C-344/01
ECLI:EU:C:2003:497
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OPINION OF MR LÉGER — CASE C-344/01
OPINION OF ADVOCATE GENERAL LÉGER delivered on 25 September 2003 1
1. Under the second paragraph of Article of the common agricultural policy, 3 as 230 EC the Federal Republic of Germany amended by Regulation (EC) No 1287/95 ('Germany') seeks the partial annulment of of the Council of 22 May 1995, 4provides Commission Decision 2001/557/EC of 11 that the EAGGF is to finance, inter alia, July 2001 excluding from Community intervention intended to stabilise the agri- financing certain expenditure incurred by cultural markets, undertaken according to the Member States under the Guarantee Community rules within the framework of Section of the European Agricultural Gui- the common organisation of agricultural dance and Guarantee Fund (EAGGF). 2 markets. 5 Germany contests the decision at issue regarding the correction of DEM 3 870 600.88 which corresponds to the amount of expenditure incurred in certain Länder, in the course of the 1996 and 1997 financial years, for the payment of suckler cow premiums.
3. This type of Community financing is based on the following mechanism. The Commission makes available to Member States, by means of advances on the provision for expenditure or intervention I — Law applicable effected in a reference period, the financial resources required to cover the expenditure in question. Until the advances are paid, the resources necessary to meet that expend- iture are mobilised by the Member States. 6 A — General rules on the monitoring of That expenditure is effected by paying expenditure financed by the EAGGF agencies offering certain guarantees and accredited as a result in the Member States. 7
2. Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing 3 — OJ, English Special Edition 1970 (I), p. 218. 4 — OJ 1995 L 125, p. 1. 5 — Article 1(2)(b) and Article 3(1) of Regulation No 729/90 as amended. 1 — Original language: French. 6 — Cited above, Article 4(5). 2 — OJ 2001 L 200, p. 28. 7 — Article 4(1).
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4. The Member States have to take the and the financial loss suffered by the measures necessary, first, to satisfy them- Community. 12 That evaluation generally selves that transactions financed by the results in the application of a flat-rate EAGGF are actually carried out and exe- correction. 13 Such a decision to refuse cuted correctly, secondly, to prevent and financing is adopted under a particular deal with irregularities and, thirdly, to procedure involving the Member State in recover sums lost as a result of irregularities question closely in the Commission's deci- or negligence. 8 sion-making process. 14
5. Having carried out these checks, the Member States transmit to the Commission the annual accounts of the paying agencies, accompanied by the information required for their clearance. 9On the basis of that information, the Commission clears the B — Special rules on the grant of stickler accounts in question. 10 cow premiums
6. That clearance of accounts decision is without prejudice to the adoption of a 8. Regulation (EEC) No 805/68 of the subsequent decision to exclude from Com- Council of 27 June 1968 on the common munity financing expenditure which is organisation of the market in beef and found, following checks by the Commis- veal, 15 as amended by Council Regulation sion, not to have been effected in compli- (EEC) No 2066/92 of 30 June 1992, 16 ance with Community rules. 11 provides that a producer keeping stickler cows on his holding may qualify, on application, for a premium for maintaining stickler cows 17 (the 'suckler cow pre- mium'). The grant of the premium is subject to certain conditions, laid down in that 7. The Commission evaluates the amounts to be excluded from Community financing, having regard to the degree of non-com- 12 — Article 5(2)(c). pliance found, in particular in the light of 13 — These flat-rate corrections can be 2%, 5%, 10%, 25% or the nature and gravity of the infringement 50% of the declared expenditure. See, in tins connection, the guidelines set out by the Commission in 1997 for the calculation of financial consequences when preparing the decision regarding the clearance of the accounts of the EAGGF/Guarantec (Doc. VI/5330/97 of 23 December 1997; 'Belle II Report', pp. 9 to 12). 8 — Article 8(1). 14 — Article 5(2) of Regulation No 1287/95. 9 — Article 5(1 Mb) of Regulation No 729/70 as amended. 15 — OJ, English Special Edition 1968 (I), p. 187. 10 — Cited above. Article 5(2)(b). 16 — OJ 1992 L 215, p. 49. 11 — Article 5(2)(c) and Article 9. 17 — Article 4d(1) of Regulation No 2066/92.
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regulation and in Commission Regulation Länder (which register applications for (EEC) No 3886/92. 18 premiums and the information relating to them) were inconsistent (up to 1997), so that the checks intended to avoid multiple applications (during the relevant period) for premiums for the same cows could only be incomplete. Moreover, in many cases the registers of livestock were incorrect, so that they did not constitute a reliable basis for I I— Facts and pre-litigation procedure the on-the-spot administrative checks of applications for premiums. Finally, and most importantly, the age from which a cow could be considered as suckling, and 9. In the course of 1997 and 1998, the therefore eligible for the grant of a pre- Commission carried out various checks in mium, was not high enough or, at least, the Germany relating to the procedure for the checks on this were insufficient, or even grant of suckler cow premiums. Those non-existent. checks were carried out on the spot in three Länder, namely North Rhineland-Westpha- lia (from 22 to 26 September 1997), Schleswig-Holstein (from 19 to 23 January 1998) and Bavaria (from 8 to 12 June 1998).
10. Following these checks, the Commis- sion indicated to the German authorities, by 12. In view of these matters, the Commis- letter of 31 August 1999, that the measures sion informed the German authorities of its laid down to ensure the correct execution of intention to make a flat-rate correction to grants of suckler cow premiums in 1996 the expenditure incurred on this ground in and 1997 appeared inadequate. all the Länder, and not just in the three Länder checked. 20The geographic reach of the flat-rate correction contemplated was justified by the similarities in the inad- equacies found in the Länder in question and by the absence of coordination by the 11. To support this finding, the Commis- federal authorities of the checks carried out sion referred to the following matters. 19 at the Länder level. In these circumstances First, the data banks existing in the various there were good grounds for thinking that the quality of suckler cows was not effectively monitored in all the Länder. 21 18 — Commission Regulation (EEC) No 3886/92 of 23 Decem- ber 1992 laying down detailed rules for the application of the premium schemes provided for in Council Regulation (EEC) No 805/68 and repealing Regulations (EEC) No 1244/82 and (EEC) No 714/89 (OJ 1992 L 391, p. 20). 20 — Cited above. 19 — See letter of 31 August 1999. 21 — Cited above.
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13. Following a request from the Commis- fore, in its reports of 26 March and 19 June sion, the German authorities forwarded 2001, the conciliation body merely stated, additional information to the Commission, on the one hand, that it was not its task to by letter of 3 November 1999, relating to resolve the question of the constitutional trie systems of checks in certain Länder. 22 legality of the extension of the flat-rate The outcome was, according to the Com- correction to the Länder not checked and, mission, t h a t only the Land of on the other hand, that the detailed rules on Mecklenburg-Western Pomerania estab- evidence relating to the quality of the lished that it had an effective system of checks laid down by the Member States checks. was of fundamental importance and called for clarification in future.
14. As a result, by an official communica- 16. Following this unsuccessful concilia- tion of 9 October 2000, the Commission tion procedure, the Commission adopted made a flat-rate correction, amounting to the contested decision. 2%, on expenditure effected — in 1996 and 1997 in respect of stickler cow premiums — in all the Länder, with the exception of Mecklenburg-Western Pomerania. The financial correction amounts to DEM 6 366 695.50, that is, DEM 2 496 094.62 for the Länder checked and DEM 3 870 600.88 for the Länder not checked. III— The action
17. Germany contests the decision at issue in that it excludes from Community 15. By letter of 21 November 2001, the financing stickler cow premiums paid in German authorities requested the opening 1996 and 1997 by the Lander not checked of a conciliation procedure in order to (with the exception of those paid by the reach an agreement with the Commission Land of Mecklenburg-Western Pomerania). regarding the extension of the flat-rate correction in question to the Lander not checked (with the exception of the Land of Mecklenburg-Western Pomerania). The respective positions of the parties were no closer by the end of this procedure. There- 18. In support of its action, the applicant puts forward three pleas alleging, first, infringement of an essential procedural 22 — The information submitted concerned the following requirement when adopting the contested Länder: Saxony, Thnringia, Mecklenburg-Western Pomer- ania, Hessen and Saarland. decision by failing to observe the relevant
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rules of evidence, secondly, infringement of at issue, so that the decision was tainted by the principle of legitimate expectations, and a procedural defect. In so doing, the thirdly, disregard of Article 10 EC. Commission had also failed to observe the extent of its duty to make investigations, which generally entailed the carrying out of on-the-spot checks in each Land, and not only the inspection of administrative docu- ments.
A — The first plea: failure to observe the 22. In my view, this argument does not rules of evidence for the clearance of stand up to an examination of the settled EAGGF accounts case-law of the Court in relation to the apportionment of the relevant burden of proof.
19. Germany alleges that the Commission extended or imputed to Länder other than 23. It is important to note that Article 8(1) those checked on the spot by the Commis- of Regulation No 729/70 provides that the sion, the (uncontested) breaches which it Member States are to take the measures had found and consequently applied the necessary to satisfy themselves that transac- flat-rate correction at issue to them. tions financed by the EAGGF are actually carried out and are executed correctly.
24. The Court has consistently held that, where the Commission refuses to charge 20. That extension was contrary to the certain expenditure to the EAGGF on the principles governing proof of an infringe- ground that it was incurred as a result of ment of the rules of Community law on the breaches of Community rules for which a grant of premiums under the EAGGF. Since Member State can be held responsible, it is it did not carry out on-the-spot checks for the Commission to prove the infringe- throughout Germany, the Commission had ments in question. 23 In other words, the failed to note matters which could give rise Commission is obliged to give reasons for to serious doubts as to the existence of its decision finding an absence of, or defects infringements in the Länder which had not in, inspection procedures operated by the been checked. Member States in question. 24
23 — See in particular Case C-281/89 Italy v Commission [1991] ECR I-347, paragraph 19, Case C-5J/91 Italy v Commis- sion [1993] ECR I-4813, paragraph 13, and Case C-253/97 Italy v Commission [1999] ECR I-7529, para- graph 6. 24 — See in particular Case C-8/88 Germany v Commission 21. It had thereby unjustifiably shifted the [1990] ECR I-2321, paragraph 23, Case C-278/98 Nether- burden of proof in relation to the factors lands v Commission [2001] ECR I-1501, paragraph 39, and Case C-349/97 Spain v Commission [2003] ECR capable of forming the basis of the decision I-3851, paragraph 46.
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25. However, initially, the Commission is doubts as to the existence of an adequate not required to demonstrate exhaustively and effective series of supervisory measures that the checks carried out by national and inspection procedures. 27 authorities are inadequate or that there are irregularities in the figures submitted by them throughout the Member State con- cerned. It is sufficient to adduce evidence of serious and reasonable doubt on its part regarding such checks or figures. 25
27. The reason for this mitigation of the burden of proof on the Commission is that it is the Member State which is best placed to collect and verify the data required for the clearance of EAGGF accounts, and, consequently, it is for that Member State to adduce the most detailed and comprehen- sive evidence that its checks or figures are accurate and, if appropriate, that the Commission's assertions are incorrect. 28
26. It is then, subsequently, for that State to show that the conditions for obtaining the financing refused are fulfilled. 2 6In other words, the Member State concerned cannot 28. I am of the opinion that the case-law is rebut the Commission's findings by mere applicable without distinction to all the assertions which are not substantiated by Member States, in the light of the funda- evidence of a reliable and operational mental requirement that Community law be supervisory system. If it is not able to show applied uniformly. 29 that the Commission's findings are inaccur- ate, those findings can give rise to serious 27 — See Case C-253/97 Italy v Commission, cited above, paragraph 7, and Case C-349/97 Spain v Commission, cited above, paragraph 48. 25 — See in particular Case C-48/91 Netherlands v Commission 28 — See in particular Case C-48/91 Netherlands v Commission, [1993] ECR I-5611, paragraph 17, Case C-54/95 Germany cited above, paragraph 17, Case C-54/95 Germanv v v Commission [1999] ECR I-35, paragraph 35, Case Commission, circa above, paragraph 35, Case C-50/97 C-28/94 Netherlands v Commission [1999] ECR I-1973, Italy v Commission [1999] ECR I-1683, paragraph 55, paragraph 40, Case C-278/98 Netherlands v Commission, Case C-278/98 Netherlands v Commission, cited above, cited above, paragraph 40, Case C-263/98 Belgium v paragraph 41, Case C-263/98 Belgium v Commission, Commission [2001] ECR I-6063, paragraph 36, and Spain cited above, paragraph 37, Case C-118/99 France v v Commission, cited above, paragraph 47. Commission [2002] ECR I-747, paragraph 37 and Case 26 — Sec in particular Case 347/85 United Kingdom v Commis- C-349/97 Spain v Commission, cited above, paragraph 49. sion [19881 ECR 1749, paragraph 14, Case C-48/91 29 — On this fundamentai requirement of the Community legal Netherlands v Commission, cited above, paragraph 16, and order, see in particular joined Cases C-143/88 and C-92/89 Case C-263/98 Belgium v Commission, cited above, Zuckerfabrik Siiderdithmarschen and Zuckerfabrik Soest paragraph 36. [1991] ECR I-415, paragraph 26.
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29. It follows that, contrary to the claims defects found, to serious and reasonable of the German Government, the Commis- doubt on the part of the Commission as to sion is not required to carry out detailed the effectiveness of the supervision by the and exhaustive investigations on the effect- German authorities in that regard in the iveness of the inspection procedures oper- other Länder. ated in the Member State concerned by means of on-the-spot systematic checks in all the Länder. This evidential requirement cannot arise from the condition requiring evidence capable of justifying a serious and reasonable doubt on the matter. Such an evidential requirement would, in practical terms, be impossible to fulfil. It would tend 32. The alleged diversity of operation and to undermine the structure of the system methods of supervision between all the introduced by Regulation No 729/70 con- Länder could not dispel the concerns of cerning the checks of transactions financed the Commission precisely because, notwith- by the EAGGF. standing this diversity, the inspections carried out on the spot in three different Länder invariably led to broadly compar- able results.
30. The contested decision may not there- fore be called into question solely on the ground that the Commission failed to carry out on-the-spot checks in certain Länder on the existence and reliability of the checks 33. Moreover, the absence of communica- made by those Länder. tion of additional information regarding many Länder (other than those checked on the spot), despite the Commission's request in that regard, could not but confirm the Commission's doubts as to the situation in all those Länder. 30
31. Moreover, in any event, the Commis- sion had good grounds for questioning whether those checks were adequate and effective. As regards the checks of the German authorities on the age of supposed suckler cows, the Commission took the trouble to carry out on-the-spot inspections 34. It follows from these arguments that in several Länder, rather than merely the first plea of failure to observe the rules exchanging correspondence. The various of evidence must be dismissed. on-the-spot inspections, the results of which are not contested by the applicant, could only give rise, in view of the similarity in the 30 — See point 13 of this Opinion.
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B — The second plea: infringement of the deficiency is confined to the failure to apply principle of legitimate expectations the system of checks adopted by the Member State concerned in that region or département. In the absence of tangible evidence to that effect, the correction should be applied to all the expenditure 35. In this plea Germany contends, essen- subject to the system of checks at issue, that tially, that the Commission infringed the is to the expenditure incurred by all the principle of legitimate expectations in that it national authorities in the sector con- suddenly changed its previous practice in cerned. 33 relation to the application of a flat-rate correction in connection with the clearance of EAGGF accounts. 31
38. Those guidelines, established in 1997, are in line with the case-law of the Court on 36. In my view this argument is not well apportionment of the burden of proof, since founded. It is apparent from the documents it is precisely in situations where there is no that the blanket charging system in question indication that the deficiency is limited in was not unprecedented since the Commis- that way that the Commission has serious sion had already made use of it vis-à-vis and reasonable doubts as to the effective- certain Member States with a federal or ness of the checks throughout the Member quasi-federal structure, as was the case with State concerned. Italy. 32
37. Moreover, the Commission was careful 39. Accordingly the conduct of the Com- to make clear in its Belle II report of 1997, mission was not capable of giving rise to cited above, that a correction should be reasonable expectations on the part of the restricted to expenditure administered in a German authorities that the financial cor- given region or département only where rections in question would necessarily be there are reasons to believe that the restricted to the expenditure incurred in Lander where on-the-spot checks were carried out. 31 — For examples of the application or the principle of legitimate expectations of the Member States in connection with the clearance of EAGGF accounts, see in particular Case C-55/91 Italy v Commission, cited above, paragraph 33 — Page 12, last paragraph, of Belle II Report. The terms of 67 and Case C-373/99 Greece v Commission [2001] ECR this report, applicable to the drawing up of the contested I-9619, paragraph 56, and the Opinion of Advocate decision, are appreciably different from those used in the General Ruiz-Jarabo Colomer in Case C-49/94 Ireland v report of 1 June 1993 known as Belle I, according to which Commission [1995] ECR I-2683, points 30 to 32. flat-rate corrections only apply to the sector of expenditure 32 — See Case C-55/91 Italy v Commission, cited above, affected in the region or administrative area in which the paragraph 18, and the Opinion of Advocate General Van deficiencies have been found, unless it can be proven that Gerven in that case (point 19). In this case, the Commission the same deficiency exists in the other regions or in all the extended to regions not checked on the spot the results of Member State concerned (doc. VI/216/93, Appendix 2, checks carried out in other regions. p. 3, paragraph 4).
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40. In consequence, the second plea must 44. Furthermore, the argument put for- be dismissed. ward by the German Government seems to run counter to a strong trend in case-law of recognising the rule of the unity of the State in Community law, well-known in international law. Several significant illus- trations of this jurisprudential trend can be found.
C — The third plea: infringement of Article 10 EC
41. Germany alleges, in its third plea, that the Commission did not take account of Germany's federal structure, consisting of independent Lander, when it extended the contested financial correction to Lander which had not been subject to checks. That 45. The first illustration of the trend can be process was contrary to the duty of found in cases concerning the clearance of cooperation in good faith on the part of EAGGF accounts. In Case C-8/88 Germany the Community institutions towards the v Commission [1990] ECR I-2321, cited Member States, which follows from Article above, the Court held that 'it is for all the 10 EC. authorities of the Member States, whether it be the central authorities of the State or the authorities of a federated State, or other territorial authorities, to ensure observance of the rules of Community law within the sphere of their competence ... (h)owever, it is not for the Commission to rule on the 42. I do not believe that this argument can division of competences by the institutional reasonably succeed. rules proper to each Member State, or on the obligations which may be imposed on federal and Lander authorities respect- ively'.34 The Court concluded that the Commission 'may only verify whether the supervisory and inspection procedures 43. To begin with, I cannot accept that the established according to the arrangements Commission has acted vis-à-vis the German within the national legal system are in their authorities in breach of the duty of co- entirety sufficiently effective to enable the operation in good faith, since, in my view, it Community requirements to be correctly has acted in accordance with the case-law applied'. 35 of the Court on apportionment of the burden of proof and has not breached the legitimate expectations of the authorities 34 — Paragraph 13. concerned. 35 — Ibid.
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46. Those observations clarified an issue obligations arising from Community law, which is rather different from that with thereby avoiding all responsibility on that which we are concerned. The Commission point in connection with an infringement had based the contested decision on the fact proceeding. 36 By extension, it might be that, on the one hand, the federal author- argued that a Member State cannot avoid ities had not given the Länder detailed the application of a particular flat-rate instructions on the nature and frequency of correction in connection with the clearance the checks, and, on the other, the Länder of EAGGF accounts on the ground that the had not drawn up and applied the appro- federal structure of that Member State priate supervisory measures. It was not prevented the attribution of defects therefore a question of knowing whether recorded in on-the-spot checks in certain the Commission was entitled to impute local authorities to other local authorities findings made in certain Länder to other not subject to checks. Länder, as in the present case.
47. However, that case-law does have some relevance in this case. It is based on the principle that a Member State's com- 49. Following this line of thought, I would pliance with the rules of Community law cite Joined Cases C-46/93 and C-48/93 must be assessed in relation to the conduct Brasserie du Pêcheur and Factortame37on of that Member State, considered as a the liability of Member States for breaches whole or as single instances, irrespective of Community law. The Court held that, in of the division of competences between the the Community legal order, a Member State different authorities of which it consists. whose liability for breach of a Community According to this case-law, it is not the task provision is in issue will be viewed as a of the Commission to interfere with the single entity, irrespective of whether the division of competences specific to a Mem- breach which gave rise to the damage is ber State, by checking whether each of the attributable to the legislature, the judiciary authorities of which it consists, viewed or the executive. 38 It concluded that the individually, or any one of them, has fact that, under national rules, the breach complied with the rules of Community complained of is attributable to the legis- law in the sphere falling within its compe- lature cannot exclude the liability of the tence. Member State in question. 39
36 — See in particular Case C-33/90 Commission v Italy [1991] ECR I-5987, paragraph 24, Case C-301/95 Commission v Germany [1998] ECR I-6135, paragraphs 21 to 23, Case C-274/98 Commission v Spain [2000] ECR I-2823, paragraphs 19 and 20 and Case C-212/99 Commission v Italy [2001] ECR I-4923, paragraphs 34 and 35. 48. Conversely, it may be recalled that the 37 — [1996] ECR I-1029. Court has consistently held that a Member 38 — Paragraph 34. See also the Opinion in Case C-224/01 State may not plead situations existing in its Kolber (20031 ECR I-1029, points 44 to 47, and that of Advocate General Geelhoed in Case C-129/00 Commission internal order, including its constitutional v Italy [20031 ECR I-14637 I-14640, paragraphs 50 to 55. order, to justify failure to comply with 39 — Paragraph 35.
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50. All these arguments from the case-law question has a federal or a centralised reflect the same reasoning, which is that a structure. Member State's position in relation to compliance with the provisions of Commu- nity law should be assessed in an overall manner, in accordance with the traditional rule on the unity of the State, i.e. irrespect- ive of its division of competences, so that it 51. The Court will rely on these arguments is unnecessary to make distinctions accord- from the case-law to dismiss the third plea ing to whether the Member State in in relation to infringement of Article 10 EC.
IV — Conclusion
52. In the light of the foregoing considerations, I propose that the Court should:
(1) dismiss the application;
(2) order the Federal Republic of Germany to pay the costs.
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