JUDGMENT OF 7. 2. 1979 — CASE 18/76 GERMANY v COMMISSION
In Case 18/76
THE COURT composed of: H. Kutscher, President, J. Menens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), P. Pescatore, M. Sørensen, A. O'Keeffe and G. Bosco, Judges, Advocate General: F. Capotorti Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts
I — Introduction and procedure
II — Conclusions of the parties
III — Principles governing the financing of intervention measures
A — Provisions to be considered
B — Submissions and arguments of the parties
IV — The individual cases
A — Transport costs occasioned by the termination of contracts (case No 2)
B — Aid for skimmed-milk powder used for animal feedingstuffs (cases Nos 4 & 5)
1. Facts
2. Submissions and arguments of the parties
(a) Aid for skimmed-milk powder used for animal feedingstuffs: presumption of double payment (case No 4)
(b) Inadequacy of the proof on the basis of which payment of the aid for skimmed-milk powder was authorized (case No 5)
C — Aid for the purchase of butter by persons in receipt of social assistance (case No 8)
1. Facts
2. Submissions and arguments of the parties
D — Sale of butter from intervention stocks at reduced prices (case No 9)
1. Facts
2. Submissions and arguments of the parties
E — Repurchase of butter sold at reduced prices and intended for processing into concentrated butter (case No 10)
1. Facts
2. Submissions and arguments of the parties
F — Costs of crushing and reconditioning sugar (case No 12)
1. Facts
2. Submissions and arguments of the parties
V — Oral procedure
Decision
Aids for skimmed-milk powder used for animal feeding-stuffs
Aid for the purchase of butter by persons in receipt of social assistance
Sale at reduced prices of butter from public stocks for export
Repurchase of butter sold at reduced prices and intended for processing into concentrated butter
Costs of crushing and reconditioning sugar
Costs
I —. Introduction and procedure
A —. In the contested decisions, which are based on the provisions of Article 5 (2) (b) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970 (I), p. 218) and of Article 8 of Regulation No 1723/72 of the Commission of 26 July 1972 on making up accounts for the European Agricultural Guidance and Guarantee Fund, Guarantee Section (Official Journal, English Special Edition, Second Series (III), p. 109) the Commission refused to recognize as chargeable to the European Agricultural Guidance and Guarantee Fund (hereinafter referred to as the EAGGF), Guarantee Section, expenditure incurred by the applicant in implementing legal measures in the context of the common agricultural policy amounting in all to
B —. The application was lodged on 16 February 1976. The written procedure was suspended as from September 1976 to enable the parties to enter into negotiations for a settlement. As those negotiations were unsuccessful the written procedure was reopened in August 1977.
C —. The amounts in question are spread over a number of items relating to the different cases mentioned below under heading IV.
II —. Conclusions of the parties
A —. The applicant claims that the Court should:
B —. The Commission contends that the Court should:
III —. Principles governing the financing of intervention measures
A —. Provisions to be considered
1. (a) Regulation No 729/70 of the Council is the basic regulation on the financing of the common agricultural policy. It contains inter alia the following provisions: Article 1 1. The European Agricultural Guidance and Guarantee Fund (hereinafter called the Fund) shall form part of the budget of the Communities. It shall comprise two sections: the Guarantee Section; the Guidance Section. 2. The Guarantee Section shall finance: (a) refunds on exports to third countries; (b) intervention intended to stabilize the agricultural markets. … Article 3 1. Intervention intended to stabilize the agricultural markets, undertaken according to Community rules within the framework of the common organization of agricultural markets, shall be financed under Article 1 (2) (b). … Article 4 1. Member States shall designate the authorities and bodies which they shall empower to effect, from the date of application of this Regulation, the expenditure referred to in Articles 2 and 3. They shall communicate to the Commission, as soon as possible after the entry into force of this Regulation, the following particulars concerning those authorities and bodies: their name and, where appropriate, their statutes; the administrative and accounting conditions in accordance with which payments are made relating to the implementation of Community rules within the framework of the common organization of agricultural markets. They shall inform the Commission forthwith of any change in those particulars. 2. The Commission shall make available to Member States the necessary credits so that the designated authorities and bodies may, in accordance with Community rules and national legislation, make the payments referred to in paragraph 1. The Member States shall ensure that those credits are used without delay and solely for the purposes laid down. … Article 5 1. Member States shall at regular intervals transmit to the Commission the following documents concerning the authorities and bodies referred to in Article 4 and relating to transactions financed by the Guarantee Section: (a) statements of cash holdings and estimates of financial needs; (b) annual accounts, accompanied by the documents required for making up the balance sheets. 2. The Commission, after consulting the Fund Committee referred to in Article 11, (a) shall decide: at the beginning of the year, on the basis of the documents referred to in paragraph 1 (a), on an advance payment for the authorities and bodies not exceeding one third of the credits entered in the budget; during the year, on additional payments intended to cover expenditure to be borne by an authority or body; (b) shall, before the end of the following year, on the basis of the documents referred to in paragraph 1 (b), make up the accounts of the authorities and bodies. 3. Detailed rules for the application of this Article shall be adopted in accordance with the procedure laid down in Article 13. … Article 8 (English text) 1. The Member States in accordance with national provisions laid down by law, regulation or administrative action shall take the measures necessary to: satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly; prevent and deal with irregularities; recover sums lost as a result of irregularities or negligence. The Member State shall inform the Commission of the measures taken for those purposes and in particular of the state of the administrative and judical procedures. 2. In the absence of total recovery, the financial consequences of irregularities or negligence shall be borne by the Community, with the exception of the consequences of irregularities or negligence attributable to administrative authorities or other bodies of the Member States. The sums recovered shall be paid to the paying authorities or bodies and deducted by them from the expenditure financed by the Fund. 3. The Council, acting by a qualified majority on a proposal from the Commission, shall lay down general rules for the application of this Article. Article 8 (French text) … 2. A défaut de récupération totale, les conséquences financières des irrégularités ou des négligences sont supportées par la Communauté, sauf celles résultant d'irrégularités ou de négligences imputables aux administrations ou organismes des États membres. … Article 8 (German text) … 2. Erfolgt keine vollständige Wiedereinziehung, so trägt die Gemeinschaft die finanziellen Folgen der Unregelmäßigkeiten oder Versäumnisse; dies gilt nicht für Unregelmäßigkeiten oder Versäumnisse, die den Verwaltungen oder Einrichtungen der Mitgliedstaaten anzulasten sind. … Article 8 (Dutch text) … 2. Indien algehele terugvordering uitblijft, draagt de Gemeenschap de financiële gevolgen van de onregelmatigheden of nalatigheden, behalve die welke voortvloeien uit onregelmatigheden of nalatigheden die aan de overheidsdiensten of organen van de Lid-Staten te wijten zijn. … Article 13 1. Where the procedure laid down in this Article is to be followed, the matter shall be referred to the Committee by the Chairman, either on his own initiative or at the request of the representative of a Member State. 2. The representative of the Commission shall submit a draft of the measures to be adopted. The Committee shall deliver its Opinion on those measures within a time limit set by the Chairman according to the urgency of the matters. An opinion shall be adopted by a majority of twelve votes. 3. The Commission shall adopt measures which shall be immediately applicable. However, if such measures are not in accordance with the Opinion delivered by the Committee, they shall at once be communicated by the Commission to the Council. In that case, the Commission may defer for not more than one month from the date of such communication, application of the measures which it has adopted. The Council, acting by a qualified majority, may adopt a different decision within one month. Unlike the system established provisionally by Regulation No 17/64/EEC of the Council of 5 February 1964 on the conditions for granting aid from the European Agricultural Guidance and Guarantee Fund (Official Journal, English Special Edition 1963-1964, p. 103), Regulation No 729/70 lays down the principle of direct financing by the Community of the measures in question. The former regulation provided that the measures in question should be financed, in the first instance, by the Member States which were subsequently reimbursed by the EAGGF (Article 9). The Commission decided, after consultation with the Fund Committee, the aid to be granted from the EAGGF (Article 10). In the Commission's proposal for a regulation on the financing of the common agricultural policy which it submitted to the Council on 16 July 1969 (Journal Officiel C 123 of 19 September 1969, p. 27), the provision corresponding to Article 8 (2) of Regulation No 729/70 (namely Article 8 (3) of the proposal) was worded as follows: Article 8 … 3. The financial consequences of irregular or fraudulent transactions shall be borne by the Community, with the exception of negligence attributable to the administrative authorities or other bodies of the Member States. … Article 8 (French text) … 3. Les conséquences financières des opérations irrégulières ou frauduleuses sont supportées par la Communauté, sauf négligences imputables aux administrations des États membres ou à leurs organismes. … Article 8 (German text) … 3. Die finanziellen Folgen von Unregelmäßigkeiten oder betrügerischen Handlungen werden von der Gemeinschaft getragen sofern nicht Fahrlässigkeit vorliegt, die den Verwaltungen der Mitgliedstaaten oder den von diesen beauftragten Stellen anzulasten ist. … Article 8 (Dutch text) … 3. De Gemeenschap draagt de financiële gevolgen van de onregelmatige verrichtingen of fraudes, behalve in geval van nalatigheid van de overheidsdiensten van de Lid-Staten of van hun organen. …, The antepenultimate recital of the preamble to the proposal for a regulation was worded as follows: … Adequate measures must be taken to prevent, repress and make good any irregularity or fraud; however, it is not possible to exclude the possibility that irregular or fraudulent transactions may be discovered subsequent to the intervention by the paying bodies or that all the sums paid may not be recovered; it is therefore appropriate to settle the problem of the determination of financial liability for such losses; the principle most in conformity with the principle of Community financing of the common agricultural policy and which best takes account of the difficulty of localizing in a single Member State the origin of each such transaction consists in charging such losses in the last instance to the Community with the exception of negligence attributable to the administrative authorities or other bodies of the Member States. …
1. (b) Article 8 of Regulation No 1723/72 of the Commission is worded as follows: The decision to make up the accounts mentioned in Article 5 (2) (b) of Regulation (EEC) No 729/70 shall cover: (a) the determination of the amount of expenditure incurred in each Member State during the year in question, recognized as chargeable to the EAGGF, Guarantee Section; (b) the determination of the amount of the financial resources still available in each Member State at the end of the year in question, representing the difference between total Community financial resources available at the beginning of the year or advanced during the year and the amount referred to under (a).
1. (c) The general rules referred to in Article 8 (3) of Regulation No 729/70 are contained in Regulation (EEC) No 283/72 of the Council of 7 February 1972 concerning irregularities and the recovery of sums wrongly paid in connexion with the financing of the common agricultural policy and the organization of an information system in this field (Official Journal, English Special Edition 1972 (I), p. 90) which contains, inter alia, the following provisions : Article 2 1. Member States shall communicate to the Commission within three months of the entry into force of this Regulation: the provisions laid down by law, regulation or administrative action for the application of the measures provided for in Article 8 (1) of Regulation (EEC) No 729/70, and the list of authorities and bodies responsible for the application of those measures and the main provisions relating to the role and functioning of those authorities and bodies and the procedure which they are responsible for applying. … Article 3 During the month following the end of each quarter, Member States shall communicate to the Commission a list of irregularities which have been the subject of the primary administrative or judicial findings of fact. … Article 4 Each Member State shall communicate without delay to the other Member States concerned and to the Commission any irregularities which are liable to have effects outside its territory very quickly or which show that a new fraudulent practice has been adopted. Article 5 1. During the month following the end of each quarter, Member States shall inform the Commission of all judicial or administrative procedures instituted with a view to recovering sums wrongly paid and shall supply the Commission with any information which is relevant in this respect. 2. At the same intervals the Commission shall be informed of the progress of the procedure referred to in the preceding paragraph and of the amounts which have been or are expected to be recovered and, where appropriate, of the reasons for abandoning legal proceedings. 3. Furthermore, as far as possible before a decision is given, the Commission shall be informed in detail of the reasons for partial or complete failure to recover sums due. 4. Where a judicial or administrative decision is given at the end of proceedings, Member States shall communicate that decision or the main points thereof to the Commission. Article 6 1. Where the Commission considers that irregularities or negligence have taken place in one or more Member States, it shall inform the Member State or States concerned thereof, and that State or those States shall hold an administrative inquiry in which servants of the Commission may take part. The Member State shall communicate to the Commission the report and the inquiry findings. If the Commission does not take part in the inquiry, it shall be kept informed of its progress by means of the quarterly communications provided for in Article 5. … 3. Where the inquiry shows that there has been an irregularity or negligence, or where this is accepted by the Member State concerned following the procedure referred to in paragraph 2, the Member State shall institute as rapidly as possible an administrative or judicial procedure to establish formally that there has been an irregularity or negligence. It shall keep the Commission informed of the progress of the procedure in accordance with Articles 3, 4 and 5.- Article 14 of the Commission's proposal for a Council regulation concerning irregularities and the recovery of sums wrongly paid in connexion with the financing of the common agricultural policy and the organization of an information system, which it submitted to the Council on 16 October 1970 (Journal Officiel C 130 of 27 October 1970, p. 7), was worded as follows: Article 14 1. Before the financial consequences arising from irregularities or negligence are finally charged to the Community the Commission shall ascertain whether responsibility for the irregularities or negligence should be borne by the administrative authorities or other bodies of the Member States. 2. If, following that investigation, the Commission takes the view that the Community has suffered a financial loss as the result of irregularities or negligence attributable to the administrative authorities or other bodies of a Member State, it shall quantify the loss and inform the Member State concerned, inviting it to submit its comments within one month. 3. After examining the observations submitted to it by the Member State within the said time-limit, the Commission shall, by decision, lay down the amount due to the Communities from the Member State owing to the irregular practice or negligence established, unless evidence is produced that the sums wrongly paid have been recovered in the meantime. The amount fixed by that decision shall be determined taking account of the observations of the Member State concerned. 4. The Member State concerned shall pay the amount due to the Communities within one month from the day of notification of the decision. At the time of adopting Regulation No 283/72 the Council and Commission made the following statement (Document R/151/72 of 4 February 1972): As regards Article 1 (a) Where a Member State is of the opinion that it must finally bear the financial consequences of irregularities or negligence attributable to its administrative authorities or other bodies it shall inform the Commission indicating the amount which it is to bear. (b) Where a Member State is of the opinion that the irregularities or negligence are not attributable to its administrative authorities or other bodies within the meaning of Article 8 (2) of Regulation No 729/70 and that the Commission must bear the financial consequences thereof it shall submit to the Commission an explanatory memorandum. If the Commission … takes the view that the financial consequences of those irregularities or negligence should not be borne by the Community it shall contact the Member State concerned and then initiate an exchange of views within the EAGGF Committee. (c) In the light of knowledge acquired in this way the Commission shall repon to the Council on the manner which it deems most appropriate to clear up the unresolved cases referred to under paragraph (b), which report shall be accompanied, where appropriate, by proposals for solutions to be adopted by the Council in order to resolve differences of that kind. As regards Article 3 Irregularities within the meaning of this regulation shall include any infringement, whether or not intentional, of a provision of a legal nature.
B —. Submissions and arguments of the parties
1. The observations of the applicant concerning the principles relating to the financing of intervention measures relate, primarily, to case No 10 and. secondarily, to the other cases referred to under IV below.
2. Before stating its point of view on the matters of principle, the Commission observes that it has already defined that point of view in a succinct form in the working paper of 16 October 1975 (Document VI/192/75) on which its decisions of 2 December 1975 are based (see point 1 (b)).
3. The applicant replies that the Commission's opinion that the EAGGF finances only measures which are in accordance with the Community provisions is not in conformity with the terms of Article 2 (1) and Article 3 (1) and, furthermore, does not comply with the system of Regulation No 729/70. In the applicant's view the wording of Articles 2 and 3 of that regulation does not lend itself to a restrictive interpretation but, on the contrary, intentionally leaves great latitude: those provisions refer to all the refunds and interventions laid down by Community law which occur in the context of the common organization of the market and in the performance of tasks assigned to the Community; the fundamental rules are decisive; formal requirements on the other hand are of merely secondary importance.
4. In its rejoinder the Commission observes, with regard to the interpretation of Article 2 (1) and Article 3 (1) of Regulation No 729/70, that the words in accordance with the Community rules would be a merely superfluous and incomprehensible addition if the applicant's interpretation was correct. In that case it would have been sufficient to state that refunds (or intervention)…, granted within the framework of the common organization of the agricultural markets, shall be financed.
IV —. The individual cases
A —. Transport costs occasioned by the termination of contracts (case No 2)
B —. Aid for skimmed-milk powder used for animal feedingstuffs (cases Nos 4 & 5)
1. Facts
1. Article 2 of Regulation No 986/68 of the Council of 15 July 1968 laying down general rules for granting aid for skimmed milk and skimmed-milk powder for use as feed (Official Journal, English Special Edition 1968 (I), p. 260) provides that aid may be granted for skimmedmilk powder which has been denatured according to methods to be determined and for skimmed-milk powder and skimmed milk produced and processed in the dairy and used in the manufacture of compound feedingstuffs.
2. Article 3 of that regulation provides that The aid shall be paid by the intervention agency of the Member State within whose territory is situated … the farm or other concern which denatured the skimmed-milk powder or used it in the manufacture of compound feedingstuffs.
3. Where use was made of the authorization thus laid down the system for the granting of aid had to comply with the rules laid down by Article 7 of Regulation No 1106/68 of the Commission of 27 July 1968 on detailed rules for granting aid for skimmed-milk powder for use as feed (Journal Officiel L 184 of 29 July 1968, p. 26) as amended by Article 1 of Regulation No 332/70 of the Commission of 23 February 1970 (Official Journal, English Special Edition 1970 (I), p. 117). That article provides that:
4. In answer to a question from the Federal Ministry of Food the Commission, by telex message of 12 October 1971, replied that:
5. In 1971 the competent authority in the Federal Republic of Germany paid aid amounting in all to DM 885701.70 for skimmed-milk powder intended for denaturing in Italy although the control copy mentioned, as the date of placing under control, a date subsequent to 30 June 1971 or it was not possible to establish clearly that the placing under control had been carried out by 30 June 1971 at the latest (case No 4).
6. The applicant also paid the aid laid down for 140 tonnes of skimmed-milk powder without the originals of the T1/T2 control copies having been supplied. That aid amounted to DM 62267.00 (case No 5).
2. Submissions and arguments of the parties
(a). Aid for skimmed-milk powder used for animal feedingstuffs: presumption of double payment (case No 4)
1. The applicant takes the view that by producing the letter from the AIMA of 14 March 1972 it has supplied the proof required by the Commission relating to the exclusion of the possibility of double payment of aid in cases where the exact date of control in Italy before 1 July 1972 could not be clearly established. By requiring proof in relation to each individual case the Commission was acting contrary to the stance adopted by it when the problem was discussed within the Management Committee for Milk and Milk Products. This contradiction is clearly evident in the text of the addendum to Document VI/145/75: … one must seriously doubt the practical possibility of establishing the necessary facts correctly so long after the operation in question.
2. The Commission observes that taking account of the wording of its telex message of 12 October 1971 the question whether it did not require the submission of proof for each individual case is, at the very least, open to doubt. That text refers in fact to certain cases. The letter from the AIMA of 14 March 1972 shows that the Italian agency was not in a position to check the cases submitted to it and consequently it merely gave a general answer unrelated to the individual cases in question and setting out the legal situation then applicable.
3. The applicant replies that in the addendum to Document VI/145/75 Commission bases its refusal on the presumption of double payment; verification of such a presumption is impossible and is of no importance from a legal point of view. It is moreover for the Commission to prove that double payment was made.
4. In its rejoinder the Commission emphasizes that the applicant, by its argument that the Commission should produce proof of double payment and that it was possible to charge the expenditure only to Italy, is effectively saying that in spite of the fact that the goods were placed under control after 30 June 1971 the applicant remained competent to pay the aid and that, consequently, any payments made by the Italian authorities were contrary to the provisions in force. In so saying the applicant takes no account of the amendment to the powers in question which has taken place in the meantime.
(b). Inadequacy of the proof on the basis of which payment of the aid for skimmed-milk powder was authorized (case No 5)
1. The applicant explains that the control copies in question were lost in transit between the Italian authorities and the German customs offices.
2. The Commission emphasizes that the control copy is the only acceptable proof under Article 7 (1) of Regulation No 1106/68. A certain regard for formalities is inherent in the very nature of the control procedure appertaining to the payment of aids. If, in a particular case, a national administration held that proof other than the specified documents was acceptable or necessary the value of the procedure would be diminished. The requirement of a strict and correct application od that procedure is also justified by reasons relating to the agricultural policy: the grant of financial benefits is justified only if it is guaranteed that the milk powder cannot re-enter the normal ambit of the market. In this respect the Commission refers to the judgment of the Court of Justice delivered on 22 October 1970 in Case 12/70 (Craeynest v Belgian State [1970]2 ECR 905). The letter from the AIMA is of no importance in the present instance where it has not even been established that entitlement to the aid existed. It is therefore not essentially a matter of merely avoiding the risk of double payment.
3. The applicant replies that the objective assigned to the payment of the aid by the regulations in question must be taken as the starting point: as the processing of skimmed-milk powder was carried out in the present instances in accordance with the provisions of Regulation No 1106/68 the mere absence of the control copy cannot be decisive.
4. The Commission emphasizes in its rejoinder that failure to comply with rules regarding essential procedural requirements entails consequences of a legal nature. The provision relating to the transfer of powers which is at the heart of case No 4 does not constitute such a rule. On the other hand, taking account of the clear and concise wording of Article 7 of Regulation No 1106/68 and of the objective of those arrangements, the binding nature of the rule relating to the requirement of the control copy is evident. If the Member States were given discretion to assess the requirements which must be satisfied by the proof of entitlement to the aid, divergent practices would be adopted which would be incompatible with a uniform application of Community law.
C —. Aid for the purchase of butter by persons in receipt of social assistance (case No 8)
1. Facts
2. Submissions and arguments of the parties
1. The applicant states that even under the procedure applied by it the administrative costs amounted to around DM 6 million annually. To have issued the vouchers for shorter periods would have doubled the cost.
2. The Commission observes that Regulation No 414/70, as amended by Regulation No 2550/70, merely authorized it to take certain measures. The validity of that authorization and not the validity of measures adopted on the basis of the authorization was restricted to 31 December 1971. Furthermore, Decision 71/166 not only revoked the authorization to issue vouchers but also abrogated Decision 70/228, that is to say, the authorization for the Member States to grant those aids. It was therefore no longer possible to issue vouchers valid after 1 May 1971.
3. The applicant replies that even if it is accepted that the Commission's interpretation is well-founded the conditions for attribution are not fulfilled. The Commission is in fact guilty of negligence: Decision 70/228 makes no reservation as to the possibility of making subsequent amendments and fixes no time-limit; Article 4 of the decision provides solely that the butter shall be granted only to persons in receipt of social assistance and does not refer to any other obligation or to the possibility of withdrawal or the fixing of time-limits. It is even doubtful whether the applicant had the power to impose such a restriction. Article 1 of the said decision merely empowered it in fact to grant the aid in question in accordance with the conditions laid down in Articles 2 to 4. In general, the Member States cannot have the power to adopt restrictions which are not expressly provided for by Community rules without jeopardizing the achievement of uniformity of legal rules within the Member States. It is not, moreover, in the present case a question of details relating to the organization of the voucher system, as the Commission believes. The Commission could have given notice, simply by means of a reservation relating to the possibility of amendment, that the measure was to be made dependent on the market situation, as it did in Article 5 of the decision of 17 December 1968 (COM(68)991 final) authorizing the Federal Republic of Germany to sell butter from public stocks at a reduced price in the form of concentrated butter.
4. The Commission states, in its rejoinder, that it did not cause the applicant to apply Community law incorrectly. Under both national law and Community law it is neither necessary nor even customary to include in every legislative measure a provision recalling the obvious fact that the measure in question may subsequently be abrogated or amended; a time-limit need be fixed only in certain exceptional cases, for example where it is known in advance that rules are necessary only for a specific period; the decision of the Commission of 17 December 1968 nevertheless had to make provision for the possibility of amendments as otherwise sales contracts which had already been concluded could no longer have been made subject to the new rules.
D —. Sale of butter from intervention stocks at reduced prices (case No 9)
1. Facts
2. Submissions and arguments of the parties
1. The applicant argues that in order to take account of Article 3 of Regulation No 1308/68 it is necessary, when calculating the period, to take into consideration the date when the butter in fact leaves the warehouse of the intervention agency for export. The risk that the purchaser may use the butter otherwise than is laid down by the regulation is in fact avoided so long as the butter is stored with the intervention agency. The disposal of large quantities is economically and materially possible only if the contracts can be spread over relatively long periods and if the refund is fixed in advance.
2. The Commission argues that in common parlance the concept of sale refers to an agreement for the transfer of the property in goods in return for payment. Regulation No 1308/68 does not define the term in detail. Nevertheless, in various articles and various recitals in the preamble indications may be found to support an interpretation in accordance with general usage. The Commission refers in this respect to Articles 1 and 2, Article 4 (1) and Article 5.
3. The applicant replies that only in Article 4 (1) does Regulation No 1308/68 expressly mention the date of the conclusion of the contract of sale. If Article 3 had referred to that date it would have been expressly indicated.
4. The Commission, in its rejoinder, recalls that the term sale in Article 4 (1) of Regulation No 1308/68 is used in exactly the same sense as that of conclusion of the contract of sale. Comparison with other provisions, in particular with Article 3 of that regulation, does not support an argument a contrario. The four months laid down in Article 1 of Regulation No 1308/68 represent, in the Commission's view, the minimum period for which butter must have been stored when the contract of sale is concluded. Operations of this type are in fact intended to dispose first of butter which has been in store for the longest period as the quality of the butter deteriorates the longer it is stored. If the applicant's view were correct the provision would have stated that butter sold had to have been stored for at least four months at the time of delivery. As regards Article 5 of the said regulation the Commission states that the determining factor is not the volume of storage space available at a given moment; rather, it is necessary to be able to assess the general outcome of the measure applied. On the one hand such disposal constitutes a substantial burden on the Community budget and is justified only if it is economically indispensable; on the other the termination of the measure cannot affect contracts already concluded. In order to be able to choose the time when the operation undertaken should be terminated the Commission must have information regarding the quantities which have formed the subject-matter of contracts of sale and not just regarding quantities which have been delivered. If the applicant's view were correct the Member States would have been able to determine the duration and thus the extent of the operation undertaken; they could thus have concluded contracts of sale under which the purchasers could have covered needs which would, in fact, only have become evident subsequently. The Community would not have been in a position to terminate the operation when it wished.
E —. Repurchase of butter sold at reduced prices and intended for processing into concentrated butter (case No 10)
1. Facts
2. Submissions and arguments of the parties
1. The applicant refers in this connexion primarily to its arguments relating to the principles governing the financing of intervention measures.
2. The Commission states first that the decisive factor in the present case is not to establish whether the decision of 19 August 1971 was applied correctly but whether the operation should be financed by the Community. The arguments therefore do not relate to the substance of the matter even if they are regarded as valid.
3. The applicant replies that in order to achieve the objectives of the Commission decision of 17 December 1968 it was obliged to repurchase the stocks which had been sold at the market price obtaining at the time, since otherwise the organization of the market in butter and the price structure for that product would have been disrupted. The situation was comparable to a case of management without mandate in a case of urgency (Notgeschäftsführung ohne Auftrag). The applicant adds that the maximum repurchase price determined by the decision of 19 August 1971 was economically inapplicable; private traders could not be presumed to be satisfied with reselling at the low price for which they had purchased even if their storage costs were reimbursed. As the Commission did not take account of all these factors the costs incurred by the applicant could not be charged to it. The fact that the provisions relating to Community financing lay down only a fixed amount for processing costs does not alter the position; the repurchase of the butter at the market price obtaining at the time was an emergency measure which is not normally laid down by such provisions. However, in the present instance the legal basis of Community financing is contained in the first sentence of Article 8 (2) of Regulation No 729/70 as, in the light of what has been set out above, it is not possible to charge the costs to the applicant.
4. The Commission observes in its rejoinder that if the applicant's view were accepted Article 8 (2) of Regulation No 729/70 would become as it were a general provision governing Community financing which would render any other rules concerning the extent of and detailed rules for such financing nugatory as the Community would in practice be obliged to finance all expenditure which was economically justified.
F —. Costs of crushing and reconditioning sugar (case No 12)
1. Facts
2. Submissions and arguments of the parties
1. The applicant observes that the procedure followed by it was approved by the Commission's representatives. Use was not made of the possibilities set out in Article 9 of Regulation No 822/70 to forestall actions on a warranty or actions for damages brought by purchasers as, because of their supply obligations, the successful tenderers had insisted on the supply of the quantity awarded in full and no other sugar corresponding to the quality awarded was available. In view of the assurance given at the time of the invitation to tender that the sugar would be free-running, the product of the sale, in the applicant's view, is not the tender price but that price after deduction of necessary expenditure. The fact that part of the sugar solidified during storage cannot be held against the applicant. The hardening was the necessary consequence of prolonged storage. When the conditions of the invitation to tender were discussed within the Management Committee for Sugar the competent German departments drew the attention of the Commission to that fact and asked that the sugar should be put out to tender in its existing state.
2. The Commission does not regard the processing of the solidified sugar into free-running sugar as wrongful: the question is merely whether the expenditure arising out of those operations must be borne by the EAGGF. Consequently the alternative arguments put forward by the applicant relating to Article 8 (2) of Regulation No 729/70 are of no relevance in this instance.
3. The applicant replies that it is contrary to Article 8 (2) of Regulation No 729/70 to charge to it costs relating to conduct which even the Commission does not regard as irregular or negligent.
4. As regards its observations concerning the principles of the applicant's arguments the Commission refers to the comments made by it in connexion with case No 10. It then emphasizes that even if it is accepted that it acted wrongly in adopting Regulation No 822/70 that cannot justify the financing by the Community of the expenditure incurred by the applicant. In any event, the Commission was by no means at the origin of the applicant's action and the expenditure in question is attributable exclusively to unsuitable storage on the part of the applicant. The Commission accepts that at the time of the adoption of Regulation No 822/70 it was well-known that there was a possibility that some of the sugar put out to tender would not be of the stated quality. It was precisely for that reason that the first paragraph of Article 9 was inserted in the regulation. The applicant is wrong in holding that that article is not applicable. The second paragraph of Article 9 of that regulation is of little relevance as in the present instance the hardening of the sugar had already been noted before its removal from store. It is not true, according to the Commission, that all the sugar put out to tender was not free-running; only 9900 tonnes of sugar out of the total amount put out to tender of 36370 tonnes had hardened.
V —. Oral procedure
1. By an application lodged on 16 February 1976 under the first and third paragraphs of Article 173 of the EEC Treaty the Government of the Federal Republic of Germany sought the partial annulment of Commission Decisions 76/141 and 76/147 of 2 December 1975 concerning the discharge of the accounts presented by the Federal Republic of Germany in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1971 and 1972 (Official Journal L 27 of 2 February 1976, p. 3 and p. 15).
2. The sums in question are composed of several items, each of which includes amounts paid by the German authorities in connexion with the implementation of Community regulations concerning the common organization of agricultural markets.
3. In contesting the legality of the decisions adopted by the Commission, the applicant Government cites, apart from the provisions of those specific regulations, certain general rules set out in Regulation No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970 (I), p. 218), in particular the first subparagraph of Article 8 (2) which is worded as follows :
4. The Commission, on the other hand, denies that Article 8 (2) is relevant to the solution of the problems in question, arguing that that provision relates to irregularities and negligence attributable to individuals as persons in receipt of EAGGF expenditure and that it relates to negligence or irregularities which are attributable to the Member States only in the exceptional case of irregularities or negligence on the part of officials in the public service acting in breach of their professional duty.
5. The text of Article 8 in the different language versions, considered in the light of the origins of the provision and the preparatory documents, on which the parties have based their arguments in the course of the proceedings, contains too many contradictory and ambiguous elements to provide an answer to the questions at issue.
6. In this respect it should be noted, first, that Article 8 defines the principles in accordance with which the Community and the Member States are to organize measures to combat fraud and other irregularities in connexion with the operations financed by the EAGGF.
7. Consequently such a situation cannot fall under Article 8 but must, on the contrary, be examined in the light of the general provisions of Articles 2 and 3 of the same regulation, according to which refunds granted and intervention undertaken in accordance with the Community rules within the framework of the common organization of agricultural markets are to be financed by the EAGGF.
8. That strict interpretation of the conditions under which expenditure is to be borne by the EAGGF is necessary, moreover, in view of the objective of Regulation No 729/70.
9. It must therefore be conclused that the provisions of Article 8 of Regulation No 729/70 are not applicable to the operations in question.
10. The applicant Government further argues that the expenditure cannot be charged either to the Community or to a Member State on the occasion of the discharge of the accounts of the national authorities and bodies under Article 5 (2) (b) of Regulation No 729/70 but must be attributed by means of a separate procedure.
11. It should be noted that that statement was issued with regard to a regulation (Regulation No 283/72 of 7 February 1972, Official Journal, English Special Edition 1972 (I), p. 90) which was adopted under Article 8 of Regulation No 729/70 and that its scope is consequently limited to the financial consequences of irregularities and negligence referred to by that article, which is not relevant here.
12. It is moreover established that up to the present no specific procedure for attributing liability has been laid down by Community law for the purpose of settling differences between the Community and the Member States.
13. It is clear from Article 5 (2) of Regulation No 729/70 that the Commission's decision is to be adopted only after the consultation with the Fund Committee referred to in Article 11, but that the special procedure defined in Article 13 is not applicable.
14. It is therefore necessary to examine with regard to each of the items at issue whether the expenditure which the Commission refused to charge to the EAGGF was incurred in accordance with the Community provisions applicable in the sector in question.
15. Some of the amounts which the Commission refused to charge to the EAGGF constitute expenditure incurred by the applicant Government by way of aid for skimmed-milk powder for use as feed under Regulation No 986/68 of the Council of 15 July 1968 (Official Journal, English Special Edition 1968 (I), p. 260).
16. Under that regulation, as amended by subsequent Council regulations, and under Commission regulations on detailed rules for the grant of that aid:
17. One item in dispute relates to aid paid by the German authorities for quantities of skimmed-milk powder exported to Italy despite the fact that the goods were placed under control, according to the information on the control copy, at a date subsequent to 30 June 1971 or that compliance with that date could not be established clearly.
18. The German authorities accounted for payment of the aid in those cases by referring to a statement made by the competent Italian body to the effect that it was legally impossible, pursuant to the instructions given to the Italian authorities by the Ministries concerned, that aid should have paid in Italy in respect of consignments for which Community aid had been paid in Germany.
19. In this regard the Commission states that while it is prepared to accept that the contested expenditure may, by way of an exception, be borne by the EAGGF if the exporting State can produce irrefutable evidence that the same expenditure has not been paid by the importing State, such evidence, in order to be valid, must refer to specific, individual cases and cannot merely consist in an affirmation that double payment was not possible under the provisions in force.
20. The Community rules in this field are drawn up in terms which do not give the national authorities the option of accepting any other proof that the goods have been placed under control in the importing country than the formal proof provided by the control copy of the transit document correctly completed and stamped.
21. Another disputed item relates to aid paid by the German authorities in respect of quantities of skimmed-milk powder exported to Italy in cases where the dates when the goods were placed under control in that country are not in dispute but where proof that the goods were placed under control was not adduced by production of the control copy of the Community transit document duly completed and stamped by the Italian authorities.
22. As has already been stated above the objective of the rules in question requires that the formalities relating to proof must be strictly adhered to in order for traders to receive the financial benefits granted within the framework of the common agricultural policy.
23. The Commission refused to charge to the EAGGF the sums of DM 17930880.40 for the 1971 financial year and DM 12051258.00 for the 1972 financial year which were paid by the authorities in the Federal Republic of Germany by way of aid for the purchase of butter by persons in receipt of social assistance.
24. Article 1 of Regulation No 414/70 of the Council of 3 March 1970 laying down general rules relating to measures intended to increase the use of butter by certain categories of consumers (Journal Officiel L 52 of 6 March 1970, p. 2) authorized the Commission to decide that Member States may grant aid to permit the purchase of butter at reduced prices by, inter alia, persons in receipt of social assistance.
25. The applicant Government, in implementation of that measure, distributed through the local social security authorities in a single operation at the beginning of 1970 and of 1971 vouchers valid for each month of the whole year, thus seeking to avoid the disproportionate increase in its already considerable administrative costs which would have accompanied the issuing of vouchers valid for shorter periods.
26. The Commission claims that the German Government, by continuing to pay aid in respect of sales after 30 April 1971, overstepped the limits laid down by the provisions in question.
27. The question arises, therefore, whether the provisions in question must be interpreted as meaning that they permitted the Member States to adopt a distribution system such as that chosen by the applicant Government.
28. Since Decision 70/228 requires the Member States to use a system of individual vouchers for distributing the aid, since the applicant Government adopted such a system, in the first instance until the end of 1970, and since the Commission decision remained in force without any amendment for an indeterminate period after the enabling regulation was extended to the end of 1971, it cannot be said that the applicant Government, by maintaining the system initially adopted without making provision for the possibility of terminating the operation in the course of the year and taking into account also the special nature of the measure in question, exceeded what it was lawfully entitled to do to implement the Commission's decision within its national territory.
29. Certain of the amounts which the Commission refused to charge to the EAGGF constitute expenditure incurred by the applicant Government in respect of the sale of butter from public stocks at reduced prices under Regulation No 1308/68 of the Commission of 28 August 1968 (Journal Officiel L 214 of 29 August 1968, p. 10).
30. Under Article 3 of that regulation butter covered by that operation was to be exported within 30 days after sale by the intervention agency, and compliance with that condition was guaranteed by the lodging of a security under Article 4.
31. The applicant Government contends that the reduced price is applicable and the condition laid down in Article 3 is satisfied in cases where the contract of sale was concluded pursuant to the regulation which was repealed and where the butter was exported within 30 days of its removal from storage, even if that took place after 22 September 1970, the date on which Regulation No 1893/70 entered into force.
32. However, in the context of the regulation in question there is no reason why the term sale used in Article 3 should be given a meaning different to that which it has in ordinary legal language and which corresponds, moreover, to that assigned to it in other provisions of the regulation.
33. Certain of the amounts which the Commission refused to charge to the EAGGF constitute expenditure incurred by the applicant Government in respect of the repurchase of butter from public storage sold at reduced prices under a decision adopted by the Commission on 17 December 1968.
34. Article 6 (3) of Regulation No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (Official Journal, English Special Edition 1968 (I), p. 176) provides that special measures may be taken for the disposal of butter held in public storage which cannot be marketed on normal terms.
35. As the German Government informed the Commission that it was no longer in a position to guarantee complete compliance with that condition in respect of certain quantities of butter sold in 1970 which had not reached the stage of retail sale it was authorized by a Commission decision of 19 August 1971 to reach agreement with the purchasers regarding cancellation of the sales contracts.
36. The applicant Government claims that the Commission must charge to the EAGGF all expenditure incurred together with the actual costs of the processing of the butter sold, irrespective of the limits of the fixed amounts which, in respect of the storage costs and the processing costs incurred by the intervention agency as a result of the measures taken under Article 6 (3) of Regulation No 804/68, were laid down by Article 4 (1) (f) and (h) of Regulation No 2306/70 of the Council of 10 November 1970 on the financing of intervention expenditure in respect of the domestic market in milk and milk products (Official Journal, English Special Edition 1966-1972, p. 44).
37. However, none of the arguments put forward by the applicant Government can justify a derogation from the exhaustive provisions of Article 4 (1) (f) and (h) of Regulation No 2306/70, pursuant to which only the fixed amounts may be charged to the EAGGF, not the actual costs which may be greater.
38. Certain of the amounts which the Commission refused to charge to the EAGGF constitute expenditure incurred by the applicant Government in respect of the crushing and reconditioning of sugar sold pursuant to Regulation No 822/70 of the Commission of 4 May 1970 concerning a standing invitation to tender for the sale of white sugar intended for animal feedingstuffs held by the German intervention agency (Journal Officiel L 98 of 5 May 1970, p. 7).
39. The crushing of certain quantities of sugar which had hardened in store was undertaken by the German authorities in order to satisfy the condition contained in Article 6 of the regulation that the sugar put out to tender should be free-running.
40. Article 4 (1) lists the items to be debited to that account and Article 4 (2) lists those which are to be credited to it.
41. In those circumstances it is not necessary to examine whether the solidifying of the sugar which made the crushing necessary was due to defective storage, as the Commission claims, or whether the Community rules were defective in that they made no express provision for the costs in question, as the applicant Government claims.
42. It must therefore be concluded that the Commission's refusal to charge to the EAGGF the expenditure considered in this connexion is justified.
43. Article 69 (2) of the Rules of Procedure provides that the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's pleading.
44. The Commission failed on one head while the applicant Government failed on the other heads.
On those grounds, THE COURT hereby:
1 Annuls Commission Decisions 76/141 and 76/147 concerning the discharge of the accounts presented by the Federal Republic of Germany in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1971 and 1972 in so far as the amounts of DM 17930880.40 and DM 12051258.00 respectively were not charged to the Fund.
2 Dismisses the application as regards the other heads of claim.
3 Orders the applicant Government to pay its own costs and three quarters of those of the Commission.