C-148/01

GREECE v COMMISSION

OPINION OF ADVOCATE GENERAL GEELHOED delivered on 12 December 2002 1

I — Introduction ment of the additional levy but it does dispute the default interest for the period from February 1997.

1. In these proceedings, the Hellenic Republic asks the Court to annul or, at least, to amend the Commission Decision of 5 February 2001 2 (hereinafter 'the contested decision') excluding from Com- munity financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agri- I I — Legal framework cultural Guidance and Guarantee Fund (hereinafter 'EAGGF').

which was regarded as temporary — until In accordance with a decision of the 1 April 2000. 6 The detailed rules for Member State, the contribution of pro- implementing that regulation were laid ducers towards the levy payable shall be down in Regulation No 536/93. 7 established, after the unused reference quantities have been reallocated or not, either at the level of the purchaser, in the light of the overrun remaining after unused reference quantities have been allocated in proportion to the reference quantities of each producer, or at national level, in the light of the overrun in the reference quan- 4. Article 1 of Regulation No 3950/92 tity of each individual producer. imposes an additional levy 'on producers of cows' milk' in respect of 'quantities of milk or milk equivalent delivered to a purchaser or sold directly for consumption during the 12-month period in question in excess of a quantity to be determined. The levy shall be 115% of the target price for 2. As regards deliveries, before a date and milk'. in accordance with detailed rules to be laid down, the purchaser liable for the levy shall pay to the competent body of the Member State the amount payable, which he shall deduct from the price of the milk paid to producers who owe the levy or, failing this, collect by any appropriate means... 5. Article 2 of Regulation No 3950/92 provides that:

3. As regards direct sales, the producer shall pay the levy payable to the competent body of the Member State before a date ' 1 . The levy shall be payable on all quan- and in accordance with rules to be laid tities of milk or milk equivalent marketed down.' during the 12-month period in question in excess of the relevant quantity referred to in Article 3. It shall be shared between producers who contributed to the overrun.

7. In Regulation No 536/93, the Commis- 9. Under Article 4(4): sion laid down the detailed rules for applying Regulation No 3950/92. In the fifth recital in the preamble, the Commis- sion states that '... experience gained has shown that major delays in both the trans- mission of figures on collections or direct 'Before 1 September each year, the pro- sales and payment of the levy have pre- ducer shall pay the amount due to the vented the arrangements from being fully competent body in accordance with the effective;... therefore, lessons should be rules laid down by the Member State. learned from the past and the necessary conclusions drawn by laying down strict requirements as regards notification and payment deadlines, and providing for pen- alties where deadlines are not met.' Where the time-limit for payment is not met, the sums shall bear interest at a rate per annum fixed by the Member State and which shall not be lower than the rate of interest which the latter applies for the recovery of wrongly paid amounts.'

8. Article 3(4) provides:

10. Finally, Article 5(2), provides:

'Before 1 September each year, the pur- chaser liable for levies shall pay the com- 'Member States shall take any additional petent body the amount due in accordance measures necessary to ensure payment of with rules laid down by the Member State. levies due to the Community within the time-limit laid down.

Where the set of documents referred to in Where the time-limit for payment is not Article 3(5) of Commission Regulation met, the sums shall bear interest at a rate (EEC) No 2776/88, which the Member per annum fixed by the Member State and States must transmit to the Commission which shall not be lower than the rate of each month, shows that this time-limit has interest which the latter applies for the not been met, the Commission shall reduce recovery of wrongly paid amounts.' advances on entry in the accounts of

'After approval of the advances, in accord- ance with the last subparagraph of Article 5(2)(a) of Regulation (EEC) No 729/70, the Commission shall place at 13. Article 13 of Decision 94/729/EC 9 the disposal of the Member States, within provides: the framework of the budget appropri- ations, the funds needed to cover expendi- ture to be financed by the EAGGF Guar- antee Section, on an account opened for that purpose by each Member State with its Treasury or any other financial institution.' '1. Payment of the monthly EAGGF Guar- antee Section advances by the Commission shall be effected on the basis of the 8 — Regulation of 16 February 1996 on data to be forwarded by the Member States and the monthly booking of expenditure financed under the Guarantee Section of the Agricultural Guidance and Guarantee Fund (EAGGF) and repealing 9 — Council Decision of 31 October 1994 on budgetary Regulation (EEC) No 2776/88 (OJ 1996 L 39, p. 5). discipline (OJ 1994 L 293, p. 14).

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information supplied by the Member States The Member State shall make its position in regard to expenditure in each chapter. known within 10 days.

The Commission's decision, stating the reasons on which it is based, shall be taken 2. If the declarations of expenditure or the after the EAGGF Committee has been information submitted by a Member State consulted and must be in keeping with the do not enable the Commission to establish principle of proportionality.' whether the commitment of funds is in conformity with the relevant Community rules, the Commission shall request the Member State to supply further infor- mation within a period which it shall determine according to the seriousness of 14. Article 8(1) and (2) of Regulation the problem. No 729/70 10 provides:

The Member States shall inform the Com- bilateral meeting between the Commission mission of the measures taken for those and the Greek Government on 4 May purposes and in particular of the state of 2000. On 26 May 2000, the Commission the administrative and judicial procedures. forwarded the minutes of that meeting to the Greek Government.

2. In the absence of total recovery, the financial consequences of irregularities or negligence shall by borne by the Commu- nity, with the exception of the con- sequences of irregularities or negligence attributable to administrative authorities or other bodies of the Member States. 16. The sums proposed were: GRD 20 568 862 by way of additional levy for exceeding the milk quota in the 1995/96 milk year and GRD 72 024 110 by way of default interest. These amounts were imposed on the basis of a check carried out by the The sums recovered shall be paid to the Commission which showed that the quota accredited paying agencies and deducted by for the 1995/96 milk year had been them from the expenditure financed by the exceeded by 7 423 986 kg of milk. The Fund.' majority of the sum imposed for that reason was paid to the EAGGF. An amount of GRD 20 568 862 was still payable. In view of the fact that this amount had not been paid by 1 September 1996, default interest was calculated as from that date.

I I I— Facts and procedure

15. In a letter of 2 August 2000, the Commission communicated its final pos- ition to the Greek authorities regarding the negative financial corrections that it 17. In the minutes of 26 May 2000, the intended to make with respect to the Commission explained its method of cal- additional levy. Those corrections were culating the default interest. It was to be due to be made within the framework of calculated for a period up to September a clearance of accounts decision to be taken 2000, with a possible reduction if the in December 2000. The letter of 2 August Greek authorities paid the amount of the 2000 followed an earlier letter sent by the additional levy and the interest before Commission on 11 April 2000 and a October 2000.

21. The Commission maintains that the EAGGF reduced the special advances for 19. In terms of the reduction applied, the January and February 1997 because the contested decision reflects the amount pro- Hellenic Republic had not, prior to posed in the letter of 2 August 2000. 1 September 1996, paid the full amount of the additional levy due. 13 In those circumstances, the EAGGF reduces the amount of additional levy declared by the Hellenic Republic by means of monthly reductions. The reduction of advances has absolutely nothing to do with the interest that milk purchasers and producers still 20. The Greek Government disputes a owe the EAGGF. considerable proportion of the default interest imposed on it. It bases its position on the fact that the Commission had already decided back in January 1997 on the amount of the additional levy by means of Decision C(97) 605 final, adopted on 5 March 1997 in the context of the procedure described in Article 13(2) of 22. These facts gave rise to the current Decision 94/729. By that decision of proceedings before the Court of Justice. In 5 March 1997, the Commission reduced its application of 4 April 2001, the Greek the advance that the Hellenic Republic was Government claims that the Court should due to receive in respect of expenditure in annul or, in the alternative, amend the the milk sector for January 1997. The contested decision. The Commission con- reduction relates to the fact that the Com- tends that the application should be dis- missed. The German and Spanish Govern- ments have both intervened in support of 11 — Commission Decision of 1 July 1994 setting up a the Hellenic Republic. conciliation procedure in the context of the clearance of the accounts of the European Agricultural Guidance and Guarantee Fund Guarantee Section (OJ 1994 L 182, p. 45). 12 — GRD 92 592 972 is equivalent to EUR 272 412.39. 13 — Pursuant to Article 5(2) of Regulation No 536/93.

27. The Greek Government disputes the Commission's submission that its position would result in default interest no longer being payable by purchasers and producers. 25. The Greek Government refers to the procedures laid down in Regulation No 536/93 for the proper application of Community rules. The purpose of Articles 3(4) and 5(2) of that regulation is to improve and speed up payment of the additional levy by the person liable, and 28. The Greek Government also invokes also to ensure that the levy is paid over to Article 8(2) of Regulation No 729/70. That the European Community within the spec- provision stipulates payment of interest ified time-limit. It is clear from these and only where irregularities or negligence are other relevant provisions that if the person attributable to administrative authorities or liable for the levy fails to comply with the other bodies of the Member States. I - 5892

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30. According to the German Government, it follows from the judgment in France v Commission 14 that Member States are 32. According to the Spanish Government, required only to pursue the collection of the Member States do not owe any debt to supplementary levies diligently and to pay the Commission but are merely required to them over to the Community, and that the collect the additional levy from milk pur- amount of the levy does not constitute a chasers or producers, with the relevant debt owed by the Member State itself. interest where necessary. The Spanish Gov- Given that, in the absence of a principal ernment does not share the Commission's debt, no right exists to require Member view that the obligation to pay interest is States to pay the levy itself, it is also logical independent of the reduction in advances. that no right to payment of default interest Unless it is shown that a Member State has should arise. In this connection the German failed to act with due diligence when Government refers to the Opinion of collecting the amounts in question, that Advocate General Jacobs in Spain v Com- State does not owe any debt to the Com- mission. 15 mission. Member States are not required to pay the Commission amounts they have not yet received from those liable for payment 14 — Case C-277/98 [2001] ECR I-8453, paragraphs 37, 38 and of the levy solely for the purpose of reduc- 43. 15 — Case C-130/99 [2002] ECR I-3005. ing the financial consequences of late

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33. The Spanish Government contends, in response to the position adopted by the Commission in proceedings still pending between Spain and the Commission in Case 35. Thus, the Member States have two C-153/01, that Regulations Nos 3950/92 obligations. In the first place, they have to and 536/93 do not amend the system ensure that those liable for payment of the previously applicable, at least as far as this additional levy pay it within the time-limit case is concerned. The Member States are laid down, failure to do so entailing a not required to pay interest on the addi- penalty in the form of default interest. tional levies that they have not yet col- Secondly, they have to pay the additional lected. Articles 3 and 4 of Regulation levy over to the Community, also acting No 536/93 introduce a system which promptly. The reduction of advances, should ensure payment of the additional which therefore relates to the second obli- levy by the stated deadline, including any gation, does not extinguish the Member penalties. However, those provisions are States' first obligation. Nor does that directed at milk purchasers (or producers). reduction imply clearance of accounts. The latter is based on amounts already paid over and any reduction of advances, plus default interest. Furthermore, in the Commission's view, the reduction of advances does not relate to the whole of the additional levy but only to 96% of the 34. The Commission opposed the appli- outstanding amount. cation and the submissions of the three governments in question. The Commis- sion's basic argument is that reduction of advances and payment of default interest are two independent and distinct measures which derive from different obligations. 36. In genera! terms, the Commission observes that, due to the poor operation 16 — See point 30 above. of the additional levy system, it decided to I - 5894

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OPINION OF MR GEELHOED — CASE C-148/01

February 1997. Thus the dispute does not ately. The first is this: what is the nature of relate to the following amounts: the reduction of advances in the context of the EAGGF clearance of accounts pro- cedure? Does that reduction imply that a Member State's non-compliance is a closed matter? If one takes the view that the reduction of advances does not completely — GRD 20 568 862 by way of additional or only partially releases the Member State levy for exceeding the milk quota in the from its payment obligation, then we must 1995/96 milk year ask the second part of the question: to what extent do the reduction of advances and the imposition of default interest constitute two different measures, capable of indepen- dent application, as claimed by the Com- mission? When assessing this part of the question, I shall examine the nature of the — GRD 24 027 489 by way of default penalties and the power of the Commission interest for the period between Septem- to impose them. Finally, after dealing with ber 1996 and January 1997. the two parts of the question, I shall assess whether sufficient reasons are stated for the decision.

The amount in dispute is GRD 47 996 621.

B — First part of the question

41. The parties agree that the Greek Gov- ernment paid too little to the EAGGF by way of additional levies for the 1995/96 milk year. It is also a fact that the advances 43. The answer to this part of the question granted to the Hellenic Republic were must be based on the purpose and content reduced as a result. This dispute is con- of the additional levy system and, in cerned essentially with whether the Com- particular, on the role played by the mission has the power in those circum- Member States in collecting that levy. stances to impose default interest on a Member State.

46. These features of the system mean that production relations in dairy farming are established for a lengthy period of time. This applies both to relations between 48. A lack of penalties — and here I producers in a particular Member State would agree with the Commission — and to relations between the various could mean that both the Member State Member States themselves. and milk producers in that State could obtain economic advantages from failure to comply with deadlines. If the additional levy system entailed an incentive of this kind, it would undermine the effectiveness of the system itself. Therefore, the Com- mission must also exercise strictly the 47. Clearly, a system of this type needs to powers to impose penalties that have been be applied strictly. Milk producers are conferred upon it.

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OPINION OF MR GEELHOED — CASE C-148/01

49. However, it should be noted that these excess milk production and on the other powers are not the only instrument the hand they are required to pay over those Commission possesses for the purpose of levies to the EAGGF. Both obligations must ensuring that Member States collect the be fulfilled within the specified time-limits. additional levies within the time-limit. If milk producers are late in making their Where the powers to impose penalties payments, they can obtain an advantage, in cannot be exercised or those powers are terms of interest, which can unduly affect inadequate, the Commission can also initi- conditions of competition in the milk and ate at any time the procedure for failure to milk products sector; if Member States are comply provided for in Article 226 EC. late in making payments to the European Community, this is detrimental to the Community budget.

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GREECE v COMMISSION

earlier, the Member State not only needs to to answer it, it is necessary to examine the ensure that the amount of the levy is paid relevant legal provisions. First, I shall into Community funds but also that the examine the obligations themselves. In this levy is paid by milk producers who overran context, I shall deal with the payment the milk quota allocated to them. The obligation incumbent on milk producers Member State is not required to pay the and the two obligations incumbent on the levy from its own resources. Member States, as mentioned above.

57. This second part of the question is 19 — With regard to direct payment, see Article 4(4) of much more technical. Therefore, in order Regulation No 536/93.

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60. It is for the Member States to ensure monthly advances. As a result, the most effective and prompt payment by milk onerous penalty that the Commission can purchasers. That obligation incumbent on apply is a reduction of those advances. the Member States also includes the meas- ures to be adopted pursuant to Article 8(1) of Regulation No 729/70 for the purpose of recovering amounts lost due to irregular- ities or negligence.

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clearance of accounts, even after advances discharged, in so far as it referred to the have been reduced, although, when apply- principal sum (the additional levy itself). ing such penalties, it must bear in mind that it has previously made a reduction. In other words, the Commission cannot require payment of an amount already paid.

69. However, the milk purchasers did not thereby discharge their debt. After all, they did not pay their debt promptly. Pursuant to Regulation No 536/93, failure to comply 66. Another penalty under the system is with the time-limit for payment incurs default interest, provided for in Articles 3(4) default interest. In this case, the period and 4(4) of Regulation No 536/93. Pay- begins to run on 1 September 1996 — the ment of default interest is an obligation date fixed by the regulation — and does incumbent upon milk purchasers or pro- not end until the milk purchasers have paid ducers. Both are required to pay that the competent national authorities. The interest to the Member States. Under fact that the Greek Government has paid Article 5(2) of that regulation, interest paid the principal sum through the reduction of is to be deducted from expenditure on the advances is irrelevant as far as the default milk sector. interest is concerned.

67. This is where I get to the heart of this dispute. First, as I have just said, the 70. To summarise, under Community law, Commission cannot demand payment of default interest is payable by milk pur- an amount already paid. However, that is chasers. It is for the national authorities to not the issue in these proceedings. As the collect that interest. However, the question Commission rightly states, the penalties are arises whether the Commission can charge imposed in relation to two different obli- the uncollected interest to the Greek Gov- gations. ernment. In this respect, the fact that the Greek authorities have not collected the default interest payable is not in dispute.

However, that provision refers to the off- the legal provisions concerning the finan- setting of interest that has been paid. In this cial consequences of irregularities or negli- case, interest is payable but has not been gence in connection with the common paid. In its judgment in Spain v Commis- organisation of the market in the milk sion, the Court of Justice held, in similar sector (Article 8(2) of Regulation circumstances, 'that the fact that certain No 729/70). The Commission expressly sums remain unpaid or have been paid submits before the Court that Article 8(2) is belatedly does not of itself constitute a not applicable and that it is taking failure to fulfil obligations laid upon the Article 5(2) of Regulation No 536/93 as Member States by Community law'. 2 0 In the legal basis. I shall discuss that assertion that judgment, the Court of Justice fol- by the Commission later, along with the lowed the line adopted in France v Com- statement of reasons for the contested mission, which concerned Regulation decision. I intend, first, to consider the (EEC) No 1546/88. 21 In the latter judg- extent to which Article 8(2) of Regulation ment, the Court of Justice held that, whilst No 729/70 is applicable. In short, has it the Member State is required to pay over been sufficiently demonstrated that the the amounts collected by it to the Commis- economic consequences of failure to collect sion, it is not itself liable to pay the the sums owed are due to irregularities or supplementary levy. 22 Although that regu- negligence on the part of the national lation has indeed been repealed and — as authorities? the Commission rightly said — the system has been reinforced subsequently, this does not mean that Article 5(2) of Regulation No 536/93 constitutes the legal basis for the correction at issue. I share the view of the German and Spanish Governments in this regard. Article 5(2) of that regulation merely places an obligation on the Member State not to hang on to amounts collected and to pay them over to the EAGGF.

there is a risk that recovery of amounts this case. I shall examine that question in unduly paid could become complicated or the light of the obligation to give reasons impossible, due to certain circumstances: flowing from Article 253 EC. According to for example, the undertaking could have the case-law of the Court of Justice, the ceased trading or accounting documents Commission is obliged to give reasons for could have been lost. each decision finding that negligence is attributable to the Member State con- cerned. 24 This means, in particular, that the Commission's statement of reasons must be clear and unequivocal so as to inform the persons concerned of the jus- tification for the measure adopted and to 74. In general, the Commission must enable the Court of Justice to exercise its supply specific evidence of negligence on powers of review. Furthermore, the state- the part of the Member State. This can be ment of reasons is not required to specify inferred from the general obligation to give all the matters of fact or of law dealt a statement of reasons. In this case, the with. 25 burden of proof on the Commission is not subject to very strict requirements. The circumstances of the case indicate that negligence is proven. When all is said and done it is a fact that the additional levy has not been collected. The Greek Government does not dispute this nor does it adduce any reasons to justify its negligence.

77. In the specific context of clearance of accounts decisions, the Court of Justice considers that the obligation to state rea- sons is not an onerous one. The decision 75. I therefore consider that Article 8(2) of does not have to give exhaustive reasons. Regulation No 729/70 can constitute the The Court has held that the reasons for a legal basis for the correction. decision must be regarded as sufficient if the Member State to which the decision was addressed was closely involved in the process by which the decision came about and was aware of the reasons for which the Commission took the view that it must not charge the sum in dispute to the EAGGF. 26 The light nature of this obligation to state reasons is due to the fact that the Member D — Statement of reasons

78. In my view, the light nature of the obligation to state reasons, to which I have just referred, relates only to the way in which the reasons are to be expressed and not to the communication of the actual reasons or their content. An integral part of the obligation to state reasons is the Com- mission's duty to inform the Member State of the legal basis for its decision. That legal basis must be appropriate for the purposes of supporting the decision. It is only when the Commission fulfils its obligation to state its reasons that the Member State can 80. Applying these considerations to this be made aware of its rights and the Court case, I consider that the Commission can be of Justice can exercise its power of review. expected to give more detailed reasons. In this case, two cumulative penalties are applied to the same fact — the failure to collect the additional levy from milk pur- chasers and producers in the Hellenic Republic during a specific period. I have already explained that Community law does not preclude such a practice. How- 79. In this connection, I would also add ever, this does not mean that the dual that, in the context of reviewing the penalty is normal practice, or that the implementation of the common agricul- Commission has a clear power to adopt tural policy by the Member State, the such a practice. Regarding the first point, obligation to state reasons is of limited this has not been raised during the proceed- significance to the extent that decisions are ings nor can it be otherwise inferred. adopted according to normal practice and Regarding the second point, I consider that the Member State is aware of that practice. the Commission has the power, but that it The same applies as far as the Court of is not clear. I have been able to infer this Justice is concerned. However, when a power only by examining the relevant decision does not follow normal practice, provisions of Community law.

82. The minutes of the meeting between 84. In the light of the foregoing, I suggest the Hellenic Republic and the Commission that the Court of Justice should partially indicate that the Commission was basing its annul the contested decision on the ground decision on Article 5(2) of Regulation that the statement of reasons is inadequate. N o 5 3 6 / 9 3 . The r e p o r t mentions In reaching this opinion, I consider it Article 8(2) of Regulation No 729/70 but, important that the default interest imposed in the Commission's view, that is clearly by the Commission is a penalty which does not the basis for the penalties. Nor can it be not accord with normal practice and that inferred from other documents that the its right to impose the penalty is not Commission w a s , in p a r t , taking self-evident. Therefore, the Greek Govern- Article 8(2) of Regulation No 729/70 as a ment could not reasonably have been aware basis. Moreover, the Commission expressly of the correct legal basis either.

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VI — Conclusion

85. On the basis of the above considerations, I suggest that the Court of Justice should:

(1) annul the Commission Decision of 5 February 2001 excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund, in so far as it refers to the default interest imposed on the Hellenic Republic in respect of expenditure in the milk and milk products sector from February 1997;