C-293/00

NETHERLANDS v COMMISSION

OPINION OF ADVOCATE GENERAL STIX-HACKL delivered on 26 June 2003 1

Table of contents

I — Introduction I - 12781

II — Relevant legislation I - 12782

III — The contested decisions I - 12786

V — The Commission's individual complaints and their legal consequences I-12796

A — Preliminary remarks I -12797

B — Technical objections raised by the Commission (Case C-293/00) I-12799

1. Introductory observations I - 12799

2. The finding and assessment of fact by the Commission I-12799

(a) Essential arguments of the parties I - 12800

I - 12779

OPINION OF MRS STIX-HACKL — CASES C-293/00 AND C-501/01

(b) Assessment I -12804

— Absence of a contingency plan I -12804

— Alleged delay in official confirmation of the CSF outbreak I-12805

— Animal movements in the protection zone I -12806

(b) Legal assessment I -12812

2. The finding and assessment of fact by the Commission I-12813

(a) In Case C-293/00 I-12813

(i) Main arguments of the parties I -12813

(ii) Legal assessment I -12815

— General I-12815

(b) In Case C-501/01 I-12819

(i) Main arguments of the parties I -12819

(ii) Legal assessment I -12819

3. Proportionality and reasons for the legal consequence established I-12821

(a) Main arguments of the parties I -12821

(i) Proportionality I-12821

3. The Netherlands Government submitted 2 — Commission Decision 2000/362/EC of 25 May 2000 on the claims for 1997 and 1998 respectively, total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1997 (notified requesting a Community contribution to under document number C(2000) 1385) (OJ 2000 L 129, p. 33); Commission Decision 2001/739/EC of 17 October the expenditure it had incurred for the 2001 on the total amount of Community aid for the purpose of eradicating CSF. The Commis- eradication of classical swine fever in the Netherlands in 1998 (notified under document number C(2001) 3110) sion considers certain expenditure ineligible (OJ 2001 L 277, p. 28).

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OPINION OF MRS STIX-HACKL — CASES C-293/00 AND C-501/01

annulled inasmuch as the Commission has 7. Article 3(2) provides: applied a flat-rate 2 5 % reduction to the expenditure at issue in each case. The Netherlands Government takes the view that such a reduction is devoid of legal basis. It further takes the view that the Commission proceeded on the basis of 'The Member State concerned shall obtain incorrect information and, what is more, a financial contribution from the Commu- assessed that information erroneously. The nity for the eradication of the disease, on contested decisions were also dispropor- c o n d i t i o n t h a t the m e a s u r e s applied tionate and could not be reconciled with immediately comprise at least the isolation the principle of the protection of legitimate of the holding from the time of suspicion expectations. Lastly, insufficient reasoning and, following official confirmation of the was given for those measures. disease:

— the imposition of suitable measures to the common organisation of markets, the prevent the risk of the spread of financial contribution by the Community, infection, divided if necessary into several tranches, must be:

— the establishment of a waiting period to be observed after slaughter before re-stocking of the holding, — 5 0 % of the costs incurred by the Member State in compensating owners for the slaughter, destruction of ani- mals and, where appropriate, their — swift and adequate compensation of products, for the cleaning, disinsecti- sation and disinfection of holdings and the livestock farmers.' equipment and for the destruction of the contaminated feedingstuffs and contaminated equipment referred to in the second indent of paragraph 2,

Under Article 3(3) of Decision 90/424 '[t]he Member State concerned shall, without delay, inform the Commission and the other Member States of the measures applied in accordance with Community legislation on notification and eradication and the results thereof. The situation shall — where vaccination has been decided be examined as soon as possible within the upon in accordance with paragraph 4, Standing Veterinary Committee, here- 100% of the cost of supply of the inafter referred to as the "Committee", set vaccine and 5 0 % of the costs incurred up by Decision 68/361/EEC. The specific in carrying out that vaccination.' financial contribution by the Community shall be decided in accordance with the procedure laid down in Article 4 1 , without prejudice to the measures provided for in the context of the common organisation of markets concerned.'

(a) a census of all the holdings shall be made as soon as possible;...

12. Article 9 of Directive 80/217, as amended by Council Directive 91/685, provides, as far as is relevant here:

(b) the movement and transport of pigs on 5 — Hence the reason for the Amsterdam Treaty creating a public or private roads shall be pro- separate basis of competence in Article 152(4) EC, by way of derogation from Article 37, as regards measures in the hibited...; veterinary and phytosanitary fields. 6 — Council Directive of 22 January 1980 introducing Commu- nity measures for the control of classical swine fever (OJ 1980 L 47, p. 11). That directive was amended by Council Directive 80/1274/EEC (OJ 1980 L 375, p. 75), Council Directive 81/476/EEC (OJ 1981 L 186, p. 20), Council Directive 84/645/EEC (OJ 1984 L 339, p. 33), Council Regulation (EEC) N o 3768/85 (OJ 1985 L 362, p. 8), Council Directive 85/586/EEC (OJ 1985 L 372, p. 44), Council Directive 87/486/EEC (OJ 1987 L 280, p. 21), (c) trucks and other vehicles and equip- Council Directive 91/685/EEC (OJ 1991 L 377, p. 1) and Council Decision 93/384/EEC (OJ 1993 L 166, p. 34). ment, which are used to transport pigs 7 — Council Directive of 23 October 2001 on Community measures for the control of classical swine fever (OJ 2001 or other livestock or material which L 316, p. 5). may be contaminated (e.g. feedingstuff,

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NETHERLANDS v COMMISSION

manure, slurry, etc.) and which are transported to a rendering plant for ren- used within the protection zone, shall dering or to a place where the pigs are not leave...; slaughtered in order to be burned or buried....

13. Under Article 14b of Directive 80/217 'Article 1 each Member State is to draw up a contingency plan on the basis of certain criteria, specifying the national measures to be implemented in the event of an outbreak The total amount of Community financial of CSF. The plans had to be submitted to aid for the eradication of classical swine the Commission not later than 1 January fever in 1997 in the Netherlands is hereby 1993 for examination and, following any fixed at EUR 109 937 795. amendment that might be necessary, appro- val.

Article 2

14. One item of horizontal legislation to which reference should also be made is Council Directive 92/119/EEC. 8 The balance of EUR 35 507 928 shall be paid as appropriations become available.

Article 3

III — The contested decisions

This Decision is addressed to the Kingdom of the Netherlands.'

(8) Further comments and the method for calculating the eligible expenditure were officially notified to the Netherlands auth- (3) The Commission adopted Decisions orities on 5 May and 29 October 1999. 98/25/EC and 1999/18/EC on Community financial aid towards the eradication of classical swine fever in the Netherlands. These Decisions provided for the payment of two initial advances amounting to EUR 74 429 868. (9) The Standing Veterinary Committee has not given an opinion; the Commission therefore proposed these measures to the Council on 17 February 2000 in accord- a n c e w i t h A r t i c l e 4 1 of D e c i s i o n 90/424/EEC, the Council being required (4) The total amount of Community aid to act within three months. must now be fixed.

(10) However, the Council has not acted (5) The Commission has checked to see within the required time-limit; these meas- whether all Community veterinary rules ures should now be adopted by the Com- have been observed and all the conditions mission.' for Community financial assistance have been met.

18. The Kingdom of the Netherlands has claimed t h a t the decision should be (6) As a result of these checks, not all of the annulled in so far as the Community expenditure submitted could be accepted as financial contribution fixed for the eradi- eligible. This position was confirmed in a cation of CSF in the Netherlands in 1997 report by the Court of Auditors. has been reduced by 2 5 % .

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OPINION OF MRS STIX-HACKL — CASES C-293/00 AND C-501/01

B — Decision 2001/739 2 1 . The recitals in the preamble thereto read as follows:

(4) The Commission has checked to see (9) The Standing Veterinary Committee has whether all Community veterinary legal not given a favourable opinion. The Com- provisions have been observed and all the mission therefore proposed these measures conditions for Community financial assist- to the Council on 19 June 2001 in accord- ance have been met. a n c e w i t h A r t i c l e 4 1 of D e c i s i o n 90/424/EEC, the Council being required to act within three months.

(5) As a result of these checks, not all of the expenditure submitted could be accepted as eligible. This position is consistent with the (10) However, the Council has not acted special report on classical swine fever within the required time-limit. These meas- issued by the Court of Auditors and with ures should now be adopted by the Com- Decision 2000/362/EC. mission.'

22. The Kingdom of the Netherlands has (6) The Commission's comments on the claimed t h a t the decision should be application submitted by the Netherlands annulled in so far as the Community were officially notified to the Dutch auth- financial contribution fixed for the eradi- orities on 11 December 2000. cation of CSF in the Netherlands in 1998 has been reduced in the form of a 2 5 % reduction in the compensation paid to livestock farmers.

(7) The total amount of Community aid for the expenditure related to the outbreaks of classical swine fever in the Netherlands in 1998 must now be fixed.

C — Background to the two decisions

(8) Pursuant to Article 3(2) of Council 23. It is common ground that the Nether- Regulation (EC) N o 1258/1999, veterinary lands authorities submitted an application and plant health measures undertaken in to the Commission in 1998 for a Commu- accordance with Community rules shall be nity financial contribution in excess of financed under the Guarantee Section of NLG 884 million to expenditure incurred the European Agricultural Guidance and in relation to veterinary measures taken in Guarantee Fund. For financial control pur- 1997. The application relates to measures poses, Articles 8 and 9 of Regulation (EC) for controlling the 1997 outbreak of CSF N o 1258/1999 apply. which were implemented in the same year.

24. Under Decision 90/424 Member States 27. The technical objections essentially can, in principle, expect to obtain 5 0 % focus on the Netherlands inability to meet co-financing in respect of the costs they the conditions required for Community have incurred, which are described in co-financing in particular in the light of a greater detail in that decision. In the case failure to fulfil the requirements under at issue, however, the Commission has Directive 80/217. In that context the Com- reduced the Community financial contribu- mission cites the absence of a contingency tion by 2 5 % . plan, the delay in establishing the presence of the disease, the excessive number of animal movements in the protection zone together with an insufficient guarantee of hygiene, the suspension of preventive clear- ing measures and a failure to set up protection zones. 25. It is also common ground that the application submitted by the Netherlands authorities in the same circumstances but in relation to 1998 concerned some NLG 63 million. Approximately NLG 22.5 million of that amount was compensation for 2 8 . The objections of a financial and livestock farmers. The Commission has administrative nature are levelled against reduced the Community financial contribu- the — in the C o m m i s s i o n ' s view — tion to the abovementioned expenditure excessive, and therefore inappropriate, likewise by 2 5 % . compensation paid to livestock farmers. The manner in which the value of the livestock was established was, it claims, unsatisfactory: animals had changed cat- egory during the evaluation process; the weight of the feedingstuff had likewise been 26. The specific reasons for the flat-rate overestimated; compensation was paid reduction in the Community financial con- several times over for some animals. tribution to the expenditure incurred in 1997 by the Netherlands can be found in the correspondence attached to the appli- cation in the corresponding action. 1 1 The Commission first of all criticises the manner in which the measures designed to 29. The reasons for the reduction in the eradicate the disease are implemented — Community contribution to the expendi- the 'technical objections' — and secondly, ture incurred in 1998 can likewise be found as an entirely separate consideration, in the correspondence attached to the regards compensation paid to livestock application in the corresponding action. 1 2 farmers overall as excessive — the 'objec- The objections raised by the Commission in tions of a financial and administrative that instance are of a financial and adminis- nature'. trative nature alone: the Netherlands auth-

33. The Netherlands Government takes the 30. The Netherlands Government raises view that the application of a (flat-rate) five pleas in law against each of the financial correction is not permitted under contested decisions. By its first plea in each Decision 90/424. It is further of the opinion case, it argues that the Commission has that implementation of the measures laid assessed the facts erroneously. The other down by Article 3(5) of Decision 90/424 pleas relate to alleged errors in law. In that gives rise to an entitlement whereby a respect the N e t h e r l a n d s G o v e r n m e n t Member State may obtain a 5 0 % financial objects first to the Commission's decision contribution from the Community towards in principle to effect a flat-rate reduction of the expenditure incurred. That decision, it the Community contribution and secondly claims, does not lay down any further to the calculation of and grounds for that conditions. In view of the severity of the flat-rate reduction. crisis which gave rise to these proceedings and the complexity of the resulting situ- ation, it was inevitable that errors in fact and erroneous assessments would be estab- lished subsequently; however, those errors were not such as to give rise to corrections. 31. It therefore appears appropriate first of all to examine the extent to which the Commission is able to verify compliance with the conditions for payment of a Community contribution laid down in Article 3(2) of Decision 90/424 and the 34. Moreover, applying a flat-rate financial consequences in law that may ensue from a correction without an express legal basis in Member State's failure to satisfy those Decision 90/424 was contrary to the conditions. requirement of legal certainty.

40. On completion of a preliminary pro- cedure the Commission decided to apply a 2 5 % reduction when fixing the Commu- 37. The Netherlands entitlement to a con- nity financial contribution. This is indis- tribution towards its costs arises indisput- putably a flat-rate reduction. The Commis- ably from Article 3(2) of Decision 90/424, sion defends that decision by explaining which provides that '[t]he Member State that it had not been possible, in view of the concerned shall obtain a financial contribu- scale and complexity of the crisis, to tion from the Community for the eradi- determine with precision which additional cation of the disease, on condition that the costs charged to the Community budget measures applied immediately comprise at had accrued as a result of shortcomings at least the isolation of the holding from the national level. time of suspicion and, following official confirmation of the disease,...' a series of additional measures described in greater 13 — Special Report No 1/2000 on classical swine fever, together with the Commission's replies (OJ 2000 C 85, detail. p. 1).

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NETHERLANDS v COMMISSION

42. However, this case does not concern expenditure in relation to the common 4 5 . H o w e v e r , t h a t q u e s t i o n c a n go agricultural policy, which would have to unanswered as the Netherlands Govern- be financed in its entirety under the Guar- ment in any event intimated clearly at the antee Section of the EAGGF; on the hearing that, rather than calling into ques- contrary, it concerns veterinary expen- tion the Commission's powers of verifi- diture, only half of which is, in principle, cation, it was essentially challenging the chargeable to the EAGGF pursuant to legal consequences — namely the flat-rate Decision 90/424. corrections — ensuing from the Commis- sion's findings which it in any case regarded as erroneous.

47. Article 10 of Decision 90/424 which compliance with the provisions of Directive establishes the entitlement to the contribu- 80/217 in particular. tion provides, after all, that '[t]he appropri- ations required for measures as referred to in this chapter shall be decided each year as p a r t of t h e b u d g e t a r y p r o c e d u r e ' , Article 9(1) of the decision expressly pro- viding that on-the-spot checks can be carried out by the Commission 'to ensure, 49. However, the legal consequence that from a veterinary point of view, that the can ensue from a failure to meet the measures adopted have been applied' (my relevant requirement of Community law emphasis). Moreover, Article 3(3) of the still has to be clarified. decision provides that '[t]he Member State concerned shall, without delay, inform the Commission and the other Member States of the measures applied in accordance with Community legislation on notification and eradication and the results thereof' (my emphasis). It is clear from those provisions 50. At the hearing the Netherlands Govern- that Decision 90/424 itself assumes — ment did not contest the argument per se albeit implicitly — that the Commission that a failure to satisfy the conditions for enjoys power to check not only whether payment of a Community contribution may there is procedural regularity but also have repercussions in law; it did, however, whether the expenditure has been effected submit that such repercussions are depend- by the paying agencies of the Member ent on the presentation — by the Commis- States in accordance with Community law. sion, of course — of evidence showing a distinct infringement of Community law. In that context the Netherlands Government referred to the discretion enjoyed by the Member States and the errors of assessment inevitably made when tackling a disease.

52. Where the Commission seeks to reduce 54. The Belle Group report codifies a long- the Community contribution to expendi- standing Commission practice the principle ture incurred by a Member State to reflect of which has not been criticised by the the financial consequences most probably Court. 18 In this respect the Court has ensuing from the infringements, this meas- concluded that 'where it proves impossible ure is in any event a rather lenient legal to establish with certainty the extent to consequence for the Member State con- which a national measure which is incom- cerned. patible with Community law has caused an increase in the expenditure entered under a budgetary item of the EAGGF, the Com- mission has no choice but to disallow... all the expenditure in question... If, then, in its function of clearing the accounts the Com- mission, instead of refusing the entire expenditure, endeavours to draw up rules to differentiate according to the degree of risk posed to the EAGGF by different levels of defective supervision, the Member State must show that those criteria are arbitrary 53. I therefore see distinct parallels with and unfair.' 1 9 the Court's position on the permissibility of flat-rate corrections in respect of agricul- tural expenditure: the basis for those cor- rections is the Commission's working docu- ment N o VI/216/93 1 7 (annexed to the 'Belle Group report'). This document sets out guidelines to be followed when finan- cial corrections must be applied in relation to a Member State. For difficult cases the report makes provision for a flat-rate method: '[a]s the systems audit approach has become more widely applied, the EAGGF has had recourse increasingly to 55. The fundamental difficulty with flat- an assessment of the risk which a systems rate corrections under agricultural pol- deficiency presents. By the very nature of ex icy, 2 0 which is also relevant here in the post auditing, it can rarely be established at veterinary field, lies in finding a practicable the time of audit whether a claim was valid when paid... The loss to the Community funds must therefore be determined by an 18 — See only Case C-50/94 Greece v Commission [1996] ECR I-3331; Case C-242/96 Italy v Commission [1998] ECR evaluation of the risk to which they were I-5863; and Case C-243/97 Greece v Commission [2000] ECR I-5813. exposed by the control deficiency, which 19 — Case C-50/94 Greece v Commission (cited in footnote 18), may concern as much the nature, or paragraph 26 et seq. quality, of the controls operated as the 20 — See the Commission's opinion in Case C-50/94 Greece v Commission (cited in footnote 18), paragraph 24: '[The quantity of controls effected....'. Belle Group report] criteria constitute a common basis of agreement in that, if it proves impossible to determine the amount of the adjustments precisely, a middle way is chosen by withholding a flat-rate amount, thus making it possible both to respect Community law and the sound 17 — This document has since been superseded by a further management of Community resources and to comply with working document, Commission document No the understandable wish of the Member States to avoid VI/5330/97 of 23 December 1993. excessive and disproportionate adjustments.'

approach between excluding expenditure sufficient certainty how CSF would have from financing — a measure regarded as developed if a different veterinary policy, d i s p r o p o r t i o n a t e — and releasing the consistent with Community law, had been Community budget of the burden of addi- pursued. As regards the 'objections of a tional costs incurred by reason of defective financial and administrative nature', the national measures. discretion enjoyed by the Member State likewise makes it impossible to determine with precision the additional costs incurred as regards the payment of adequate com- pensation to livestock farmers. Con- 56. The Court did not cite the absence of sequently, I do not see any objection in legal basis or the failure to observe the principle to applying flat-rate corrections in requirement of legal certainty when it these cases. criticised the flat-rate corrections that the Commission is in the habit of determining. On the contrary, it proceeded from the premiss that the criteria on which flat-rate corrections are based lead to a shift in the 59. It is, as yet, to be determined whether burden of proof in favour of the Commis- the Commission established the respective sion; thus the Member State concerned has percentages for the flat-rate correction on to show that those criteria are arbitrary and the basis of relevant information, thereby unfair. inferring that the national measures are insufficient to satisfy the conditions under Article 3(2) of Decision 90/424, and whether it gave sufficient reason for that percentage rate. 57. Although there are no such criteria as regards veterinary expenditure, that does not mean, however, that the flat-rate cor- rections established by the Commission in 60. I conclude that the second plea raised the contested decisions are devoid of a legal in each of the two cases, inasmuch as it basis but — in accordance with the case- relates to the alleged absence of a legal law cited above — in fact that more strin- basis, and the fourth plea in each case gent requirements must be imposed on the alleging a failure to observe the principle of Commission as regards giving reasons for legal c e r t a i n t y m u s t be rejected as the chosen rates of correction. unfounded.

adopting them the Commission had relied in itself present a problem. However, where on incorrect information (first plea in each the criterion for assessing whether the case) and because the conclusions it had conditions mentioned in Article 3(2) of drawn from that information were legally Decision 90/424 are met is sought in incorrect (second plea in each case). It particular in Directive 80/217, it must be furthermore claims that the decisions are noted that although that directive indeed disproportionate (third plea in each case) has contributed to harmonising veterinary and are vitiated by an inadequate statement policy in the Member States with regard to of reasons (fifth plea in each case). CSF, the Member States continue none the less to enjoy a broad margin of discretion as regards the choice of measures to be adopted. In the cases at issue here it is not disputed, for example, that Community law does not contain any obligation to 62. Since the parties themselves make a slaughter animals as a preventive measure. distinction between technical objections It is likewise agreed that it is in principle for and objections of a financial and adminis- the Member State to determine the amount trative nature, the pleas mentioned will be of compensation to be paid to the livestock examined separately in relation to each farmers — within the limits of what is type of objection. However, it appears considered adequate of course. expedient to begin by focusing on funda- mental considerations relating to the inten- sity of the review by the Court and the sharing of the burden of proof.

infringement of Community law but also, the sharing of the burden of proof in that it and primarily — for example, in the is for the Member State to demonstrate that debate on the suspension of preventive the Commission has committed a manifest slaughter operations — from a lack of error of assessment. If the Member State expediency in the national measures. does not furnish such evidence relating to the Commission's findings, it cannot for that matter challenge the resulting decision by claiming that the cases to which the Commission referred were isolated cases from which it was impossible to draw 66. To establish the scope of judicial general conclusions. review, it is crucial to ascertain whether the Commission took sufficient account of the margin of discretion enjoyed in this matter by the Member State concerned. Indeed, it is not for the Court to rule on the veterinary policy that should have been 68. Reference is additionally had to the pursued. On the contrary, it has to confine case-law on the clearance of EAGGF itself to assessing whether or not the accounts, under which 'it is the Member Commission has made a manifest error of State which is best placed to collect and assessment. The need for such a restricted verify the data required for the clearance of review is a direct result of the discretion EAGGF accounts; consequently, it is for enjoyed by each Member State individually the State to adduce the most detailed and in defining its strategy for eradicating the comprehensive evidence that it has made disease on the one hand and in determining checks or that its figures are accurate and, the compensation to be paid to the live- if appropriate, that the Commission's stock farmers on the other. 2 1 assertions are incorrect'. 22

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principle of p r o p o r t i o n a l i t y and the 73. However, the Netherlands Government requirement to state reasons. for its part criticises the actual rate of the reduction which the Commission has decided to apply to the financial contribu- tion. In this regard it is essentially claiming 70. I have already pointed out that flat-rate that the Commission has acted in breach of corrections should, in principle, be per- the principle of proportionality (third plea mitted. 2 3 However, since in this case the in each case) and of the requirement to flat-rate reductions are not decided on the state reasons (fifth plea in each case). Since basis of criteria defined in advance — such its arguments in this context do not differ as those contained in the Belle Group from its arguments concerning the objec- report — more stringent requirements tions of a financial and administrative must be imposed as regards their justifi- nature, I shall examine the third and fifth cation, in particular when it comes to pleas raised in the two cases together in my examining proportionality. A fact that observations on the latter objections. must be borne in mind in this connection is that the Commission itself enjoys a certain measure of discretion pursuant to the case-law. 2 4

B — Technical objections raised by the Commission (Case C-293/00) 2. The finding and assessment of fact by the Commission

1. Introductory observations

75. As the arguments put forward by the 78. The Commission notes that the absence Netherlands Government to support its of an approved contingency plan at the second plea in each case are restricted to time of the outbreak is not subject to repeating the criticisms expressed in dispute. It is inconsequential that the relation to the first plea in each case, I Netherlands authorities had dealt with the should like to examine the two pleas jointly CSF outbreak in accordance with the con- since they are, obviously, closely con- tingency plan in place for foot-and-mouth nected. disease since that contingency plan could not take account of the special features of pig farming in the Netherlands, namely the high density of the pig population and the large number of holdings. It goes on to observe that it had not been notified of the (a) Essential arguments of the parties existence of the 'scenario' prior to the outbreak. It is also apparent from the rejoinder that the Commission considers a contingency plan to be vital, given that a plan of that kind had, in its view, reduced the risk of any shortcomings in controlling — Absence of a contingency plan the disease.

— Animal movements in the protection 82. The Commission also submits that on zone the morning of 3 February 1997 a sus- pected outbreak of swine fever was rec- orded. Nevertheless, the competent auth- orities had waited until 12 noon on the 85. The Netherlands Government asserts following day to confirm the disease offi- that it did everything in its power to cially and had waited a further 12 hours to minimise the number of animal movements impose the transport ban. Such failure to within the protection zone. Transport bans act had significantly increased the risk of had been imposed pursuant to Directive spreading the disease. 80/217 and it had been decided to impose additional transport bans. Compliance with those bans was monitored strictly. The Commission failed to acknowledge the fact that a substantial proportion of the 83. Although the Commission concedes animal movements were necessary to meet that detecting swine fever on a holding is the requirements of the purchasing policy fraught with difficulty, it none the less u n d e r C o m m i s s i o n R e g u l a t i o n (EC) points out that the symptoms detected and N o 413/97 25 or were justified on veterin- the fact that the disease was present in ary grounds. It wrongly maintained that the areas of Germany with which the Nether- hygiene precautions taken were insuffi- lands maintains active trade relations cient. should have prompted the Netherlands authorities to notify the suspicion more swiftly and to set in motion the official means of investigation necessary under Article 4 of Directive 80/217. 86. The Commission maintains that the Netherlands authorities had allowed ani- mals to be transported in tens of thousands of cases, by far exceeding the boundaries 84. From a legal point of view, the Com- defined by Article 9(8) of Directive 80/217. mission notes that the necessary measures must be implemented with immediate effect pursuant to the introductory sentence of 25 — Commission Regulation of 3 March 1997 adopting exceptional support measures for the market in pigmeat Article 3(2) of Decision 90/424. According in the Netherlands (OJ 1997 L 62, p. 26).

89. The Commission regards preventive slaughter as an important means of avoid- ing the risk of the disease spreading, in 87. From a legal point of view, the Com- particular in areas with a high-density pig mission recalls the fact that under the population such as in the Netherlands. Yet provisions of Article 9(8) and (9) of Direc- it acknowledges 26 that Community law tive 80/217 animal movements in the pro- makes no provision for an obligation to tection zone are permitted only by way of effect preventive slaughter. It maintains, derogation. In this respect, it concludes, the however, that the discretion enjoyed in this Netherlands authorities had not fully met respect by the Member States is restricted the requirement to avoid the risk of spread- to taking the measures which are objec- ing the virus. Moreover, the shortcomings tively necessary to control the disease. At established with regard to the cleaning and the material time, both the Commission disinfecting of trucks fell expressly within and the Standing Veterinary Committee the scope of Article 9(8) of Directive (hereinafter 'the Committee') were aware 80/217. of the expediency of pursuing a policy of preventive slaughter in high-density areas.

92. It was apparent from all those factors that the policy of preventive slaughter had not been applied consistently as a means of eradicating the disease. Even though some preventive clearing operations had been carried out, certain holdings had not been cleared in spite of their close proximity to an outbreak site. 95. The Commission in that connection emphasises the fact that it has based its objections directly on the relevant provi- sions of Community law. Thus it claims not 93. That inconsistent policy generated con- to have relied in that context on the siderable additional costs which were simulation set out in the study in question. charged to the Community budget. To calculate those costs the Commission had reference to a study by the Landbouwuni- versiteit Wageningen (the Netherlands). The study describes the repercussions that systematic, preventive clearing might have had on the development of the epidemic and estimates the additional costs charged to the Community budget to be in the region of EUR 69 million. 96. From the legal aspect, the Commission regards the two-month suspension of pre- ventive clearing in holdings close to infected holdings and the subsequent appli- cation of an — in its view — inconsistent 94. The Netherlands Government, on the policy as a failure by the Netherlands other hand, points out that the abovemen- authorities to take account of Article 3(2) tioned study had, above all, highlighted of Decision 90/424 and Article 5(2) of that Community legislation on controlling Directive 80/217. The authorities had, CSF was outdated in view of modern, according to the Commission, also acted intensive pig farming. Where it points to in breach of the obligation to inform the benefits of preventive slaughter, the p u r s u a n t to Article 3(3) of Decision study may indeed be of use for revising the 90/424.

1 0 1 . The w o r d i n g of Article 3(2) of Decision 90/424, namely that 'following — Absence of a contingency plan official confirmation of the disease', the Member State concerned is required inter alia to impose 'suitable measures to prevent the risk of the spread of infection', defi- nitely seems to support the view held by the 98. I must point out at the outset that the Netherlands Government. However, it parties concur that there was no contin- probably will not be easy to contest that gency p l a n w i t h i n t h e m e a n i n g of it was not after official confirmation of the Article 14b of Directive 80/217 at the time disease that a contingency plan had to be of the outbreak. They do not agree, how- established and s u b m i t t e d , and con- ever, on the impact of that fact in law. sequently the absence of a contingency plan probably will not be regarded as a breach of the fifth indent of that provision. The Commission's interpretation of that provision seems bold at the very least.

99. The Netherlands Government con- siders that payment of the Community financial contribution does not presuppose the existence of such a contingency plan. It submits, merely in the alternative, that it had acted in accordance with equivalent 102. I should like, nevertheless, to chal- plans; the absence of a contingency plan lenge the view adopted by the Netherlands therefore could not be regarded as anything Government that the absence of a contin- more than a formal omission. gency plan is merely a formal omission.

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103. In this context it is irrelevant that the Netherlands authorities acted in accord- 106. It is perfectly logical to conclude that ance with the contingency plan in place for the earlier the disease is officially confirmed foot-and-mouth disease because, as the and the appropriate measures taken to Netherlands Government actually prevent the risk of the disease spreading acknowledges in a different context, 28 in accordance with Article 4 et seq. of there are substantial differences between Directive 80/217, 2 9 the greater the prob- the two diseases. Nor can the existence of ability that the outbreak will be swiftly the 'Swine Fever Scenario' make any dif- contained. However, the time from which ference to that assessment because it was the Netherlands authorities should be criti- not approved by the Commission until after cised for delayed reaction is uncertain. the outbreak of CSF in question, which means that there was no guarantee prior to the outbreak that the national authorities would proceed in a manner that would not be subject to criticism. 107. Article 3(2) of Decision 90/424 merely refers to 'measures applied immediately' from the time of suspicion or confirmation 27 — 'Health strategies to control swine infectious diseases: of the disease. The measures referred to in European experience'; Commission working document of that provision are, again, apparent from 30 January 1996 (VI/1715/96), cited in the special report by the Court of Auditors (cited in footnote 13) at paragraph 14, footnote 2. 28 — See above, at point 94, the submissions of the Netherlands Government concerning the study by the Landbouwuni- 29 — This essentially involves imposing a transport ban and, versiteit Wageningen. where necessary, carrying out slaughtering operations.

108. It must consequently be concluded that the Commission enjoys a certain dis- cretion in assessing whether national auth- 110. In the light of those circumstances and orities have acted sufficiently promptly. in view of the absence of a contingency The Commission pointed out in particu- plan — thus allowing doubts to surface lar — without being challenged on the over the ability of the Netherlands auth- matter by the Netherlands Government — orities to react — the Commission was that 18 holdings had already been con- entitled to criticise the Netherlands auth- taminated by 3 and 4 February 1997, orities, without in the process making a clearly as a result of transporting animals. manifest error of assessment, for having This means that those cases indeed did arise failed to give official confirmation of the after notification of the suspected presence outbreak of the disease — and to impose a of swine fever on 3 February 1997 but none t r a n s p o r t a t i o n ban — w i t h sufficient the less before official confirmation of promptness. swine fever on 4 February 1997; however, a ban on transportation did not come into effect until 00.00 on 5 February 1997.

— Animal movements in the protection zone 109. Indeed, the Netherlands Government is right to point out that Community law does not prescribe a ban on transportation 111. This difference in opinion between the parties concerns, on the one hand, the Commission's legal assessment and, on the 30 — See, for example, Article 5 of Directive 80/217: paragraph 1 thereof refers to the slaughter without delay of infected other hand, the facts. To justify the number livestock; paragraph 2 thereof provides for the possibility of transporting livestock so that it may be slaughtered of animal consignments the Netherlands without delay. Article 8(1)(c) of the directive refers to the Government has regard to the purchasing requirement to detect 'immediately' any suspicion of swine fever as the purpose of the official surveillance. scheme under Regulation N o 413/97 and to

115. However, that apparent contradiction 113. Conversely, the Commission does not is not insuperable provided that, when dispute that those consignments were authorising the movement of animals, the effected with a view to implementing Member State requires that the hygiene exceptional market support measures in standards laid down in Directive 80/217 be the form of the purchasing scheme under met. Regulation N o 413/97. Its first complaint in this regard is, on the contrary, concerned with the fact that a large number of animal consignments were authorised without giv- ing any consideration to whether the mar- ket support measures could in fact be implemented by means of a smaller number 116. The criticism that the Commission of consignments. levels against the Netherlands authorities is clearly that although they had provided for a restriction (of one movement per holding within a two-week period), when granting authorisation they had failed to apply that restriction, which fully reflects the purpose 114. The Commission's approach raises of Directive 80/217. the issue of the extent to which the requirements of Directives 80/217 and 90/425/EEC 32 as regards animal consign- 33 — Article 9(4) as amended by Council Directive 91/685/EEC of 11 December 1991 amending Directive 80/217/EEC introducing Community measures for the control of classical swine fever (OJ 1991 L 377, p. 1): 'The following 31 — The Commission maintains that animal consignments were measures shall be applied in the protection zone:... (b) the authorised in several tens of thousands of cases; see movement and transport of pigs on public or private roads point 86 above. shall be prohibited.... (f) pigs may not be removed from a 32 — Council Directive of 26 June 1990 concerning veterinary holding in which they are kept for 21 days after the and zootechnical checks applicable in intra-Community completion of the preliminary cleaning and disinfection of trade in certain live animals and products with a view to the infected holdings....'. the completion of the internal market (OJ 1990 L 224, 34 — Article 9(8) as amended by Directive 91/685 (cited in p. 29). This directive is the legal basis for the computer- footnote 33): 'By derogation from [paragraph] 4(f)..., the based system for recording the movement of animals competent authority may authorise that pigs be moved within the Community (ANIMO). See paragraph 24 et seq. from the holding to be transported to a rendering plant for of the special report by the Court of Auditors (cited in rendering or to a place where the pigs are slaughtered in footnote 13). order to be burned or buried....'.

119. I therefore conclude that the Commis- sion did not commit a manifest error of 122. Community law does not in effect assessment when it relied on Article 9 of impose any obligation to slaughter live- Directive 80/217 to object to the number stock as a preventive measure following an of, and hygiene conditions applying to, outbreak of CSF. Under Article 5(2) of animal consignments effected with a view Directive 80/217 Member States can, as a to implementing exceptional market sup- preventive measure, remove pigs which are port measures. not infected or suspected of being infected from holdings so that they can be slaught- ered without delay in specialised establish- m e n t s . H o w e v e r , the fifth indent of Article 3(2) of Decision 90/424 associates payment of the Community financial con- tribution with 'the imposition of suitable — Preventive slaughter policy measures to prevent the risk of the spread of infection'. 3 8 Here it is unclear whether the measures applied by the Netherlands authorities can be classified as suitable 120. Suspension of the policy of preventive slaughter, an incomprehensible measure in the Commission's view, is one of the main 36 — Loc. cit., paragraph 46. criticisms it levels against the Netherlands 37 — However, the actual time that the Netherlands authorities authorities since such a measure has informed the Commission and the other Member States of the measure is subject to dispute; see point 90 above. 38 — By contrast, the first indent of Article 3(2) of Decision 90/424, which the Commission invokes in its defence, appears to be irrelevant as it explicitly concerns the 35 — De uitbraak van klassieke varkenspest in Nederland. slaughter of animals affected or suspected of being affected Eindeevaluatie, 30 March 1998. by the disease.

126. The Netherlands Government is, in my view, right to point out that it was in principle free to choose whether or not to 123. Although it is undisputed that there order preventive clearance. That freedom was no obligation to remove and slaughter of choice existed even in spite of the pigs as a preventive measure, experience high-density pig population as the ability has shown — albeit not undisputedly — 3 9 to weigh up the situation clearly depends that such a preventive measure is an on the intensity of the disease, but this can effective way of tackling outbreaks of be ascertained only after a period of time. swine fever in high-density areas, which include the entire territory of the Nether- lands. 4 0 It is therefore uncertain, in the light of that information, what the restric- tions are as regards the discretion enjoyed 127. Nevertheless, the Netherlands Gov- by the Member States in choosing the ernment has not maintained that the Com- strategy for tackling the problem. mission unduly encroached on that margin of discretion in adopting its decision. The Commission voiced its preference for pre- ventive clearance, but instead of addressing the policy actually pursued, its complaint 124. In my view, a distinction must be concerned the twofold shift in policy drawn between the objections relating to effected in disregard of the Committee. the suspension of preventive clearing meas- ures and the objections concerning the implementation of subsequent clearing measures. 128. The Commission would have com- mitted a manifest error of assessment had it criticised the suspension per se, expressing its own misgivings on that measure. How- 125. As regards the suspension of preven- ever, this proposition cannot be inferred tive clearing measures, the Commission is from the observations submitted by the less critical of the decision per se than of the parties. arrangements by which it was imple- mented, in particular the failure in the

puted by the Netherlands Government; it 133. It is apparent from the observations does, however, have reference to the infor- made by the Netherlands Government that mation provided and claims that it was clearance was initially resumed only within possible to conclude that the measures in a limited area because of overburdening at question had been suspended in spite of the rendering plants. Even though Community absence of express notification. law does not lay down requirements as regards defining the clearance area or the period to be observed between completing disinfection measures on an infected hold- ing and undertaking preventive clearing 130. However, that approach cannot be measures on neighbouring holdings, it can considered consistent with the spirit and still be noted that the effectiveness of the purpose of Article 3(3) of Decision 90/424. preventive clearance policy has been com- The requirement that the Member State promised on account of the capacity short- concerned give information concerning 'the ages in rendering plants in the Netherlands. measures applied in accordance with Com- The situation is compounded by the fact munity legislation on notification and that the multiple changes in the policy in eradication and the results thereof, as laid question do not point towards its consist- down in that provision, is clearly designed ency. The Commission's objections cannot, in particular to enable the Committee to on that basis, be described as manifestly examine the situation. Such examin- erroneous in law. ation — and the associated coordination of the Member States' respective veterinary policy — cannot be undertaken if changes in policy in the relevant Member State are not notified or if they could, at best, be inferred indirectly from other information. 134. I will come back to the matter of the financial consequences of that objection in assessing proportionality and in examining the plea concerning the failure to fulfil the obligation to state reasons. 131. Thus the Commission has not com- mitted a manifest error of assessment in criticising the failure to notify suspension of the preventive clearing measures.

137. The Commission has raised objections of a financial and administrative nature in 140. The Netherlands Government points the contested decisions. Those objections out that the concept of 'adequate compen- relate to the compensation paid to livestock sation' for livestock farmers is not defined farmers, which cannot, in the Commis- in law either in Directive 80/217 or in sion's view, be regarded as 'adequate' Decision 90/424 or in any other instrument within the meaning of the final indent of of Community law. Thus, it claims, it falls Article 3(2) of Decision 90/424. to the Member States to apply that concept. The limits of their discretion in this regard are apparent only from the spirit and purpose of the relevant legislation, namely Directive 80/217 and Decision 90/424 in this instance. Payment of the Community financial contribution under Article 3(2) of 138. Before turning my attention to the Decision 90/424 is conditional solely on the facts which the Commission relies on in swift and adequate compensation of the support of the plea alleging lack of livestock farmers following official confir- adequacy, I consider it appropriate first of mation of the outbreak. The compensation, all to look at the interpretation to be given it concludes, is therefore intended to meet to the legal concept in question, which is the objective of the relevant legislation, the main subject-matter of the second plea namely of controlling CSF, which was also raised by the Netherlands in each case. indisputably the case in the Netherlands.

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142. Whilst the Netherlands Government considers that the Member States alone are competent to determine the compensation in question, the Commission considers that it may carry out checks into the amount of compensation paid by relying on the unde- fined legal concept of adequacy. 146. Adequate compensation within the meaning of Article 3(2) of Decision 90/424 is not therefore simply sufficient compen- sation but compensation the amount of which does not, basically, exceed the loss 143. It should first be stated that, as a actually suffered by the livestock farmer condition for payment of a Community concerned in view of all the circumstances financial contribution under Decision of the case. The discretion enjoyed by a 90/424, the concept at issue constitutes a Member State is therefore restricted by the concept of Community law the interpre- need to establish a connection between the tation of which is subject to review by the c o m p e n s a t i o n p a i d a n d the d a m a g e Court. actually suffered.

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149. I therefore conclude that the Commis- sion's view that the concept of 'adequate compensation' does not permit payment of 152. The Netherlands Government further unlimited levels of compensation to live- points out that the findings made by the stock farmers is not erroneous in law. Commission during its inspections were unrepresentative and consequently could not justify the financial correction that was 41 — Special report (cited in footnote 13), paragraph 53. decided.

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153. The Commission gives a detailed compensation payments and up to 2 5 % of account of its objections of a financial the compensation paid at the height of the and administrative nature. It mentions that outbreak. The irregularities which had been independent experts from the DLV had found could not be considered in isolation; fixed the rates for calculating compen- overestimation had been found in 2 4 % of sation, which were generally consistent the compensation cases reviewed. with the market prices at that time, but these rates were not applied in practice.

158. With regard to the discrepancies in the number of animals between the censuses carried out by veterinarians and expert evaluations, the Commission rejects the argument that the censuses carried out by 155. The Commission rejects the objection veterinarians have produced inaccurate levelled against it that the cases it cites were figures. That argument, it maintains, is unrepresentative. It argues that its checks contrary to the wording and the spirit and covered 7 % of the total amount of all purpose of Article 4 of Directive 80/217.

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164. Here the Commission's objection is basically that although standard compen- 162. As regards the data on which the sation rates had been set for some cate- Commission relies in relation to any sub- gories of pig in the Netherlands, the experts sequent corrections, I consider it sufficient to point out that the Commission had explained — and has not been contra- 42 — See above at point 67.

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167. Moreover, two further sources con- firm that there are a significant number of — The unaccountable reassignment of cases in which the estimate of the value of animals to another category livestock was greater than the standard rates. On the one hand, both the Nether- lands Government and the Commission have reference to a report by accountants 170. Here the Commission fundamentally (Moret) Ernst & Young which in any event objects to the fact that in some cases the confirms that the weight of the livestock 44 — Rapport inzake de status per medio 2000 van het beheer over de financíele afwikkeling van de Klassieke Varkenpest 43 — See again the special report of the Court of Auditors (cited 1997 en 1998. in footnote 13) at paragraph 53. 45 — See above, point 155.

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experts have reassigned animals to other 173. Thus the Netherlands Government categories that are more favourable from was not able to refute the Commission's the point of view of compensation. In the objection. view of the Netherlands Government, no evidence has been adduced to support the argument that certain livestock farmers are given preferential treatment, and it criti- cises the Commission's estimates.

— Overestimated weight of feedingstuffs

171. The Commission has relied on specific cases to support its allegation. It was 174. The Commission's objection concern- therefore for the Netherlands Government ing the weight of feedingstuffs was essen- to demonstrate in particular that the alle- tially that the difference between the esti- gation did not apply to the cases cited by mated quantities and the quantities that the Commission. Whilst it referred gen- had actually been weighed came to as much erally to the evaluation procedure, it failed as 4 3 % . The Netherlands Government to furnish the appropriate evidence. expressly challenges that percentage but does not at the same time categorically deny that the quantity of animal feeding- stuffs had in fact been overestimated.

178. On this matter the Commission essen- tially criticises the additional expenditure incurred as a result of flat-rate compen- sation paid to holdings with sows which have been cleared as a preventive measure.

— Summary and conclusion

179. The Netherlands Government justifies the notional 4.73 piglets per sow by the need to compensate for the lost breeding value of sows. The Commission, by contrast, claims with good reason that allowance can be made for that factor in estimating a sow's value. 182. The Commission's objections of a financial and administrative nature were based on facts that do not point to a manifest error of assessment by the Com- mission. That view is underpinned by the 180. It should be pointed out that the Court of Auditors which generally reached report by the Netherlands Ministry of similar conclusions following its own Agriculture 4 7 likewise indicates that con- inspections. 48 The Netherlands Govern- siderable a d d i t i o n a l expenses are ment has not successfully undermined the incurred in connection with that system. Commission's objections.

47 — Cited in footnote 44. 48 — Special report (cited in footnote 13), paragraph 53 et seq.

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184. The Netherlands Government alleges that the Commission has drawn general conclusions regarding the fixing of com- 187. It follows from the contested decision pensation for affected livestock farmers and from the Commission's letter of from a mere six compensation cases. 11 December 2000 that the Commission takes the following objections in essence as the basis for applying a 2 5 % reduction to the expenditure notified by the Netherlands Government for compensating livestock farmers: inconsistency between the number 185. Following a review of those six of compensation claims and actual animal cases 4 9 the Netherlands Government estab- numbers with regard to gilts; application of lishes that none of the cases individually rates exceeding the standard rates by 9.4% bears out all of the Commission's objec- on average in compensating for sows; tions. 5 0 In five out of the six cases the overestimation of the weight of livestock irregularities, it claims, are of little signifi- by 12.2% on holdings comprising fattening cance, that is to say, only one or two pigs alone; overestimation of the weight of objections at most would be valid; the feedingstuffs by 1 7 % on holdings cleared complaint about overcompensation result- on the day that the estimate was made; ing from indexation applies to just one 15.5% increase in compensation by reason case. This shows, according to the Nether- of an indexation system. lands Government, that the allegation of repeated and systematic irregularities can- not be substantiated by one single fact.

190. As to the second objection concerning the regular application of rates exceeding the standard rates, I should like to refer to my previous observations on the same objection raised in Case C-293/00. 51 It must additionally be stated that the Com- mission based that objection on the total 192. As to the fourth objection on the number of compensation payments for overestimated weight of feedingstuffs on sows rather than on individual cases. The holdings where the estimate in question Netherlands Government has proved that took place at the same time as clearing, it there was justification for exceeding the should be observed that the Netherlands standard rates in only one out of the six Government does not in principle dispute cases. 5 2 It has not therefore been able to that the weight has been overestimated to show that the Commission relied in that some extent — albeit to a lesser extent regard on incorrect facts. The Commission than argued by the Commission — but also found irregularities in the livestock attributes this measure to practical dif- evaluations in all six cases but the Nether- ficulties. Nevertheless, different calculation lands Government was unable to explain methods do not explain the different them. In so far as those individual cases approaches to the scale of overestimation. confirm the conclusions drawn on all the Here the Commission considers, rightly, compensation cases, there is no indication that the percentage overestimation has to that the Commission has made a manifest be expressed in relation to the actual error of assessment. weight, that is to say, the weight estab- lished when the feedingstuffs are destroyed. The Commission cannot therefore be con- 51 — See above, point 164 et seq. sidered in this regard to have committed a 52 — In the case of Van Dongen (cited in footnote 49). manifest error of assessment.

194. It must consequently be noted that the Commission has not based its objections on isolated cases. On the contrary, it has examined individual cases in conjunction with the results of comprehensive, critical assessments of the compensation payments (a) Main arguments of the parties made in 1998 and has subsequently drawn conclusions on whether there may have been shortcomings. The submissions of the N e t h e r l a n d s G o v e r n m e n t are to be accepted only inasmuch as they point to the fact that not all the objections apply to all the cases specifically addressed. How- (i) Proportionality ever, the Netherlands Government has not been able to demonstrate that the Com- mission relied on manifestly erroneous facts. 197. In Case C-293/00 the Netherlands Government considers that the shortcom- 53 — It refers, in particular, to incorrect estimates by veterinar- ings established by the Commission (or the ians and to customary fluctuations in livestock. circumstances which it describes as such) in

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implementing measures to control CSF are of those additional costs; the remaining unconnected with the financial correction 5 8 % was charged to the Community applied. budget.

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was of no advantage to the Netherlands considerable volume of correspondence because the Court has consistently held that between the Commission and the Nether- the Commission could exclude unjustified lands Government. For that reason, it expenditure outright from the financing. concludes, just a brief statement of reasons is sufficient in accordance with the case- law.

(ii) Obligation to state reasons 205. In Case C-293/00 the Commission adds that it set out all complaints, including those on the new estimate, in a letter of 18 November 1999 from Mr Coleman, Director-General of the Health and Con- sumer Protection DG, to Mr Bot, Perma- 203. In both cases the Netherlands Gov- nent Representative of the Netherlands. ernment considers that insufficient reason- That letter is, it claims, sufficient in itself ing has been given for the contested to fulfil the obligation to state reasons. decisions and that, in that respect, there has been a failure to fulfil the obligation to state reasons under Article 253 EC. The Commission had failed in particular to mention the legal basis which it had used to apply the 2 5 % financial correction. Nor had it explained how it came to consider it 206. The Commission applies that argu- necessary to reduce the Community finan- ment mutatis mutandis to Case C-501/01, cial contribution. It had been all the more referring in t h a t case to a letter of necessary to provide detailed reasons for 11 December 2000 from Mr Coleman. the second contested decision as the Com- mission had not previously expressed any misgivings about the indexation system operating in the Netherlands.

208. Assuming that a correction is permis- sible after all, the Netherlands Government in any event considers there to be a discrepancy between the amount of the reduction determined by the Commission 212. It seems in any event unhelpful to and its objections to the policy pursued by draw parallels with the criteria set out in the Netherlands Government. the Belle Group report for the application of the correction rates since those rates relate to the total expenditure of the Member State, whereas the correction rates at issue here can be applied only to half of the total expenditure. 209. I have already expressed an opinion on whether a flat-rate correction is, in principle, permissible; I therefore refer in that regard to my observations above. 5 4

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administrative nature, to its own assess- — Statement of reasons ments as well.

217. As far as the obligation to state reasons is concerned, reference must be had to the case-law which the Commission rightly cites and under which '[i]n the 214. The study conducted by the Land- particular context of the preparation of bouwuniversiteit Wageningen into the decisions relating to the clearance of financial consequences with regard to the accounts, the statement of reasons for a technical objections provides a useful scale. decision must be regarded as sufficient if That study is complemented by the Com- the Member State to which the decision mission's own assessments on the objec- was addressed was closely involved in the tions of a financial and administrative process by which the decision came about nature which, assuming that those objec- and was aware of the reasons for which the tions are correct in their substance, do not Commission took the view that it must not differ in essence from the figures mentioned c h a r g e t h e s u m in d i s p u t e t o t h e by the Netherlands Government in the EAGGF'. 5 6 written procedure.

218. That case-law appears to be appli- cable to the circumstances of this case. 215. It should also be pointed out that the financial consequences calculated by the Commission are clearly greater than the correction actually made, which leads me to conclude that the Commission took due account of the inevitable errors made by 219. The Court has consistently held that the Member State concerned in exercising 'the extent of the duty to state the reasons its discretion and of the particular com- on which a decision is based, laid down in plexity of the CSF outbreak in question. Article 190 of the EC Treaty, depends on the nature of the act in question and on the context in which it was adopted'. 5 7 In this context the Court also points out in settled case-law that although the statement of reasons required must disclose in a clear

2 2 1 . The Kingdom of the Netherlands was therefore closely involved in the process by 2 2 5 . However, I — unlike the Nether- which the first contested decision came lands Government — consider it imposs- about and was aware of the reasons for ible to infer from the above consideration which the Commission took the view that it that the Commission's objections concern- could deduct the sums in dispute. ing the policy adopted at the start of the outbreak of swine fever in the Netherlands in 1997 do not retain any relevance in relation to the situation prevailing in 1998. The Commission's criticisms in relation to 1998 admittedly relate solely to compen- sation for livestock farmers; clearly, how- ever, had there been no strategic errors at 222. I conclude that since the contested the start of the CSF outbreak, it would have decision — considered in that light — been possible, under certain conditions, to met the requirements of Article 253 EC, this plea m u s t also be rejected as unfounded. 58 — See above at point 211.

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prevent the disease from spreading on a ent from an internal Commission working scale known only too well and the expen- document 6 0 that the Commission estab- diture incurred in 1998 might, as a result, lished that livestock and animal feeding- have been avoided altogether. stuffs had been overvalued by in the region of 2 8 % . The Netherlands, however, clearly did not have an opportunity to give an opinion on those calculations.

228. It must be noted here that the addi- tional financial burden associated with 230. The Netherlands Government addi- each of the complaints regarding 1998 tionally argued 62 — and indeed was not fluctuates, according to Commission calcu- lations, between 9.4 and 1 7 % . It is appar- 60 — Annex 1 to the rejoinder. 61 — See above, point 57. 59 — See my observations in point 71 et seq. above. 62 — Application, paragraph 35, and Annex 7 thereto.

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63 — See, to this effect, point 188 above. 64 — For example, the significance of the 1997 objections for 236. In Case C-501/01, in the light of my assessing 1998. 65 — For the principle of the right to be heard in a procedure for above remarks concerning the outcome of the clearance of EAGGF accounts, see Case C-377/99 the proceedings, the claims to that effect by Germany v Commission [2002] ECR I-7421 and my Opinion in that case, in particular point 80 et seq. thereof. the Kingdom of the Netherlands should be 66 — Cited in footnote 60. allowed.

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VII — Conclusion

237. In view of the foregoing considerations, I propose that the Court should:

— In Case C-293/00