Opinion of Mr Advocate General Van Gerven
Mr President,
Members of the Court,
1. Under Article 173 of the EEC Treaty the Italian Government seeks a declaration that the Commission's decision of 5 November 1987 on the reimbursement to the Italian Republic by the European Agricultural Guidance and Guarantee Fund (hereinafter referred to as the EAGGF), Guidance Section, of aid granted to organizations of producers of fruit and vegetables in respect of 1984 is partially void. The Italian Government's complaint against the decision is that only the amount of LIT 700924892 was allowed to be charged to the EAGGF in respect of the aid, although Italy had submitted a request for the reimbursement of LIT 2935382400.
The legislative background
2. The dispute between the parties is centred on Article 14(1) of Regulation (EEC) No 1035/72 of the Council of 18 May 1972 on the common organization of the market in fruit and vegetables. Title II of that regulation, of which Article 14 forms part, introduces a system of aid for organizations of producers of fruit and vegetables. Article 13 sets out the conditions which must be satisfied by those organizations in order to qualify for that aid, which is known as startup aid. Article 14 empowers the Member States to grant such aid. Pursuant to Article 36(2) the Member States are reimbursed for that startup aid at the rate of 50% by the EAGGF, Guidance Section.
3. The dispute which is described in the pleadings exchanged between the parties relates to the refusal by the Commission to charge to the EAGGF aid paid by Italy more than three years after the formation of the organization in question or, as regards aid relating to the third year, more than four years after the date of formation.
4. In order to place the applicable regulation in its context I should not omit to refer to the new provision added to Regulation (EEC) No 1035/72 in 1978, Article 14(1)a. Article 14(1)a provides for the grant of aid whose amount is to be determined in a different manner: not as a single sum calculated on the basis of production marketed by member producers before their membership, but on the basis of production marketed under the auspices of the organization, not exceeding the actual cost of formation and administrative costs of the organization. A second departure from the system laid down by Article 14(1) is to be found in the second subparagraph of Article 14(1)a, in which it is provided that the aid shall be paid during the seven years following the date of establishment (emphasis added). At the hearing a representative of the Commission pointed out that the new system introduced by Article 14(1)a was used exclusively in France, whereas the former system provided for in Article 14(1) on which the outcome of this dispute turns was used exclusively in Italy. France and Italy are therefore the only Member States in which use is made of one of the two systems.
5. Nor ought I to overlook Council Regulation (EEC) No 3284/83 of 14 November 1983. That amending regulation proceeds on the basis that the provision contained in Article 14(1)a limiting the costs to the actual cost of formation and administrative costs is the only one which is to be definitively maintained. The provision contained in Article 14(1) was to remain in force for a limited period. In the new Article 14, as it appears in Regulation (EEC) No 3284/83, the former Article 14(1)a is reproduced in paragraph 1, whilst the provision contained in the original Article 14(1) is reproduced in paragraph 2.
The arguments of the parties
6. The Italian Government divided its application into three principal arguments, and also put forward an alternative submission. The first submission goes to the inadequacy of the statement of reasons on which the contested decision is based. The Italian Government's second submission, which is by far the most important, alleges that Article 14 of Regulation (EEC) No 1035/72, taken together with Article 36 thereof, has been infringed and misapplied. The nub of its argument is that the Commission is wrong to regard Article 14 as stipulating a period for the payment, as opposed to the grant, of aid. The third argument put forward by the Italian Government as a principal submission alleges a misuse of powers. That submission will not be dealt with separately since it coincides to a considerable extent with the second submission and for the rest forms part of the alternative submission.
The allegation that the statement of reasons was inadequate
7. In its first submission the Italian Government alleges that the contested decision is based on an inadequate statement of reasons, even if the penultimate recital in the preamble to the decision in question refers to Commission memorandum No 61.000 of 17 July 1987, in which the Commission finally brought to a conclusion the exchange of correspondence with the Italian Government.
8. It seems to me that the case-law cited by the Commission is decisive in the present case, and that the Italian Government's submission cannot therefore be accepted. In a recent judgment of 24 March 1988, the Court held that EAGGF decisions need not set out in extenso all the grounds and reasoning on which they are based.
The allegation that Article 14 was infringed
9. Italy's second argument, that Article 14 of Regulation (EEC) No 1035/72 was infringed, is in two parts. The first part is to the effect that Article 14 stipulates no period for payment as distinct from the grant of aid. The three-year period mentioned in Article 14 is merely intended to serve as a point of reference in order to determine the amount of aid. The second part of the argument is that even if it is appropriate for the payment to be made as rapidly as possible that does not mean that it must take place within a specific period of, for example, three years, since payment at a later date is also capable of facilitating the attainment of the objective of the Community rules.
10. The Commission deploys four arguments against the allegation that there was an infringement of Article 14. First, the only means whereby the objectives pursued by Regulation (EEC) No 1035/72, namely the encouragement of the formation of producers' organizations and the facilitation of their functioning, may be achieved is to pay aid as rapidly as possible during the initial phase of such organizations' existence.
The implementation of provisions in the inter-administrative relationship
11. The question raised by the Italian Government relates to the Commission's power as the administrator of the EAGGF, when applying a payment period provided for in a Council Regulation, informally to specify the detailed manner in which it is to be applied. In other words the question is whether in fact a power of interpretation, or more broadly a power of definition, is conferred on the Commission (as on anyone entrusted with the implementation of a policy) and which is to be distinguished from the power of implementation itself inasmuch as it is limited to supplementing or completing the applicable legal provisions. I shall briefly examine the nature and limits of such a power.
12. First of all, I wish to point out that the present case concerns not the relationship between the Commission and economic operators — although what I am about to say applies mutatis mutandis to that relationship as well — but rather the relationship between the Commission as the Community administrative authority and the national administrations entrusted with the implementation of Community law. That inter-administrative relationship is dealt with only schematically at Community level. However, the Court has stated that the most serious gaps must be filled with the aid of two fundamental principles. The first fundamental principle, derived from Article 5 of the Treaty, emphasizes the need for genuine cooperation between the Community and national authorities in order to ensure the correct implementation of Community law in favour of the citizens. A second basic principle, which is mentioned expressly in Article 40(3) of the EEC Treaty as regards agricultural policy, lays down the principle of equality between the economic operators in the different Member States. In the relationship between the Commission and one or several Member States no elements may supervene which give rise to unequal treatment.
13. Inter-administrative relations between the Commission and national administrations must be based on the principle of legality. When the Commission lays down rules to be observed by Member States in the context of EAGGF accounts it must evidently be able to base itself on a clear provision which confers on it the power to lay down implementing measures. Of relevance in this connection is Article 7 of the basic regulation, Regulation (EEC) No 729/70 on the financing of the common agricultural policy, in which the Commission is given the power to determine the detailed rules for the application of each of the common measures. Article 36 of Regulation (EEC) No 1035/72, which is at issue in this case, takes a different line as far as the rules for the application of aid mentioned in Article 14(1) of the regulation are concerned. In that case the power is conferred on the Council, which used that power to adopt Regulation (EEC) No 449/69 of 11 March 1969, enacted in pursuance of the regulation preceding Regulation (EEC) No 1035/72.
Assessment of the lawfulness of the payment period laid down in the present case
14. Against this general background I will now consider the payment period actually imposed by the Commission on Italy.
15. As regards the first question it seems to me that when it appeared that owing to practical difficulties it was not possible to observe scrupulously a strict interpretation of Article 14(1), the Commission was nevertheless entitled to adjust the payment period informally. That is in fact an illustration of what I have referred to above as the exercise of an implementing power in respect of which the Commission was entitled to rely in this case on one of the abovementioned general principles — not so much the principle of equal treatment (although that too), since it was established at the hearing that the system in question is applied only in Italy, but rather the principle of genuine cooperation between the Community and national administrations with a view to the correct implementation of Community law in the interests of the citizen. In pursuance of that principle, the administrations must ensure that the objective of the Community aid scheme, which in the present case is a scheme for providing startup aid, is achieved in the best manner possible, and that the recipients of aid are as rapidly as possible put in possession of the aid granted to them. The fixing of a short payment period answers that objective. It is significant that the Italian government also acknowledges that principle, even if it contests the duration of the period stipulated.
Reasonableness of the stipulated period
16. The question remains whether the period allowed by the Commission was reasonable and was laid down in a manner which was not arbitrary. In the context of that assessment it is not for the Court to substitute itself for the Commission. I shall merely set out the following considerations.
17. Finally, I would like to examine the argument of the Italian Government that certain delays in the payment of aid were attributable to a general inquiry by the Commission or to checks decided upon by the Italian Government in order to see whether the organizations satisfied the conditions of Article 14(1).
Conclusion
18. I have already pointed out (in paragraph 6) that the Commission has conceded the alternative submission made by the Italian Government. In view of that acceptance of principle, all that remains to be determined is the result in figures — in other words, the amount in respect of which the contested decision should be declared void. In a letter of 14 June 1989 the Commission stated that examination of the documentation submitted by Italy had resulted in full acceptance of the amount of LIT 158524650 vouched for by that documentation.
1 Original language: Dutch.
2 The number of the contested decision is C (87) 2027
3 OJ, English Special Edition 1972 (II), p. 437
4 See the judgment of the Court of 28 January 1986 in Case 129/84 Italy v Commisson [1986] ECR 309, together with the Opinion of Sir Gordon Slynn at pp 312 to 319, with particular regard to Article 13
5 Council Regulation (EEC) No 1154/78 of 30 May 1978 amending Regulation (EEC) No 1035/72 on the common organization of the market in fruit and vegetables (OJ 1978, L 144, p. 5).
6 Mentioned in the Report for the Hearing in the summary of the letter from the Italian Minister of 18 July 1986.
7 Amending Regulation (EEC) No 1035/72 on the common organization of the market in fruit and vegetables, OJ 1983, L 325, p. 1.
8 Third recital in the preamble.
9 See in particular the system for the hop sector (mentioned by the Commission in the written procedure) (Council Regulation (EEC) No 1696/71 of 26 July 1971, OJ, English Special Edition 1971 (II), p. 634), the common organization in the fisheries sector (Council Regulation (EEC) No 100/76 of 19 January 1976, OJ 1976, L 20, p 1, Article 6(1)(2)) and the system governing various sectors simultaneously in three Member States in Regulation (EEC) No 1360/78 (OJ 1978, L 166, p 1, Article 10)
10 Admittedly, in such cases a recognition procedure under Community law is provided for (see paragraph 5 above) Moreover, the argument based on consistency, in conjunction with the wording of Article 14, could justify the opposite conclusion. In fact, the system originally used in France in that sector went by the dale of formation See paragraph 4 above
11 Judgment of 14 January 1981 in Case 819/79 Germany v Commission [1981] ECR 21, paragraphs 19 to 21.
12 See to the same effect the judgment of 27 January 1981 in Case 1251/79 Italy v Commission [1981] ECR 205, paragraphs 20 and 21.
13 In Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraphs 59 and 60; see also paragraph 78 of the Opinion of Mr Advocate General Mischo of 1 October 1987 delivered in that case.
14 The Commission refers to the judgment of the Court of 3 March 1982 in Case 14/81 Alpha Steel [1982] ECR 749, paragraph 10, and to the judgment of 21 September 1983 in Joined Cases 205 to 215/82 Deutche Milchkontrol [1983] ECR 2633, it is perhaps alluding to paragraph 33. which is of little relevance in this context
15 Judgment of 27 May 1981 in Cases 142 and 143/80 Essevi and Salengo[198l] ECR 1413
16 Judgment of 27 February 1985 in Case 56/83 Italy v Commission [1985] ECR 713, on this point at paragraph 31.
17 This management function is recognized in Anide 11 of basic Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy, OJ. English Special Edition 1970 (I), p 218
18 J. Schwarze, in Europaisches Verwaltungsrecht, 1988, p 425, describes the Durchfuhrungsrccht of the Commission as ergänzende Rechtsetzung
19 In legal doctrine proper to federal systems of law such as that of the Federal Republic of Germany much attention is paid to these relationships. See inter alia R. Boest: Die Agrarmärkte im Recht der EWG, 1984; J. Scherer: Das Rechnungsabschlußverfahren — Ein Instrument zur Durchsetzung europaischen Verwaltungsrechts? Europareckt 1986, at pp. 52 to 72; J. Schwarze: Europäisches Verwaltungsrecht, 1988.
20 These fundamental principles are considered together in paragraph 17 of the judgment of 21 September 1983 in Joined Cases 205 to 215/82 Deutsche Milchkontor [1983] ECR 2633. As regards recognition of the need to resolve certain problems of administrative law which are not specifically covered by the Treaty by drawing inspiration from the rules common to the law of the Member States, in order to avoid a denial of justice, I may refer to the judgment given by the Court on 12 July 1957 in Joined Cases 7/56 and 3 to 7/57 Algera and Others v Common Assembly of the ECSC [1957] ECR 39, at p. 55 (Law, A, III, 5th paragraph).
21 The fact that the requirement imposed on a Member State to observe a reasonable period may be derived from the obligation to cooperate laid down in Article 5 of the EEC Treaty is borne out by the judgment of the Court of 6 July 1971 in Case 59/70 Netherlands v Commission [1971] ECR 639 in the context of Article 86 of the ECSC Treaty which is analogous to Article 5.
22 See footnote 15.
23 Regulation cited in footnote 16.
24 OJ, English Special Edition 1969 (I), p. 101.
25 It is in fact a variant, of a general nature, of the power of interpretation vested in anyone who applies a legal provision. When the interpretation given is applied in regard to different persons it is normal for it to be inserted in an interpretative document of a general nature.
26 Although the interpretation of Community rules by the Commission is not binding on national authorities (sec in that connection the judgment of the Court of 27 March 1980 in Case 133/79 Sucnmex [1980) ECR 1299, paragraphs 16 and 22, and the judgment of 10 June 1982 in Case 217/81 Interagra 11982] ECR 2233, paragraph 8) it is very important (sec tne judgment of tnc Court of 25 November 1980 in Case 820/79 Belgium v Comimmoii [1980] ECR 3537. paragraphs 13 and 15), and is more persuasive when it expresses general principles of law which arc themselves binding.
27 See Article 7(1), cited above, of Regulation (EEC) No 729/70 to which Article 36 of Regulation (EEC) No 1035/72 refers. It is not disputed that the Commission followed the procedure which is there stipulated (see the last recital in the preamble to the contested decision) and, moreover, that it was constantly in contact with Italy over the fixing of the period in question. Incidentally, I would observe that both paragraphs of Article 7 require the Fund Committee to be consulted but that that article, applicable to the Guidance Section, is drafted less precisely as regards the nature or the form of the provisions which are referred to therein than the corresponding Anieles 2 to 5 for the Guarantee Section. That circumstance, which is aggravated by the absence of case-law of the Court on Article 7, may be explained in my view by the fact — which is also apparent in this case — that in the Guidance Section it is less frequently that operators are granted direct aid. It is therefore more often a purely inter-administrative relationship in which a more flexible approach is justified.
28 In a passage of ils memorandum of 30 July 1980 reproduced in the Report for the Hearing, the Commission spoke in the authentic Italian version of la concessione (the grant) and il pagamento (payment), two actions which are covered by the term accordare (grant) used in the first sentence of Article 14(1).
29 See paragraph 2 above for the method of calculating aid on the basis in particular of members' production in tne three calendar years preceding the year in which they became members.
30 The principle of equal treatment is in fact not entirely irrelevant if only one Member State operates the system under examination. In its judgment of 3 May 1978 in Case 112/77 Töpfer [1978] ECR 1019, paragraph 20, the Court in fact discussed equal treatment in terms of preventing privileged positions from becoming established.
31 See in particular the reference to a letter from the competent Italian ministry made in the abovcmentioned letter of 30 July 1980.
32 See footnote 8.
33 Judgments of 7 February 1979 in Case 11/76 Netherlands) Commission [1979] ECR 245, paragraphs 8 and 9, and in Case 18/76 Germany v Commission [1979] ECR 343, paragraphs 7 and 8. See also the judgment of 28 January 1986 in Case 129/84 Italy v Commission [1986] ECR 309, paragraph 19.
34 It is not immediately clear why the need to check whether the organizations satisfy the conditions for the grant of aid may constitute an obstacle to the payment of aid within the period prescribed. Since that verification relates to the functioning of the organizations, that can be carried out at any time and during the whole year. As an example of a case relating to the conditions for the grant of aid I would refer again to the judgment of the Court mentioned in footnote 3.
35 Judgment of 28 January 1986 mentioned in footnote 3, paragraph 20.
36 It is now otherwise: since 1 June 1984 the recognition of organizations is prescribed by Community law (Regulation (EEC) No 3284/83, examined above at paragraph 5, in particular Article 13(2) thereof).