C-54/95

The German Government is contesting the Decision on six grounds, covered by six sepa- 2 — Case C-54/91 Germany v Commission [1993] ECR I-3399. In rate pleas in law, discussed below in the order its judgment in that case, the Court dismissed Germany's in which they appear in the procedural docu- application to have the Decision on the clearance of the EAGGF accounts for 1988 annulled, in relation —among ments. other things — to the corrections made by the Commission to the expenditure in respect of production refunds for starch and sugar. Those corrections were imposed because the German authorities had unduly advantaged certain compa- nies, by authorising them to submit applications for refund certificates not before processing commenced, as required by * Original language: Italian. the relevant Community legislation, but after processing. The 1 — OJ 1994 L 352, p. 82. The findings on which the Commis- Court pointed out that the administrative practice described sion based its decision not to charge to the EAGGF the sums made it impossible to carry out consistently the physical in issue (see below) are set out in its Summary Report con- checks Germany was required to make on goods, and that it cerning the clearance of the EAGGF Guarantee Section could not claim, in order to circumvent that requirement, that Accounts for 1991 (Doc. VI/320/94 of 21 December 1994; a different system of supervision was allegedly more effec- hereinafter 'the Summary Report'). tive: ibidem, paragraphs 36 to 40.

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4. In its application — and basing this on the reference in the text of the Summary Report to the correction being 'increased by 10% in view of the delay in amending the procedures' — the German Government described that increase as an 'additional penalty' for negli- gence, complaining that the Commission had imposed that penalty without having the authority to do so. According to the German 3. The German authorities did not transmit Government, the Commission has the to the Commission the information requested authority only to require that the measures concerning the measures taken to modify the provided for and regulated by national law be supervisory procedures until July 1994. In substantively compatible with Community view of the inadequacy of the supervisory law, but does not have the power to penalise measures applied during the 1991 financial late communication of the national measures year, the Commission decided not to charge adopted. What is more, since the new control to the EAGGF 5.5% of the expenditure procedures had been applied as of November relating to the refunds in question incurred 1993, the delay in communicating them to the by the competent national authorities and Commission by the German authorities bodies for that year. The rate applied was the cannot be material. same (5%) as that already applied — for the same reason — for the 1988-1990 financial

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6. The Commission's response is that there is to be charged to the Community budget. no element of penalty in charging to Ger- many the expenditure in question. The impo- sition of the rate of correction in question is consistent with Commission practice regarding the clearance of EAGGF accounts. Such a practice favours the Member States by taking retroactive account of the amendments they have made to their systems of supervi- 8. I therefore agree with the Commission that sion, which were found to be irregular, during a 100% financial correction could have been the (in this instance three-year) period between applied to the expenditure on refunds dis- the end of the relevant financial year and the bursed on the basis of the administrative adoption of the decision on the clearance of practice in force in Germany in 1991, 5 a for-

exist. Furthermore, on 31 January 1994, and on the occasion of the clearance of accounts in the absence of information to the contrary for the 1988 to 1990 financial years, it had from the German authorities, the Commis- confined itself to charging a rate of 5%. In sion was justified in assuming that they had yet to put a stop to the infringement of Com- munity law, that had been established in rela- tion to 1991 also, in application of the Court's 5 — See Case C-197/90 Italy v Commission [1992] ECR I-1, para- graphs 37 to 40, and Case C-56/91 Greece v Commission judgment. [1993] ECR I-3433, paragraphs 20 to 22.

point of fact, according to the case-law of the have made an overall reduction in that cor- Court of Justice, a Member State that has rection to the level of 5% but was not entitled been accorded favourable treatment on to impose the further increase of 10%. grounds of fairness during a particular finan- cial year does not acquire any right to demand that the Commission should refrain from cor- recting the accounts that it has submitted — as the Commission is required to do where an infringement of Community rules has been 10. I consider that assertion to be unfounded. established — in relation to the clearance of In the first place, Germany seems to fail to accounts for subsequent years also. 6 appreciate that, by reducing the financial cor- rections at the time of clearance, the Com- mission generally arrives at the same outcome as is now alleged to be illegal and unaccep- table: the assessment whether the national supervisory measures, as applied during the financial year covered by the decision, com- plied with the rules is affected retroactively — in a manner favourable to the Member

The imum sum applicable. It would not, of course, Member States cannot have it both ways: they be in the interest of the applicant Member cannot be allowed to complain that the above- State to take that view because though it mentioned administrative practice of the Com- makes no claim to a reduction in the correc- mission may in individual cases, such as the tion, it certainly derives an advantage from case in point, have unfavourable financial con- this. sequences (or, to be more precise, conse- quences less favourable than the Member State concerned could theoretically anticipate). Therefore, setting aside the issue of the legal nature of the Guidelines and any binding effect they may have, 7 the argument which the German Government claims to base on the Guidelines is unfounded (see point 5 The criticism levelled by the German Gov- above). ernment actually concerns the Commission's authority to determine, at its own discretion, the level of that reduction: according to the German Government, the Commission could 7 — The Commission argues that the Guidelines cannot form the basis for any direct entitlement on the part of the Member

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12. The inquiries made by the E A G G F (pur- suant to Article 9 of Regulation (EEC) N o 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy — hereinafter 'Regulation N o 729/70'), 10 working with the competent German and I consider that the solution I have proposed Dutch authorities, during November 1991 is consistent with the principles established and April 1992, revealed the existence in those by the Court's judgment in Case C-413/92 two States of artificial export patterns to Poland of cattle fraudulently declared to be pure-bred breeding animals but in fact slaugh-

8 — The requirement that the Member States should transmit the information required to enable the Commission to take its decision on the clearance of accounts in good time may in fact have its foundation in Article 5 of the Treaty even more 9 — See Case C-413/92 Germany v Commission [1994] ECR than in the provisions of secondary legislation (sec Case 14/88 I-3781, paragraphs 29 to 31. Italy v Commission [1989] ECR 3677, paragraphs 16 to 20). 10 — OJ, English Special Edition 1970 (I), p. 218.

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13. The finding that animals exported to Poland were intended for slaughter and were not going to be used for breeding purposes was then confirmed by the fact that they were infected with bovine enzootic leucosis (here-

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inafter 'BEL'). Entitlement to refunds was (ii) Substance and fulfilment of the obligations therefore also precluded on the ground that incumbent on the national authorities in rela- the product was unsound. tion to the disbursement of the refunds in question, in accordance with Article 5 of Regu- lation No 3665/87

(i) The unlawful inclusion in the clearance of accounts for the 1991 financial year of sums reding to the 1992 financial year 16. The German Government maintains that the cattle exports met the conditions required to enable them to be classified as pure-bred breeding animals and were actually placed in free circulation and marketed in Poland. The Commission's assertion that the bulk of the animals were slaughtered on arrival in Poland, being in fact animals intended for slaughter, 14. In its reply, the German Government is not substantiated by serious and reasonable criticised the inclusion in the financial correc- doubt, as required by the case-law of the tion for 1991 of a sum (amounting to D E M Court of Justice in order to satisfy the rules 15 037 768.01) relating to export refunds dis- on the burden of proof. O n the allegation bursed in 1992. If the Commission wanted to that the cattle exported were not of sound apply a correction to the expenditure in ques- quality (infected with BEL: see point 13 tion declared for the 1992 financial year, it above), the German Government claims that, ought to have done so in the context of the in Poland, imports of pure-bred breeding ani- clearance of those accounts. mals of the bovine species were subject to extremely rigorous checks, including the sub- mission of a certificate issued by an autho- rised veterinary surgeon. In the absence of evidence to the contrary from the Commis- sion, there is no reason to doubt that those checks were properly carried out in the case of the transactions in issue.

therefore criticise the German authorities for tificates stating that the cattle were intended having considered — until the point when for breeding purposes. doubts concerning the existence of irregulari- ties arose — the national pedigree certificates proof of the quality of the breeding animals (and thus of the fair marketable quality of the products exported), or for having disbursed the refunds applied for, as required under the legislation in force. It is also immaterial that, in individual cases, the exporters submitted pedigree certificates that did not extend as far The German authorities appear to have failed back as the grandparents. O n the other hand, to appreciate that the procedure for checking since Article 1 of Directive 77/504 does not that the exported product is of fair market- require that an animal should be registered in able quality takes place in two successive a herd-book before it can be covered by the stages. The fact that Article 1 of Directive term 'pure-bred breeding animal of the bovine 77/504 merely requires that the animal be eli- species', having only to be eligible for regis- gible for entry in the herd-book is relevant tration therein, the post-clearance drawing-up only for the purposes of establishing that the or submission of a pedigree certificate was goods referred to in the export declaration also sufficient for the purposes of recognising and the goods actually exported are the same that the animal was of such quality. (first stage). However, once that has been established, ascertaining that the pure-bred breeding animals of the bovine species exported are of fair marketable quality (sec- ond stage) has to include performance moni- toring and the data on their genetic value. It is only by reference to those factors that the value of the animals for breeding purposes — which determines their greater commercial value — can be established. That is also apparent from Article 3(4) of Regulation N o 3665/87, according to which — for the pur- pose of entitlement to refund — the quantity, nature and characteristics of the product exported must be established on the day of export, that is to say 'the date on which the 18. The Commission first of all rejects the customs authority accepts the export declara- German Government's claim that in 1991 tion in which it is stated that a refund will be Community legislation contained no rules applied for' (see Article 3(1)). Above all, the concerning checks on the fair marketable requirement that the checks in question be quality of pure-bred breeding animals of the carried out may be inferred from an interpre- bovine species intended for export, based on tation of the tariff nomenclature which deter- their genetic value and performance. Instead mines the rate of refund for each product. of simply checking the information contained The description chosen of 'pure-bred breeding in the T 5 control copies, the German authori- animals of the bovine species' — which attracts ties ought also to have required the submis- a rate of refund of E C U 98/100 kg, far higher sion at the time of export of appropriate cer- than the rate applicable to other live cattle

(ECU 55.5/100 kg) — must necessarily refer for the product in question on the third to the specific use of the animal for breeding country market, but simply to obtain the purposes: there is thus an indissoluble link refunds, set at a higher level than fór cattle between that use and the economic objective for slaughter — the exporters were not even linked to the granting of export refunds. entitled to receive the refunds at that reduced rate. In particular, it is not correct that under Article 78 of Council Regulation (EEC) N o 2913/92 of 12 October 1992 establishing the Community Customs Code (hereinafter 'Reg- ulation N o 2913/92'), 15 a new customs dec- laration had to be drawn up for that purpose. 19. Finally, the Commission reiterates that Article 78(3) of that regulation merely gives the health checks of the kind provided for rise to a requirement that, where post- under Polish law for imports of breeding ani- clearance examination of customs declara- mals were not carried out in relation to the tions indicates that the provisions governing transactions in issue. The reason why the the customs procedure concerned have been failure to carry out those checks did not pre- applied on the basis of incorrect or incom- vent the transactions in issue taking place was plete information, the customs authorities that the animals exported from Germany were must take the measures necessary to regu- considered to be cattle for slaughter. That is larise the situation. The German authorities demonstrated by the fact that the cost of dispute that they in fact complied with the issuing the accompanying documents (pedi- Community legislation as interpreted by the gree and health certificates) for the exported Commission. Contrary to the Commission's animals was D E M 20 per head and therefore contention, the German body responsible for insufficient to cover the cost (DEM 40 per disbursement asked the exporters to repay head) of even the blood tests needed to iden- the sums paid out in their entirety not in rela- tify BEL. tion to all of the transactions in question, but only in those cases in which the exporter failed to provide the proof requested within the period fixed (transport documents and customs documents issued for import by the Polish authorities). In the remaining cases, (iii) The Commission's refusal to charge the the refunds were paid at the reduced rate expenditure in issue to the EAGGF, in the applicable to the export of cattle for slaughter. alternative, on the basis of the rate laid down for export refunds for cattle for slaughter is unlawful

22. I would first point out that the Summary Report had already indicated that the subject- matter of the decision would include sums relating to the 1992 financial year (see points 15 and 16 above); however, the German Gov- ernment did not plead that their inclusion was unlawful until it submitted its reply. 'The management of E A G G F finances is prin- Therefore, setting aside the question of how cipally in the hands of the national adminis- the correction in issue should properly have trative authorities responsible for ensuring been allocated between the two abovemen- that the Community rules are strictly tioned financial years, the first subparagraph observed. That system, based on trust, does of Article 42(2) of the Rules of Procedure not involve any systematic supervision by the precludes that new plea being taken into Commission, which moreover would in prac- account. tice be impossible for it to carry out. ... Only the Member State is in a position to know and determine precisely the information nec- essary for drawing up E A G G F accounts since the Commission is not close enough to obtain

23. Having said that, the German Govern- 16 — Sec, among many, Case C-55/91 Italy v Commiuion, cited ment's second plea seems to me to be largely in footnote 6 above, paragraph 13.

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the information it needs from the economic appropriate, that the Commission's calcula- operators. tions are incorrect'. 17

17 — Sec Case C-48/91 Netherlands v Commission [1993] ECR I-5611, paragraphs 11, 12, 16 and 17. See also Case 820/79 Belgium v Commission [1980] ECR 3537, paragraph 15; Case 214/86 Greece v Commission [1989] ECR 367, paragraph 19, and Case C-281/89 Italy v Commission [1991] ECR I-347, The Commission is required not to demon- paragraph 20. In his Opinion of 22 November 1990 in the latter case. Advocate General Mischo made the point that to strate exhaustively that there are irregularities apply the rule on the burden of proof rigidly 'would not in the data submitted by the Member States only be contrary to the principle actori incumbit probatio but would also require the Commission to furnish negative but to adduce evidence of serious and reason- evidence which would be very difficult to obtain, whereas it may reasonably be expected that a defendant (sic) Member able doubt on its part regarding the figures State, being ex hypothesi familiar with the conditions under submitted by the national authorities. The which it arranged for the operations in question to be car- ried out, would be in a position to produce positive evidence reason for this mitigation of the burden of in that regard' (sec [1991] ECR I-354, point 18). proof on the Commission is that ... it is the 18 — Opinion delivered on 22 November 1990 (cited in footnote 17 above), point 19. State which is best placed to collect and verify 19 — More than 57 000 head of cattle were imported into Poland the data required for the clearance of E A G G F from Germany in 1991, compared with 166 in 1990 and 374 in 1989. accounts; consequently, it is for the State to 20 — See the letter to the Federal Minister for Finance of 12 adduce the most detailed and comprehensive November 1991, containing a request that an inquiry be set in motion by the Public Prosecutor's office or the appro- evidence that its figures are accurate and, if priate customs unit (annex 3 to the Commission's rqoinder).

the fact that these were animals for slaughter. 25. At neither the preliminary stage of the In fact, since the cattle were not free of BEL, administrative procedure nor during these they met the veterinary requirements for proceedings has the German Government, for slaughter animals only and not the more strin- its part, been able to rebut the content of the gent requirements placed on breeding stock. two abovementioned documents. 22 The pos- It cannot be ruled out that by demanding a sibility, advanced by Germany (see point 27 veterinary certificate worded in "neutral" below), that the Polish economic operators terms, the exporters were seeking to prevent sent pure-bred breeding animals for slaughter doubts arising in the minds of customs offi- does not carry conviction. Furthermore, the cials as to whether these were really pure- applicant Member State has failed to provide detailed statistics to support its claim that the bred breeding animals of the bovine species, increase in the exports in question was the were those officials to scrutinise the relevant result of the break-up in 1991 of many agri- veterinary documents. ... There is reason to cultural cooperatives in the former German suppose that the requirement for the purpose Democratic Republic resulting from reunifi- of export refunds that the goods be of sound cation. There do not appear to be any facts to and fair marketable quality was not met by confirm that market outlets for some 57 000 the majority of the animals exported to Poland pure-bred breeding animals existed in Poland, before the entry into force of the communi- despite the serious problems Polish agricul- cation of 14 October 1991'. Those statements ture was facing at the time. are further corroborated by the statements made by the Polish Director of Veterinary Services: 21 no breeding cattle were imported into Poland from the spring of 1991, save for a few animals that had a pedigree certificate, whereas 90% of the 91 221 live cattle imported from Germany in 1991 were cattle for slaughter and were slaughtered within 72 hours of entering Polish territory. In my view, the facts set out above, at least taken as a whole, constitute serious, specific and cor- 26. However, the objection from the German roborative evidence that the animals exported authorities concerns the actual legal premiss possessed neither the zootechnie characteris- on which the correction in issue appears to be tics nor the pedigree of breeding cattle, and based: they claim that Community law did that the German body responsible therefore not require payment of the refunds in issue to paid the differentiated refunds relating to them be subject to compliance with the formal to the exporters without complying with the requirements of documentary evidence (veri- requisite formalities concerning proof and fication of pedigree and assessment of genetic checks. value) stipulated by the Commission. Con- trary to the view the Commission has taken, during 1991 — the year in which the German authorities first established, in the month of October, the existence of irregularities in the sector dealing with live cattle exports to Poland

27. More specifically, the Commission was 29. At first sight, the way in which Germany wrong to base its finding that the infringe- interprets the abovementioned 'anti-fraud ment in question was established on the 'anti- clause', in an attempt to deny that it is appli- fraud' clause under Article 5(1) of Regulation cable in this case, seems plausible. The aim of N o 3665/87, in conjunction with Article 13 Article 5(1) of Regulation N o 3665/87 — at of that regulation, Article 1 of Regulation N o least as actually worded — seems in fact 1544/79 and Articles 1 and 6 of Directive merely to be to prevent differentiated refunds 77/504 (see point 12 above). According to the being disbursed incorrectly where the declared German Government, Article 5(1) was not territorial destination (third country for which applicable to the circumstances giving rise to the refund is higher) does not tally with the this aspect of the dispute since none of the true destination (third country for which the situations set out in the definitive list it con- refund is lower). Once that condition has tains apply. 23 been met, it could be argued — as the German Government has done — that it little matters how the product exported is used: and that applies even if, as in this case, the price of that product (like the relevant rate of refund, calculated to bring the Community price 28. The German Government further points down to the level of the market price in the out that the obligation to submit the pedigree certificate showing the results of performance 24 — See Commission Regulation (EEC) N o 2342/92 of 7 August 1992 on imports of pure-bred breeding animals of the bovine species from third countries and the granting of export 23 — See footnote 12 above and the relevant section of this refunds thereon and repealing Regulation (EEC) N o 1544/79 Opinion. (OJ 1992 L 227, p. 12; hereinafter 'Regulation N o 2342/92').

30. Nevertheless, if we consider the spirit of the relevant provisions of Regulation N o 3665/87, the premiss implicit in the applicant Member State's argument seems to me to be illogical: namely that any abuse involving the end-use of the exported product would inevi- tably be of lesser gravity and have therefore 31. I therefore conclude from the combined to be tolerated. It is my view, however, that provisions of Articles 3(4), 5(1) and 13 of the system set in place by Regulation N o Regulation N o 3665/87 that the payment of 3665/87 requires that the objective of ensuring a differentiated refund, the rate of which is that the refunds are paid only to those genu- determined by reference to the characteristics inely entitled to them has to be pursued, of the product in question and its specific which includes the requirement that the prod- use, is subject to two conditions: not only uct's declared use tallies with its actual use. I must the product be imported into the third therefore consider that the Commission was country stated in the export declaration, it right to cite Article 5(1) of Regulation N o must also in fact be placed on the market in 3665/87: construing the concept of 'true des- that country in accordance with the use to tination' as implying both geographical des- which its nature and characteristics would tination and function. Consequently, there normally lend themselves. In this case, there- can be no doubt that in this case both the fore, proof that the exported pure-bred conditions set down by way of alternative by breeding animals of the bovine species were Article 5(1) could be considered to be met. of sound and fair marketable quality would The 'existence of serious doubt as to the true necessarily consist in evidence that they had destination of the product' (Article 5(1)(a)) specific genetic characteristics and zootechnic could not be denied if only because of the value distinguishing them from the other live spectacular increase in the exports of (declared) cattle. pure-bred breeding animals in 1991. 25 There was the additional risk of the product being re-introduced into the Community (Article 5(1)(b)): that risk existed because of the dif- ference between the amount of the export refund applicable to pure-bred breeding ani- mals of the bovine species in 1991 (ECU

34. However, that issue is of only relative importance. Germany could not in any event be permitted to rely on alleged gaps or impre- cision in the Community legislation on super- vision at the time of the facts in issue for the reason that the obligations incumbent on the Member States in this area exist indepen- dently of the powers of the Commission. In 33. I venture, in passing, to raise at least one the light of the duty of genuine cooperation doubt concerning this claim by the German with the Commission laid down in Article 5 Government: Article 3 of Regulation N o of the Treaty, particularly in relation to the 2342/92 simply incorporated into the eviden- proper use of Community resources, it is in tial requirements for the granting of export fact for the Member States to ensure that refunds the substance of the abovementioned Community law on the common agriculture Decision 86/404 of 29 July 1986 26 — based policy (hereinafter the 'CAP') is implemented on Articles 5 and 6(1) of Directive 77/504 — in their territory, 28 and this includes setting in which the Commission introduced the in place a system of supervision to ensure specimen pedigree certificate for pure-bred that the substantive and formal requirements breeding animals of the bovine species for use for the granting of export refunds are prop- in intra-Community trade and specified the information that had to be listed (including, in particular: 'the results of performance tests and the results with origin of the assessment 27 — Use of a breeding certificate that complies with the specimen of the genetic value, on the animal itself and certificate is not compulsory 'provided that the particulars mentioned in this Decision are already present in the refer- ence documentation referring to the pure-bred animal of the bovine species that enters into intra-Community trade' (see the third recital in the preamble to Decision 86/404, cited in footnote 14 above). 26 — Sec footnote 14 above 2nd the relevant section of this 28 — See joined Cases 205-215/82 Deutsche Milchkontor v Ger- Opinion. many [1983] ECR 2633.

29 — See Case C-8/88 Germany v Commission [1990] ECR I-232I, paragraphs 16 to 20), concerning the granting of premiums for the maintenance of the stickler cow herd and of pre- The Commission, for its part, has only a miums for sheepmeat producers. supplementary role to play in monitoring in 30 — Article 8(1) of Regulation N o 729/70, which is the basic regulation in relation to the obligations of the Community detail Community expenditure in relation to and the Member States in connection with the financing of the common agricultural policy, provides: CAP financing (see Article 8(1) and the eighth T h e Member States in accordance with national provisions laid down by law, regulation or administrative action shall take the measures necessary to: — satisfy themselves that the transactions financed by the Fund are actually carried out and are executed correctly; 31 — See Case C-2/93 Exportslachterijen van Oordegem v Bel- — prevent and deal with irregularities; gische Dienst voor Bedrijfsleven en Landbouw and Generale — recover sums lost as a result of irregularitiesor negli- Bank [1994] ECR I-2283, paragraphs 14 and 17 to 18; my gence ...'. emphasis; references to earlier judgments omitted).

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recital in the preamble to Regulation N o munity law and the relevant expenditure 729/70). 32 cannot be borne by the EAGGF. 34

1991. In accordance with the case-law of the 20 above). 35 I would point out here that, on Court of Justice therefore, the refunds in issue the basis of the serious and reasonable doubts — which were disbursed in breach of the concerning irregularities raised by the Com- obligation to set in place appropriate checks mission, and in the absence of evidence to the on the performance and genetic value of pure- contrary furnished by the German authorities bred breeding animals of the bovine species (see point 25 above), it seems legitimate and — failed to meet the requirements of Com- right to conclude that the exports in issue were of a speculative nature (as defined above; see point 19).

It is failed to perform its own supplementary role in relation to entitled to disallow expenditure even where it is esublished the system of supervision set up by Regulation N o 729/70. that no substantive irregularity has been committed (see I take the view, however that although the Commission has Case 327/85 Netherlands v Commission [1988] ECR 1065, the power to do this, it was not required to address to Ger- paragraph 25. See also Case C-197/90 Italy v Commission many the request provided for in the second subparagraph (cited in footnote 5 above) paragraph 38. of Article 5(2). The obligation to implement Article 5(1) is 35 — The German Government did noty however, argue that the incumbent on the Member States and is an independent expenditure on the refunds in issue incurred during 1991 requirement that does not have to be triggered by a prior ought to have been charged to the EAGGF at least to the request from the Commission (and in this case there is some level of the number of animals lawfully exported during the doubt as to whether there would have been any point in subsequent financial year (1992: 9 300 head) or the previous making such a request). financial year (1990: 166 head).

That is not the case here: the exporters know­ ingly received sums of money by way of refunds for transactions involving cattle fraud­ IV — Third plea: the correction of DEM ulently declared to be pure-bred breeding 56 692 508.70 in respect of irregularities (fal­ animals of the bovine species but which were sification of evidence of arrival at destination not in fact of the 'sound and fair marketable quality' promised, as they subsequendy turned and manipulation of quantities) committed out to be simply cattle for slaughter. Above by IMEX during the period 1981—1987 in all, since the customs declarations were not relation to exports of livestock to the Near amended post clearance to reflect the real state and Middle East is unlawful of affairs — and they could, for example, have been amended had the German authorities carried out the checks on the declarations provided for by Article 78 of Regulation N o (i) Correction of DEM 22 Oil 281.10 for the 2913/92 (see point 20 above) — to have delay on the part of the German authorities accepted Germany's claims would have in carrying out thorough checks on the law- resulted in the anomalous situation of charging fulness of the transactions carried out by IMEX to the EAGGF, in relation to exports (offi­ after 1 January 1986: the Commission finding cially) of breeding cattle, sums which ought, is unfounded in substance and fails to provide a sufficient statement of reasons

mission for having been unable to cite in detail to Germany in relation to refunds disbursed and give a sufficient statement of the reasons unlawfully, the Commission was bound by for its allegations of infringements committed the finding of the Munich Landgericht (125 by the German authorities. The customs inves- instances in which auxiliary customs officer tigation unit could not have been expected to H falsified the quantities, at the Hamburg act differently because sufficient evidence to loading centre, resulting in loss totalling DEM bring charges against IMEX had to be gath- 11 745 714). N o financial correction could be ered in a way that avoided arousing suspi- imposed on the basis of other irregularities cions that could have led IMEX to mask its that were merely presumed to have taken criminal activities involving sophisticated fal- place. sification techniques. That is why, although investigative measures were adopted as far back as December 1985, it was not possible to put a stop to the manipulation of quanti- ties by IMEX until after the Munich police 39. The Commission points out that, for the had transmitted, in October 1987, the results purposes of establishing whether or not expen- of their investigation into the falsification of diture incurred by the Member States in rela- the customs stamps used. The Commission's tion to CAP financing meets the requirements refusal to charge the sum in question to the of Community law — the objective of the EAGGF, in accordance with Article 8(2) of clearance of accounts procedure — there is Regulation N o 729/70, 38 on the ground of no reason to consider the findings of a national negligence on the part of the German authori- court decisive. Since it is not necessary for the ties in preventing and prosecuting the irregu- infringement to be established and penalised larities, is therefore unlawful. in the criminal courts before expenditure incurred in breach of Community rules can be charged to the Member State, the Com- mission was fully entided to refer to the out- come of the inquiry conducted by the Munich customs investigation unit (284 instances in (ii) The failure to charge to the EAGGF the which quantities had been manipulated refunds disbursed between 1981 and 1987 on resulting in loss totalling D E M 25 024 493), the ground that auxiliary customs officers had which was not called into question or refuted. manipulated the quantities: the correction of DEM 25 024 493 is unlawful to the extent that it goes beyond the findings of the criminal court (iii) Illegality of charging to the Federal Republic of Germany the sum of DEM 9 656 734.74, equivalent to 10% of the payments made after 1 January 1986, on the ground that the national authorities had failed 38. The German Government maintains that, to meet the deadline for transmitting addi- when calculating the expenditure to be charged tional information

tion in the sum charged to Germany to 90% does not therefore have the power to set a of the relevant amounts. That limitation — deadline (far less to penalise any 'late' notifi- based on the German authorities' failure to cation). It is actually only the Member State meet the deadline for forwarding to the Com- concerned that is able, in the final analysis, to mission the additional information on the assess the real possibilities of recovering sums state of progress in and likely outcome of the wrongly paid, in the light of the state of procedures for recovery of the refunds dis- progress and developments in the procedures bursed after 1 January 1986 for export trans- for recovery that could or have already been actions in respect of which the true quanti- set in motion. ties had been manipulated by auxiliary customs officers — is tantamount to an additional penalty and is unlawful because there is no legal basis for it. The communication sent to the Commission by the German authorities on 27 May 1984 was not actually covered by Article 1(3) of Regulation N o 1723/72 con- cerning the forwarding by the Member States of the additional information needed for clear- ance. 39 That communication actually formed part of the information system set in place by Council Regulation (EEC) N o 595/91 of 4 March 1991 concerning irregularities and the Furthermore, any deadline set by the Com- recovery of sums wrongly paid in connection mission for forwarding additional informa- with the financing of the common agricul- tion within the meaning of Article 1(3) of tural policy and the organisation of an infor- Regulation N o 1723/72 can encompass only mation system in this field and repealing that information that Community law requires Regulation (EEC) N o 283/72 (hereinafter to be included in the clearance of accounts 'Regulation N o 595/91') and in particular for each financial year. It is only following Article 5(2) thereof. 40 The significance of that notification under Article 5(2) that the infor- distinction is that, in the context of Article mation forwarded to the Commission could 5(2) of Regulation N o 595/91, it is the Member be included in the procedure for the clearance States which may, at their discretion, take the of accounts for a specific year.

E e totally recovered, it shall inform the Commission, in a special notification, of the amount not recovered and the the finding that the deadline of 31 January reasons why the amount should, in its view, be borne by the 1994 (set for the forwarding of additional Community or by the Member State. information for the 1991 financial year) had This information must be sufficiently detailed to enable the Commission to decide who shall bear the financial conse- not been observed — is unlawful.

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failure to fulfil an obligation, it ought in any sessed at that time: that would have resulted event to have applied the procedure provided in 100% of the expenditure in issue being for by Article 169 of the Treaty. charged to Germany. The decision imposed no additional penalty on Germany and was consistent with the Commission's previous administrative practice of limiting to 90% of the sums in question the amount it proved necessary to charge to the E A G G F in the light of fresh information that the Member State concerned had forwarded belatedly.

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(see point 34 above). In this case, did Ger- designed to prevent irregularities in EAGGF- many adopt such measures as were required financed transactions. As the Court of Justice under Article 5 of the Treaty and Article 8(1) has had occasion to point out in the case of of Regulation N o 729/70? The documents supervisory measures adopted at the national before the Court indicate that it did not: it is level in order to implement Community rules true that the competent national authorities regarding the common agricultural policy, the did not actually sit back and do nothing, but national authorities must act with the same nor were the measures they took conspicuous degree of care as they exercise in imple- by their effectiveness. I would point out that menting the corresponding national legisla- in the IMEX affair 'the buck was passed' ini- tion, in order to prevent any erosion of the tially and repeatedly from one customs inves- effectiveness of Community law. 42 tigation unit to another for alleged reasons of territorial responsibility.

In that the Commission pointed out — they were context, it is clear that evidence that carried attempted on two occasions only, one of some weight was not acted upon because it which (the monitoring of a consignment was considered insufficiendy detailed to allow exported by air) was doomed to failure from a criminal investigation to be set in motion. the outset (compulsory weighing of the ani- mals before they were loaded on the aircraft making it extremely easy to establish whether 42 — See Case C-2/93 (cited in footnote 31 above),paragraph 19.

Furthermore, the illegal payment of Commu- investigation unit and, at a criminal level, that nity funds came to an end, followed imme- established by the Munich Landgericht do diately by the winding-up of IMEX, in the not tally (see point 38 above) does not at all wake of the investigation instituted by the justify the claim that the correction made by German authorities on 28 October 1987, that the Commission was excessive. In this case, is to say barely a week after the person who moreover, it is clear on closer examination had supplied the exporters with the falsified that the accuracy and veracity of the data stamps had made his statement to the Munich transmitted by the national authority is not in police. 43 The Member State's claim that, in dispute: the figures on which the decision is relation to the administration of E A G G F based are in fact drawn from the final report financing, the full and uniform application of of the inquiry into IMEX by the Munich Community law, based on checks that the customs investigation unit, dated 23 June 1989. transactions being financed have actually taken Germany is relying, however, on a general place and have been carried out in accordance principle of law, according to which only with the rules, remains subject to the condi- those irregularities established by the criminal tions governing the implementation of national courts may be considered proven and give criminal legislation, seems to be irremediably rise to corrections of the relevant expendi- at odds with the principles set down by the ture. Such a principle is, however completely Court of Justice in its case-law concerning incompatible with the rationale — never mind the primacy of Community law and the the letter — of the system of supervision set Member States duty of genuine cooperation. 44 up by Regulation N o 729/70. It is no coinci- My view, however, contrary to that of the dence that no trace of it is to be found in the German Government, is that the prevention subsequent Regulation N o 595/91, mentioned of a negative financial impact on the Com- above (see point 40), which clearly equates munity budget is an objective that co-exists the establishment of irregularities by the with but is quite separate from that of estab- administrative authorities with the finding of lishing and bringing a criminal prosecution in irregularities by the courts, and merely pro- respect of an offence. In relation to the clear- vides in the third subparagraph of Article 1 ance of accounts it is only the former objec- that: 'This Regulation shall not affect the tive that matters. application, in the Member States, of rules relating to criminal proceedings or mutual assistance between Member States at judicial level in criminal matters'. I therefore consider that Germany has not succeeded in proving that the conditions for obtaining the financing 45. For that same reason, the fact that the list withheld under the decision are met, in terms of infringements established by the customs of the particular aspect discussed above.

mitting additional information on the state the Member States to notify the Commission and likely outcome of the procedures for of those national procedures which they con- recovery the national authorities had set in sider fruitless so that the Commission is able motion. The arguments Germany puts for- to take a decision on charging (to the E A G G F ward on that point seem to me to be formal- or the Member State concerned) the financial istic and to some extent contradictory: the consequences thereof. However, that provi- applicant Government claims that the com- sion does not at all preclude — as alleged by munication of 27 May 1994 was made in the German Government — the power of the accordance with Article 5(2) of Regulation Commission to 'provoke', so to speak, the N o 595/91 and therefore constitutes a 'special Member State into taking a view, possibly by notification' to be given by the Member States making use of the powers provided for under of their own initiative and without being sub- Article 1(3) of Regulation N o 1723/72. H o w ject to deadlines. There is, however, reason to can the existence of a power of that nature be doubt that that was the nature of the com- denied, particularly when, despite objective munication in question: the German authori- signs that the procedure has failed, the national ties appear to forget that they had been asked authorities fail to take the initiative of giving to provide the information in issue on several special notification, in breach of the duty to occasions, including prior to the decision of exercise general diligence required by Article 21 January 1994. In particular, the Commis- 5 of the Treaty and Article 8(1) of Regulation sion had informed them, by letter of 10 N o 729/70? October 1993 — six years after the financial year during which the irregularities had been committed, and four years after the adoption of the final report by the Munich customs investigation unit — that it intended closing the file on IMEX under the 1991 clearance of accounts procedure, in view of the fact that the procedures for recovery undertaken had failed to yield results.

precisely identified Community obligations. 45 plea submitted by Germany has therefore to It is my view that in this case the Commis- be rejected. sion cannot be accused of having neglected the requirements of sound administration: since the Commission had informed the German authorities a long time previously of its intention to settle the IMEX dossier under the 1991 clearance of accounts — at the time V — The fourth plea: the correction of DEM the decision of 21 January 1994 was notified 997 814 in respect of irregularities committed — the German authorities could not have by the Südfleisch company in 1991 con- failed to realise that the additional informa- cerning exports of beef to Lebanon is illegal tion requested as part of the abovementioned procedure specifically included information as to the likely success of the national proce- dures for recovery that had been commenced. For that reason, once the ten-day deadline — which was short but, in my view, reasonable and not arbitrary — had expired, the Com- mission could actually have charged to Ger- 50. The fourth plea submitted by the German many 100% of the sums that could not be Government concerns the Südfleisch com- recovered (see points 8-11 above). pany. After it had exported some 628.75 tonnes of beef during March 1991, Südfleisch provided the German authorities on 1 July of that same year — on final closure of the pre- financing procedure which had been left in

Süd- be heard, and may culminate in proceedings fleisch was therefore paid the refunds appli- before the Court. 46 I consider that the third cable at the time to exports of beef to Lebanon (equivalent to DEM 294.27 per 100 kg net weight of exported product), a rate substan- 45 — See Case C-34/89 Italy v Commission [1990] ECR I-3603, tially lower than the refund applicable to paragraph 14. exports to the UAE (equivalent to D E M 46 — See Case C-334/87 Greece v Commission [1990] ECR I-2849, 423.75 per 100 kg).

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The deadline may be extended in the case of an exporter who, although he has acted with all due diligence, has not produced the above- mentioned documents to the authorities within 52. The Commission points out that the fact 12 months of the date on which the export that Südfleisch instructed an insurance agent declaration was accepted. to inquire into whether the goods had been correctly transported barely two months after they had been dispatched and that it sent three of its employees to the UAE to investigate in June 1991 (see below), indicates that the exporter more or less immediately had doubts (i) Fulfilment of the conditions governing the as to the true destination of the products granting of an extension of the deadline exported. In the light of that circumstance, the Commission insists that the production in July 1991 of false evidence that the goods had arrived in the U A E was fraudulent or at least grossly negligent.

tion. Indeed, the initial attempts to obtain with all due diligence to obtain the proof that evidence date back to May 1991 when required during the 12 months following the Südfleisch commissioned a Mr Hoffmann, an date of acceptance of the export declaration is insurance agent, to inquire into the move- also belied by the unprofessional nature of ments of the vessel that had transported the the investigation which the company's three goods and to ascertain in particular whether employees carried out in the port of Ajman. it .'had unloaded the whole of its cargo in As far as the German authorities were able to

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able to be present when the goods were actu- In any event, even if it were correct that the ally given customs clearance for placement on German authorities ought to have taken the market in the U A E because the day sched- account of the subjective factor of the con- uled for verification was a religious festival. duct of Südfleisch when taking their decision The representatives therefore did no more on the request to extend the deadline, the than establish that the cargo holds of the Principal Customs Office could not in any vessel used to transport the goods were more case have refused that extension, as it was not or less full of Südfleisch containers with their in a position to know whether exporter had seals intact. acted deliberately or with gross negligence Neither the criminal investigations nor the investigations by the customs authorities were able to establish that representatives of Süd- fleisch were responsible for falsifying the documents or making fraudulent use of them.

(ii) Exercise by the national authorities of the discretion accorded to them by Article 47(4) of Regulation No 3665/87

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56. Lastly, the Commission contends that, 58. According to the consistent case-law of contrary to what is maintained by the German the Court of Justice, the concept of force Government, the establishment of possible criminal responsibility is an issue completely separate from verification of the requirements 47 — The 24th recital in the preamble to Regulation N o 3665/87 states: 'whereas no refund is granted if the tūne-limits ... for provided for by Article 47(4) of Regulation submitting the proof required for obtaining payment of the N o 3665/87. The process of verification cer­ refund are not complied with; ... the rules at present in force should, however, be relaxed; ... measures should accordingly tainly includes the need, however, to ascertain be adopted pursuant to Commission Regulation (EEC) No 2220/85 (laying down common detailed rules for the appli­ whether an extension that allows an exporter cation of the system of securities for agricultural products) to continue to search for the 'right docu­ (OJ 1985 L 205, p. 5), as amended by Regulation (EEC) N o 1181/87 (OJ 1987 L 113. p. 31)' (my italics). Article 19 of ments' — in circumstances such as those of Regulation (EEC) N o 2220/85, as amended by Article 1 of Regulation (EEC) N o 1181/87, provides — for the purpose the instant case and following the discovery of release of a security — that if the deadline for showing that the quantities have been manipulated — final entitlement to the sum granted has passed without pro­ duction of evidence of entitlement, it may be postponed in is compatible with Article 47(4). a case of force majeure.

majeure differs in its scope in different areas with the normal criteria of due diligence and of the law and must be defined by reference care that is, in my view, contradicted by the to the particular legal context in which it is facts established by the Commission (see point intended to operate. 48 The legal context I 53 above), even setting aside the question described above (see points 50 to 57) seems to whether Südfleisch can be held responsible me not dissimilar in substance to the situa- for falsifying the customs clearance certificate tions referred to the Court of Justice in the in the UAE or for its fraudulent use. 51 abovementioned Cases 109/86 49 and

All that can be gleaned from the documents before the Court are accusations as veiled as they are It seems to me highly significant that, in vague of breaches of the contractual obliga- attempting to justify extending the deadline tions entered into by the carrier of the goods granted to Südfleisch, Germany has been and Al Fatha Goldstore (whose role in rela- unable to cite any specific external event that tion to the contract of sale in issue is in any was abnormal, unforeseeable and unavoidable case unclear).

and 8). 50 — Cited in footnote 46 above and the relevant section of this 51 — Furthermore, in the light of the points I have made above Opinion (concerning, in the part of relevance to the instant concerning the need to distinguish between preventing case, the financial correction applied by the Commission in unduly detrimental financial effects having to be borne by respect of the extension of the original period of validity of the Community budget and criminal prosecution of the an export certificate on grounds o f force majeure, granted by irregularities in question (see point 44), I consider it super- the Greek authorises when the contract of sale was termi- fluous to discuss the argument raised by the German authori- nated because of non-performance (failure of the Sudanese ties, according to which, since neither the criminal investiga- Government to open a credit line to fund the transaction). tion nor that carried out by the customs investigation unit That extension resulted in the continuing application of a uncovered evidence of responsibility on the part of company rate of refund higher than that in force on the date the cus- representatives, it has to be accepted that Südfleisch acted toms formalities were completed; see paragraphs 21, 34 and with all due diligence for the purposes of Article 47(4) of

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The Commission in nary commercial risk inherent in commercial fact properly decided that the Principal Cus- transactions: whether or not the exporter acted toms Office ought at least to have awaited the in good faith is immaterial. It is, however, for imminent communication of the outcome of the exporter, who is fully at liberty to select the investigative mission before taking its own such trading partners as his interests may dic- decision, and that it was only on expiry of tate, to take the appropriate precautions either the original annual deadline (in March 1992) by including the requisite clauses in the con- that the German authorities would have been tract or by effecting appropriate insurance. in a position fully to assess whether Südfleisch Similar principles apply to any fraudulent had exercised due diligence, by reference to practices involving the re-introduction into all the circumstances that had occurred after the Community of goods in respect of which the date on which the export declaration was the exporter has obtained a refund. 52

I therefore conclude that the deadline. According to the Court, of Justice, fourth plea must be rejected: the fact that the that power of supervision by the Commis- extension of the annual deadline accorded to sion is needed to ensure that Community law Südfleisch was unlawful both on the ground is properly applied; 53 I see no reason why, that the requirement of force majeure was not the necessary changes being made, that power met and on the ground that the national cannot come into play where, at their discre- authorities misused their own discretionary tion, the national authorities are granting an powers, means that the company was late in extension to the deadline for submitting docu- submitting its proof.

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the Republic of South Africa or the docu- ments accompanying the meat. It cannot, in particular, be ruled out that the products 60. During a mission to Zimbabwe in Feb- exported by Barfuß were placed on the market ruary and March 1990, the German customs in South Africa and that the certificates in investigation unit uncovered German certifi- issue — issued in Germany and stamped in cates of fitness for consumption relating (inter Zimbabwe — were fraudulently attached to alia) to consignments of beef that Barfuß had other consignments of meat, in the course of declared it had exported to the Republic of subsequent commercial transactions, specifi- South Africa and in respect of which it had cally after the product was imported into obtained the relevant export refunds. At the Africa. The delay in initiating the procedure time, there was no refund provided for the for recovery, therefore, was actually the result export of the product in question to Zim- of doubts as to its legality and likelihood of

That argument was considered unaccept- sequent re-export to Zimbabwe, followed by able by the Commission, since it would imply re-import into the Community under the — contrary to what emerges from the case-law arrangements for exemption from customs of the Court of Justice — that procedures for duties pursuant to the Third Lomé Conven- recovery are possible only where it is proven tion). with absolute certainty that the goods exported were placed on a market other than that of the country of destination. In this case, in the Commission' view it was for Barfuß to fur- 55 — See footnote 38 above nish incontrovertible proof that the goods had

63. In the light of the interpretation guidance that emerges clearly from the earlier case-law of the Court of Justice (and more particularly the decision in Dimex), 56 there was then no point in further suspending the procedure for recovery — as decided by the Principal Cus- toms Office in August 1991, when Barfuß 64. Under Article 8(2) of Regulation N o raised an objection — in order to await the 729/70, refunds that have been paid to an decision of the Court of Justice on the request exporter and have not been recovered may for a preliminary ruling in the Möllmann- legitimately be charged to a Member State if Fleisch case submitted to it by the Finanzger- it is clear that, having first disbursed the sums icht Hamburg. 57 Finally, for no good reason, in question negligently or incorrectly, the according to the Commission, the German national authorities also failed to act swiftly authorities declined to implement the deci- to rectify the irregularities. To justify the lack sion to recover adopted on 1 July 1991 and of decisiveness and the 'hiccups' that occurred closed that procedure by decision of 7 June in the procedure for recovery, the German 1994. The Commission contends that, even if Government has cited the doubts of the the Principal Customs Office were genuinely German authorities as to •whether the pay- persuaded that the order against Barfuß for ments to Barfuß were in fact irregular, as alleged by the Commission. Those doubts were said to be founded on the provisions of national law (and the case-law of the Bundes- 56 — See Case 89/83 Dimex [1984] ECR 2815, paragraph 11. gerichtshof) on the burden of proof (see point 57 — See Case C-27/92 Möllmamn-Fleisch [1993] ECR I-1701, paragraph 11. 61 above) to which Article 8(1) of Regulation

65. In accordance with the principles estab- lished by the Court of Justice in the Dimex and Möllmann-Fleuch cases (see footnotes 56 and 57), the discovery in Zimbabwe of cer- tificates of fitness for consumption relating to 66. As the Court of Justice has long made consignments of meat which, according to clear, in contrast to the relationship between Barfuß, had been exported to South Africa the national intervention agencies and the was such as to arouse reasonable and justifi- economic operators — which is governed by able doubts as to whether the objective of the national law, within the limits imposed by differentiated export refunds had actually been compliance with Community law, in accor- achieved. 60 Therefore the German authorities dance with Article 8(1) of Regulation N o could and ought to have asked Barfuß to 729/70, 62 — the relationship between the prove, by furnishing one or more of the Member States and the Commission, and documents listed in Article 20(4) of Commis- therefore responsibility for any negligence, is sion Regulation N o 2730/79 of 29 November governed by Community law in accordance 1979 laying down common detailed rules for with Article 8(2) of the regulation. 63 It fol- the application of the system of export refunds lows from the general obligation to exercise on agricultural products, 61 applicable at the diligence laid down in Article 5 of the Treaty time of these events, that the meat had in fact — which finds expression, in the specific been placed on the market in the territory of sector of CAP financing, in Article 8 of Regu- lation N o 729/70 6 4— both that the national authorities cannot justify a failure to fulfil their obligation to rectify irregularities quickly 58 — See Joined C u e s 205 to 215/82 (cited in footnote 28 above), paragraph 36. 59 — See Case C-28/89 Germany v Commission [1991] ECR I-581, paragraph 33, and Joined Cases 146/81, 192/81 and 193/81 BayWa and Others v BALM [1982] ECR 1503, para- 62 — See footnote 58 above and the relevant section of this graph 29. Opinion. 60 — See Case 125/75 Milch-, Feu- und Eier-Kontor v Haupttol- 63 — See Case 34/89 Italy v Commission (cited in footnote 45 lamt Hamburg-Jonas [1976] ECR 771, paragraph 6, in which above), paragraphs 9 to 11. The Court pointed out that the the Court stated that the raison d'être of the system of reply to the question whether the Member State concerned varying the refund would be disregarded if, in order to or the Community had to bear the financial burden of sums qualify for payment of the refund at a higher rate, it was suf- wrongly paid had direct consequences for the Community ficient for tne goods simply to be unloaded at a port of the budget and could not be determined by national law, which country of destination without actually reaching the import differed from one Member State to another. It would be market. contrary to the uniform nature of the CAP if the Member 61 — OJ 1979 L 317, p. 1, as subsequently amended. Regulation States were able to alter its financial consequences by means N o 2730/79 was repealed, with effect from 1 January 1988, of their national rules. by Article 50 of Regulation N o 3665/87, which 1 have cited 64 — See footnote 34 above and the relevant section of this on several occasions. Opinion.

VII — Sixth plea: the correction of DEM The German Government claims to have acted 3 118 563.54 in respect of irregularities linked with the requisite diligence, but, in my view, to the granting of the special premium for the facts belie this: the procedure for recov- beef producers is unlawful ering the sums wrongly disbursed was not set in motion by the Principal Customs Office until one year after the irregularity had been established and was immediately suspended; more particularly, it remained suspended for a further year awaiting the Court's ruling in Möllmann-Fleisch. Finally, the loss of the 68. I propose that the Court should disre- originals of the certificates of fitness for con- gard the last plea concerning the financial sumption made it permanently impossible to correction, at the flat rate of 4%, applied by enforce the order for recovery (see points 60 the Commission — because of the extremely and 63 above). limited opportunities for inspection, the poor quality of the checks carried out on the iden- tification of the animals and the non-existence of reliable administrative controls — to the expenditure relating to the special premium 67. Furthermore, I do not consider that the for beef producers declared in 1991 (on the Commission can be criticised for having failed basis of applications submitted in September to respect, in this case, the need for its finan- 1990) by Bavaria, Baden-Württemberg and cial relationship with the Member States to be Lower Saxony. Indeed, the German Govern- certain and predictable, which I have already ment stated at the hearing that it was with- mentioned. 67 Apart from the fact that the drawing that plea. That the arguments adduced German authorities could not reasonably have by the German Government should be dis- been unaware that their inertia was likely to regarded is absolutely clear from the Court's have damaging financial repercussions, it is judgment of 3 October 1996 in Case C-41/94 clear from the documents in the case that, Commission v Germany 68 — delivered after the written procedure in this case had been completed — in relation to a similar plea sub- 65 — Sec Case C-28/89 Germany v Commission (cited in footnote mitted by Germany in connection with the 59 above),paragraph 32. 66 — Sec Case C-34/89 Italy v Commission (cited in footnote 45 above), paragraph 12. 67 — See footnote 45 above and the relevant section of this Opinion. 68 — [1996] ECR I-4733, paragraphs 6 to 73.

— o r d e r t h e Federal R e p u b l i c of G e r m a n y t o p a y t h e costs.

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