract,

The Commission states in addition that the prices entered in the contracts were below the inter- vention price at the material time. That is not challenged by the Greek Government. From a letter of 23 December 1982 from the Ministry of Economic Affairs to the I shall now consider, by examining the most National Bank of Greece, produced by the Greek important evidence, to what extent it may Government, and a letter of 24 December 1982 from the Director of the National Bank of Greece to all banks, be regarded as established that programme produced as Annex XVI to the application, it appears that contracts were concluded. The examination the credit granted by KYDEP was approved by the Ministry of Economic Affairs and financed by the Greek will first relate to the programme contracts Agricultural Bank, which again was re-financed by the concluded between the Greek authorities, National Bank of Greece. 13 — The report is produced in summary form as Annex XII to KYDEP and the private traders, and then to the application.

From two documents it may be deduced that in 1984, too, programme contracts Various documents deal with the conclusion concluded with the millers' federation of programme contracts with pasta manu- concerning common wheat were executed. facturers. The Hellenic Republic has Thus in a letter of 6 September 1984 from acknowledged that it concluded a the millers' federation to the Ministry of programme contract concerning 8 900 Economic Affairs 15 reference is made to the tonnes of pasta representing 15 000 tonnes programme contract 'concluded most of durum wheat.

contract. It appears from the same with the purchase of 30 000 tonnes of durum wheat with an option on a further 14 — The report is produced as Annex X to the application. 10 000 tonnes. This wheat was to be From p. 12 it appears that the acknowledged programme withdrawn from KYDEP's stores at latest contract cost the State DR 1 500 000 000. In its pleadings the Hellenic Republic has claimed that the version of the by 31 March 1984, and to be exported at report produced by the Commission docs not agree with latest by 31 December 1984.

. . signed with the millers in August contained in the version produced by the Commission. 1984. However, it is not quilt' clear whether this is an 15 — Annex XVII to the application. actual programme contract or whether it refers to a 16 — See in this respect the letter of 10 August 1983 from the contract concluded by KYDEP with the millers in millers' federation, produced as Annex XVIIa to the connection with the contract under which KYDEP itself application, together with the two contracts concluded undertook to arrange for 400 000 tonnes of common between KYDEP and private traders in January and wheat to be processed and exported; in that connection February 1983 concerning sale of common wheat from the see below. 1982 harvest, cf. note 12. 19 — Annex IV to the application. 17 — Annex XI to the application. 20 — Annex XIII to the applicalion.

Then as regards the second type of programme contracts in which KYDEP itself undertook to have the wheat processed and exported, the Greek Government acknowledges having concluded one such With regard to 1985, it may be seen from a contract in 1984 with regard to the export decision of 2 December 1987 by the of 400 000 tonnes of common wheat. 22 In Committee on prices and incomes 2 1that the report of KYDEP's 36th general KYDEP entered into contracts with the meeting the aid relating to this programme millers in relation to the 1985 harvest of contract is stated to be DR 2.45 per kg. In common wheat (which were presumably the analytical report concerning KYDEP's carried out in 1986) and that it was accounts for the financial year 1988, cf. subsequently decided that KYDEP's deficit page 71, it is stated that KYDEP itself thereby incurred should be made good by undertook to mill and export flour in return the State. The expression 'programme for aid amounting to DR 3.5 per kg. contract' does not appear expressly in that Further, the report states, on page 79, that connection but it is stated that KYDEP 'in KYDEP managed to mill and export in one this case was executing political decisions'. 22 — In the internal memorandum of 16 April 1984, Annex XI 21 — The decision was produced by the Greek Government. It to the application, it is stated that for the period from 10 concerns mainly cereals from the 1987 harvest, but April to 30 June 1984, 132 000 tonnes of common wheat contains on p. 3 a section with the heading: Covering were to be withdrawn from KYDEP's stores in connection KYDEP's deficit resulting from the sale of common wheat with KYDEP's milling of flour under the programme from the 1985 harvest. contract.

From the documents produced it does not In that respect it need only be said that the seem possible to show that programme question whether programme contracts contracts of this type were also concluded in concluded in writing may be produced 1985 and 1986. However, as regards 1986 I cannot be decisive as long as sufficient would refer also in this context to the evidence of their existence may be information in the analytical report on considered to have been adduced in some KYDEP's accounts for the financial year other way. 1988 on the coverage of the deficit by the State. Secondly, the Commission, it is stated, has not given the exact amount of KYDEP's deficit allegedly made good by the Greek State. It may therefore be concluded that the Commission has furnished proof that the Greek authorities, at any rate in the years 1982 to 1985, concluded programme In view of the fact that KYDEP's internal contracts with KYDEP and the private documents show a fair number of discre- traders with regard to the latters' processing pancies and that the Greek Government has and export of wheat and that the Greek been reluctant to assist the Commission in Government, at any rate in 1984, concluded clarifying the facts in this case, the a programme contract with KYDEP with Commission cannot be reproached for the regard to its processing and export of fact that it has been impossible to establish wheat. In addition the Commission has the exact amount by which the Greek State shown that in the period 1982 to 1986 the has subsidized KYDEP. That circumstance Hellenic Republic made good KYDEP's cannot be regarded as preventing a finding deficit arising from operations on the that aid has been granted in contravention market in durum and common wheat. of the rules of Community law.

Delivery of cereals into Community inter- As I have already stated, it must be vention regarded as established that:

— KYDEP continually had its deficit arising from the aforesaid operations on As proof that KYDEP delivered 340 000 the market in cereals covered partly by tonnes of common wheat into Community direct aid from the State, partly by intervention, the Commission has relied on favourable financing arrangements the report of KYDEP's 36th general obtained from the Greek agricultural meeting, page 12 of which states as follows bank, which was re-financed by the in describing operations in 1982: National Bank of Greece, which in turn was acting with the approval of the Greek Ministry of Economic Affairs;

24 — As may be seen from the quotation, the report (see Annex X to the application) states that 346 000 tonnes of wheat 'By order of the government, KYDEP were delivered into intervention and not only 340 000 tonnes, as stated in the Commission's claim. In its delivered 346 000 tonnes (of common application the Commission quotes the report correctly wheat) into Community intervention, the and it seems that the restriction of the claim to 340 000 tonnes must have been due to a clerical error. Never- theless, the Court should in my view restrict its decision to 23 — See the Court's judgment in Case 272/86 Commission v the quantity stated in the claim. Greece [1988] ECR 4875 at paragraph 21. 25 — See note 14 in this connection.

I - 2440

COMMISSION v GRUECU

— the Greek millers, as a result of State — persisting in its refusal to provide the interference in KYDEP's operations, Commission with the information were able to purchase cereals at prices required and to answer the below intervention prices and with eight Commission's objections; months' interest-free credit from KYDEP; and

I-2441

OPINION OF MR GULMANN —CASE C-61/90

In its reply to the Commission's formal a number of specific questions in that initial letter dated 13 January 1988 the regard. Greek Government described KYDEP's legal status and asserted in that connection that no legal text authorized the State to give instructions to KYDEP. Furthermore The investigation was never carried out and the Greek Government maintained that the the questions seem to have remained programme contracts described by the unanswered. There is every reason to Commission in its initial letter were believe that the Greek Government must be informal contracts concluded between regarded as responsible for that since to all KYDEP and the millers — without any kind appearances it either failed to answer the of interference from the public sector and Commission's inquiries or did so inad- without the transfer of any funds from the equately. In a letter of 8 April 1985 the State to KYDEP or the grant of any kind of Greek Minister for Agriculture stated that aid in respect of the products concerned. he had no opportunity to intervene as it was exclusively for KYDEP to authorize access to information concerning its activities and the like.

The fact that KYDEP is a body, which, at any rate during the period at issue, was controlled and partially financed by the The suggestion that the Greek Government State, was, as I have mentioned, established had no opportunity in the relevant period to by the Court in an earlier case and is in any give instructions to KYDEP is contrary to event also substantiated in this case. The what has already been established regarding fact that the Greek authorities were party to the relationship between the Greek the programme contracts is similarly clear Government and KYDEP and the letter and is moreover partially acknowledged by may therefore be taken as an expression of the Greek Government. the government's lack of intention to cooperate.

Conclusions

I shall accordingly propose that the Court should declare that:

— the Hellenic Republic has failed to fulfil its obligations under the provisions of the common organization of the market in the cereals sector by intervening from 1982 to 1985 on the cereals market by way of programme contracts concluded with KYDEP and private traders and by inducing KYDEP to deliver 340 000 tonnes of common wheat into Community intervention;

— the Hellenic Republic has acted in breach of Article 93(3) of the Treaty by omitting to notify the Commission of aid granted partly to KYDEP and partly to private traders;

— the Hellenic Republic has failed to fulfil its obligation to co-operate under Article 5 of the Treaty by failing to inform the Commission or to assist it in obtaining the information required; and

— the Hellenic Republic should be ordered to pay the costs.