C-178/00

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3. The Italian Republic also challenges the ation made by the Italian authorities for Commission decision refusing to grant it 1995 and the actual situation with regard the sum of ITL 11 952 457 079 in respect to those stocks. On the basis of the avail- of the régularisation of invoices for the sale able evidence the Commission decided: of cereals into public intervention.

4. The grounds for the adjustments — to reduce the expenditure declared in imposed are summarised in the Consoli- respect of budget item 1011.003 by dated Report on the results of the inspec- ITL 3 358 746 955; tions for the clearance of the accounts of the Guarantee Section of the EAGGF for 1995. 3 I shall consider the specific aspects of those various adjustments in turn (points I to VII).

— to reduce the expenditure declared in respect of budget item 1012.003 by ITL 807 967 249, and

I — Specific financial adjustments of ITL 3 358 746 955, ITL 807 967 249 and ITL 22 116 046 015 in respect of expen- diture relating to storage costs for durum wheat — to increase the expenditure declared in respect of budget item 1013.003 by ITL 22 116 046 015.

Stock at 1 October 1994 '... the quantity of cereals stored as it was 715 241.251 t reconstituted on 1 October 1994 (at the start of the 1995 financial year) [was] 715 241.791 tonnes [and] was broken down as follows:

The Commission staff noted with regard to that stock as declared by the Italian auth- orities that it was 174 640.558 tonnes greater than the quantity which appeared Stock recorded at 1 October 1994 (based previously in the EAGGF tables at on inventory checks) 30 September 1994 (the date on which 639 282.836 t the 1994 financial year ended), which was 540 601.233 tonnes; they put that discrep- ancy down to the Italian authorities having increased the stocks by 198 146.458 tonnes and reduced the same stocks by 23 505.900 tonnes.

+ Stock with Casillo 91 664.845 t

It should be observed that, irrespective of the grounds for the specific adjustments that were made, the Commission staff,... in their letter No 4014 of 9 February 2000..., + Stock with Federconsorzi declared that they had accepted the 117.980 t increase of 174 640.558 tonnes in the stocks of durum wheat from the 1995 financial year, even though they confirmed the negative adjustment subsequently.

+ Stock with Molini Nuova Daunia 7 681.500 t

The view expressed by the Commission 4 — Application (pp. 2 and 3). discloses an unjustified enrichment on its

7. It should be pointed out that under 9. The factual and legal grounds on which Article 38(1)(c) of the Rules of Procedure the Italian Republic bases its application of the Court of Justice an application must for annulment arc not clear from the state the subject-matter of the proceedings arguments it puts forward. Although the and a summary of the pleas in law on Commission has been able to submit its which the application is based. It is settled defence effectively due to its knowledge of case-law 5 that that statement must be the case documents and the part it played in sufficiently clear and precise to enable the the pre-litigation procedure, the fact defendant to prepare its defence and the remains that the Court is not in a position to conduct a judicial review solely on the basis of the information provided in the 5 — See, for example, judgments of the Court of Justice in Case application. In that connection, it is appro- C-347/88 Commission v Greece [1990] ECR I-4747, priate to point out that the Community paragraph 28 and Case C-52/90 Commission v Denmark [1992] ECR I-2187. paragraphs 17 to 19, and judgments of judicature cannot take the place of the the Court of First Instance in Case T-195/95 Guérin automobiles v Commission [1997] ECR II-679, paragraphs applicant, or his lawyer, by trying to locate 20 to 27; Case T-113/96 Dubois et Fils v Council and and identify itself among the documents on Commission [1998] ECR II-125, paragraphs 29 and 30; Joined Cases T-305/94 to T-307/94, T-313/94 to T-316/94, the file the information which it might T-318/94, T-325/94, T-328/94, T-329/94 and T-335/94 Limburgse Vinyl Maatschappy and Others v Commission regard as supporting the claims formulated [1999] ECR II-931, paragraphs 39 to 4 3 . See also orders of in the application. 6 the Court of First Instance of 28 April 1993 in Case T-85/92 De Hoe v Commission [1993] ECR II-523, paragraphs 20 to 26; of 29 November 1993 in Case T-56/92 Koelman v Commission [1993] ECR II-1267, paragraphs 21 to 24, and of 1 June 1999 in Case T-73/99 Meyer v Council and 6 — See, for example, the order in Koelman v Commission, cited Commission [1999] ECR II-1739, paragraphs 7 and 8. above, paragraph 2 3 .

13. That regulation provides that national agencies are required to draw up annual A — Legal background accounts for each product which is subject to public storage intervention measures. 14 The annual accounts must contain in par- ticular the expenditure relating to the storage of products. Article 2 provides that Member States are to take all measures necessary to ensure the proper preservation 11. Council Regulation (EEC) No 2727/75 of products. Article 5 provides that quan- of 29 October 1975 7 is designed to attain the objectives of the common agricultural policy in the sector of cereals and in 10 — Article 2 of Commission Regulation (EEC) N o 1569/77 of particular market stability. 8Article 7 of 11 July 1977 fixing the procedure and conditions for the taking over of cereals by intervention agencies (OJ 1977 that regulation provides that the interven- L 174, p. 15). Those obligations were continued by tion agencies designated by Member States Article 2 of Commission Regulation (EEC) N o 689/92 of 19 March 1992 fixing the procedure and conditions for the are obliged to buy in cereals which are taking over of cereals by intervention agencies (OJ 1992 L 74, p. 18), which replaced Regulation N o 1569/77 with offered to them provided that the offers effect from 1 July 1992. comply with conditions regarding the 11 — Articles 3 and 4 of Regulation N o 1569/77, as amended by Commission Regulation (EEC) N o 1022/90 of 25 April quality of the products. 9In order to be 1990 (OJ 1990 L 106, p . 11). That principle was continued accepted products must be of 'sound, fair by Article 3 of Regulation N o 689/92. 12 — See Article 1 of Council Regulation (EEC) N o 1883/78 of 2 August 1978 laying down general rules for the financing of interventions by the European Agricultural Guidance and Guarantee Fund, Guarantee Section (OJ 1978 L 216, 7 — Regulation on the common organisation of the market in p. 1). cereals (OJ 1975 L 2 8 1 , p. 1). 13 — Regulation laying down the factors to be taken into 8 — Fourth recital in the preamble. consideration in the annual accounts for the financing of 9 — That obligation was continued by Article 4 of Council intervention measures in the form of public storage by the Regulation (EEC) N o 1766/92 of 30 June 1992 on the European Agricultural Guidance and Guarantee Fund, common organisation of the market in cereals (OJ 1992 Guarantee Section (OJ 1990 L 337, p. 3). L 181, p. 21), which replaced Regulation N o 2727/75 with 14 — Article 1(1). See also Article 4(1) of R e g u l a t i o n effect from the 1993/94 marketing year. N o 1883/78.

tities which have deteriorated because of B — Facts the physical conditions of storage or by reason of overlong preservation are to be recorded in the accounts as having left the intervention stock on the date when the loss or deterioration was established. 15. An inspection conducted in March 1995 by the Consorzio Controlli Integrati in Agricoltura (Agricultural Integrated Inspections Cooperative, 'the CCIA') revealed that 122 709.192 tonnes of durum wheat stored in the warehouses of Coop. San Giorgio 16 were of very poor quality. 14. The detailed rules for the application of that regulation are laid down in Commis- sion Regulation (EEC) No 3597/90 of 12 December 1990. 1 5Article 2(3)(c) pro- vides that in cases of deterioration or destruction of the product as a result of bad conservation conditions the value of the product is to be accounted for in 16. The C o m m i s s i o n found t h a t accordance with paragraph 1. Article 2(1) 84 481.128 tonnes of wheat did not meet provides that the value of missing quan- the conditions required for admission into tities is to be calculated by 'multiplying intervention. In its view the quality of the these quantities by the basic intervention product had been poor since it was bought price in force for the standard quality on in. Under Article 7 of Regulation the first day of the current financial year, No 3597/90 the Commission therefore increased by 5%'. Moreover, Article 7 charged the Italian authorities the buy- provides that quantities entering storage ing-in price of the quantities at issue and which are found not to meet the conditions the storage costs entered in the accounts laid down for storage are to be entered in from the start of the 1990/91 season until the accounts as a sale at the price at which the end of the 1995 financial year. they were purchased. Entry, removal and storage costs already entered in the accounts in respect of each of the rejected quantities are to be deducted and taken into account separately. To that end, stor- age costs are to be calculated by multi- plying the rejected quantities by the number of months which elapse between 17. As regards the remaining 38 228.064 entry and removal, by the standard amount tonnes, the Commission considered that the and by the agricultural conversion rate of deterioration of the product was the result the month of removal. 16 — It should be noted that in Italy the intervention agency, the Azienda dl Statt) per gli Interventi nel Mercato Agricolo (the State agency for intervention in the agricultural 15 — Regulation on the accounting rules for intervention market, 'AIMA') has delegated all the operations for the measures involving the buying-in, storage and sale of buying-in and storage of cereals to private operators who agricultural products by intervention agencies (OJ 1990 are called 'enti assuntori' (sec Consolidated Report, p. 89). L 350, p. 43). Coop. San Giorgio is one of those private operators.

22. As we know, only intervention oper- ations undertaken in accordance with the

19. I shall consider each of those points in turn. 17 — Annexes B1 to B37 to the application.

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Community rules within the framework of on the file 22 that a quantity of 84 481.128 the common organisation of agricultural tonnes of durum wheat stored by Coop. markets are financed by the EAGGF. In the San Giorgio did not comply with the event of any dispute it is for the Commis- requirements laid down by Regulation sion to prove an infringement of the rules No 1569/77. The quality of the wheat on the common organisation of agricultural was poor when it was acquired by the markets. 18 The Commission is therefore storer. It is also clear from the file that that Obliged... to give reasons for its decision finding is based on the result of analyses of finding an absence of, or defects in, inspec- samples taken by the CCIA at Coop. San tion procedures operated by the Member Giorgio in March 1995. 23 State in question'. 19

23. The Member State concerned, for its part, cannot rebut the Commission's find- ings by mere assertions which are not 25. Like the Commission, 24 I think that the substantiated by evidence of a reliable and 37 certificates produced by the Italian operational supervisory system. 20 If it is Republic are not likely to refute that not able to show that they are inaccurate, finding. 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. 21

27. That requirement of independence is was 1 185.269 tonnes less than the Com- not met in the present case. It is common mission's figure. Although the Italian auth- ground 25 that the samples analysed by the orities sent that figure to the Commission private laboratory, Consulchimica de Cro- in March 1999 the Commission kept the tone were taken by the storer himself and contested adjustment at the proposed level not by an independent person. The Italian of 38 228.064 tonnes. The adjustment was Republic recognises, moreover, that that therefore not justified to that extent. fact is such that it damages the objectivity of the results of the analyses, since the storer is answerable to the AIMA for its decision to buy in cereals and for any deterioration in the products during stor- age. 30. The arguments of the Italian Govern- ment cannot therefore be accepted.

28. In those circumstances I think that the 31. It is clear from the documents on the analysis certificates produced by the appli- file 26 that during the inspection conducted cant are not such that they invalidate the in March 1995 the CCIA found that the Commission's findings. I therefore suggest quality of 37 042.795 tonnes of durum that the Court rejects the first complaint. wheat being stored by Coop. San Giorgio was poor and that another 1 185.269 tonnes were missing. The Commission therefore imposed a financial adjustment in respect of both those quantities, attribu- ting the same value to the quantity which 2. The existence of an error of assessment had deteriorated and to the quantity which in the calculation of the quantity of prod- was missing. ucts at issue

I I I— The sale of durum wheat to Algeria Article 11(4) stated that payment of the purchase price for the wheat and export of the wheat meal within the specified period constituted a 'primary requirement' within the meaning of Article 20 of Commission Regulation (EEC) No 2220/85 of 22 July 1985. 30 That regulation contains the provi- A — Legal background and facts sions governing the system of securities required by several Community regulations in the context of the common agricultural policy. 31 3 3 . Commission Regulation (EEC) No 2131/93 of 28 July 1993 2 8provides that cereals bought in by the intervention agencies must be put up for sale by invitation to tender. 35. On 10 March 1995 the Commission amended Regulation No 2668/94 by adopt- ing Regulation (EC) No 545/95. 32 It pro- vided that the full amount of the security would be released within 15 clays of the 34. By Regulation (EC) No 2668/94 of date on which the successful tenderer pro- 31 October 1994 29the Commission auth- vided evidence that 'the primary require- orised the Italian intervention agency to put ment referred to in paragraph 4 had been up for sale by tender 148 000 tonnes of met'. durum wheat for export in the form of durum wheat meal to Algeria. Article 11(2) provided that the successful tenderer should lodge a security of ECU 50 pel- tonne of durum wheat in order to ensure performance of the requirement to export 36. In this particular case the Commission the products and import them into Algeria. considered that the Italian administration That article also provided that an initial had released the security lodged by one of amount of ECU 25 per tonne should be the successful tenderers, Italgrani SpA, lodged at the time the export certificate was without the latter providing evidence that issued and a further amount of ECU 25 pel- the purchase price had been paid for the tonne should be lodged before the cereals products. The Commission therefore were removed from storage. Article 11(2) imposed a financial adjustment of ITL stated that the full amount of the security 1 923 101 478, corresponding to the would be released within 15 days of the amount of the security which should have date on which the successful tenderer pro- been forfeited. vided evidence that the wheat meal had actually arrived in Algeria. Lastly, 30 — Regulation laying down common detailed rules for the application of the system of securities for agricultural products (OJ 198.5 I. 205, p. 5). See ill particular with regard to that term my Opinion, also delivered today, in 28 — Regulation laying down the procedure and conditions for Case C-177/00 (Italy v C o m m i s s i o n , points 106 and 107) the sale of cereals held hy intervention agencies (OJ 1993 pending hefore the Court of Justice. L 191, p. 76). 31 — Hirst recital in the preainhle. 29 — O J 1994 L 284, p. 45. 32 — O J 1995 L 55, p. 27.

38. Like the Commission, I think that that argument is unfounded. 4 1 . In this particular case it is not disputed that Italgrani SpA failed to pay the pur- chase price for the quantity of durum wheat which it was awarded. 3 5 Since the successful tenderer did not comply with a 39. It is clear from the documents on the primary requirement within the meaning of file 3 3 that, contrary to what the Italian Article 20 of Regulation N o 2220/85 the Republic contends, the contested adjust- Italian authorities could not release the ment is not based on infringement of security it had lodged. Article 11(2) of Regulation N o 2668/94, as amended by Regulation N o 545/95. On the contrary, the Commission considered that the Italian authorities were not entitled to release the security lodged by Italgrani SpA unless that company complied with the requirements laid down in Article 11(4) of 42. In those circumstances, I suggest that Regulation N o 2668/94. That provision the Court should reject the plea supporting was not, however, amended by Regulation the claim for annulment. N o 545/95, so the complaint alleging retro- spective application of Community legis- lation must be rejected. 34 — Article 1(a) of Regulation No 2220/85 provides that that regulation applies to securities to be given under Regu- lation No 2727/75. 35 — See Consolidated Report (p. 105), application (p. 5) and 33 — Consolidated Report (p. 105). defence (paragraphs 29 and 30).

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IV — The financial adjustment of ITL common wheat and maize and the equiv- 9 965 368 843 corresponding to the value alent value of the missing quantities of of the discrepancies found in the stocks of barley. The total amount of the adjustment common wheat, barley and maize is ITL 9 965 368 843.

44. In the case of common wheat, the quantity declared at the end of the 1994 'The Italian Republic would like to point financial year was 361 tonnes, whereas the out... that the stock adjustments result from quantity declared at the start of the 1995 the fact that during October 1994 the financial year was 6 3 6 . 3 tonnes (an Italian administration made the required increase of 275 tonnes). As regards barley, adjustment to accord with the actual stocks the quantity declared at the end of the 1994 as they were found to exist following the financial year was 80 0 3 9 . 6 7 tonnes, inventory check carried out... by the CCIA. whereas the quantity declared at the start of the 1995 financial year was 52 195.07 tonnes (a reduction of 27 844.6 tonnes). Lastly, as regards maize, the quantity declared at the end of the 1994 financial year was 27 371.061 tonnes, whereas the quantity declared at the start of 1995 was 62 8 1 7 . 3 2 4 t o n n e s (an increase of 35 446.263 tonnes).

[The Commission's approach is] opportun- ist since it turns the fact that the Italian administration, correctly, adjusted the 45. The Commission therefore decided to require the Italian authorities to pay the carry-over value of the surplus quantities of 36 — Application (p. 6).

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stocks shown on the books to accord with account in the EAGGF tables in respect the stocks actually in storage to its own of the 1994 financial year; economic advantage. The Commission benefits, on the one hand, from the "carry- over value" as a result of the increase in the stocks of common wheat and maize, with- out giving the Italian State a similar advan- tage in return as regards barley... , and, on the other, from the value calculated on the basis of Regulation... No 3597/90 follow- (3) [t]he technical storage costs (budget ing reduction in the stock of barley which is item 1011.03) due in respect of finan- not due to the actual loss of the product. cial years 1992, 1993 and 1994 on 275 tonnes of common wheat stored because the 5 000 tonnes of common wheat to be supplied as food aid to Albania in full in December 1992 were not delivered.'

49. The Italian Republic considers that in making the contested adjustment the Com- mission imposed a double penalty on it. It puts forward the following arguments: 38 V — The financial adjustment of ITL 2 502 127 250 corresponding to the amount of adjustments made by the Com- mission in an earlier monthly declaration (common wheat, barley and maize)

'(1) In the 12th monthly declaration for the year 1995 the Italian administration provided the following information in Tables 8, line 1, and 52, line 30: A — Facts

48. The Commission staff imposed an adjustment of ITL 2 502 127 250 in order — maize stocks at 1 October 1994 to correct an error made by the Italian equivalent to 27 371.061 tonnes; authorities in the annual declaration. When it drew up the annual EAGGF tables for the 1995 financial year the Italian adminis- tration failed to carry over the adjustments made by the Commission in a monthly declaration under Article 9(7) of Commis- sion Regulation (EEC) No 2776/88 of 7 September 1988. 37 — technical costs (budget item 1011.006): ITL 472 481 200; 37 — Regulation on data to be sent in by the Member States with a view to the hooking of expenditure financed under the Guarantee Section of the Agricultural Guidance and Guarantee Fund (EAGGF) (OJ 1988 L 249, p. 9). 38 — Application (pp. 7 and 8).

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— financial costs (budget item referred to in paragraph 4.5.1.3.2 of 1012.006): ITL 141 376 660; the Consolidated Report (Addendum II).

C — Assessment ITL 11 952 457 079 in respect of the régularisation of invoices for the sale of cereals into public intervention. It contends that if it is not awarded that sum by the Commission it will suffer a double penalty.

50. The Italian Government's arguments fail to meet the conditions laid down in Article 38(1 )(c) of the Rules of Procedure of the Court of Justice. They do not make it possible to identify the legal and factual grounds on which the applicant bases its application. Although the Commission was able to submit its defence as a result of its involvement in the pre-litigation procedure, 52. Under Article 38(1 )(d) of the Rules of the Court of Justice is not able to conduct a Procedure of the Court of Justice, an judicial review solely on the basis of the application must state the form of order information provided in the application. As sought by the applicant. In the present case we have seen, the Court cannot take the the plea in law relied on by the Italian place of the applicant, or his lawyer, by Republic concerns a measure of which it is trying to locate and identify itself the not seeking the annulment. That plea is information which might support the therefore inadmissible. claims formulated in the application. The fifth plea must therefore be declared inad- missible.

VII — Costs VI — Regularisation of invoices for the sale of cereals into public intervention

51. The Italian Government raises one last 53. Under Article 69(2) of the Rules of plea which, it admits, 39 does not con- Procedure, the unsuccessful party is to be cern the contested decision. It states that ordered to pay the costs if they have been during the conciliation procedure it applied for in the successful party's plead- lodged an application for payment of ings. Since the Commission applied for an order for costs and the Italian Republic has been unsuccessful, the latter must be 39 — Application (p. 8). ordered to pay the costs.

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