Keywords
Summary

Keywords

1 Agriculture - Common organisation of the markets - Beef and veal - Intervention mechanisms - Buying-in by tendering procedures - Relationship between tenderers - Article 9 of Regulation No 859/89 - Interpretation - Rule that tenders must be independent - Scope

(Commission Regulations No 859/89, Arts 9, 12(2) and 15, and No 2456/93, Art. 11)

2 Agriculture - EAGGF - Clearance of accounts - Refusal to charge to the EAGGF expenditure arising from irregularities in the application of the Community rules - Disputed by the Member State concerned - Burden of proof - Divided between the Commission and the Member State concerned

3 Agriculture - EAGGF - Clearance of accounts - Refusal to charge to the EAGGF expenditure arising from irregularities in the application of the Community rules - Assessment of the financial impact - Disputed by the Member State concerned - Burden of proof

4 Agriculture - Common agricultural policy - EAGGF financing - System of rules for offsetting storage costs for sugar - Member States' obligation to organise an effective system of administrative checks and on-the-spot inspections - Unreliable inspection procedures - Refusal to charge to the Fund

(EC Treaty, Art. 5; Regulation No 729/70 of the Council, Art. 8(1); Commission Regulation No 1998/78, Art. 19)

5 Agriculture - Common organisation of the markets - Sugar - Offsetting of storage costs - Levy imposed on producers - Principle of financial neutrality - Scope

(Council Regulation No 1358/77, Art. 6(2))

6 Agriculture - Common agricultural policy - EAGGF financing - Principles - Conformity of expenditure with the Community rules - Burden of proof - Divided between the Commission and the Member State concerned

(Regulation No 729/70 of the Council, Arts 2 and 3)

Summary

1 In the context of intervention measures in the beef and veal sector, and in particular of the system of buying-in by tendering procedures, Article 9(1) of Regulation No 859/89 provides that tenderers must undertake to comply with all the relevant provisions and Article 9(2) that interested parties may submit one tender only per category in response to each invitation to tender. Since the need to ensure legal certainty means that rules must enable those concerned to know precisely the extent of the obligations which they impose on them, the wording of Article 9(2) cannot provide any support for the interpretation that, on account of the difference in meaning between the words `interested party' and `tenderers', the latter may submit one tender only in response to an invitation to tender where they are part of a single group. Such an interpretation would thus be tantamount to applying retroactively Article 11 of Regulation No 2456/93, which introduces into the Community legislation provisions on the relationship between tenderers.

That being the case, although the rule that tenders must be independent, an essential requirement for the validity and effectiveness of any tender procedure, which underlies Articles 9(6) (confidentiality of tenders), 12(2) (prohibition on the transfer of rights and obligations arising from the tender procedure), 9(4)(c) (tenderers' obligation to lodge a security) and 15 (tenderers' obligation to receive payment personally) of Regulation No 859/89, does not prevent several companies belonging to one group from taking part at the same time in one tender procedure, it does preclude those same companies from agreeing on the terms and conditions of the tenders which they each submit, if the tender procedure is not to be distorted.

2 So far as concerns the financing of the common agricultural policy by the EAGGF, it is for the Commission, where it intends to refuse to charge to the EAGGF expenditure declared by a Member State, to prove an infringement of the rules on the common organisation of the agricultural markets. Accordingly, the Commission is obliged to give reasons for its decision finding an absence of, or defects in, inspection procedures operated by the Member State in question. The latter, for its part, cannot rebut the Commission's findings by mere assertions which are not substantiated by evidence of a reliable and operational supervisory system. If it is not able to show that they are inaccurate, the Commission's findings can give rise to serious doubts as to the existence of an adequate and effective series of supervisory measures and inspection procedures.

3 Where in the context of its task of clearing the EAGGF accounts, if a national measure that is incompatible with Community law has caused an increase in the expenditure of the EAGGF, the Commission, instead of rejecting all the expenditure in question, has endeavoured to establish the financial impact of the unlawful action by means of calculations based on an assessment of what the situation on the relevant market would have been if the infringement had not occurred, the burden of proving that those calculations are not correct rests on the Member State.

4 It is apparent from Article 8(1) of Regulation No 729/70 on the financing of the common agricultural policy and from Article 19 of Regulation No 1998/78 laying down detailed rules for the offsetting of storage costs for sugar, viewed in the light of the duty to cooperate in good faith with the Commission laid down in Article 5 of the Treaty, and with particular regard to the correct utilisation of Community resources, that Member States are required to set up comprehensive administrative checks and on-the-spot inspections guaranteeing the conformity of financial operations with Community law. Where the Commission establishes that in a Member State no such comprehensive system of checks exists or if the system established is defective to the point of giving rise to doubts as to compliance with the conditions imposed for the reimbursement of the expenditure concerned, the Commission is entitled to disallow certain expenditure incurred by that State.

5 It is evident from Article 6(2) of Regulation No 1358/77 that the system for offsetting storage costs in the sugar sector is based on the principle of financial neutrality in that the levies collected must be equivalent to the reimbursement paid. However, that balance must be achieved at Community level and not at the level of the Member State or the undertaking concerned.

6 Articles 2 and 3 of Regulation No 729/70 permit the Commission to charge to the EAGGF only sums paid in accordance with the rules laid down in the various sectors of agricultural production, leaving the Member States to bear the burden of any other sum paid, and in particular any amounts which the national authorities wrongly believed themselves authorised to pay in the context of the common organisation of the markets.

Although it is therefore for the Commission to prove an infringement of the Community rules, the Member State concerned must demonstrate that the Commission committed an error as to the financial consequences to be attributed to it.