C-232/96

* Original language: German. 1 — European Agricultural Guidance and Guarantee Fund. 2 — This problem is also at least partly in issue in Cases C-209/96 3 — The relevant provision is to be found in Article 11(3) of United Kingdom v Commission [1998] ECR I-5655, C-233/96 Commission Regulation (EEC) N o 859/89 of 29 March 1989 Denmark v Commission [1998] ECR I-5759, C-238/96 laying down detailed rules for the application of intervention Ireland v Commission [1998] ECR I-5801 and C-242/96 measures in the beef and veal sector (OJ 1989 L 91, p. 5). Italy v Commission [1998] ECR I-5863. 4 — Article 13(4) of Regulation N o 859/89.

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5. Speculative tendering for larger quantities, according to the Commission, runs counter to the purpose of intervention, which is, for example by intervention buying-in, to stabi- 7. As far as the intervention measures in the lise the market and prevent or mitigate a sub- context of the public storage of cereals are stantial fall in prices, 5 where market prices concerned, the Commission justifies the fall below a certain level. Regulation N o reduction prescribed in that sector on the 859/89 6 introduced a tendering procedure. 7 ground that, in the course of inspections, it Under that procedure purchase prices and found deficiencies in the public storage of cereals.

5 — Fourth recital in the preamble to and Article 5 of Regulation (EEC) N o 805/68 of the Council of 27 Tunc 1968 on the common organisation of the markets for beef and veal (OJ, 8 — Second recital in the preamble to Council Regulation (EEC) English Special Edition 1968 (I), p. 187). N o 571/89 of 2 March 1989 amending Regulation (EEC) N o 805/68 on the common organisation of the market in beef and 6 — Cited in footnote 3. veal, repealing Regulation (EEC) N o 1302/73 and extending 7 — Third recital and Article 7 et seq. of Regulation N o 859/89. Regulation (EEC) N o 4132/88 (OJ 1989 L 61, p. 43).

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B — Facts and legal provisions 10. In that report the Commission stated, with regard to multiple tenders, that the docu- ments showed that tenders from different companies often gave the same address, tele- phone and fax numbers and had sometimes been signed by the same person. The invoices sent by the different undertakings were also Intervention measures in the beef and veal consecutively numbered. The French sector authority must therefore have been aware of the conduct of the tenderers from the begin- ning. Nevertheless, France carried out no checks in this connection, as it ought to have done.

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13. Paragraph 2 provides: 'Interested parties 16. Specific conditions regarding the validity may participate in the invitation to tender of tenders are, the applicant submits, apparent issued by intervention agencies of the Member only on a reading of Article 11(3) of Com- States in which this is opened either by lodging mission Regulation (EEC) N o 2456/93 of a written tender against a receipt or by any 1 September 1993 laying down detailed rules other written means of communication for the application of Council Regulation accepted by the intervention agency, with (EEC) N o 805/68 as regards the general and advice of receipt; they may submit one tender special intervention measures for beef, 13which only per category in response to each invita- was not yet in force at the material time. That tion to tender.' 12 provision is as follows:

14. The distinction between the terms 'ten- derer' and 'interested party' is, in the Com- 'Interested parties may submit only one tender mission's view, of significance in this connec- per category in response to each invitation to tion. According to the Commission, it follows tender. from the difference in wording that interested parties are not to be equated with tenderers. The term 'interested parties' refers not only to those persons who actually took action and lodged tenders. It embraces a much wider class of persons. It is not, therefore, only the individual tenderer, that is to say the person who actually lodges the tender, who is pro- The Member States shall ensure that tenderers hibited from lodging more than one tender. are independent of each other in the terms of The prohibition covers all persons tendering their management, staffing and operations. in respect of the same quantity of meat.

19. In this context, the French Republic seeks a declaration that the Commission decision is 17. The applicant, which, unlike the Com- void in so far as it disallowed expenditure of mission, is of the opinion that the second FRF 84 061 448 relating to intervention mea- sentence of Article 9(2) was fully complied sures in the cereals sector. That amount cor- with in the context of the tendering proce- responds to 2 % of expenditure in respect of dure operated by it, in October 1995 referred technical, financing and other costs for 1992. a request for conciliation to the Conciliation The Commission justifies that reduction on Body. 14 According to the applicant, the Con- the ground of deficiencies in the public storage ciliation Body gave the following opinion in of cereals. its provisional conclusion in the annex to the final report: Although Member States took no initiative to counter the practice of mul- tiple tenders which in fact, from an economic point of view, stem from the same operator, the Commission itself must have been aware of it, but failed to react before 1993. In the 20. During an inspection carried out in June circumstances, the Conciliation Body went and July 1993, the Commission found defi- on, and because of the apparent absence of ciencies in the management of the interven- financial loss to the Fund resulting from this tion system. It informed the French national practice, the financial correction of 2% of authorities of this and, according to the appli- total expenditure was difficult to justify. cant, gave notice of financial consequences for the 1993 clearance of accounts. In their reply of December 1993, the French authori- ties set out a list of measures which they would take in order to improve the system for the public storage of cereals.

— declare null and void Commission Deci- 22. During further inspections in June and sion 96/311/EC 15 on the clearance of the July 1994 the Commission found that the accounts presented by the Member States deficiencies established during the first inspec- in respect of the expenditure for 1992 of tion had not been remedied by the French the Guarantee Section of the European authorities. It informed the authorities that Agricultural Guidance and Guarantee financial corrections would be adopted with Fund and in respect of certain expendi- effect from 1992. After a further exchange of ture for 1993, in so far as the Commis- correspondence with the Commission, the sion has disallowed for France for 1992: applicant eventually referred a request for conciliation to the Conciliation Body. According to the applicant, the Conciliation Body, in its final report, reached the conclu- sion that the financial correction was justi- fied. It was certainly to be regretted that the Commission gave the impression of having changed its original intention. However, the Conciliation Body also points out that the French authorities do not deny that they had — FRF 76 041 440 of eligible expendi- to modify their original system in order to ture corresponding to intervention comply with the Commission's requirements. measures in the beef and veal sector as regards the submission of tenders under the tendering procedure,

Forms of order sought

— FRF 84 061 448 of eligible expenditure corresponding to intervention mea- sures concerning the public storage of cereals; 23. Folio wing the Commission decision, the French Republic finally brought an action before the Court of Justice of the European 15 — See footnote 9.

Intervention measures in the beef and veal sector

27. The applicant points out that, according to the Court's case-law, the Member States must show that the conditions for the main- Meaning and purpose of the second sentence tenance of financing are fulfilled. Referring to of Article 9(2) the national control system, it submits that it can be shown that each tenderer constitutes a separate and independent undertaking. The Commission does not dispute that. However, the applicant submits that is not sufficient 25. First, the applicant claims that the Com- since it is necessary for successful interven- mission has misconstrued the second sentence tion that the companies be economically inde- of Article 9(2). That provision, it argues, pendent of one another.

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In that connection it would appear appropriate to examine first the manner in which the Commission seeks to interpret the second sentence of Article 9(2). The pleadings mainly speak of 'multiple' tenders. Those cannot be 29. According to the case-law of the Court, tenders submitted by one and the same ten- '. . . only refunds granted and intervention derer under one name, for such tenders are undertaken in accordance with the Commu- not lawful in France either. Moreover, as is nity rules within the framework of the also clear from the pleadings, the Commis- common organisation of agricultural markets sion does not object to every kind of connec- are to be financed by the E A G G F ' . 16 In that tion between the individual tenders.

30. Moreover, in regard to the requirements be prohibited by the authorities of the Member which the formulation of provisions must States. satisfy, the Court has held: 'Since a rule whose breach inevitably entails financial conse- quences must be sufficiently clear and precise, the Commission was not entitled to rely on the terms of subheading . . . as a basis for imposing, at the time of the clearance of E A G G F accounts, an interpretation which was not dictated by the normal meaning of the words used.' 18 32. The Commission points out that, according to the Court's case-law, a provision is not merely to be construed literally but also in accordance with its meaning and pur- 16 — Judgment in CaseC-48/91 Netherlands v Commission [1993] ECR I-5611, at paragraphs 13 and 14, with further refer- pose. 19 Accordingly, the Commission con- ences. tends that the provision at issue in these pro- 17 — Judgment in Netherlands v Commission (cited in footnote 16, at paragraph 18, with further references); judgment in ceedings would be deprived of its purpose if Case C-281/89 Italy v Commission [1991] ECR I-347, at paragraph 19, with further references; judgment in Case 347/85 United Kingdom v Commission [1988] ECR 1749, at paragraph 16; judgment in Case C-55/91 Italy v Commis- sion [1993] ECR I-4813, at paragraph 13, with further refer- 19 — Judgments in Case C-283/91 Contarmi [1992] ECR I-6359, ences. at paragraph 14, and Joined Cases C-296/93 and C-307/93 18 — Judgment in Case 349/85 Denmark v Commission [1988] France and Ireland v Commission [1996] ECR I-795, at ECR 169, at paragraph 16. paragraph 21.

35. In the Commission's view, this conclu- sion follows from the wording. It should be 37. However, it is more instructive to have said on this point that a difference in wording regard to the provisions which preceded those as between paragraphs 1 and 2 of Article 9 could certainly point to a difference in meaning. It could be inferred from this that it is not sufficient to check whether the person 20 — Commission Régulation (EEC) N o 2271/90 of 1 August 1990 amending Regulation (EEC) N o 859/89 laying down who actually submits the tender only submits detailed rules for the application of intervention measures in the beef and veal sector (OJ 1990 L 204, p. 45). a single one, that is to say whether in each 21 — This distinction is also reflected in the English version, which case an independent (legal) person participates speaks of 'interested parties' and 'tenderer'.

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at issue in the present proceedings. Thus, in same quantity of meat. The meaning and pur- 1990 it was made possible to submit several pose of the provision here at issue in the last tenders at different prices. Regulation N o phrase of Article 9(2) is thus in any case that 1282/90 22 amended the last phrase of Article several tenders may not be submitted in respect 9(2) to read as follows: of a specific quantity of meat. That provision would become meaningless if it could readily be circumvented by recourse to nominees.

39. In the applicant's view no conclusions may be drawn from those different language versions. The aim of Regulation N o 1282/90 41. Moreover, the Court has held that even was to improve the existing rules and to make in cases where, viewed objectively, Commu- it possible for the same tenderer to submit nity law is incorrectly applied as a result of different tenders at different prices. After these an interpretation adopted in good faith by the rules were repealed, Regulation N o 859/89 national authorities, costs incurred in that merely provided that the same tenderer may connection must, under Articles 2 and 3 of submit one tender only. N o other conditions Regulation N o 729/70, 23 be borne by the were laid down. At the same time, however, Member States. 2A This strict interpretation of it is clear that after repeal of the provision in Regulation N o 1282/90 the tenderer may no longer submit several tenders in respect of the 23 — Regulation (EEC) N o 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (OJ, English Special Edition 1970 (I), p. 218). 24 —Article 3(1) of Regulation 729/70 provides: 22 — Commission Regulation (EEC) N o 1282/90 of 15 May 1990 'Intervention intended to stabilise the agricultural markets, amending Regulation (EEC) N o 859/89 laying down detailed undertaken according to Community rules within the frame- rules for the application of intervention measures in the beef work of the common organisation of the markets, shall be and veal sector (OJ 1990 L 126, p. 31). financed under Article 1(2)(b).'

42. Admittedly, the applicant rightly points out that the last phrase of Article 9(2) is silent as to who the individual tenderers are and the manner in which they are to structure their relationships one to another. This, however, is 45. In the Commission's view, the reduction not essential. It follows from the meaning made in the context of the clearance of accounts is justified on the ground that the and purpose of the last phrase of Article 9(2) applicant did not ensure compliance with that that it is prohibited to offer meat by way of provision. nominees. The applicant cannot rest content with the assertion that it is under no obliga- tion under the terms of Article 9 to examine possible connections between individual ten- derers. That goes merely to the question as to the manner in which observance of a prohibi- tory provision such as that contained in the 46. It is clear that in France tenders are exam- last phrase of Article 9(2) can be monitored. ined only to see whether they originate from different legal persons. N o further examina- tion was undertaken. In what follows it will now be considered whether on that basis the applicant may be said to have failed to observe a provision of Community law, since the 25 — Judgment in Case 11/76 Netherlands v Commission [1979] ECR 245, at paragraphs 8 and 9. Commission has mentioned no actual example

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26 — Judgment in Netherlands v Commission, cited in footnote 16, at paragraph 11. 27 — Seventh recital in the preamble to Regulation No 729/70.

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50. Article 8 of the regulation, which reflects compliance with Community provisions. 28 those recitals, provides in paragraph 1 thereof: The extent of this obligation on the Member States in regard to the financing of the E A G G F was decided by the Court in its judgment in Exportslachterijen van Oordegem. In that judgment it was held in regard to Article 8(1) of Regulation N o 729/70:

'The Member States in accordance with national provisions laid down by law, regula- tion or administrative action shall take the measures necessary to:

'That provision, which expressly lays down in that specific area the obligations imposed on Member States by Article 5 of the Treaty, defines, the Court has said, the principles — satisfy themselves that transactions according to which the Community and the financed by the fund are actually carried Member States must ensure the implementa- out and are executed correctly; tion of Community decisions on agricultural intervention financed by the Fund and combat fraud and irregularities in relation to those operations (judgment in BayWa, cited above, at paragraph 13).

53. Thus, the question arises whether in the specific case now before the Court the appli- cant was required to carry out further checks, that is to say whether the Member State ought to have or could have done more and, if so, 56. In the present case, however, there was a what? further provision to be considered which could not be circumvented. An interested party desirous of selling his meat into inter- vention could not submit more than one tender. That followed from the underlying rationale of intervention. It is true that that idea was only subsequently given concrete 54. As the Commission here stated, the dis- shape in Regulation N o 2456/93. 32 However, advantage for the Fund arises out of the fact that does not alter the fact that prior to this that the submission of several tenders by an there must already have been awareness of interested party by means of nominees encour- that idea. ages the submission of speculative tenders. Yet if one has regard to the Commission's procedure against speculative tenders, it might be queried whether the applicant was required to take any further steps.

57. Thus, it is clear that the applicant ought to have carried out further checks in order to 55. In order to prevent speculative tenders establish whether the tenders submitted were whereby, in anticipation of a specific reduc- in fact from the same tenderer. That is par- tion coefficient, tenders are made in respect of ticularly the case in light of the clear indica- a greater quantity of meat than is available, a tions, already alluded to, of interconnections security payment was introduced under between individual tenderers. Even if it could Article 10(1), 30 in order to ensure that 'ten- not with certainty be concluded from those ders are bona fide and that the conditions laid indications that there was an infringement of down are complied with'. 31 That means that the second sentence of Article 9(2), the indi- cations were however of such a nature as to

58. The applicant has submitted that moni- 59. It must therefore be held that the appli- toring of that kind could not be carried out cant ought to have carried out further checks since slaughtering came after the submission but failed to do so. of tenders. It was therefore not possible to locate the meat in respect of which tenders were made since it did not yet exist in the form of meat. O n the contrary, it was still out at pasture. In that connection, it should be stated that that was not the only way of checking whether the tender was submitted by a nominee. For example, an examination Proof of loss occasioned to the E A G G F — could be carried out as to the interconnection burden of proof between the individual tenderers and whether it was at all possible for the individual ten- derer to offer its own beef. Thus, Regulation N o 2456/93 provides that the Member States are to ensure that tenderers are independent of each other in terms of their management, staffing and operations. 33 Even before the 60. It now falls to examine whether a reduc- entry into force of the 1993 regulation such a tion in the context of the clearance of accounts, check could have been carried out. As has as applied by the Commission, was justified been shown, a monitoring obligation on the on the facts. In the applicant's view that is part of the Member States may subsist even not the case since the Fund suffered no loss. if it is not expressly provided for in the rel- evant regulation. In the present case this duty arose out of the rationale underlying inter- vention long before the provision was enacted in Regulation N o 2456/93. The important factor in that connection is that the Member State should check whether in fact tenders are being made in respect of different quantities 61. In order to answer that question, regard of meat. The manner in which it carries out must be had to the Court's case-law on proof those checks is for it to decide. This does not of loss and the burden of proof in the context need to be expressly regulated by the Com- of the clearance of E A G G F accounts. Thus, mission. Accordingly, the Commission cannot the Court has stated that only refunds granted and intervention undertaken in accordance with the Community rules within the frame- work of the common organisation of agricul- 33 — Second sentence of Article 11(3). tural markets are to be financed by the

65. That case is, admittedly, not directly com- 63. There may be a case of that kind here parable with the present case since the Com- since, precisely because the necessary checks mission is not alleging that the figures com- were not made, the Commission was unable municated to it by the applicant are incorrect. to establish to what extent the applicant's The point is rather that the figures could have conduct occasioned loss to the EAGGF. It been different if the applicant had carried out adequate checks. In this case also, however, the Commission has not merely submitted 34 — Judgment in Netherlands v Commission, cited in footnote that the E A G G F suffered loss. Rather it has 16, at paragraph 14, with further references. shown that the applicant infringed Commu- 35 — Judgments in Netherlands v Commission, cited in footnote nity law and the manner in which it did so. 16, at paragraph 16, and United Kingdom v Commission, cited in footnote 17, at paragraph 14. 36 — Judgments in Case C-50/94 Greece v Commission [1996] ECR I-3331, at paragraph 26, Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, at paragraph 32 et seq., and United Kingdom v Commission, cited in footnote 37 — Judgment in Netherlands v Commission, cited in footnote 17, at paragraph 13. 16, at paragraph 17.

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It has set out, furthermore, how that may 68. Moreover, the applicant claims that the have favoured speculative bids by tenderers. risk with speculation is always high and does It has explained, finally, that that may have not depend on whether multiple tenders have led to an erroneous appraisal of the market been submitted. It points out that the security and thus to excessive buying-in of beef, pos- payment which is required in respect of a sibly at increased prices. Thus, in any event, given quantity of meat always remains the it had adduced credible evidence that it was same regardless of whether one or more ten- possible for loss to have been incurred by the ders have been submitted. That cannot be EAGGF. disputed. What the applicant fails to take into account, however, is that the level of the security payment retained may, as shown above, be reduced in the case of multiple ten- ders.

70. The applicant also claims that the tender prices communicated to the Commission were not excessive. O n the contrary, they fell within 67. It is therefore for the applicant — as is a broad range between the market price and apparent from the judgment cited in point 61 the maximum price fixed by the Commission. — to show that the conduct alleged against it The Commission was therefore perfectly able did not lead to an increase in expenditure in to assess the market situation. Had that not the context of the EAGGF. The applicant been the case, it argues, the intervention submits that the 2 % reduction cannot be jus- buying would necessarily have resulted in a tified on the ground that there was specula- rise in the market price. However, that was tion in connection with the intervention not the case. buying. It claims that the multiple tenders did not trigger a downward price spiral at the time of the intervention buying. That is not maintained by the Commission either. Rather it has submitted that, on account of the specu- lation, the meat was bought into intervention 71. As the Commission rightly submits, the at higher prices than was necessary. function of intervention is to support the

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market. To that extent it is questionable 74. Since the Commission has thus at least whether its effects could be so marked — adduced credible evidence that the applicant's even with increased buying-in — as to result conduct may have occasioned loss to the in such a price rise. Moreover, the applicant EAGGF, it is for the applicant to show that refers in this context only to the question of this was not the case. the buying-in price. At least as important, if not even more so, is the question whether more meat was bought in than was necessary to support the market. In that regard, irre- spective of the price, multiple tenders may give rise to an erroneous appraisal.

76. Likewise in connection with the obser- vance of formalities, the Court has held: 'In view of the essential nature of the formalities which were not complied with and of the fact that it was not possible to check that the time-limit within which the products were to be exported was observed, and in view, there- fore, of the probability of losses, or even fraud, to the detriment of the Community 73. The applicant has thus been unable to budget, the amount disallowed by the Com- show that the submission of multiple tenders mission, which was limited to 2% of the did not lead to an increased risk to the Fund. expenditure involved, cannot be regarded as It should also be pointed out in this connec- tion that the applicant itself stated at the hearing that the risk of forfeiting the security 38 — Judgment in Case 327/85 Netherlands v Commission [1988] payment is lower with multiple tenders. ECR 1065, at paragraph 25.

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79. The applicant's argument cannot be accepted without reservation. As the Com- mission states, the practice of so-called mul- tiple tenders enables the tenderer to speculate with several tenders whereby, in the event of 81. N o r can the applicant's submission that an unsuccessful speculation, the loss is reduced the prices in the alleged multiple tenders varied because the security payment is smaller for by only a few francs disprove the claim that the smaller quantity. speculation and possibly also loss to the E A G G F occurred. Speculating by indicating different prices is only one aspect which is complained of by the Commission. However, 39 — Judgment in Case C-49/94 Ireland v Commission [1995] ECR I-2683, at paragraph 22. the main form which the speculation undoubt-

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edly takes is that of excessive bids. The fact by means of calculations. These calculations that such bids cannot be ruled out and may are based on an assessment of the situation result in a loss to the Fund cannot be refuted which would have prevailed on the market in by the applicant's submission. question had it not been for the infringement. In such cases, the Court has held, it is for the Member State to show that the conditions for obtaining the financing refused by the Com- mission are fulfilled. 41 Thus, in this case also, it is for the applicant to show that the Com- 82. Thus, it is clear that the applicant has mission's assessment is erroneous. As dem- been unable to refute the Commission's argu- onstrated above, it has been unable to do so. ment concerning financial loss incurred by the EAGGF.

2 % reduction for all the Member States, — 5% where the deficiency relates to impor- although in many cases for two years, whereas tant elements of the control system or to the reduction in France's case was limited to the operation of controls which play an 1992 only. Under those circumstances, important part in the assurance of the according to the applicant, no correction regularity of the expenditure, such that it should have been carried out, particularly as can reasonably be concluded that the risk the risk to the Fund 'was minimal. of loss to the E A G G F was significant;

— 10% where the deficiency relates to the whole of or fundamental elements of the 87. The Commission rightly refers in this control system or to the operation of con- connection to the Court's case-law under trols essential to assuring the regularity of which financing of expenditure can be disal- the expenditure, such that it can reason- lowed even as to 100% if the precise financial ably be concluded that there was a high consequences of a measure contrary to Com- risk of widespread loss. munity law cannot be established. 42

89. Those guidelines also provide that no 88. For the purposes of flat-rate correction, correction should be made in relation to cases the Commission has adopted certain guide- of minor deficiencies in the controls where lines upon a proposal by an interservice group the risk of loss is assessed as minimal. That (Belle Group Report). The group proposed a applies particularly to cases where the national reduction in flat-rate calculations by three authorities took effective steps to remedy the possible percentages: deficiencies as soon as they were brought to light, and where the deficiencies arose from difficulties in the interpretation of Commu- nity provisions.

Intervention measures concerning public 91. Moreover, the applicant submits that the storage of cereals Commission should not have extended the 2% reduction to the budgetary item relating to depreciation. The failure to observe certain conditions for the submission of tenders had no effect whatsoever on storage conditions. Such a financial correction bears no relation to the financial risk which existed for the Fund. 95. In this connection, the applicant chal- lenges the Commission decision from three points of view. Firstly, it claims that the mea- sures adopted by the French authorities in the sphere of intervention for cereals were sufficient. The Commission, on the other hand, is of the opinion that the Fund was exposed to serious financial risks as a conse- quence of existing deficiencies in the control system. 92. In this connection, the Commission sub- mits that the costs connected with deprecia- tion bear a direct relation to the value of the quantities purchased, amounting to 50 to 55% thereof. It is therefore not clear how losses due to depreciation could be separated from other relevant items. That must be endorsed. The more meat is purchased by intervention 96. In support of its submission, the appli- — possibly as a consequence of excessive ten- cant claims that certain of the measures ders — the more losses arise through its demanded by the Commission are not laid depreciation. down in the relevant Community provisions.

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97. In this connection, reference should be sion's requirements. According to the appli- made to Article 6 of Commission Regulation cant, however, the improvements notified were (EEC) N o 689/92 of 19 March 1992 fixing not carried out until 1993. the procedure and conditions for the taking- over of cereals by intervention agencies, 43 which states: 'The intervention agencies shall, where necessary, adopt additional procedures and conditions for taking over, compatible with this Regulation, to take account of any special conditions existing in the Member State in question; ..."

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102. In this case also, the applicant has basi- by the French authorities. The fact that the cally put forward mere assertions. That cannot Commission did, after all, make a correction suffice in view of the fact that the Commis- for 1992, was a breach of legal certainty. sion found that cereals which should have been stored under different systems had been mixed together or substituted for one another. That allegation has not been denied by the applicant. The latter has merely pointed out that cereals which were supposed to be stored in the context of intervention measures were not concerned. Nevertheless, as the Commis- 105. It should be said in this connection that sion rightly argues, it can be inferred from the Commission had based that announce- this that the effectiveness of the control system ment on the fact that the French authorities was questionable and that there was the risk for their part had notified improvements. that cereals stored under different arrange- According to the Commission, those improve- ments were not strictly separated from each ments were not carried out. (Thus the Com- other. mission found that there was substitution and/or mixing of cereals with different storage arrangements.)

103. The applicant has thus been unable to 106. The applicant argues in this connection show that the measures adopted by it were that it is also a breach of legal certainty if sufficient and that there was no breach of decisions are based on provisions other than Regulation N o 729/70. The other submissions those applicable to intervention measures. made by the applicant relate to the 1993 mar- However, as has already been demonstrated, keting year which cannot be used by way of it is at least possible to infer from this that comparison since, according to the applicant, there were deficiencies in the control system. the notified improvements to the system were The applicant would at least have had to carried out in December 1993. submit that such substitution was allowed in the case of the other storage methods men- tioned. This it has failed to do.

109. Finally, the applicant claims that the Commission has been unable to cite any 112. The Commission, on the other hand, examples of substitution occurring between submits that the item in question relates to cereals under different storage arrangements. financial consequences of losses in the con- In this connection, reference should be made text of sales. Since it established that there to the Court's case-law. The Court has held were missing quantities, it argues that this, in that where the Commission has not adduced combination with the existing control defi- any evidence relating to individual cases in ciencies, could result in losses to the Fund. which the agricultural rules were not com- plied with, that does not mean that the super- visory system existing in the Member State concerned guarantees the correct application of those rules. Proven individual cases con- stitute an additional factor which may sub- 113. Whether there were in fact missing quan- stantiate the Commission's criticisms tities in this case is a matter of dispute between regarding the effectiveness of the Member the parties. As has already been demonstrated, State's supervisory system. 46 Moreover, the however, it may be assumed that there were applicant itself has denied that such substitu- deficiencies in the control system. That being tions occurred. the case, it is not possible to concur with the applicant when it claims that such losses on

46 — Judgment in Netherlands v Commission, cited in footnote 16, at paragraph 33. 47 — OJ 1990 L 350, p. 43.

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(2) o r d e r t h e F r e n c h R e p u b l i c t o p a y t h e costs.

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