C-46/97

C — The case-law of the Court I-5727

The respective duties of the Commission and Member States as regards clearance of the EAGGF accounts I-5727

The nature of the dispute referred to the Court I - 5728

II — The related claims submitted in Cases C-46/97 and C-243/97 I - 5728

A — The corrections applied in respect of production aid for olive oil I - 5728

1. The Community regulations on the 'olive oil' sector I-5728 2 . Facts I - 5732 3. The actions I-5736

4. Assessment I-5754

III — The claim specific to Case C-46/97 I-5750

A — The correction applied in respect of production aid for cotton I-5760

* Original language: French.

I - 5721

OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

2. In the first case (C-46/97), the Hellenic GRD 2 031 347 293 and GRD Republic requests the partial annulment of 2 413 383 890 in respect of exports of C o m m i s s i o n Decision 9 6 / 7 0 1 / E C of olive oil from Greece to non-member 20 November 1996 amending Decision countries, GRD 2 002 118 984 in respect 96/311/EEC on the clearance of the of tobacco (production in excess of max- accounts presented by the Member States imum guaranteed quantity), GRD in respect of the expenditure for 1992 of 246 543 179 in respect of wine (permanent the Guarantee Section of the European abandonment of areas under vines), GRD Agricultural Guidance and Guarantee Fund 82 224 025, GRD 54 471 120 and GRD (EAGGF) and in respect of certain expen- 97 597 184 in respect of the public storage diture for 1993, 1 in so far as the Commis- of cereals and, finally, GRD 1 531 502 946 sion refused to charge to the EAGGF the in respect of missing quantities of durum sums of GRD 5 251.911 509 in respect of wheat. p r o d u c t i o n aid for olive oil, G R D 61 090 105 in respect of wine (permanent abandonment of areas under vines), GRD 12 910 334 855 in respect of production aid for c o t t o n a n d , finally, G R D 3 916 884 473 in respect of tobacco (pro- duction in excess of maximum guaranteed quantity).

6. Regulation (EEC) No 729/70 of the 9. Article 8(1) of Regulation No 729/70 Council of 21 April 1970 on the financing provides that the Member States, in accor- of the common agricultural policy3 pro- dance with national provisions laid down vides, in Articles 2 and 3 thereof, that the by law, regulation or administrative action, Guarantee Section of the EAGGF shall is to take the measures necessary to satisfy directly finance refunds on exports to third themselves that transactions financed by countries and intervention intended to the EAGGF are actually carried out and are stabilise the agricultural markets respec- executed correctly, to prevent and deal with tively granted to undertakings 'according to irregularities and to recover sums lost as a Community rules within the framework of result of irregularities or negligence. the common organisation of agricultural markets'.

10. Article 8(2) thereof states that, in the absence of total recovery, the financial consequences of irregularities or negligence 7. Under Article 4 of Regulation are to be borne by the Community, with the No 729/70, the Commission is to make exception of the consequences of irregula- available to Member States the necessary rities or negligence attributable to admin- credits so that the competent national istrative authorities or other bodies of the authorities and bodies may, in accordance Member States. The sums recovered are to with Community rules and national legis- be paid to the paying authorities or bodies lation, pay these refunds and intervention. and deducted by them from the expenditure financed by the EAGGF.

15. Council Regulation (EEC) No 595/91 of 4 March 1991 concerning irregularities 12. According to Article 9(2), officials and the recovery of sums wrongly paid in appointed by the Commission to carry out connection with the financing of the com- inspections on the spot are to have access to mon agricultural policy and the organisa- the books and all other documents relating tion of an information system in this field to expenditure financed by the EAGGF. At and repealing R e g u l a t i o n (EEC) the request of the Commission and with the N o 283/72 6 provides, in Article 3(1) agreement of the Member State, inspec- thereof, that, during the two months fol- tions or inquiries concerning the transac- lowing the end of each quarter, Member tions referred to in Regulation No 729/70 States are to communicate to the Commis- are to be carried out by the competent sion a list of irregularities which have been authorities of that Member State. Officials the subject of primary administrative or of the Commission may also participate. judicial findings of fact.

13. Regulation (EEC) No 1723/72 of the Commission of 26 July 1972 on making up 16. Under Article 5(1) of Regulation accounts for the European Agricultural No 595/91, during the two months follow- Guidance and Guarantee Fund, Guarantee ing the end of each quarter, Member States Section, 4 aims to set out the procedure are to inform the Commission of the whereby annual accounts are to be forwar- procedures instituted following the irregu- ded to the Commission. 5 larities notified under Article 3 and of all important changes resulting therefrom.

19. Under Article 6(2) thereof, the Member — 5% of expenditure, where the defi- State is, as soon as possible, to commu- ciency relates to important elements of nicate to the Commission the inquiry the control system or to the operation findings. Where the inquiry shows that of controls which play an important there has been an irregularity, the Member part in the assurance of the regularity State is to inform the Commission thereof of the expenditure, such that it can within the deadlines specified in the Reg- reasonably be concluded that the risk ulation. of loss to the EAGGF is significant;

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GREECE V COMMISSION

— 10% of expenditure, where the defi- 23. Whilst, according to Article 8(1) of ciency relates to the whole of or Regulation No 729/70, the national autho- fundamental elements of the control rities remain free to choose such measures system or to the operation of controls as they consider appropriate to protect essential to assuring the regularity of Community financial interests, 'their the expenditure, such that it can rea- choice must not in any way hinder speedy, sonably be concluded that there is a efficient and thorough performance of the high risk of widespread loss to the necessary checks and inquiries'. 8 EAGGF.

21. Document No VI/216/93 points out that it is possible to refuse all expenditure and that, as a result, a higher correction rate may be deemed appropriate under exceptional circumstances. 24. In this context, it is for the Commission to prove an infringement of the rules on the common organisation of the agricultural markets. 9 The Commission is therefore obliged 'to give reasons for its decision finding an absence of, or defects in, inspec- tion procedures operated by the Member State in question'. 10 C — The case-law of the Court

28. Regulation No 136/66/EEC of the Council of 22 September 1966, 14as amen- ded by Regulations (EEC) of the Council Nos 1562/78 of 29 June 1978 1 5and The nature of the dispute referred to the 2210/88 of 19 July 1988, 1 6established a Court common organisation of the market in oils and fats.

27. It should be observed that, in an application for annulment based on Arti- 29. The purpose of the organisation of the cle 173 of the EC Treaty, the Court's only market in olive oil is 'to maintain the level task is to consider whether the pleas in law of consumption of that product in the raised in support of the application are well Community, having regard to the competi- founded. It is not required to either increase tion from other vegetable oils, and to or reduce any corrections which may prove ensure that producers receive a fair income to be inappropriate in the light, in particu- for the quantity of olive oil actually pro- lar, of the criteria laid down in Document duced'. 17 No W216/93. 13

14 — OJ, English Special Edition 1965-1966, p. 221. 11 — Ibidem, at paragraph 7. 15 — OJ 1978 L 185, p. 1. 12 — Case C-240/97, at paragraph 39. 16 — OJ1988 L 197, p. 1. 13 — See, by analogy, Case 253/97, at paragraph 8. 17 — First recital of Regulation No 1562/78.

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GREECE V COMMISSION

30. Article 5 of Regulation No 136/66, as each grower as to the quantities of amended by Regulations Nos 1562/78 and olives pressed and the quantities of oil 2210/88, therefore establishes a system of obtained correspond to the quantities aid for the production of olive oil. of olives and oil stated in the evidence of pressing.

— the compliance of the file submitted by each of its members with the obliga- tions referred to in Article 3, and in particular the existence of evidence 35. Article 14(2) of Regulation No 2261/84, that the olives have been pressed in an as amended by Regulation No 3500/90, approved mill; provides that producer Member States are to verify the activities of each producer organisation and association and, in parti- cular, the checking operations referred to in Article 8(1) and Article 10, first indent, of that regulation which must be carried out — with regard to olive growers whose by these bodies. average production is at least 500 kilograms of olive oil per marketing year, that the particulars supplied by 20 — According to Article 9 of Regulation No 2261/84. 'an association ... comprises at least 10 producer organisa- tions ... or a number ot organisations accounting tor at least 5°. of the olive oil produced in the Member State 18 — OJ 1984 L 208, p. 3. concerned. However, the producer organisations compris- ing an association must be from two or more economic 19 — Of 27 November 1990 (OJ 1990 L 338. p. 3). regions.'

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OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

3 6 . Article 14(3a) of R e g u l a t i o n kilograms of olive oil per marketing year, No 2261/84, as amended by Regulation the checks should verify: No 3500/90, provides that, for the pur- poses of paying aid to olive growers whose average production is at least 500 kilo- grams of olive oil per marketing year, the producer Member States are to check: — the accuracy of the crop declarations on the basis of criteria to be deter- mined,

3 9 . A r t i c l e 10(2) of R e g u l a t i o n No 3061/84, as amended by Commission Regulation (EEC) No 928/91 of 15 April — the compatibility between the olive 1991, 22 states that Member States are to production declared by each olive check on the spot a representative percen- grower as having been pressed in an tage of olive growers to be determined. approved mill and the particulars given Where an agency responsible for checks is in his crop declaration on the basis of entrusted with the task of carrying out such criteria to be determined. checks, that percentage is to be indicated in the agency's work schedule. The percentage is to vary according to whether or not the basic data from the olive cultivation regis- ter are available in the areas concerned. Priority is to be given to checks on growers whose production potential has changed 3 7 . A r t i c l e 14(4) of R e g u l a t i o n substantially. No 2261/84, as amended by Regulation No 3500/90, points out that, with regard to the olive oil produced by olive growers 21 — OJ 1984 L 288, p. 52. whose average production is less than 500 22 — OJ 1991 L 94, p. 5.

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GREECE V COMMISSION

45. In order to equip the Community with effective instruments for checking and managing the olive market, the establish- 42. Article 1(1) of that regulation specifies that the Member States producing olive oil 25 — OJ 1980 L. 360, p. 15. are to establish a register of olive cultiva- 26 — O J 1979 L 262, p. 11. tion to cover all olive-growing holdings 27 — O J 1988 L .57, p. 18. within their territory. 28 — The methods set out in this annex consist in particular of preliminary operations involving the zoning or the olive- growing regions in order to obtain zones with homoge- neous geopedological, morphological and agronomic con- ditions and the organisation and pteparation or the whole 23 — OJ 1975 L 19, p. 1. aerial and ground survey by reference to the suitability of the various methods of data collection and analysis to the 24 — First recital. particular character of each zone.

I - 5731

OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

ment of computerised files has been speci- 50. Article 11(2), first subparagraph, of fied in addition to the register of olive Regulation No 3061/84, as amended by cultivation. 29 Regulation No 98/89, states that all the components of the computerised files must be operational before 31 October 1990. Moreover, Member States are to use the data for the checks as and when the specific files are established. 4 6 . A r t i c l e 16(1) of R e g u l a t i o n No 2261/84 requires each Member State producing olive oil to draw up and keep up to date permanent computerised files of olive and olive-oil production data.

53. The main complaints made by the Commission involve the absence of an olive (a) absence of guidelines given to cultivation register and usable computer- inspectors enabling them to verify ised files (particularly due to the different that the quantities of olive oil types of software used; supply to a single produced actually correspond to file was thus prevented). the quantities declared;

54. In addition, Summary Reports Nos 1 and 2 describe in detail the inadequacy of (b) failure to notify the result of checks the alternative controls put in place by the carried out to Didagep, the Greek Greek authorities instead of those specified paying body; in the Community regulations [hereinafter the 'alternative control(s)']. According to the Commission, these alternative controls did not enable the risk of fraud to which the EAGGF is exposed to be effectively combatted. (c) absence of sufficient staff both to ensure everyday management of applications for aid for the produc- tion of olive oil and to check on the spot that the amounts declared by 55. Thus, in Summary Report No 1, the list the applicants for this aid actually of defects and deficiencies noted in the exist; alternative control system put in place by the Hellenic Republic consists of 18 points which can be grouped under four headings and summarised as follows:

(d) prohibited combination of the duties of manager and inspector; 31

(1) Lack of coordination between the competent local and national offices 3 1 — In other words, the staff granting financing after having verified the content of the aid application tiles are the same with regard to both the management as those checking on the spot that the applications are real.

(b) for having neglected to check pro­ ducers who had declared unusual yields; 57. On 13 July 1995, the Greek authorities 32 — The withdrawals of approval proposed by the Olive Oil informed the EAGGF that new procedures Agency, the body falling under the authority of the Greek taking this list into account had been put in Ministry of Agriculture and composed of public officials (hereinafter the 'Agency'), were not actually implemented. place for the 1995/96 marketing year.

I - 5734

GREECE V COMMISSION

58. For 1992, the EAGGF indicated that it 62. Thus, although the 1992/93 and was maintaining the proposed financial 1993/94 marketing years were years of correction of 10% and stated that this reduced olive harvests, no instruction would revised downwards only if it were enabling the detection of producers with proven that the new system put in place unusual yields was given by the competent was able to respond significantly to the Greek authorities to the inspectors. Conse- requirements of protecting Community quently, it is apparent that all the applica- funds from risks of irregularity and fraud. tions made for production aid were accepted and paid.

59. Summary Report No 2 indicates that 63. Likewise, the withdrawals of approval the analysis of the various documents and from mills at which irregularities had been information supplied to the EAGGF, and detected, requested by the Agency, were not the missions carried out by the latter from i m p l e m e n t e d . With regard to the 20 to 24 May 1996 in respect of the 1993 1994/1995 marketing year, from a total of and subsequent financial years, only served 134 proposed withdrawals, only two were to confirm the defects in the management applied by the Ministry of Agriculture. and alternative control system. Social or political reasons were put forward by the Greek authorities to justify the failure to implement the Agency's propo- sals.

amended Regulations Nos 154/75 and assessing the reported facts and exceeded 2261/84 (olive cultivation register and the limits of its discretionary power. single computerised file), but it also did not take effective alternative measures enabling these deficiencies to be overcome. The EAGGF therefore concluded that any effort by the Agency was being definitively blocked by the opposition of the Greek 68. It claims firstly that the Commission is competent authorities. essentially acting on the basis of the absence of an olive cultivation register and an operational single computerised file, the absence of which it does not contest. However, it maintains that, since the Court had already penalised it on these 65. On 3 June 1996, the EAGGF therefore grounds, 33 the Commission could not warned the Greek authorities that this impose further corrections for 1992 and attitude was liable to lead to serious 1993 based on the same objections. financial consequences and pointed out that, in exceptional circumstances, the refusal of all expenditure incurred by a Member State could constitute an appro- priate measure.

69. Secondly, it maintains that it informed the Commission in good time of the objective reasons preventing it from putting in place the Community control instru- 66. However, for 1993, the EAGGF pro- ments provided for by the aforementioned posed only that a flat-rate correction of regulations and that, in so far as it colla- 10% should be applied to the expenditure borated in good faith with the Community declared by the Hellenic Republic, unless authorities, the corrections which were the latter brought an action before the applied to it should not have been applied. conciliation body in this respect.

76. It is common ground, and in no way disputed by the Hellenic Republic, that 72. I consider that the pleas in law of the these obligations have not been complied Hellenic Republic raised in support of its with to date. application concerning the corrections applied by the EAGGF to the expenditure incurred in respect of aid for the production of olive oil must be rejected. In my opinion, it is apparent from the documents in the case that the system put in place by the 77. As regards the first complaint, to the Greek authorities during 1992 and 1993 effect that, as the Hellenic Republic was involves serious irregularities with regard found guilty in Case C-50/94 of having to fundamental elements of the control neglected to establish the Community con- system such that it could properly be trol instruments, such as the olive cultiva- concluded that there was a high risk of tion register and the single computerised widespread loss for the EAGGF. file, the Commission could not again put forward the same facts against the Hellenic Republic, I believe that this is unfounded.

73. It should be remembered that, in accordance with Regulation No 3453/80 amending Regulation No 154/75, the Hel- 78. In Case C-50/94, the Court ruled on lenic Republic had to establish the olive facts relating to irregularities committed cultivation register by 31 October 1988. during 1990. However, Cases C-46/97 and

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OPINION OH MR LÉGER — CASES C-46/97 AND C-243/97

C-243/97 concern irregularities noted dur- tion 'cannot ... prove that it was absolutely ing 1992 and 1993. impossible' 36 to fulfil its obligations.

80. As regards the second plea in law according to which the Hellenic Republic allegedly informed the Commission in good time of the difficulties which it was 83. In addition, the obligations laid down encountering in establishing the Commu- by the aforementioned regulations and nity control instruments provided for by their purpose were fully explained to the amended Regulations Nos 154/75 and Hellenic Republic in Case C-50/94. 38 3061/84 and that, having collaborated in good faith with the Commission, the penalties should not have been imposed thereon, I consider this plea, too, to be unfounded. 84. Since 31 October 1988, the date by which the olive cultivation register had to be established, and despite the judgment in Case C-50/94, no significant change has occurred in the system of checking aid for 81. It is accepted that a Member State may the production of olive oil implemented by raise the absolute impossibility of properly the Hellenic Republic. implementing a Community decision.34 However, in this situation, the Member State must 'in any event submit the pro- blems linked with such implementation in good time to the appropriate institution for consideration.'35 A Member State which 85. By failing to put in place the solutions notifies difficulties after the expiry of the prescribed by the Community regulations, period laid down by a Community regula- the Hellenic Republic has demonstrated

34 — Case 213/85 Commission v Netherlands [1988] ECR 281, 36 — Ibidem, at paragraphs 40 to 42. at paragraph 22. 37 — Ibidem, at paragraphs 40 and 41. 35 — Case C-50/94, at paragraph 39. 38 — Ibidem, at paragraphs 30 to 39.

87. As regards the third complaint, accord- ing to which an effective alternative control was put in place in Greece, it should be noted that the Hellenic Republic does not dispute that the system which it established 90. As I have already indicated, the Court does not enable the plots to be identified at has already accepted that a Member State municipal level. It also does not deny may invoke an absolute impossibility of having failed to implement the majority of properly implementing a Community deci- the proposed withdrawals of approval from sion. However, in such a case it is the mills at which irregularities had been responsibility of the Member State invok- detected by the Agency. The absence of a ing that impossibility to prove the existence system capable of locating the plots of this type of circumstance before the declared and of identifying their owner expiry of the period laid down by the prevents the aid management and control Community decision in question. 39 authorities in question from verifying the accuracy of the declarations made and, as a result, from avoiding the risk of multiple declarations for the same plot. It cannot therefore be concluded that such a system is 91. In this case, I have already indicated effective. that the Hellenic Republic did not notify the difficulties which it was encountering in establishing the Community control instru- ments until after the expiry of the periods laid down by Regulations Nos 154/75 and 88. It follows that the Hellenic Republic has not provided any specific and signifi- 39 — Case 215/85, at paragraph 22. and Case C-50/94, at cant evidence capable of establishing the paragraph 39.

96. Council Regulation (EEC) No 1442/88 93. As a result, it is apparent that the of 24 May 1988 on the granting, for the Hellenic Republic has not provided evi- 1988/89 to 1995/96 wine years, of perma- dence that it was absolutely impossible for nent abandonment premiums in respect of it to meet its Community obligations. wine-growing areas 42 aims to encourage the abandonment of areas under vines by granting premiums, in order to bring pro- duction definitively back to the level of demand. 43The amount of these premiums varies according to the productivity of the 94. It therefore follows that the Hellenic areas concerned, in order to take account Republic has not provided any specific and of the cost of the grubbing-up operations significant evidence capable of rebutting and the loss of replanting rights and also the Commission's statements and analysis the loss of future income. 44 or the consequences which have resulted therefrom.

97. According to Article 2(3) of Regulation No 1442/88, the yield per hectare of the areas referred to in Article 2(1)(b) 45 is to 95. In those circumstances, I ask you to hold that the claim of the Hellenic Republic 42 — OJ1988 L 132, p. 3. 43 — First recital. 40 — Case C-265/95 Commission v trance [1997] ECR I-6959, 44 — Third recital. at paragraph 55. 45 — This involves areas of more than 25 ares cultivated with 41 — Ibidem, at paragraph 56. wine-grape varieties.

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GREECE V COMMISSION

101. According to Article 4(2) of Regula- tion No 2729/88, the competent body of 9 9 . C o m m i s s i o n R e g u l a t i o n (EEC) the Member State is to verify the informa- No 2729/88 of 31 August 1988 46 lays tion mentioned in paragraph 1, register the down detailed rules for the application of declaration provided for in Article 4(2) of Regulation No 1442/88. In the interests of Regulation No 1442/88, determine the ensuring that the system runs efficiently production capacity of the wine-growing and can be supervised, the nature of the areas to be grubbed up on the basis of their information to be entered on the applica- age, state of upkeep and the proportion of tion for a premium must be laid down and missing vines, among other considerations, provision must be made for the checking of calculate the yield per hectare of the areas that information. 47 Before the premium is concerned, in accordance with Article 2(3) paid or, should an advance have been of Regulation No 1442/88, and notify the made, the security released, the production applicant of the level of premium granted, capacity of the areas to be grubbed up after allowing him to submit his own should be assessed and it should be verified observations. that grubbing up of said areas has actually taken place. 48

100. Under Article 4(1)(a) of Regulation No 2729/88, applications for premiums are 102. Under Article 6(1) of Regulation No 2729/88, the competent body is, at 46 — OJ 1988 L 241, p. 108. the applicant's request and within two 47 — fourth recital. months of the complete grubbing up of 48 — Sixth recital. the vines located on the plots identified, to

104. Article 3(1) of that regulation pro- vides that Member States are to take the necessary measures to improve control of compliance with the rules in the wine sector, notably in the particular fields listed in the Annex, including the grubbing up of 1 0 7 . A r t i c l e 4(1) of R e g u l a t i o n vines. No 2392/86 initially set the deadline for establishing the vineyard register in its entirety at 27 July 1992. However, consid- ering that some Member States encoun- tered technical difficulties in complying with that deadline, the Council extended this to 31 December 1996 by Regulation 105. Article 3(2) thereof provides that 'The (EC) No 1549/95 of 29 June 1995. 52 controls in [these] areas ... shall be carried out either systematically or by sampling. In the case of sampling, Member States shall ensure by their number, nature and fre- quency that controls are representative of the whole of their territory and correspond to the scale of the wine-sector products marketed or held with a view to their 108. Likewise, Article 4(4) of Regulation marketing'. No 2392/86, as added by Regulation No 1549/95 and amended by Council Reg- ulation (EC) No 1596/96 of 3.0 July 1996, 53 states that Member States which, on 1 July 1995, have not yet established a vineyard register or which have only estab- 1 0 6 . C o u n c i l R e g u l a t i o n (EEC) No 2392/86 of 24 July 1986 establishing 50 —OJ 1986 L 208, p. 1. 51 — Second recital. 52 — OJ 1995 L 148, p. 37. 49 — OJ 1989 L 202, p. 32. 53 —OJ 1997 L 206, p. 38.

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GREECE V COMMISSION

lished a partial register are, before 3. The actions 31 December 1998, to establish reference charts covering the entire area under vines.

110. It is stated in these two summary 113. The Commission, for its part, main- reports that this situation is the result of the tains its complaints. It also refers to inspec- absence of a vineyard register and land tions carried out by the EAGGF services in register in this Member State, thereby 1995 which identified irregularities leading necessitating recourse to specific persons to serious doubts about the efficiency of the with good knowledge of the regions being national checks. The national inspectors inspected and who are the only ones able to were therefore not in a position to justify verify the accuracy of the information the areas admitted in the context of the appearing in the applications submitted by administrative procedures for the control the producers declaring that they have and approval of aid applications. This grubbed up the vines and applying for the situation therefore revealed the total related premiums. absence of any assurance that the informa-

I - 5743

OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

tion provided by the aid applicants was granting premiums for grubbing up vines to truthful with regard to the location of wine-growers agreeing to this. Its main aim plots, their precise area and the identity of is therefore the regulation of the common the owner. market in wine.

118. The Community control instruments 4. Assessment recommended by Regulation No 2392/86, as amended, are the establishment of a vineyard register and a land register. These are compulsory from 31 December 115. I consider that the objections of the 1996. 54 Hellenic Republic regarding the corrections applied by the EAGGF in respect of aid for permanent abandonment of areas under vines for 1992 and 1993 must be rejected. 119. These Community instruments have a dual objective. First, they are intended to ensure effective control of the regularity of aid for permanent abandonment of areas under vines granted by Member States. 116. It should be noted that Regulation Second, they enable the common agricul- No 1442/88 aims to encourage the aban- donment of wine-growing areas in order to bring wine production in the Community 54 — Article 4(1) of Regulation No 2392/86, amended by definitively back to the level of demand by Regulation No 1549/95.

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GREECE V COMMISSION

122. Given that the Hellenic Republic has acknowledged in the course of these pro- ceedings that the control and management system put in place in Greece does not enable the plots, areas and owners of the vines to be identified, and in view of its claim that this problem can be overcome by on-the-spot checks carried out by commu- nal officials, I doubt that the Hellenic 120. It is undeniable, and in no way Republic is in any position to comply with disputed by the Hellenic Republic, that the aforementioned obligations by the spe- the system put in place in Greece relies cified deadlines. exclusively on the competence, reliability and rigour of certain officials who alone are able to verify the accuracy of premium applications. Such a system does not meet the requirements of the Community regu- lations. The information supplied by the Hellenic Republic cannot be effectively verified by either national or Community outside services. Consequently, the system 123. Under Article 8(1) of Regulation put in place does not enable the objectives No 729/70, 56 the proper functioning of of Regulations Nos 1442/88 and 2392/86 the common agricultural policy also to be achieved. It must accordingly be requires that Member States take all the concluded that, by maintaining such a measures necessary to satisfy themselves system, the Hellenic Republic is infringing that transactions financed by the EAGGF the aforementioned Community regula- are actually carried out and are executed tions. correctly and also to prevent irregularities.

55 — Second recital of Regulation No 2392/86. 56 — Point 9 of this Opinion.

129. That regulation provides for a system of maximum guaranteed quantities under C — The corrections applied in respect of which, if the quantities fixed for a variety tobacco (production in excess of maximum or group of varieties are exceeded, the guaranteed quantity) prices and premiums relating thereto are to be reduced by applying the provisions laid down in Article 4(5) of Regulation No 727/70, amended by Council Regula-

57 — OJ, English Special Edition 1970 (I), p. 206. 1. The Community regulations on the 58 — Fifth recital. 'tobacco' sector 59 — Sixth recital.

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GREECE V COMMISSION

tions (EEC) Nos 1114/88 of 25 April intervention prices and the premiums 1 9 8 8 , 600 1251/89 of 3 Mav 1989, 6 1 granted to purchasers of leaf tobacco, the 1329/90 of 14 May 1 9 9 0 , 6 23577/90 of derived intervention prices for baled 4 D e c e m b e r 1990 6 3and 8 6 0 / 9 2 of tobacco, the reference qualities and the 30 March 1992. 644 production areas, defines the recognised production areas for each Community- produced tobacco variety.

1 3 0 . A r t i c l e 7 a ( 1 ) of R e g u l a t i o n No 727/70, inserted by Council Regulation 1 3 3 . C o m m i s s i o n R e g u l a t i o n (EEC) (EEC) No 2267/88 of 19 July 1988, 65 No 2824/88 of 13 September 1988 68 lays provides that, notwithstanding Articles 2, down detailed rules for the application of 4 and 6, the prices and premiums are to the system of maximum guaranteed quan- apply only to varieties of tobacco from tities in the tobacco sector 'in particular as communes where that variety has already regards the determination of the quantity been grown at least once in the five years actually produced during a given harvest, preceding the harvest in question. the calculation of any reduction in prices and premiums, the granting of the advance and the payment of prices and premiums before determination of actual produc- tion'. 6 9

139. In accordance with Article 15 of Reg- ulation No 727/70, Regulation (EEC) No 1726/70 of the Commission of 25 August 1970 fixes the procedure for 1 3 6 . A r t i c l e 3(2) of R e g u l a t i o n granting the premium for leaf tobacco 75 No 2824/88 provides that any balance is which, under Article 3 of Regulation to be paid and the security shall be released No 727/70, is granted to natural or legal or forfeited after actual production is persons who purchase leaf tobacco direct determined in accordance with Article 1. from Community producers.

1 4 0 . A r t i c l e 6(1) of R e g u l a t i o n 137. The actual production of each variety No 1726/70 provides that the right to the or each group of varieties of tobacco, the premium is to accrue as soon as the tobacco prices and premiums to be paid in applica- leaves the place in which it was under tion of the system of maximum guaranteed supervision. quantities and the overrun of the maximum guaranteed quantities shall be fixed by the Commission by regulation.

141. Article 7(1) thereof states that the premium is to be due as soon as the right to the premium accrues. 138. This information, relating to the tobacco harvests for 1989 to 1992, is set out in Commission Regulations (EEC) Nos 71 — OJ 1990 L 187, p. 23. 72 —OJ 1991 L 208, p. 26. 73 — OJ 1992 L 217, p. 75. 74 —OJ 1993 L 187, p. 26. 70 — OJ 1992 L 291, p. 6. 75 — OJ, English Special Edition 1970 (II), p. 587.

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GREECE V COMMISSION

146. The first complaint made by the Commission against the Hellenic Republic in Summary Reports Nos 1 and 2 is that the latter delayed in recovering the overpaid premiums after the maximum guaranteed 144. In addition, Commission Regulation quantities of tobacco were exceeded. (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products 77 states that, for reasons of clarity and administrative effi- ciency, 'the rules concerned should be 147. According to the Commission, it is apparent both from the spirit and the letter

76 — OJ 1992 L 1 2 4 , p . 3 1 . 7 7 — OJ 1987 L 351, p. 1. 78 — First recital.

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of Regulations Nos 2046/90, 2267/91, be recovered. Noting that these recoveries 2178/92 and 2065/93 that, in order to which should have occurred by September force economic operators to comply with 1993 were spread over 31 months, the the new maximum guaranteed quantities, Commission proposed, by analogy with the Member States are to recover the amount result of the conciliation procedure for of those premiums even before the new 1992, calculating a rate of interest of tobacco harvest starts. 10% over an average of 15.5 months on the total amount recovered late, or a correction of GRD 1 950 445 999, to which should be added the unrecovered amount. The total amount of the proposed c o r r e c t i o n w a s t h e r e f o r e GRD 2 002 118 984.

153. On the first complaint, the Hellenic 156. In the alternative, if the Court were to Republic acknowledges the facts but con- agree with the Commission's analysis, the tends that the Commission was unfounded Hellenic Republic requests that it be in demanding the immediate recovery of allowed to benefit from the deduction of the premiums unduly granted. It maintains the sums granted to the companies required that it follows from Articles 6 and 7 of to reimburse premiums unduly received Regulation No 1726/70 that the amounts which have initiated legal proceedings and by which the premium is reduced because been granted interim relief in the form of a the maximum guaranteed quantities have protection order. been exceeded must be reimbursed when the tobacco is released from supervision, that is when the end recipient, the tobacco processor, accrues the right to the premium.

157. The Commission maintains this com- plaint based on Article 2 of Regulations Nos 2046/90, 2 2 6 7 / 9 1 , 2178/92 and 2065/93.

154. According to the Hellenic Republic, the legal system described by the Commis- sion assumes that a specific and fixed date 158. In its opinion, any late recovery, in for the recovery of the amounts unduly this case aggravated by the depreciation of received was set by regulation so that all the Greek drachma in relation to the ecu, Member States could use the same method threatens the objective of the aforemen- and so that competition could develop tioned regulations which consists in sub- under equal conditions for all. sidising only tobacco production not exceeding the maximum guaranteed quan- tities. In addition, any delay in recovering unduly paid premiums could only create inequalities between Greek processors and those of other Member States with the risk of disrupting the functioning of the com- mon organisation of the market.

Member States arising from the Commu- 162. With specific regard to the Nafplion nity regulations. Region, the Hellenic Republic contends that, although the records bear dates between 10 and 26 September 1992, the checks were in fact properly carried out before those dates. It states that those documents were postdated in order to comply with the ministerial decree adopted on 3 September 1992 and to provide a legal basis for any liabilities arising out of the 160. On the second complaint, the Helle- checks. It therefore maintains that the nic Republic contends that, immediately corrections are unlawful and unjustified. after the adoption and publication of Regulation No 1197/92 in May 1992, the Greek Tobacco Board (hereinafter the 'EOK') adopted the first instructions for its application, while Ministerial Decree No 27988/92, which provided a legal basis 163. The Commission maintains its second for the penalties in cases of irregularities complaint and contends that the late pub- detected during checks on cultivated areas, lication, on 3 September 1992, of the was adopted on 3 September 1992. ministerial decree on on-the-spot checks of cultivated areas, whereas Regulation No 1197/92 was in force from 12 May 1992, created serious doubts as to whether the checks had actually been carried out when the tobacco was still in the fields, given that the harvest started in July and ended in August and September.

165. The Commission points out that, although the Greek authorities claimed that the checks carried out in other regions were properly executed, they could not prove this despite repeated requests by the Com- 168. Second, it contends that the premiums mission. In those circumstances, the Com- granted for the cultivation of the Virginia mission set 28 February 1995 at the latest tobacco variety, judged to be irregular on as the deadline for forwarding further the basis of Regulation No 727/90, were information in connection with the clear- granted in application of a structural pro- ance of accounts for 1992. It was not until gramme and that it was normal for farmers a year after this deadline had passed that making major investments to put in place the Hellenic Republic submitted various the infrastructure essential to the cultiva- documents from which it emerged that the tion of this variety, in particular drying checks had been carried out between Octo- rooms, to be compensated. Thus, to impose ber and November 1992, that is at a time on them a correction for an activity when the tobacco was no longer in the encouraged by the Community would not fields. These documents also proved that only be unfair but also odd. the checks involved a percentage of only 4.88%.

169. Finally, it states that the Virginia and Basmas varieties were exempt from the application of Article 7a of Regulation No 727/70.

166. The Commission essentially conclu- ded, because of the late adoption of the measures for checking the tobacco in the 170. The Commission maintains its third fields, but also for all the above reasons, complaint. It claims that the Member States that the checks laid down by Regulation cannot decide arbitrarily on whether or not No 1197/92 had not been carried out. to apply the conditions fixed by the Com-'

176.. On the first plea, relating to the late recovery of overpaid premiums, I maintain that the interpretation proposed by the Hellenic Republic, to the effect that the recovery of the premiums unduly paid because the maximum guaranteed quanti- ties have been exceeded must take place 173. The Hellenic Republic claims that it when the end processor has acquired his can show, with the support of factual right to the premium, that is when the evidence, that the securities were actually tobacco is released from supervision, can- released in time. not be accepted essentially for four reasons.

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177. First, it is settled case-law 79 that only N o 7 2 7 / 7 0 , i n s e r t e d by R e g u l a t i o n intervention undertaken in accordance with No 2267/88, which expressly provides that the Community rules is to be financed by the prices and premiums are to apply only the EAGGF and that, where the Commis- to varieties of tobacco from communes sion has doubts concerning a transaction where that variety has already been grown. which it considers to be justified by the It must accordingly be concluded that the surrounding facts or circumstances, it must right of subsequent economic operators is withhold the sums corresponding to that conditional on the right of prior operators. transaction unless the Member State pro- duces sufficient evidence to dispel those doubts. 80

179. Second, both the aim and general scheme of Regulations Nos 7 2 7 / 7 0 , 2046/90, 2267/91, 2178/92 and 2065/93 confirm this interpretation.

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OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

deď. Under Article 2 of those regulations, vention prices; and those carried out on their date of entry into force is set as the tobacco processors who receive the pre­ third day following their publication in the miums. The checks carried out on tobacco Official journal of the European Commu­ producers must necessarily, in order to be nities. effective, be carried out before the tobacco harvest and, therefore, before the checks carried out on the tobacco processors which necessarily occur at a later date.

181. It must accordingly be concluded that, on the entry into force of Regulations Nos 2046/90, 2267/91, 2178/92 and 2065/93, the Member States were required to 184. In this case, in so far as the correction demand the immediate reimbursement of applied by the Commission was due to the premiums paid over and above the max­ lack of monitoring of the accuracy of the imum guaranteed quantities, that is before declarations made by tobacco producers, it the start of the following harvest. was for the Hellenic Republic to recover the premiums unduly paid without waiting for the tobacco to be released from super­ vision, that is at the moment when the end processor's right to the premium accrued. I have already shown that, in this type of situation, that operator cannot claim such a 182. The general scheme of Regulations right. Nos 727/70 and 2824/88 also confirms this analysis.

188. As for the alternative claim of the Hellenic Republic, it should be noted that internal relations between the Greek autho- rities and the parties concerned, particu- 186. Third, the Hellenic Republic's argu- larly following decisions issued by national ment that the Commission's analysis was courts, do not affect the obligations of not valid owing to the failure to set by Member States arising from the Commu- regulation a specific and fixed date for the nity regulations. 81 This is why the claim recovery of the amounts received unduly, so made by the applicant must also be that all the Member States could use the rejected. same method and so that competition could develop under equal conditions for all, ignores the fact that the interpretation proposed by the Hellenic Republic has the same disadvantages as the interpretation which it disputes. In addition, it does not take account of the fact that the main 189. On the second plea, relating to the objective of the abovementioned Commu- absence of checks on the areas and the nity regulations in the tobacco sector is to Virginia variety cultivated in ineligible subsidise production of tobacco complying communes, it should be noted that, in with the maximum quantities and not to accordance with settled case-law, the Mem- equalise the conditions of competition ber State in respect of which the Commis- between the various producers. sion has given reasons for its decision finding an absence of, or defects in, inspec- tion procedures carried out in application of the operating rules of the Guarantee Section of the EAGGF cannot 'rebut the Commission's findings by mere assertions which are not substantiated by evidence of a reliable and operational supervisory sys- tem. If it is not able to show that they are 187. Fourth, the system put in place in inaccurate, the Commission's findings can Greece cannot be claimed to have any give rise to serious doubts as to the dissuasive effect and therefore does not existence of an adequate and effective series have any practical effect in that the eco- of supervisory measures and inspection nomic operators involved in doubtful trans- procedures'. 82 actions are penalised only after these irre- gularities have been committed. Thus, the Hellenic Republic does not dispute that the 81 — See, for example, by analogy, Case C-263/96 Commission v Belgium [1997] ECR I-7453, at paragraph 27. amounts at issue were in this case recovered 82 — Case C-253/97, at paragraph 7.

192. On the third plea, relating to the corrections applied following irregular declarations of the cultivation of tobacco of the Virginia variety in ineligible commu- nes, I would ask the Court to find that the Hellenic Republic has no basis for main- taining that the Commission should have regarded as eligible the communes situated 195. Moreover, it cannot be maintained in regions in which the cultivation of that the concept of 'communes' within the tobacco is traditionally practised. meaning of the aforementioned provisions

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extends to all communes in a given produc- the provisions of Article 7a of Regulation tion area. It should be observed that the N o 7 2 7 / 7 0 , inserted by R e g u l a t i o n Council makes a distinction between these No 2267/88, that the Virginia and Basmas two concepts and that, where it wishes a tobacco varieties are exempt from the measure to be applied to a production area conditions of application of the interven- and not to a commune, it expressly indi- tion prices and premiums laid down by cates this. 8 3 these regulations.

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OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

so late, it has not been able to decide on its applied by the Commission in respect of the relevance. securities lodged and not released within the periods set must be rejected.

201. It should be recalled that, in accor- dance with settled case-law, the Member III— The claim specific to Case C-46/97 State against which the Commission has given reasons for its decision finding an absence of, or defects in, inspection proce- dures carried out in application of the operating rules of the Guarantee Section of the EAGGF cannot 'rebut the Commis- sion's findings by mere assertions which are A — The correction applied in respect of not substantiated by evidence of a reliable production aid for cotton and operational supervisory system. If it is not able to show that they are inaccurate, the Commission's findings can give rise to serious doubts as to the existence of an adequate and effective series of supervisory measures and inspection procedures'. 84 1. The Community regulations on the 'cot- ton' sector

203. The Council adopted Regulation 202. As the Member State did not consider (EEC) No 2169/81 of 27 July 1981 laying it useful to submit this evidence in sufficient down the general rules for the system of aid time to enable the Commission to carry out for cotton. 85 all the checks that might prove to be necessary, in particular any checks on the spot or hearings, and as I am also unable to carry out these checks, it must therefore be considered that the Hellenic Republic has not provided any significant evidence cap- able of rebutting the Commission's analysis 204. Article 10 of that regulation provides or the inferences which it has drawn from it that the producer Member States are to set and that the plea regarding the corrections up a system of controls to, in particular:

(a) the accuracy of the declarations of areas sown, on the basis of random inspections relating to not less than 5 % of the declarations;

206. Under Article 8(1) of Commission Regulation (EEC) No 1201/89 of 3 May 1989 laying down rules implementing the system of aid for cotton, 8 " all cotton (b) that the contracts lodged fulfil the conditions laid down in Article 10, in 86 — See points 6 to 9 of this Opinion. particular compliance with the mini- 87 — OJ 1 9 8 9 L 123, p. 23. mum price;

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OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

(c) that the quantity of cotton for which 2. Facts aid is being applied for corresponds to the quantity of unginned cotton of Community origin produced on the area indicated in the contract(s); 211. Summary Report No 1 points to ser- ious deficiencies in fundamental elements of the system of management and control of production aid for cotton. These defi- ciencies consequently justify the flat-rate corrections of 10% of expenditure applied during the clearance of accounts for 1992 of the Guarantee Section of the EAGGF (d) that the quantity of cotton for which and in respect of certain expenditure for aid is paid corresponds to the quantity 1993. of Community cotton actually ginned.

212. The Commission states that, having noted for the 1991/92 marketing year a significant and unexplained gap between the Greek authorities' production estimate 2 0 9 . Article 12(2) of R e g u l a t i o n and the volume for which aid was claimed, No 1201/89 states that the competent and in view also of the previous history of agency is to allow as qualifying for aid this product, 88 it found it necessary to call only the quantity of cotton in respect of on the Hellenic Republic, on 10 July 1992, which all the conditions are fulfilled. to carry out an investigation on the basis of Article 6 of Regulation No 595/91 con- cerning irregularities and the recovery of sums wrongly paid in connection with the financing of the common agricultural pol- icy and the organisation of an information system in this field. 89

215. Although the competent Greek autho- rities, on the one hand, initiated legal 217. Subsequent checks carried out by the proceedings and imposed administrative EAGGF revealed that the competent Greek penalties in relation to the 1991/92 market- authorities had still not communicated ing year and, on the other hand, adopted information on the progress of the investi- new measures to improve the quality of the gation requested in 1992 under the provi- national control system and issued new sions of Regulation No 595/91, that they national instructions to be followed in the were still using in 1992 the same manage- 1992/93 and 1993/94 marketing years, the ment and control system for sums paid in EAGGF drew the attention of those autho- respect of production aid for cotton as in rities to the inadequate nature of those 1991 and that they had not applied the new measures. They specifically asked the Hel- instructions adopted until after the 1993/94 lenic Republic to complete the investigation marketing year. As a result of those persis- in progress and, in accordance with Arti- tent deficiencies and irregularities, while cle 6 of Regulation No 595/91, to commu- nicate to the EAGGF the final conclusions of the investigation and a precise evalua- 90 — Ibidem, point·. 9 .ind 10.

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OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

acknowledging the progress made in the 3. The action quality of cooperation, owing to the efforts of the joint working party, the EAGGF proposed a correction of 25% of the expenditure declared by Greece for the 220. The Hellenic Republic claims that the 1992 financial year in respect of cotton. correction of 10% imposed by Decision 96/701/EC is based on an incorrect assess- ment of the facts and implies that the Commission has misused its powers or exceeded the limits of its discretion.

219. The supplement to Summary Report No 1, of 23 September 1996, pointed out that the EAGGF investigations carried out in 1995 and 1996 had confirmed the 222. According to the Hellenic Republic, in improvement of the situation. Thus it was the absence of negligence or lack of dili- noted that adequate measures had been gence on the part of the competent Greek adopted by the Greek authorities to restore authorities, the flat-rate correction of 10% cooperation with the Commission and to is not justified. ensure, as from the 1995/96 marketing year, that checks on cotton production aid and aid to small producers were in con- formity with the rules. The EAGGF, with regard to the 1992 financial year, therefore proposed reducing the correction of 25% 223. The Commission maintains its com- originally notified to the Hellenic Republic plaints and claims that the applicant has to a flat rate of 10% and to refund the not provided any evidence showing that the difference. findings on the basis of which it acted in the

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224. The purpose of those controls was to examine the national procedures for the management and control of aid in the cotton sector in connection with the clear- 228. Finally, it was observed that the ance of accounts for 1992 and subsequent records which should have been made of years. the unannounced checks were either unu- sable or unsatisfactory. Reading these very brief documents did not enable the signifi- cance and extent of these checks to be determined, which proved the formal nat- 225. In the course of those controls many ure of these documents. During the on-the- irregularities were detected. The EAGGF spot checks, the absence of any 'plausibil- thus pointed out that in no nome 91 had the ity' control in terms of the undertaking's data collected in order to determine the energy consumption, staff and ginning land been either computerised for the capacity was noted. This situation was a purpose of setting up the equivalent of a result of the lack of the computer equip- land register or used to check the accuracy ment necessary to monitor the various of the declarations of cultivation and to applications for interim payments, the determine the areas declared by more than applications for calculation of the aid and one producer. the actual applications for aid in relation to the applications for checks. As a result, it was impossible to apply correctly and verify the application of the percentage of aid to the various quantities processed.

226. In addition, it pointed out that the plots and land cultivated had not been delimited in an objective manner.

233. It is clear, first, that the substantiated account of the facts produced by the Commission 94 reveals serious deficiencies and negligence in regard to fundamental elements of the control system and the 231. The Commission also acknowledges conduct of controls intended to guarantee that the Greek authorities made genuine the regularity of expenditure. This logically efforts to improve the control system, and justified the conclusion that there was a this, moreover, was the reason for the high risk of widespread loss to the EAGGF. reduction of the correction from 25 to Second, it is clear that the irregularities 10%. However, for 1992, it states that it acknowledged by the Hellenic Republic in would not be permissible to disregard the respect of 1992 are the direct consequence fact that the expenditure in question was of the absence of an effective, reliable and incurred in the almost total absence of objective control system adopted by that effective controls.

93 — Case C-253/97, at paragraph 7. 92 — See points 20 and 21 of this Opinion. 94 — See points 223 to 229 of this Opinion.

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State. Moreover, the Hellenic Republic 237. Accordingly, I would ask the Court to seems to acknowledge this implicitly in so find that the pleas relating to the expendi- far as it agreed to adopt new control ture in respect of production aid for cotton measures and to ensure compliance with for 1992 must be rejected. them, particularly by issuing new instruc- tions applicable as from the 1995/96 mar- keting year.

IV — The claims specific to Case C-243/97 234. In addition, it should be noted that the Hellenic Republic does no more than reject the evidence submitted by the Commission without, however, adducing the slightest evidence in rebuttal capable of invalidating the Commission's analysis or its inferences from that analysis. A — The correction applied in respect of failure to observe the deadlines for making payments to recipients of olive oil produc- tion aid

2. Facts

239. In accordance with Article 12b(2) of Regulation No 3061/84, as amended by Regulations Nos 98/89 9 9 and 928/91 , 100 241. Summary Report No 2 states that the the Member States are to pay the balance of EAGGF introduced a programme to check the production aid to producers whose automatically whether or not the ceilings average output is at least equal to the and deadlines for payments specified in the quantity referred to in the first indent of Community regulations were being com- Article 5(2) of Regulation No 136/66, plied with. With regard to the payment of amended by Regulations Nos 1915/87 aid to recipients after the deadlines, the and 2210/88, within 90 days of the deter- programme is designed automatically to mination by the Commission of the actual refuse expenditure according to a sliding production for the marketing year con- scale of penalties which takes account of cerned and of the unit amount of the the number of months of delay. production aid provided for in Arti- cle 17a(3) of Regulation No 2261/84, amended by Regulation No 3500/90. 101

246. The Commission points out that force majeure constitutes an exception to the general rule of strict compliance with the legislation in force and must, as such, be 249. In this case, the Hellenic Republic interpreted and applied restrictively. cites an excessive workload caused by the According to the case-law of the Court, influx of applications to be dealt with in the the concept of force majeure implies either short period prescribed by Regulation an absolute impossibility or an unusual No 2796/93. circumstance beyond the control of the operator, the consequences of which could be avoided only at the price of excessive sacrifices, despite the exercise of all due care. 250. Those circumstances, as very properly pointed out by the Commission, cannot be described either as beyond the control of

247. It contends that in this case the 103 — See, in particular. Case C-263/97 First City Trading and Others [1998] ECR I-5537, at paragraph 38, and Case Hellenic Republic has no basis on which C-376/97 Wettwer [1999] ECR I-3449, at paragraph 30.

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OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

the party relying on them, or as unforesee- B — The correction applied in respect of able, and therefore do not constitute a case exports of olive oil from Greece to non- of force majeure. member countries

256. In addition, Article 9(1) of Regulation No 729/70 provides that Member States 253. As a result, I would ask the Court to reject the plea submitted by the Hellenic Republic as unfounded. 104 — See points 6 to 12 of this Opinion.

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are to make available to the Commission 1990 to 1993. Containers supposedly con- all information required for the proper taining olive oil actually contained other working of the EAGGF and are to take all products which were not eligible for export suitable measures to facilitate the super- refunds. vision which the Commission may consider it necessary to undertake within the frame- work of the management of Community financing, including inspections on the spot. Member States are to communicate to the Commission provisions laid down by 259. The result of the wide-ranging inves- law, regulation or administrative action tigation carried out in 1993 and 1994 in which they have adopted for the applica- Cyprus, Lebanon and Greece by the Com- tion of legal acts of the Community relating mission, with which the competent Greek to the common agricultural policy in so fai- authorities were sometimes associated, con- as those acts have financial consequences firmed the reported fraud. for the EAGGF.

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import licence issued by the competent duct actually exported was soya oil. The Lebanese authorities; that, during the years investigators also discovered that a Greek 1990 to 1992, no imports of olive oil company had made false declarations in declared to be of Greek origin had taken Greece while exporting what was supposed place, and that the consignments which to be olive oil to non-member countries were declared, on their exportation from during 1990 to 1993. Greece, to be of olive oil and were trans- shipped via Cyprus, were declared as soya oil on their arrival in Lebanon.

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100%, the Hellenic Republic had helped to to be subject to the financial consequences foster a reeling of impunity among certain of irregularities detected, as permitted by unscrupulous exporters who were able to the provisions of Article 8(2) of Regulation engage in a fictitious trade in olive oil since No 729/70. they knew perfectly well that they did not run the slightest risk of a penalty for fraud. In so doing, the Hellenic Republic had infringed the provisions of Article 8 of Regulation No 729/70.

3. The actions

267. Summary Report No 2 indicates, moreover, that the Greek authorities were 270. The Hellenic Republic does not dis- unable to prove that, in their campaign pute either the existence or the amount of against unlawful activities, they took suffi- the fraud described in Summary Report cient action to initiate the legal proceedings No 2, but considers that in this case the (both criminal and civil) that were neces- financial consequences of that fraud are not sary in order to put an end to that kind of attributable to it. It relies on the same traffic. Moreover, they did not inform the arguments as those which it put forward in EAGGF of the total amount of fraud the inquiry and conciliation procedure. committed by the operators subject to inquiry, despite the insistence of the EAGGF.

2 7 1 . The Commission, for the reasons expounded in Summary Report No 2, maintains its complaints. 268. As a result, the amounts relating to the companies in question were calculated on the basis of the quantities declared to have been exported to Egypt and Lebanon in 1992 and 1993. The financial correc- tions applied under Article 8(2) of Regula- tion N o 7 2 9 / 7 0 a m o u n t e d to G R D 2 031 347 293 and GRD 2 413 383 890. 4. Assessment

1. The relevant Community provisions

2 7 6 . C o u n c i l R e g u l a t i o n (EEC) No 3492/90 of 27 November 1990 lays 274. Commission Regulation (EEC) down the factors to be taken into consid- No 689/92 of 19 March 1992 fixes the eration in the annual accounts for the procedure and conditions for the taking- financing of intervention measures in the over of cereals by intervention agencies. 106 form of public storage by the EAGGF, Article 5 of that regulation provides that Guarantee Section. 109 '[A]ny operator who stores bought-in pro- ducts on behalf of the intervention agency shall monitor their presence and state of 107 _ Commission Regulation of 14 March 1990 laying down rules for drawing up the annual inventory of agricultural preservation regularly and inform the products in public storage (OJ 1990 L 67, p. 21). 108 — This form must indicate the type of product stored, the name of the storekeeper, the description of the batch, the batch number, the weight entered, the weight checked, 105 — Case C-253/97, at paragraph 6. the weight verified and so on. 106 — OJ 1992 L 74, p. 18. 109 — OJ 1990 L 337, p. 3.

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277. Article 2(1) of that regulation pro- points out that quality checks by approved vides that 'Member States shall take all laboratories on lots offered for purchase measures necessary to ensure the proper were not being carried out on anonymous preservation of products which have been samples as required by ethical practice in the subject of Community intervention.' this field and that the storage itself was unsatisfactory due to the absence of any systematic measuring of warehouses and silos by officials responsible for the physical controls.

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OPINION OF MR LÉGER — CASES C-46/97 AND C-243/97

283. Given that the Greek authorities, 3. The actions having acknowledged that the control sys- tem put in place was deficient, started to make improvements to it, the EAGGF proposed applying a flat-rate correction of 2% in respect of the public storage of cereals. The amounts of the financial correction thus applied were GRD 82 224 025, GRD 54 471 120 and GRD The public storage of cereals 97 597 184.

The public storage of cereals

The missing quantities of durum wheat not 293. According to settled case-law, 1 10 only declared intervention undertaken in accordance with Community rules is to be financed by the EAGGF and, where the Commission has doubts concerning a transaction which it considers to be justified by the surrounding 290. The Hellenic Republic acknowledges facts or circumstances, it must withhold the the facts but claims, first, that some sums corresponding to that transaction amounts corresponding to missing quanti- unless the Member State produces suffi- ties have subsequently been repaid and, cient evidence to dispel those doubts. 111 second, that some sums have not been received because court proceedings are still pending in this respect. As regards the latter sums, the Hellenic Republic states that the EAGGF will be credited with the corre- sponding amounts either voluntarily or 294. Similarly, it has unfailingly been held through compensation at the end of the that, in an action for annulment under current court proceedings. Article 173 of the EC Treaty, the Court's only task is to consider whether the pleas in law raised in support of the application are well founded. It is not required to increase or reduce any corrections which may prove to be inadequate in the light, in particular, of the criteria laid down in Document No 291. The Commission maintains its com- VI/216/93. 1 1 2 plaints and contends that, under Article 5 of Regulation No 3492/90, the missing quantities having left the intervention stock must be recorded in the accounts on the date when the loss was established. 295. Finally, the internal relations between the Greek authorities and the parties con- cerned, particularly following decisions delivered by national courts, do not affect

301. Consequently, it follows from all the foregoing considerations that the pleas 297. It should be pointed out that the raised by the Hellenic Republic in these Hellenic Republic has acknowledged the cases must be rejected in their entirety. facts set out against it by the Commission.

302. Under Article 69(2) of the Rules of 298. In addition, it is expressly stated in Procedure, the unsuccessful party is to be Article 5 of Regulation No 3492/90 that ordered to pay the costs if these have been the missing quantities of durum wheat must applied for. be recorded in the accounts as having left the intervention stock on the date when the loss was established.

303. That provision falls to be applied in these two cases.

299. The Commission is required to com- ply with the rules thus laid down by the Community regulations and cannot dero- gate from them by allowing Member States 304. In Cases C-46/97 and C-243/97, the Hellenic Republic must therefore bear its own costs and pay those incurred by the 113 — See, for example and by analogy, Case C-263/96, at paragraph 27. Commission.

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(1) dismiss the application;

(2) order the Hellenic Republic to bear its own costs and pay those incurred by the Commission.

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