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Document 62001CJ0501

    Judgment of the Court (Fifth Chamber) of 6 November 2003.
    Kingdom of the Netherlands v Commission of the European Communities.
    Commission Decision 2001/739/EC of 17 October 2001 on the total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1998.
    Case C-501/01.

    European Court Reports 2003 I-13263

    ECLI identifier: ECLI:EU:C:2003:603

    Arrêt de la Cour

    Case C-501/01


    Kingdom of the Netherlands
    v
    Commission of the European Communities

    «(Annulment of Commission Decision 2001/739/EC of 17 October 2001 on the total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1998)»

    Opinion of Advocate General Stix-Hackl delivered on 26 June 2003
        
    Judgment of the Court (Fifth Chamber), 6 November 2003
        

    Summary of the Judgment

    1..
    Agriculture – Approximation of laws on health policy – Financial contribution of the Community to veterinary measures taken by Member States – Emergency measures in the event of the occurrence of certain animal diseases – Commission's power to review – Scope – Financial adjustment where the measures adopted are inadequate – Where contested by the Member State concerned – Burden of proof

    (Council Decision 90/424)

    2..
    Agriculture – Approximation of laws on health policy – Financial contribution of the Community to veterinary measures taken by Member States – Emergency measures in the event of the occurrence of certain animal diseases – Adjustments to the Community financial contribution – Limits – Financial aid for the eradication of classical swine fever in the Netherlands – Linear adjustment – Principle of proportionality – Breach – None

    (Council Decision 90/424; Commission Decisions 2000/362 and 2001/739)

    1.
    In the context of the application of Decision 90/424 on expenditure in the veterinary field, the Member States have a certain latitude as regards the choice of the measures to be taken and the manner in which they are to be implemented and in that regard the Commission cannot substitute its own assessment for that of the Member State concerned. On the other hand, if the Commission, while respecting the latitude enjoyed by the Member State concerned, has established that that State has not taken sufficient steps to combat the disease and that a financial adjustment must be applied, it is for that Member State to prove that the Commission has made a manifest error of assessment. see para. 20

    2.
    Any adjustment to the Community financial contribution in the fight against classical swine fever by virtue of Decision 90/424 on expenditure in the veterinary field must not exceed the extra costs to which the inadequacies in the measures adopted by the Member State concerned gave rise to the detriment of the Community budget and for which that State must assume responsibility. On the other hand, since the Commission is under an obligation not to spend Community funds improperly, it must take care, when making such a financial adjustment, not to reduce the Community participation by too small an amount by comparison with the inadequacies established. Since the finding of inadequacies in a situation such as this is frequently based on factual evidence and extrapolations based on representative samples, it must therefore be recognised that the Commission has a considerable discretion when determining the amount of the financial adjustment. However, the exercise of that discretion is still subject to compliance with the principle of proportionality. As regards, more particularly, Decision 2001/739 on the total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1998, it cannot be argued that the Commission acted disproportionately when it applied a linear adjustment and thus reduced the Community financial contribution by 25% for 1998, like the rate established by Decision 2000/362 on the total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1997, even if it is true that the inadequacies established by the Commission for 1998 were lower than those for 1997. Although the Commission, for budgetary reasons, had to adopt two different decisions, each relating to expenditure pertaining to one financial year, it was a matter of one and the same epidemic. The expenditure for 1998 is therefore linked with the expenditure for 1997. In those circumstances, it does not appear unreasonable to select the same rate of adjustment for both financial years. see paras 31-37, 39




    JUDGMENT OF THE COURT (Fifth Chamber)
    6 November 2003 (1)


    ((Commission Decision 2001/739/EC of 17 October 2001 on the total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1998))

    In Case C-501/01,

    Kingdom of the Netherlands, represented by H.G. Sevenster, C. Wissels and J.G.M. van Bakel, acting as Agents,

    applicant,

    v

    Commission of the European Communities, represented by T. van Rijn, acting as Agent, with an address for service in Luxembourg,

    defendant,

    APPLICATION for annulment of Commission Decision 2001/739/EC of 17 October 2001 on the total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1998 (OJ 2001 L 277, p. 28), in so far as the determination of the total amount of Community financial aid for the eradication of classical swine fever in the Netherlands in 1998 provides for a reduction of 25% of the compensation paid to farmers,



    THE COURT (Fifth Chamber),,



    composed of: C.W.A. Timmermans, President of the Fourth Chamber, acting as President of the Fifth Chamber, D.A.O. Edward (Rapporteur) and S. von Bahr, Judges,

    Advocate General: C. Stix-Hackl,
    Registrar: M.-F. Contet, Principal Administrator,

    having regard to the Report for the Hearing,

    after hearing oral argument from the parties at the hearing on 26 March 2003,

    after hearing the Opinion of the Advocate General at the sitting on 26 June 2003,

    gives the following



    Judgment



    1
    By application lodged at the Court Registry on 24 December 2001, the Kingdom of the Netherlands brought an action under Article 226 EC for annulment of Commission Decision 2001/739/EC of 17 October 2001 on the total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1998 (OJ 2001 L 277, p. 28; the contested decision), in so far as the determination of the total amount of Community financial aid for the eradication of classical swine fever in the Netherlands in 1998 provides for a reduction of 25% of the compensation paid to farmers.

    Community legislation

    2
    The contested decision provides: Article 1The total amount of Community financial aid for the eradication of classical swine fever in the Netherlands in 1998 is hereby fixed at EUR 6 277 156.Article 2The amount referred to in Article 1 shall be paid after adoption of the present Decision.Article 3This Decision is addressed to the Kingdom of the Netherlands.

    3
    The preamble to the contested decision is worded as follows:

    (1)
    An epidemic of classical swine fever occurred in the Netherlands in 1997 and in 1998. The appearance of the disease represents a serious danger to the Community pig herd. With a view to the speedy eradication of the disease the Community is able to contribute to the expenditure incurred by the Member State.

    (2)
    In relation to the outbreak of classical swine fever which occurred in 1997 the Commission adopted Decision 2000/362/EC on the total amount of Community aid for the eradication of classical swine fever in the Netherlands in 1997. This Decision provided for the payment of a total amount of EUR 109 937 795.

    (3)
    On 10 September 1999 the Netherlands presented an application for reimbursement of all the expenditure incurred in the country in relation to the outbreaks of classical swine fever in 1998. At the request of the Commission, the Netherlands provided further information on this matter on 6 December 1999, 7 February 2000 and 21 April 2000.

    (4)
    The Commission has checked to see whether all Community veterinary legal provisions have been observed and all the conditions for Community financial assistance have been met.

    (5)
    As a result of these checks, not all of the expenditure submitted could be accepted as eligible. This position is consistent with the special report on classical swine fever issued by the Court of Auditors and with Decision 2000/362/EC.

    (6)
    The Commission's comments on the application submitted by the Netherlands were officially notified to the Dutch authorities on 11 December 2000.

    (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.

    (8)
    Pursuant to Article 3(2) of Council Regulation (EC) No 1258/1999, veterinary and plant health measures undertaken in accordance with Community rules shall be financed under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund. For financial control purposes, Article 8 and 9 of Regulation (EC) No 1258/1999 apply.

    (9)
    The Standing Veterinary Committee has not given a favourable opinion. The Commission therefore proposed these measures to the Council on 19 June 2001 in accordance with Article 41 of Decision 90/424/EEC, the Council being required to act within three months.

    (10)
    However, the Council has not acted within the required time limit. These measures should now be adopted by the Commission.

    4
    The contested decision is based on Article 3, and in particular paragraphs 2 and 5 thereof, of Council Decision 90/424/EEC of 26 June 1990 on expenditure in the veterinary field (OJ 1990 L 224, p. 19), most recently amended by Commission Decision 2001/572/EC of 28 July 2001 (OJ 2001 L 203, p. 16; Decision 90/424).

    5
    Article 3 of Decision 90/424 provides:

    1.
    The provisions of this Article shall apply in the event of the occurrence of one of the following diseases in the territory of a Member State:

    ─
    ...

    ─
    classical swine fever,

    ─
    ...

    2.
    The Member State concerned shall obtain a financial contribution from the Community for the eradication of the disease, on condition that the measures applied immediately comprise at least the isolation of the holding from the time of suspicion and, following official confirmation of the disease:

    ─
    the slaughter of animals of susceptible species which are affected or contaminated or suspected of being affected or contaminated, and their destruction, and, in the case of avian plague, destruction of the eggs,

    ─
    the destruction of contaminated feedingstuffs and contaminated equipment, where the latter cannot be disinfected in accordance with the third indent,

    ─
    the cleaning, disinsectisation and disinfection of the holdings and of the equipment on the holdings,

    ─
    the establishment of protection zones,

    ─
    the imposition of suitable measures to prevent the risk of the spread of infection,

    ─
    the establishment of a waiting period to be observed after slaughter before re-stocking of the holding,

    ─
    swift and adequate compensation of the livestock farmers.

    2a
    The Member State concerned shall also qualify for a Community financial contribution where, on the outbreak of one of the diseases listed in paragraph 1, two or more Member States collaborate closely to control the epidemic, particularly in carrying out an epidemiological survey and disease surveillance measures. Without prejudice to the measures provided for under the common organisation of markets concerned, the specific community financial contribution shall be decided on in accordance with the procedure laid down in Article 41.

    3.
    The 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 be examined as soon as possible within the Standing Veterinary Committee, hereinafter referred to as the Committee, set up by Decision 68/361/EEC. The specific financial contribution by the Community shall be decided in accordance with the procedure laid down in Article 41, without prejudice to the measures provided for in the context of the common organisation of markets concerned.

    4.
    If, in view of the development of the situation in the Community, it proves necessary to continue the measures provided for in paragraph 2, a new decision concerning the financial contribution by the Community, which might exceed the figure of 50% laid down in the first indent of paragraph 5, may be adopted in accordance with the procedure laid down in Article 40. When this decision is adopted, any measures which the Member State concerned must take in order to ensure the success of the action may be laid down, and in particular measures other than those mentioned in paragraph 2.

    5.
    Without prejudice to market support measures to be taken as part of the common organisation of markets, the financial contribution by the Community, divided if necessary into several tranches, must be:

    ─
    50% of the costs incurred by the Member State in compensating owners for the slaughter, destruction of animals and, where appropriate, their products, for the cleaning, disinsectisation and disinfection of holdings and equipment and for the destruction of the contaminated feedingstuffs and contaminated equipment referred to in the second indent of paragraph 2,

    ─
    where vaccination has been decided upon in accordance with paragraph 4, 100% of the cost of supply of the vaccine and 50% of the costs incurred in carrying out that vaccination.

    6
    Article 41 of Decision 90/424 provides:

    1.
    Where the procedure laid down in this Article is to be followed, the chairman shall refer the matter without delay to the Standing Veterinary Committee set up by Directive 68/361/EEC ..., hereinafter referred to as the Committee, either on his own initiative or at the request of a Member State.

    2.
    The representative of the Commission shall submit to the Committee a draft of the measures to be taken. The Committee shall deliver its opinion on the draft within a time limit which the chairman may lay down according to the urgency of the matter. The opinion shall be delivered by the majority laid down in Article 148(2) of the Treaty in the case of decisions which the Council is required to adopt on a proposal from the Commission. The votes of the representatives of the Member States within the Committee shall be weighted in the manner set out in that Article. The chairman shall not vote.

    3.

    (a)
    The Commission shall adopt the measures envisaged if they are in accordance with the opinion of the Committee.

    (b)
    If the measures envisaged are not in accordance with the opinion of the Committee, or if no opinion is delivered, the Commission shall, without delay, submit to the Council a proposal relating to the measures to be taken. The Council shall act by a qualified majority.

    If, on the expiry of a period of three months from the date of referral to the Council, the Council has not acted, the Commission shall adopt the proposed measures and implement them immediately.

    7
    Council Directive 80/217/EEC of 22 January 1980 introducing Community measures for the control of classical swine fever (OJ 1980 L 47, p. 11), in the version amended by Council Directive 91/685/EEC of 11 December 1991 (OJ 1991 L 377, p. 1) ( Directive 80/217) provides in Article 9:

    1.
    Immediately after the diagnosis of classical swine-fever has been officially confirmed in pigs on a holding, the competent authority shall establish a protection zone with a radius of at least three kilometres around the outbreak site, which shall itself be included in a surveillance zone of a radius of at least 10 kilometres.

    ...

    4.
    The following measures shall be applied in the protection zone:

    (a)
    a census of all the holdings shall be made as soon as possible; after the establishment of the protection zone these holdings shall be visited by an official veterinarian within not more than seven days;

    (b)
    the movement and transport of pigs on public or private roads shall be prohibited. This prohibition shall not apply to the transit of pigs by road or rail without unloading or stopping. However, in accordance with the procedure [laid down in Article 16, a derogation] may be granted for slaughter pigs coming from outside the protection zone and on their way to a slaughterhouse situated in the said zone;

    (c)
    trucks and other vehicles and equipment, which are used to transport pigs or other livestock or material which may be contaminated (e.g. feedingstuff, manure, slurry, etc.) and which are used within the protection zone, shall not leave:

    (i)
    a holding situated within the protection zone,

    (ii)
    the protection zone,

    (iii)
    a slaughterhouse, without having been cleaned and disinfected in accordance with the procedures laid down by the competent authority. Those procedures shall provide in particular that no truck or vehicle which has been used in the transport of pigs may leave the zone without being inspected by the competent authority;

    (d)
    no other species of animal may enter or leave a holding without the authorisation of the competent authority;

    (e)
    all dead or diseased pigs on a holding shall be notified to the competent authority, which shall carry out any investigations necessary to establish the presence of classical swine-fever;

    (f)
    pigs may not be removed from a holding in which they are kept for 21 days after the completion of the preliminary cleaning and disinfection of the infected holdings as provided for in Article 10; after 21 days, authorisation may be given to remove pigs from the said holding:

    (i)
    directly to a slaughterhouse designated by the competent authority, preferably within the protection or surveillance zone, provided that:

    ─
    an inspection of all the pigs on the holding has been carried out,

    ─
    a clinical examination of the pigs to be moved for slaughter, including the taking of the body temperature of a proportion thereof, has been carried out,

    ─
    each pig has been marked by ear marking,

    ─
    the pigs are transported in vehicles sealed by the competent authority. The competent authority responsible for the slaughterhouse shall be informed of the intention to send pigs to it. On arrival at the slaughterhouse these pigs shall be kept and slaughtered separately from other pigs. The vehicle and equipment which have been involved in the transport of the pigs shall immediately be cleaned and disinfected.

    ...

    8.
    By derogation from paragraphs 4(f) and 6(f), the competent authority may authorise that pigs be moved from the holding to be transported to a rendering plant for rendering or to a place where the pigs are slaughtered in order to be burned or buried. These animals shall be tested at random for the presence of the classical swine-fever virus. The criteria laid down in Annex IV with regard to the collection of blood samples shall be taken into account during such random testing.

    All necessary precautions shall be taken to avoid the risk of spreading the virus during such transport, in particular by cleaning and disinfecting the truck after the transport.

    9.
    Where the prohibitions provided for in paragraphs 4(f) and 6(f) are maintained beyond 30 days because of an outbreak of further cases of the disease and as a result problems arise in keeping the pigs, the competent authority may, following a reasoned application by the owner, authorise removal of pigs from a holding within the protection or surveillance zone, as the case may be, provided that:

    (a)
    the official veterinarian has verified the facts;

    (b)
    an inspection of all pigs on the holding has been carried out;

    (c)
    a clinical examination of the pigs to be moved, including the taking of the body temperature of a proportion thereof, has been carried out;

    (d)
    each pig has been marked by ear marking;

    (e)
    the holding of destination is located in the protection zone or within the surveillance zone.

    All necessary precautions shall be taken to avoid the risk of spreading the virus during such transport, in particular by cleaning and disinfecting the truck after the transport.

    8
    Article 14b of Directive 80/217 provides that each Member State is to draw up a contingency plan specifying the national measures to be implemented in the event of an outbreak of classical swine fever. These plans are to be submitted to the Commission not later than 1 January 1993; the Commission is to examine them and, after any necessary amendments, approve them.

    9
    In the meantime, Directive 80/217 has been replaced by Council Directive 2001/89/EC of 23 October 2001 on Community measures for the control of classical swine fever (OJ 2001 L 316, p. 5).

    Facts

    10
    By the contested decision, the Commission fixed the amount of the Community contribution to the costs of the fight against classical swine fever in the Netherlands in 1998 at an amount significantly below the amount declared by that State. The Netherlands had declared a total amount of NLG 63 077 783.93, of which NLG 22 455 339.57 related to compensation paid to breeders affected by the epizootic. The Commission limited the Community financial contribution in respect of the compensation to NLG 8 256 604.57. It thus applied a reduction of 25%.

    11
    It is apparent from the file that in 1997 there was a crisis in the Netherlands owing to an epidemic of classical swine fever. In 1998, the year during which that epidemic came to an end, five outbreaks of classical swine fever were declared (compared with 424 outbreaks in 1997). Sixty-eight holdings were preventively evacuated, including four on the basis of a single positive epidemiological sample. In all, 52 548 animals were evacuated in 1998. The main purpose of the measures taken in 1998 was to restore a normal situation, in particular by taking the greatest possible number of measures so that the pig sector could function normally again after the eradication of classical swine fever.

    12
    It follows from the contested decision that the Commission bases the financial adjustment on a number of complaints. By those complaints, the Commission criticises the Netherlands for the fact that the number of animals for which compensation was claimed under the head young sows was several times higher than the usual number of young sows on a holding, that the compensation paid for all sows was on average 9.4% of the DLV (Directorate for Agriculture and Fisheries) scales, that, for holdings with only fattening pigs, the weight was overvalued by 12.2%, that in the holdings which were evacuated on the day of the estimate, the estimated weight of feedingstuffs was 17% higher than the total weight of the same feedingstuffs weighed in the destruction centres and that the total amount of compensation paid to pig breeders had increased by 15.5% owing to the revaluation system.

    13
    According to the letter of 11 December 2000 from Mr Coleman, Director-General of the Directorate-General Health and Consumer Protection, referred to in the sixth recital of the contested decision, the Commission considered that it was justified in applying a flat-rate adjustment of 25%, regard being had to the scope and repetitive nature of the irregularities, and also to the fact that the outbreaks of classical swine fever declared in the Netherlands in 1997 and 1998 are part of the same epidemic and that the expenditure for 1998 is therefore linked with that for 1997. That letter also states that the Commission's conclusions are based on an examination of the financial data concerning all the cases of compensation of farmers and that there was no extrapolation on the basis of the six files selected.

    Procedure before the Court

    14
    Taking the view that the contested decision is vitiated by errors of law, the Kingdom of the Netherlands brought the present action, in which it claims that the Court should:

    1.
    annul the contested decision in so far as the amount of the Community contribution fixed for 1998 for the eradication of classical swine fever in the Netherlands provides for a reduction of 25% of the compensation paid to breeders;

    2.
    order the Commission to pay the costs.

    15
    The Commission contends that the Court should dismiss the application of the Kingdom of the Netherlands as unfounded and order it to pay the costs.

    Preliminary observations

    16
    The Netherlands Government puts forward five pleas in law in support of its application. First, it claims that the contested decision is based on factually incorrect elements (first plea). Second, it claims that the Commission has acted unlawfully in adopting the decision. Decision 90/424 does not offer the possibility of applying an adjustment to the Community financial contribution, at any event as the Commission has done (first part of the second plea). Furthermore, the Commission is alleged to have interpreted the facts in a legally incorrect manner (second part of the second plea). Next, the Netherlands Government contends that the contested decision is disproportionate (third plea). It claims that the absence of any express legal basis formulated in sufficiently precise legal terms for the application of a financial adjustment has also entailed a breach of the principle of legal certainty (fourth plea). Last, the Netherlands Government submits that the contested decision does not contain a sufficient statement of reasons for the purposes of Article 253 EC (fifth plea).

    17
    The first part of the second plea and the fourth plea call in question the very principle of the possibility of applying a flat-rate or other adjustment to the financial participation of the Community under Article 3(2) and (5) of Decision 90/424. As the very existence of such a possibility constitutes a precondition for the examination of the other pleas, that possibility must be examined first.

    First part of the second plea and fourth plea

    18
    The first part of the second plea and the fourth plea put forward in the present case are identical to the first part of the second plea and the fourth plea in Case C-293/00 Netherlands v Commission [2003] ECR I-12775, in which judgment has been given today. As those pleas were rejected in that case (see paragraphs 20 to 30), and in the absence of any new arguments on the part of the Netherlands Government as regards the present case, those pleas must be rejected on the same grounds.

    First plea and second part of the second plea

    Arguments of the parties

    19
    By the first plea and the second part of the second plea, the Netherlands Government claims that the Commission erred in establishing and interpreting the facts which in its view justify the financial adjustment.

    20
    As stated at paragraphs 32 to 34 of the abovementioned judgment in Netherlands v Commission , the Member States have a certain latitude as regards the choice of the measures to be taken and the manner in which they are to be implemented and in that regard it cannot substitute its own assessment for that of the Member State concerned. On the other hand, if the Commission, while respecting the latitude enjoyed by the Member State concerned, has established that that State has not taken sufficient steps to combat the disease and that a financial adjustment must be applied, it is for that Member State to prove that the Commission has made a manifest error of assessment.

    21
    The Netherlands Government criticises the Commission for having relied solely on six compensation files in order to draw a number of general conclusions for the purpose of determining the compensation payable to pig breeders affected by the epizootic. After examining each of the files in detail, the Government concludes that none of them combines all the complaints raised by the commission (namely a disproportionate number of young sows, amounts of compensation set at too high a level, overestimates of the weight of the pigs, unusual weight of the feedingstuffs and faults in the revaluation system). Five of the files have only a very small number of irregularities (only one or two and, more important still, the complaint that the revaluation led to overcompensation by comparison with the market price cannot be referred to a single file). The Netherlands Government therefore takes it as established that no facts corroborate the Commission's consideration that the irregularities which it found were repetitive and systematic.

    22
    The Netherlands further contends that the Commission misinterpreted the concept of adequate compensation. As that concept is not defined in Directive 80/217, or in Decision 90/424, or in any other piece of Community legislation, the Member States have a discretion to define it, within the limits defined by the objective and purpose of the applicable Community legislation.

    23
    At points 137 to 149 and 184 to 194 of her Opinion, the Advocate General has stated her reasons for concluding that the complaints put forward by the Commission in respect of the fight against classical swine fever in 1998 reveal no manifest error of assessment on the Commission's part.

    24
    The Court agrees.

    25
    The first plea and the second part of the second plea must therefore be rejected.

    Third plea

    26
    By its third plea, the Netherlands Government claims that the contested decision infringed the principle of proportionality.

    Arguments of the parties

    27
    The Netherlands Government submits that there is a profound imbalance between, on the one hand, the imperfections found (or at least qualified as such) by the Commission in the determination of the compensation paid to farmers affected by classical swine fever in 1998 and, on the other, the financial adjustment applied by the Commission.

    28
    In any event, it is disproportionate to impose a general reduction on the basis of an unrepresentative sample. Since, moreover, unlike in 1997, the Commission does not accuse the Netherlands authorities of any technical errors, it is not proportionate to apply for 1998 the same reduction as for the previous year.

    29
    In that regard, the Netherlands emphasises the differences between the two years. Owing to the crisis in early 1997, priority was given to the proper functioning of the veterinary organisation in the fight against that disease. From mid-1997, special attention was given, in close cooperation with the Commission, to administrative organisation. In 1998, when the epidemic was in its final stage, the measures taken were designed to restore the situation to normal.

    30
    The Commission contends that the situation involved one and the same epizootic of classical swine fever. The administrative and financial complaints remained the same, so that it appears justified to apply the same rate of adjustment for the two periods. It points out that the financial adjustment is considerably below the excess cost due to the inadequacies established and assumed by the Community budget.

    Findings of the Court

    31
    Any adjustment to the Community financial contribution in the fight against classical swine fever must not exceed the extra costs to which the inadequacies gave rise to the detriment of the Community budget and for which the Member State concerned must assume responsibility.

    32
    On the other hand, since the Commission is under an obligation not to spend Community funds improperly, it must take care, when making such a financial adjustment, not to reduce the Community participation by too small an amount by comparison with the inadequacies established.

    33
    Since the finding of inadequacies in a situation such as this is frequently based on factual evidence and extrapolations based on representative samples, it must therefore be recognised that the Commission has a considerable discretion when determining the amount of the financial adjustment. However, the exercise of that discretion is still subject to compliance with the principle of proportionality.

    34
    It is true that the inadequacies established by the Commission for 1998, the year in issue in the present case, were lower than those for 1997, the year in issue in Netherlands v Commission . It is also true that the Commission had at one point envisaged a financial adjustment of only 15% and that it was not until later that it decided to apply the same rate as for 1997, namely 25%.

    35
    However, as Mr Coleman explained in his letter of 11 December 2000, referred to above, it was a matter of one and the same epidemic. The expenditure for 1998 is therefore linked with the expenditure for 1997.

    36
    Since the epidemic extended over two financial years, the Commission, for budgetary reasons, had to adopt two different decisions, each relating to expenditure pertaining to one financial year (1997 in Netherlands v Commission , cited above, and 1998 in the present case).

    37
    In those circumstances, it does not appear unreasonable to select the same rate of adjustment for both financial years. That is a fortiori the case when it has not been shown that the rate applied for 1998 exceeds the amount of the loss occasioned by the failure to observe the conditions set out in the Community legislation and for which the Netherlands must assume financial responsibility.

    38
    Furthermore, since the flat-rate adjustment applied by the Commission does not consist in a fixed sum, but in a percentage of the Community financial aid, coming to approximately EUR 110 million for 1997 and EUR 6.3 million for 1998, the fact that the shortcomings established for 1998 were less than those established for 1997 does not in itself affect the fixing of the same percentage for the two financial years.

    39
    Consequently, and taking account of the wide discretion which the Commission has in fixing the rate of the financial adjustment, it cannot be argued that it acted disproportionately when it applied a linear adjustment and thus reduced the Community financial contribution by 25% for 1998 too.

    40
    The third plea must therefore be rejected.

    Fifth plea

    41
    The Netherlands Government maintains that the contested decision does not contain a proper statement of reasons and thus fails to satisfy the obligation to state reasons laid down in Article 253 EC.

    42
    The Netherlands Government contends that it is impossible, on the basis of the information in the contested decision, to ascertain the legal basis or other legal elements on which the Commission based its complaints.

    43
    The Commission denies that it failed to observe the requirement to state reasons. The scope of the obligation to state reasons is determined, inter alia, by the extent to which the addressees of the decision were associated in preparing it. In the present case, as for the procedure for the clearance of the European Agricultural Guidance and Guarantee (EAGGF) Fund, there was an extensive exchange of correspondence between the Commission and the Netherlands authorities.

    44
    Furthermore, the legal basis is clearly indicated and its arguments for imposing a reduction are set out in the fourth, fifth and sixth recitals of the preamble to the contested decision. Those arguments are elaborated in Mr Coleman's letter of 11 December 2000, referred to above.

    Findings of the Court

    45
    It must be borne in mind that, whilst the reasoning required by Article 253 EC must show clearly and unequivocally the reasoning of the Community authority which adopted the contested measure so as to enable the persons concerned to ascertain the reasons for it and to enable the Court to exercise judicial review, the authority is not required to go into every relevant point of fact and law (see, inter alia, Case C-491/01 British American Tobacco (Investments) and Imperial Tobacco [2001] ECR I-11453, paragraph 165).

    46
    Furthermore, the question whether a statement of reasons satisfies the requirements must be assessed with reference not only to the wording of the impugned measure but also to its context and to the whole body of legal rules governing the matter in question ( British American Tobacco (Investments) and Imperial Tobacco , cited above, paragraph 166).

    47
    That is a fortiori the case where the Member State concerned has been closely associated with the process of drafting the contested measure and is thus aware of the reasons underlying the measure (see, as regards the clearance of the EAGGF accounts, Case C-27/94 Netherlands v Commission [1998] ECR I-5581, paragraph 36, and, as regards total allowable catches of fish, Case C-120/99 Italy v Council [2001] ECR I-7997, paragraph 29).

    48
    In the present case, the Netherlands authorities were closely associated in the process of preparing the contested decision and were aware of the reasons why the Commission considered that it was entitled to deduct the amounts in question. In those circumstances, it is not necessary to repeat in the final decision the details of the reasoning and a brief statement of reasons must therefore be regarded as sufficient. The contested decision satisfies those requirements.

    49
    In the absence of a failure to state reasons, the fifth plea must therefore be rejected.

    50
    Since all the pleas have thus been rejected, the application must be dismissed in its entirety.


    Costs

    51
    Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Commission has applied for costs and the Kingdom of the Netherlands has been unsuccessful, the latter must be ordered to pay the costs.

    On those grounds,

    THE COURT (Fifth Chamber)

    hereby:

    1.
    Dismisses the application;

    2.
    Orders the Kingdom of the Netherlands to pay the costs.

    Timmermans

    Edward

    von Bahr

    Delivered in open court in Luxembourg on 6 November 2003.

    R. Grass

    V. Skouris

    Registrar

    President

    1 –
    Language of the case: Dutch.
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