Action brought on 5 March 2010 - Italy v Commission
(Case T-117/10)
Language of the case: Italian
Parties
Applicant: Italian Republic (represented by: P. Gentili, avvocato dello Stato, and G. Palmieri, avvocato dello Stato)
Defendant: European Commission
Form of order sought
Annul Decision No C (2009) 10350 of the European Commission of 22 December 2009 concerning the cancellation of part of the contribution from the European Regional Development Fund allocated to Italy for the operational programme POR Puglia Obiettivo 1 2000-06.
Order the European Commission to pay the costs.
Pleas in law and main arguments
The Italian Republic challenges before the General Court of the European Union Decision No C (2009) 10350 of the European Commission of 22 December 2009, notified on 23 December 2009, concerning the cancellation of part of the contribution from the European Regional Development Fund allocated to Italy for the operational programme POR Puglia Obiettivo 1 2000-06.
In support of its challenge, the Italian Republic relies on the following grounds:
First ground: infringement of Article 39(2)(c) and (3) of Regulation No 1260/99
1 and Article 4 of Regulation No 438/2001.
2 It is submitted in this connection that the Community auditors concluded that there were systemic deficiencies in first-level controls on the basis of certain irregularities which were not identified by those controls in the award and implementation of public works contracts. While the contested decision did not in fact refute the analytical counter-arguments put forward by the Region, which ruled out the possibility of systemic deficiencies, it nevertheless made a correction of 10% under Article 39 of Regulation No 260/99, as if the first-level regional control systems did not comply with the requirements of Article 4 of Regulation No 438/2001. The Commission thus also infringed the principle of partnership.
Second ground: infringement of Article 39(2)(c) and (3) of Regulation No 1260/99 and Article 10 of Regulation No 438/2001. The applicant points out that the second ground is similar to the first ground but concerns the second-level checks provided for in Article 10 of Regulation No 438/2001, which the Community audit also found to be systematically deficient due to the irregularities that had not been pointed out which were identified in certain samples, in spite of the fact that all those irregularities were disputed in analyses carried out by the Region supported by factual and legal arguments which were not rebutted in the contested decision.
Third ground: failure to state reasons and further infringement of Article 39(2) and (3) of Regulation No 1260/99. The contested decision is vitiated as a result of failure to state reasons because the conclusion that there were systemic deficiencies justifying a 10% correction is based on the situation as it appeared to the auditors in 2007 and 2008, while it totally disregards the quantitative and qualitative progress documented by the Region up to the end of 2009 and the counter arguments to the specific points made by the auditors referred to in connection with the previous grounds. No reasons were therefore given for the Commission's conclusion that there was a serious threat to the Fund.
Fourth ground: infringement of Article 12 of Regulation No 1260/99, the first paragraph of Article 4 of Regulation No 438/2001 and Article 258 TFEU and lack of competence on the part of the defendant. According to the applicant, the Commission attached major importance to the alleged infringements - which are of no great importance - of the rules governing the award of public contracts. However, according to a correct interpretation of Article 12 of Regulation 1260/99 and Article 4 of Regulation No 438/2001, systematic infringement of those rules cannot result directly in a correction being made but must instead give rise to the instigation of an infringement procedure, with a corresponding suspension of payments, pursuant to Article 32(3)(f) of Regulation No 1260/99, in respect of the measures to which the infringement relates.
____________1 - Council Regulation (EC) No 1260/99 of 21 June 1999 laying down general provisions on the Structural Funds (OJ 1999 L 161, p. 1). 2 - Commission Regulation (EC) No 438/2001 of 2 March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the Structural Funds (OJ 2001 L 63, p. 21).