C-147/99

1 — Original language: German. 2 — European Agricultural Guidance and Guarantee Fund.

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2. In Decision 99/187/EEC 3 (hereinafter 4. The Italian Government claims that the the 'contested decision') the Commission contested decision should be annulled, in so found, among other points, that the follow- far as it has disallowed the above amounts ing amounts could not be charged to the in clearing the expenditure financed by the EAGGF: EAGGF in 1995.

— Approximately ITL 500 000 000 for 5. The Commission contends, firstly, that costs of public stocks of durum wheat, the application should be dismissed and, on the grounds that the quality of this secondly, that the applicant should be product was not acceptable for inter- ordered to pay the costs of the proceedings. vention;

— ITL 2 751 722 888 for consumption 6. Each of the three pleas submitted in the aid for olive oil, on the grounds of application will be discussed here as irregularities in the administrative pro- regards the corresponding contested correc- cedure for withdrawal of approval tion. For further details regarding the facts, from olive-oil packaging plants; the course of the proceedings and the arguments of the parties, reference should be made to the Report for the Hearing. The content of the pleadings in the case will be reproduced below only as required to — ITL 62 6 8 5 9 1 6 0 0 0 and support the present Opinion. ITL 13 998 973 000 for premiums for ewes and goats, on the grounds of irregularities in management and con- trols.

9. That financial correction relates to a total of slightly over 18 000 tonnes of 12. In this context, reference should be durum wheat, of which only 1 485.104 made to the settled case-law of the Court of tonnes (hereinafter the 'quantity in dis- Justice 9 regarding the clearance of the pute') are the subject of the present action. accounts of the EAGGF and the burden of The quantity in dispute accounts for one proof in direct actions against Commission part of the amount of the correction and, decisions in this Community sector. according to the Italian Government's esti- mates, comes to about ITL 500 000 000 of the total sum of ITL 3 857 589 582. 8

13. According to that case-law, the EAGGF finances only interventions carried out in accordance with the Community rules and, 10. The quantity in dispute consists of where the Commission has doubts con- batches of durum wheat that had been or cerning an intervention which it considers should have been stored at three separate to be justified by the relevant facts or warehouses. Since the pleas in the applica- circumstances, it must withhold the sums tion are based on matters of fact, no corresponding to that transaction unless

5 —OJ 1992 L 181, p. 21. 9 — See judgments in Case 347/85 United Kingdom v Commis- 6 — OJ 1992 L 74, p. 18. sion [1988] ECR 1749, in Case C-48/91 Netherlands v Commission [1993] ECR I-5611, in Case C-240/97 Spain v 7 — Summary Report, point 4.5.1.1.1.3(b). Commission [1999] ECR I-6571, and in Case C-253/97 8 — Application, point 12. Italy v Commission [1999] ECR I-7529.

17. For the San Lorenzo warehouse, the 15. The Court of Justice has also held that Italian Government challenges the quantity '[t]he Commission is required not to of 954.220 tonnes deducted by the Com- demonstrate exhaustively that there are mission by way of correction (hereinafter irregularities in the data submitted by the the 'quantity corrected') for the 1991/92 Member States but to adduce evidence of marketing year. For that purpose the Italian serious and reasonable doubt on its part Government invokes the counts made by regarding the figures submitted by the the Italian intervention agency AIMA and national authorities. The reason for this the outcome of the analyses made follow- mitigation of the burden of proof on the ing an on-the-spot inspection. In accor- Commission is that... it is the State which is dance with those analyses, the Italian best placed to collect and verify the data Government claims, the Commission required for the clearance of EAGGF should have deducted only 64.51 tonnes accounts; consequently, it is for the State for the 1987/88 marketing year. to adduce the most detailed and compre- hensive evidence that its figures are accu- rate and, if appropriate, that the Commis- sion's calculations are incorrect.' 12 18. Essentially the parties disagree in respect of the items to which the quantity corrected refers and, consequently, on whether the Italian Republic's rights of 16. In its first plea, the Italian Government defence were observed during the pre- challenges only three particular corrections, litigation procedure, and also on whether alleging presumed errors of calculation. It the contested decision of the Commission was sufficiently reasoned on this point. In particular, the Italian Government com- 10 — Judgment in Spain v Commission (cited in footnote 9), at plains that — following the inspection of paragraph 39. 27 December 1993 — the Commission 11 — Judgment in United Kingdom v Commission (cited in had not complained earlier of the absence footnote 9), at paragraph 14. 12 — Judgment in Netherlands v Commission (cited in footnote of the 1 076.22 tonnes on which it based its 9), at paragraph 17, with a reference to the judgment in Case C-281/89 Italy v Commission [1991] ECR I-347, at calculations in the letter of 31 August 1998 paragraph 19. (proposing the corrections to the Italian

authorities) and in the 1995 Summary 1 076.220 tonnes noted at paragraph Report. On this, the Italian Government 4.5.1.1.1.3(b) of the 1995 Summary stresses that some missing quantities were Report. corrected separately, as such, at paragraph 4.5.1.1.1.3(a) of the 1995 Summary Report. 21. In the light of the documents in the case, the Italian Republic's arguments on this point cannot be accepted. UCLAF 19. It must first be clarified which market- inspection minute No 4a, for the inspection ing year the quantity corrected relates to. of 10 December 1993, submitted by the Whilst the Italian Republic starts from the Italian Republic itself, 13 .refers unequivo- assumption that these quantities of durum cally to the marketing year 1991/92. The wheat relate to the 1987/88 marketing year, Commission also rightly stresses that, in a the Commission (from what it has stated) is letter of 24 June 1998 to the competent referring to a quantity which relates to the national bodies, 14 the Italian authorities 1991/92 marketing year. According to the started from the assumption that the dis- Commission, this can be seen from its letter puted quantity was charged to the market- of 31 August 1998 to the Italian authori- ing year 1991/92. The Italian Government's ties. On the other hand, the Italian Gov- contention that the Commission is misre- ernment refers, in this regard, to a letter presenting the nature of that letter in from the Commission dated 6 August 1997 treating it as amounting to an admission relating to the initiation of the correction cannot be upheld: this letter shows rather procedure in 1994. The Italian Government that the Italian authorities clearly started infers from this that its rights of defence out from accurate data. have been infringed in so far as the Commission altered the subject-matter of the correction in the course of the proce- dure. 22. For the rest, it must be stressed that even if the quantity corrected had originally been charged to another marketing year, that alone would not be enough to vitiate the contested decision: in such circum- 20. With respect to that assertion by the stances, the Italian Republic would have Italian Government regarding the letter of had to show that, during the process of 6 August 1997, the Commission observes preparing the decision, it was unable to that, as regards the San Lorenzo ware- participate in the ongoing discussion15 on house, no correction was made for durum the matter with the Commission. However, wheat for the 1987/88 marketing year. That the Italian Republic's own statements show decision, contained in a letter of 1 October that these circumstances did not obtain in 1998 to the Italian authorities, was adopted this case. following the report of the Conciliation Body. The letter of 6 August 1997 has therefore lost all significance on this point. 13 — Annex 2 to the reply. According to the Commission, the con- 14 — Application, Annex A8. tested 954.220 tonnes in the San Lorenzo 15 — On this, see for example the considerations set out by warehouse relate to the marketing year Advocate General Alber in his Opinion in Case C-278/98 Netherlands v Commission [2001] ECR I-1501, a t 1991/92 and are included within the point 138 et seq.

23. It must therefore be found that the 26. Lastly, the Italian Republic explains the Italian Republic has not shown that the quantities found missing in the San Lorenzo Commission has made an error in charging warehouse as dispatches which, it says, had the correction concerned to a particular not yet been entered in the proper register. marketing year. The Commission rejects this claim as completely unfounded. The inspection min- ute of 10 December 1993 18 shows that the management of the registers at that ware- house was defective. The Italian Republic's 24. Alternatively, the Italian Republic con- argument is therefore not sufficient to tends that, according to inspection minute invalidate the points made by the Commis- No 4a, 16 there were two different esti- sion and, consequently, this argument also mates of quantities and the Commission must be rejected. accepted the higher quantity as true, that is the one less favourable to Italy, without giving sufficient reasons for this. The Commission raised an objection of inad- missibility to that argument under Arti- cle 42(2) of the Rules of Procedure of the Court of Justice on the ground that the C — The Castellaci warehouse Italian Republic had used the argument only in its reply and, therefore, out of time. There are, according to the Commission, many reasons for upholding that objection, 27. As regards the Castellaci warehouse, but a detailed examination would be the Italian Government challenges the cor- needed only if Italy's arguments regarding rection relating to 95.4 tonnes of durum the substance of the case were successful. wheat. At the time of the inspection made by the UCLAF in December 1993, the Castellaci warehouse should — on the basis of the Italian authorities' accounting information — have held 956.77 tonnes. However, the estimates of the quantities 25. However, on the basis of the documents present, made at the time of that check, in the case, it must be noted that the showed that only 861.37 tonnes were Commission accepted as valid only those actually present, that is a shortfall of 95.4 inspection results which emerged from a tonnes compared with the corresponding checking procedure conducted in the pre- costs charged to the EAGGF. In addition, sence of all the parties concerned. The the analyses showed that the quantity reasons for that decision can also be present was not of intervention quality. gathered from the Check Report of 3 Jan- uary 1994 on the checks made after hearing both sides. 17 The Commission therefore has given plausible reasons on this point; the Italian Republic's argument must be rejected in this respect too. 28. The Commission made a financial correction for 956.77 tonnes of durum

wheat, stating as the reason for this that the warehouse should — on the basis of the EAGGF 'Guarantee' section had been Italian authorities' accounting figures — charged for the storage costs on that have held 1 994.014 tonnes because the quantity and not on the 861.37 tonnes EAGGF had been charged for warehousing actually present. The Italian Republic con- costs in an amount corresponding to that tends that the contested decision is invalid quantity. However, the estimates of the because, in its view, the Commission should quantities present, made following an have shown that the missing quantity also inspection, showed that only 1 450.800 was not of intervention quality. tonnes were actually present, that is a shortfall of 543.214 tonnes. In addition, the analyses showed that the quantity present was not of intervention quality. 29. In that regard, the Italian Republic's argument does not appear to be convincing. For the purposes of the financial correction to the costs of quantities charged to the EAGGF, it is not the quantities actually 31. The starting point here is therefore the present which count but the quantities same as in the case of the Castellaci ware- shown as present from the warehouse house. However, the Italian Republic now accounts and charged to the EAGGF. claims that, as at 30 October 1993, the Therefore, where the results from the Jungetto warehouse held only 969.250 analyses effected show that a quantity of tonnes of durum wheat. The additional durum wheat is not of intervention quality, quantity of 1 024.764 tonnes was stored it is necessary, for the purposes of the later, between 30 December 1993 and correction by the Commission, that refer- 5 January 1994, that is — the Italian ence should be made to the quantity as Government states — after the Granmi- shown in the accounts. It must further be chele and Raddusa warehouses had made stressed that, under the rules on the burden this quantity available. Therefore, at the of proof described earlier, 19 it was for the time of the inspection concerned — that is Italian Republic to show that the quantities on 16 December 1993 — the store held missing at the time of the check were only the first quantity stated above. eligible for intervention. According to the Italian Government, only that quantity could therefore have been the subject of any correction.

33. The Commission has stated that it is time of the inspection at the Raddusa — prepared to accept that argument and to on 16 December 1993 — the information abandon that correction as soon as the provided by the Italian Republic itself Italian Republic has produced proof of this. shows that only 888.44 tonnes were stored However, the documents in the case show there. 21 It is admittedly not impossible that that the Commission regards this claim by the missing quantity came into the Raddusa the Italian Government as contradictory warehouse between 16 December and and incomplete. 30 December — the date on which it is claimed the transfer began; however, this has not been alleged in the proceedings. In addition, the handwritten notes regarding the alleged transfers, made on the extracts from the accounts for the Jungetto ware- 34. In any case, in accordance with the line house and produced in the case, 22 have of reasoning set out above, 2 0 the Commis- been specifically disputed by the Commis- sion was entitled — if not, indeed, sion. 23 On this point, therefore, the Italian required — to take as the basis for the Republic has not discharged the burden of correction the quantity actually charged to proof which lies on it. the EAGGF, once it was convinced that the quantities actually present were not eligible for intervention.

37. In the light of the above considerations, the Italian Government's arguments on the three corrections regarding the public 35. However, the quantity which — stocks of durum wheat appear convincing. unquestionably — was missing at the time The first plea therefore must be rejected. of the inspection might also have been eligible for intervention, provided that this was actually delivered to the Jungetto warehouse at a later date. It has therefore to be established whether the Italian Republic has produced proof of this, con- trary to what the Commission maintains. I I — Aid for the consumption of olive oil — Withdrawal of approval for packa- ging plants in Italy

of aid for the consumption of olive oil 24 in on the market in the Community where the the marketing years 1993/94 (charged to production target price (less the production 1994) and 1994/95 (charged to 1995). The aid) is higher than the representative mar- reason for those corrections, stated at ket price for olive oil. The aid is then equal paragraph 4.7.3.1 of the 1995 Summary to the difference between these two Report, is that aid was paid to undertakings amounts. whose status as undertakings eligible to receive the aid should have been with- drawn. The reason for this, it is said, is that, in the marketing years concerned, those undertakings had submitted applica- tions for aid although they had already exceeded the 20% threshold for quantities 41. Council Regulation (EEC) No 3089/78 accepted as qualifying for aid, under Arti- of 19 December 1978, 26 as last amended cle 12(6) of Regulation No 2677/85. by Council Regulation (EEC) No 3461/87 of 17 November 1987 27 (hereinafter 'Reg- ulation No 3089/78'), lays down general implementing rules on aid for the con- sumption of olive oil. 39. After receiving the report of the Con- ciliation Body in Joined Cases 98/IT/108 and 98/IT/095, the Commission reduced the total amount proposed (corrected pre- viously) from ITL 3 764 182 386 to ITL 2 342 756 462 for 1994 and from 4 2 . Under Article 1 of R e g u l a t i o n ITL 422 221 471 to ITL 408 996 426 for No 3089/78, consumption aid is granted 1995. only to approved olive-oil packaging plants. Articles 2 and 3 lay down the conditions for granting and withdrawing such approval. Under Articles 5 and 6, entitlement to consumption aid is acquired the moment the olive oil leaves the packa- ging plant; packaging plants must submit A — Legal context applications within specified time-limits.

applied qualifies for such aid. Under Arti- submitted to the competent authority an cle 8, the aid is to be paid when the application for aid together with a certifi- supervisory body designated by the Mem- cate showing that a security of an amount ber State in which packaging takes place equal to the aid has been lodged. has checked that the conditions for grant- ing the aid have been satisfied. The aid may, however, be advanced as soon as the aid application is submitted, provided that sufficient security has been provided. 46. Article 12 of that regulation lays down the procedures for the inspections which the competent authorities must carry out and, in particular, provides that such inspections are to be carried out every 12 44. Article 9(3) of Commission Regulation months. Article 12(6) was reworded in (EEC) No 2677/85 of 24 September 1985 Regulation No 571/91 30 and further laying down implementing rules in respect amended in Regulation No 643/93, 31 from of the system of consumption aid for olive which the formulation which follows oil, 28 as amended by Commission Regula- applies for the present purposes: tion (EEC) No 643/93 of 19 March 1993 29 (hereinafter 'Regulation No 2677/85'), provides:

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years depending on the seriousness of the sion's differing view leads to the Member infringement. State's decision on withdrawal being retro- active, which is unacceptable.

52. The Commission maintains, lastly, that 48. The Italian Government infers from the individual corrections made are, as Article 12(6) of Regulation No 2677/85 that withdrawal of approval can be ordered only after the relevant checks have been 32 — On this, see the Opinion of Advocate General Alber in Case C-253/97 Italy v Commission [19991 ECR I-7529, at carried out. It contends that the Commis- point 64.

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C — Assessment 56. The Commission considers that this danger can be avoided by making the grant of consumption aid unlawful once the reference quantity threshold has been 54. This plea raised by the applicant raises reached or, in technical and legal terms, the question of the point in time from by regarding the withdrawal decision as which withdrawal of approved packaging- effective from the earliest relevant point in plant status produces its effects for the time; the Italian Republic however consid- purposes of assessing the lawfulness of the ers that it is essential to have a formal grant of consumption aid for olive oil to finding that the reference quantities have any undertaking on which that penalty may been exceeded, by means of inspection. be imposed. Whilst the Italian Government maintains that that point in time should be the day on which the report recording the 33 — There are clear points of contact with the arguments of the Hellenic Republic in Case C-373/99 in respect of con- infringement is written, the Commission sumption aid for olive oil: the Commission has apparently says that it is the date of submission of the used the same interpretation of Article 12(6) of Regulation No 2677/85 as the basis for the contested decision in that application for consumption aid by means case.

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58. On a literal reading of Article 12(6) of finding the infringements, as is maintained Regulation No 2677/85, that penalty in by the Italian Government. fact requires the competent authority to find that the application for consumption aid is for a quantity greater than that for which entitlement to aid has been recog- nised. Hence, the finding that the quantity 60. In that connection, it must also be threshold has been exceeded is closely observed that this is not the only case linked with the imposition of the penalty, where the Court has had occasion to rule with the result that the payment of con- on the relationship between Article 9 and sumption aid must be regarded as lawful up Article 12 of Regulation No 2677/85.

In those proceedings, the Advocate General, referring to these (apparently) conflicting rules on time-limits, expressed the view that Article 12 provides only a minimum 59. From the systematic standpoint, Arti- rule and that Article 9 remains unaffected cle 9(3) of Regulation No 2677/85 appears in that respect. 34 to be of particular importance here. Under that provision, aid is to be paid only on those quantities 'for which entitlement to 34 — Opinion of Advocate General Geelhoed delivered on 3 April 2001, ECR I-5944, at point 60, together with aid has been recognised following on-the- point 23.

64. In that context, it must also be remem- 62. In the light of those considerations, it bered that imposition of the penalty is does not seem appropriate to accept as intended to afford adequate protection for lawful that the EAGGF should finance the financial interests of the European consumption aid where it relates to a Communities. Thus, Article 2(1) of Regu- period of time subsequent to the coming lation No 2988/95 39 provides that penal- into being of the circumstances giving rise ties are to be 'effective, proportionate and to the penalty under the second subpara- dissuasive'. The effective and dissuasive nature of such penalties cannot be disre- garded, therefore, when considering the 35 — C. Blumann, Politique agricole commune: Droit commu- legally relevant question of the time at nautaire agricole et agro-alimentaire, 1996, point 519. which the penalty of withdrawal of 36 — Cited at footnote 29. approval takes effect. 37 — Cited at footnote 24. 38 — See also the Fact Sheet from DG VI, 'For a reform or the olive-oil sector', Position as at 10/1998: 'From now on [consumption aid] is completely abolished, especially because of the cost of the checks that were necessary to 39 — Council Regulation (EC, Euratom) No 2988/95 of apply it, because of the difficulties of operating the system 18 December 1995 on the protection of the European and because of its limited effects on consumption.' Communities financial interests (OJ 1995 L 312, p. 1).

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66. In principle, no legitimate expectation can arise for the packaging plant during that period, since — under Article 9(3) of Regulation No 2677/85 — its entitlement to consumption aid in respect of a parti- 69. Lastly, for the sake of completeness, cular application can be recognised only consideration should be given to the merits after an on-the-spot check has been con- of the Commission's alternative submission ducted. on the possibility of making a flat-rate correction in the present instance. In response to the Italian Republic's argument that a flat-rate correction could not be made in this case, the Commission refers to the judgment in Case C-253/97. However, in that judgment 40 it was held that 'there is therefore no reason in principle why an analytical correction should not be applied concurrently with a flat-rate correction'. It is therefore open to question whether the 67. As a result, therefore, the Commission Commission is right to refer to that judg- must be regarded as right in maintaining ment. However, the question whether in the that if, for the purpose of calculating the present case a flat-rate correction is possi- corrections, the method proposed by the Italian Republic were used, the final out- come would be that the expenditure 40 — Case C-2J3/97 Italy v Commission [1999] ECR I-7529, charged to the EAGGF would depend on paragraph 74.

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ble does not call for further examination, A — Legal context since that possibility is not relevant to the assessment of the individual corrections concerned.

— a high percentage of irregularities — doubts raised as to eligibility from the revealed during inspections in farms fact that male animals and young carried out in Calabria and Sicily at the female animals, which were ineligible, instigation of Unit A.I.3, a large pro- were included incorrectly by the portion having led to the total or inspectors; partial rejection of the applications;

— checks carried out by the Italian autho- rities themselves in Sicily in 1996. — useless registers of flocks precluding worthwhile inspection outside the period of keeping; In 1996, the Italian authorities decided to carry out a full inspection in the Sicilian farms which had made an application for the premium for sheepmeat. For the whole of Sicily the results of that inspection, based — insufficient notification of the place of on a check of 79% of the applicants, keeping of the animals; necessitated partial rejection of 33.66% and total rejection of 19.8% of applica- tions.'

— non-existent system of marking of 74. In the 1995 Summary Report the flocks when several are kept together, Commission proposed the following cor- which makes checking impossible; rections:

Budget Heading 1994 1995 2220 - ITL 38 718 586 000 - ITL 23 967 330 000 3805 - ITL 7 927 656 000 - ITL 6 071 317 000

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42 — See Report for the Hearing, at point 56, and Annex C3 to 43 — Document VI/5330/97, of 23 December 1997. the application. 44 — Document VI/216/93, of 1 June 1993.

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79. Alternatively, the Italian Republic the applications had to be rejected at least states that, on the basis of the 1997 guide- in part. 45 The Commission also stresses the lines, a correction rate of 25% is lawful shortcomings of the checks effected by the only 'where a Member State completely Italian authorities, although those autho- fails to apply a control system, or there are rities themselves had admitted that the risk serious shortcomings in applying it, and if of fraudulent applications was substantial there are widespread proven irregularities in those regions. Furthermore, according to and negligence in combating fraudulent the Commission, it should be noted that in and irregular practices'. The Italian Repub- 1996, when the checks by the Italian lic contends that, on that basis, the correc- authorities were made on a widespread tion of 25% appears clearly disproportion- basis for the first time, the level of irregu- ate in the light of the circumstances in this larities in Sicily (apart from the Province of case. Palermo) was still above 40%; 83% of applications for premium in the Province of Catania could not be accepted in the same period.

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normally provided might be appropriate 'in maintains that it communicated the results exceptional cases'. 4 7 from its own inquiries to the Conciliation Body, in a written note to its president.

84. In its reply the Italian Republic repeats its contention that the Commission did not state adequate reasons for its decision to D — Assessment apply a correction rate of 25%: it did not explain why, following the conciliation procedure, it reduced the correction per- centage only in respect of the marketing 86. This third plea repeats corresponding year 1993 in Calabria, nor did it state why arguments put forward by the Italian the situation in the regions concerned Republic in Cases C-242/96 4 9 and should be described as 'exceptional' and, C-253/97 50 regarding similar corrections lastly, it had failed to take due account of made in earlier years. the observations by the Conciliation Body. 4 8

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89. It must be borne in mind here that, 'as involved in the process by which the the Court has consistently held, the Com- decision came about and is therefore aware mission, instead of seeking to establish the of the reason for which the Commission financial impact of the failure of the Italian considers that it must not charge the sums monitoring authorities to fulfil their obli- in dispute to the EAGGF'. 52 gations, could have rejected the entire expenditure tainted by the infringement'. 51

93. In the present case, therefore, the Commission is right in referring to its 90. Furthermore, it is not seriously dispu- communication of 4 March 1998, and it ted in this case that the possibility of must be noted that its obligation to state applying a rate higher than the 2, 5 or reasons in this respect is of limited scope. 10% previously provided had already been As a result, all that needs to be verified is introduced before the guidelines of 1997. whether the reasons stated by the Commis- However, in that context, account must be sion can sustain the contested decision. taken of the fact that the Commission might itself be bound by the guidelines laid down in the Belle Report of 1993.

94. However, reference must first be made to the settled case-law of the Court as regards the burden of proof in cases of this 91. However, even under the 1993 guide- type. According to that case-law, lines provision was made for application of '[a]lthough it is... for the Commission to the disputed correction rate of 25%, at prove an infringement of the Community least 'in exceptional cases'. Therefore, the rules, the Member State concerned must examination of this point in the dispute demonstrate that the Commission commit- could be limited to establishing whether the ted an error as to the financial conse- Commission did in fact give adequate quences to be attributed to it'. 5 3 reasons for there being such an exceptional case.

ture concerned to be charged to the 99. That notwithstanding, the modifica- EAGGF or that only a smaller correction tions made in the corrections after the was lawful. conciliation procedure show that the Com- mission took ample account of the Con- ciliation Body's report. Thus, the Commis- sion reduced the correction rate in respect of the marketing year 1993 for Calabria, from 2 5 % to 10%, after the Conciliation 96. As for the criticism levelled by the Body had noted that one of the principal Italian Republic against the Commission grounds for criticism raised by the Com- for its failure to give adequate reasons for mission applied to only one of the two its refusal, after the conciliation procedure, regions. to modify the amount of the correction for Sicily in respect of the marketing year 1993 and for Sicily and Calabria in respect of the marketing year 1994, it is sufficient to note that that criticism disregards the rules on the burden of proof. 100. As regards the application of a cor- rection rate of 25% for Sicily in respect of the marketing year 1993, it must be noted that the Italian Republic has not explained how a lesser correction might have been 97. However, in view of the reservations more appropriate. Where the Italian stated by the Conciliation Body regarding Republic maintains that the decision is the reasons given for the Commission's clearly inappropriate on this point because, decision, it none the less appears appro- it considers, the Commission has not taken priate in any event to verify whether the account of its efforts to improve the obligation to state reasons has been fulfilled intensity and efficiency of the controls, its here. arguments seem insufficiently substanti- ated. It must also be observed here that, as the Italian Republic has itself stated, those efforts did indeed begin in 1993, but they produced intensified controls only in 1995. 98. As regards the Italian Republic's argu- ment based on the fact that the Concilia- tion Body, too, criticised the statement of reasons for the decision, it must firstly be observed that the Conciliation Body's report is not binding. 54 The Commission is therefore not obliged to follow all the opinions stated by the Conciliation Body in 101. In the light of the foregoing consid- the individual points of its report. erations, it must be concluded that the statement of reasons for the contested Commission decision appears questionable 54 — Judgment in Case C-44/97 Germany v Commission [1999] only in that it applied the same correction ECR I-7177, paragraph 18. More recently, see also the Opinion of Advocate General Geelhoed in Case C-374/99 rate of 25% in respect of the marketing (cited in footnote 34), at points 41 and 52. year 1994 to Calabria and Sicily.

105. The third plea also must therefore be rejected. 103. In that connection, it must first be pointed out that the Italian system of controls unquestionably revealed signifi- cant shortcomings in the marketing year 1994. In that regard, I refer to the state- 106. In the result, none of the pleas put ments by the Commission 56 (not disputed forward by the Italian Government is well on this matter) and to the considerations I founded and the application must therefore have set out above. 57 Furthermore, if it is be dismissed in its entirety. borne in mind that, according to the statements of the Commission (not dispu- ted on this matter either), only a fraction of the controls necessary was effected throughout the country — in particular, however, in the regions concerned — and that the shortcomings found in those IV — Costs regions were sometimes so serious 58 that it made the controls pointless, then the arguments put forward by the Italian Government do not seem capable of remov- 107. Under the first subparagraph of Arti- cle 69(2) of the Rules of Procedure of the Court of Justice, the unsuccessful party is to 55 — See the Opinion of Advocate General Alber in Case C-253/97 Italy v Commission [1999] ECR I-7529, at be ordered to pay costs if asked for by the point 2 1 . successful party. Since the Italian Republic 56 — See also above, at point 8 1 , and in the Report for the has been unsuccessful, it must be ordered to Hearing, at points 62 and 68. 57 — Point 100. pay the costs, as applied for by the 58 — See above, at point 7 3 . Commission.

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