Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. In the present action the Italian Republic seeks the annulment of Commission Decision 89/418/EEC of 26 June 1989 amending Decision 88/630/EEC on the clearance of the accounts presented by the Member States in respect of the EAGGF, Guarantee Section, expenditure for 1986 (Official Journal 1989, L 192, p. 33).
2. As far as the detailed circumstances of the case are concerned, I shall mention only those necessary for my reasoning and for the rest refer to the Report for the Hearing.
3. Regulation (EEC) No 2794/83 (1) lays down detailed arrangements for placing on the internal market, for use in animal feed, 450 000 tonnes of common wheat of bread-making quality held by the Italian intervention agency.
4. In particular, the second paragraph of Article 5 provides that in order to facilitate verification of use in animal feed
"the intervention agency concerned shall colour the product so that it can be identified. Colouring must be carried out at minimum expense".
The dispute concerns the latter requirement.
5. According to the general rules on the financing of agricultural intervention, that expenditure is to be charged to the EAGGF but is initially incurred by the Member States, which are entitled to reimbursement under the procedure for clearance of the accounts for the year in question.
6. In the present case, on 7 June 1985 the Commission decided to reimburse the expenditure for colouring on the basis of standard amounts set at the rate of ECU 1.17 per tonne of cereal treated, although the Italian intervention agency had determined at ECU 6.15 per tonne the expenditure incurred on the colouring operation required by Regulation No 2794/83 and applied for reimbursement on that basis from the EAGGF. The Italian Government brought an action before the Court which, by judgment of 4 February 1988, (2) annulled the decision of 7 June 1985 in so far as it fixed a standard amount for the reimbursement of the expenditure incurred for colouring.
7. In order to implement that judgment, the Commission sought additional information as to the costs actually incurred by the Member States. Considering that the Italian authorities had not proved that the method adopted by them was the least costly possible, it finally decided, by means of the contested decision, to charge to the EAGGF the expenditure declared by Italy only at the rate of ECU 1.17 per tonne rather than at the rate of ECU 6.15 per tonne.
8. It is that part of the decision that the applicant is challenging, on the basis of two pleas in law.
The first plea in law
9. The Italian Government considers that the contested decision is in breach of the principle of res judicata as regards the judgment of 4 February 1988.
10. It states that the Court then definitively settled the question of the expenditure in respect of the colouring operations prescribed by Regulation No 2794/83. It contends that it is well established that the principle of res judicata applies not only to the submissions made in the case concerned but also to those which could have been made, including the one on which the Commission is relying in the present case, namely that minimum expenditure must be incurred. Any other approach to that principle would allow parties to recommence their actions ad infinitem.
11. The parties agree that paragraph 18 of the judgment to which I have just referred is of fundamental importance to the present case. It reads as follows:
"Since colouring cannot be regarded as a material operation involved in withdrawal from stock or processing, it is necessary to refer to the only provision dealing with costs connected with colouring, namely Article 5 of Regulation No 2794/83 which provides that 'colouring must be carried out at minimum expense' . The wording of that article suggests that the costs connected with colouring must be reimbursed in full provided that the method adopted was the least costly possible, a point not raised in the proceedings".
12. By contrast with the applicant, I am of the opinion that the latter reservation indicates very clearly that the Court was saying that it had not dealt with any problem that might arise concerning the requirement of minimum expenditure; any other interpretation conflicts with the ordinary meaning of the words. (3)
13. I am also prevented from accepting the applicant' s view by the fact that I consider that the problem resolved by the Court in that case was entirely different. The issue was whether, having regard to the general rules governing the financing of intervention under the common agricultural policy, the expenditure concerned could be regarded as falling within the category of expenditure capable of being reimbursed by means of standard amounts or whether, on the contrary, it should be reimbursed in full. The Commission rightly emphasizes that the question of proving minimum expenditure, with which the present action is concerned, is another problem which cannot arise unless and until the principle of full payment is established.
14. The present case is therefore clearly different from the previous one; it is not a question of pleas which could have been made at the earlier time. The principle of res judicata cannot therefore be set up against the Commission since the latter' s decision is based on a fresh issue which was expressly excluded by the Court from its previous judgment.
The second plea in law
15. The applicant claims that the Commission should have given precise and detailed proof of the minimum expenditure that could actually have been achieved in the particular circumstances prevailing in Italy or at least should have indicated precisely why the information provided by Italy was unacceptable.
16. It may well be true that, according to previous decisions of the Court, (4) it is incumbent on the Commission to prove a breach of the rules on the common organization of the agricultural market, whereupon the Member State must, if appropriate, prove that the Commission made an error concerning the financial consequences thereof. In the present case, that would mean that the Commission was under an obligation to prove the irregularity, namely that the operations were not carried out at the best price. It must, however, be pointed out that the context in this case is different, in that regard, from that of the case-law just referred to, in so far as the distinction drawn by the Court therein between the irregularity and its financial consequences is inappropriate in the present case, where the two matters are identical since the infringement consists precisely in the fact that the cost of the operation in question was not kept to the minimum.
17. In this case, therefore, there is no irregularity to be proved whose existence could be distinguished from the financial consequences to be drawn from it, an area in which the burden of proof falls on the Member State, as is shown by the case-law to which I have just referred.
18. Moreover, such a solution would not only be contrary to the principle actori incumbit probatio but would also require the Commission to furnish negative evidence which would be very difficult to obtain, whereas it may reasonably be expected that a defendant Member State, being ex hypothesi familiar with the conditions under which it arranged for the operations in question to be carried out, would be in a position to produce positive evidence in that regard.
19. Moreover, in the present case the Commission has produced such copious and varied evidence that it must be considered that, by all appearances, the applicant does not have a good case and that this adduction of evidence would, if necessary, bring about a reversal of the burden of proof.
20. It is therefore certainly incumbent upon Italy to prove that its method was the least costly possible. It must be stated that the Italian Government, although having proved that it incurred certain expenditure, has not shown that such expenditure represented the actual cost of the operations in question and still less that that was the lowest possible cost available. It has merely produced calculations to show the amount of the lump sum adopted by the Italian intervention agency, without determining the actual cost of the colouring operation as a whole, whereas it is apparent from the judgment in Case 256/85, supra, that it is only the latter cost that can be charged to the EAGGF.
21. It must also be emphasized that the applicant government has not produced the slightest evidence to allow a comparison to be made between the various ways of carry out the colouring operation. The Commission rightly stresses that the very fact that the second paragraph of Article 5 of Regulation No 2794/83 requires the colouring operation to be carried out "at minimum expense" presupposes that a comparative analysis must be undertaken, something which the Italian authorities did not do in the present case.
22. The Italian authorities are certainly right to claim that they were under no obligation to conduct a tendering procedure. But there are other ways of ensuring competition, such as seeking quotations from different companies, as was done in particular in the United Kingdom. As to the argument that time was short, it is difficult to accept since the operations of colouring the cereals were spread over a period of three years, from 26 October 1983 to 6 October 1986, according to a statement made by the Commission which was not contested. Moreover, pressure of time cannot be relied on to justify an infringement of a Community regulation.
23. It is also true that account must be taken of the existence of differing situations in the Member States. However, that consideration alone cannot explain a 34-fold difference between the cost of colouring in the Member State where the operation was least costly and the cost in Italy. Furthermore, the Commission refers to the fact that the colouring agent used in Italy was considerably more expensive than that used elsewhere in the Community, just as it was more costly to use a private company to monitor the colouring operations rather than using national civil servants, the procedure adopted by the other Member States. Finally, it must be emphasized that the existence of differing situations in the Member States in no way releases the Italian authorities from the obligation to keep expenditure to a minimum, having regard to the circumstances prevailing in Italy.
24. As we have seen, the Italian authorities have produced no evidence to give the impression that such a comparative analysis, required by Article 5 of Regulation No 2794/83, was undertaken. All they have done is to explain that there were practical advantages to be obtained by entrusting the colouring operations to the companies responsible for storing the cereals. But they have not shown how that solution was necessarily the least expensive or that other possibilities were considered.
25. It cannot therefore be considered that the applicant has proved that the colouring operation was carried out "at minimum expense". The Commission was therefore right to reject the entire expenditure incurred or else to accept only part of it, as it is entitled to do by virtue of previous decisions of the Court. (5)
26. Having opted for the latter course of action, should the Commission have applied, in Italy' s case, the highest amount allowed for another Member State, in this case Belgium, namely ECU 2.00 per tonne? In its preparatory working document of 6 March 1985, it followed that method and estimated the costs incurred by the Italian authorities by reference to those incurred in the Member State in which, after Italy, the costs had been highest, namely Germany. It thus arrived at an estimated figure of ECU 1.38 per tonne.
27. However, that amount was then incorporated in the calculation of a weighted average for the whole Community which, initially, was ECU 1.14 per tonne but was then raised, on the basis of fresh information, to ECU 1.17 per tonne. It is that figure, determined in 1985 for the purpose of making a reimbursement to the Member States on the basis of a standard amount (a decision declared void by the Court) that has now re-emerged to be used as a basis for an ex gratia reimbursement for Italy (and France).
28. Should the Commission have worked out a fresh weighted average, based on more recent information, and used it for those Member States which failed to show that they had carried out the colouring operations "at minimum expense"?
29. I do not think so. It is apparent from previous decisions of the Court that, in the absence of evidence to the contrary from the Member States, the Commission has considerable latitude in estimating the expenses to be charged to the EAGGF, the calculation involved being necessarily hypothetical. (6) In the last analysis, therefore, I consider that the Commission cannot be criticized for adopting the figure of ECU 1.17 per tonne, a figure which had the advantage of corresponding to the expenditure already charged to the EAGGF.
30. For all the foregoing reasons, I propose that the Court dismiss the present action and order the applicant to pay the costs.
(*) Original language: French.
(1) Commission Regulation (EEC) No 2794/83 of 6 October 1983 on the sale on the internal market of 450 000 tonnes of common wheat of bread-making quality held by the Italian intervention agency and amending Regulation (EEC) No 1687/76 (OJ 1983, L 274, p. 18).
(2) Case 256/85 Italian Republic v Commission [1988] ECR 521.
(3) See the Opinion of Mr Advocate General Roemer in Case 14/64 Gualco née Barge v High Authority and the judgment in that case at [1965] ECR 51, from which it is apparent that questions in respect of which the Court made no express reservation are res judicata.
(4) Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 14. See also Case 262/87 Netherlands v Commission [1989] ECR 225, paragraph 21, and Case C-335/87 Hellenic Republic v Commission [1990] ECR I-2875.
(5) Judgment in Case 342/85 Italy v Commission [1987] ECR 4677, paragraphs 19 and 20, and the judgment in Case 347/85 United Kingdom v Commission, supra, paragraphs 15 and 16.
(6) See, to that effect, the judgment in Case C-334/87 Hellenic Republic v Commission [1990] ECR I-2849 and the judgment of the same date in proceedings between the same parties in Case C-335/87 [1990] ECR I-2875.
Translation
Full & Egal Universal Law Academy