Case T‑230/10

Kingdom of Spain

v

European Commission

(EAGGF — Guarantee Section — Expenditure excluded from financing — Fruit and vegetables — Obligation to justify expenditure — Conditions for recognition of producer organisations)

Summary of the Judgment

1.      Agriculture — Common organisation of the markets — Fruit and vegetables — Producers’ organisations — EAGGF financing — Condition — Proof of expenditure incurred

(Council Regulation No 2200/96, Art. 15(5), first para.; Commission Regulation No 1433/2003, Art. 18(2)(c))

2.      Agriculture — Common organisation of the markets — Fruit and vegetables — Producers’ organisations — EAGGF financing — Recognition of those organisations by national authorities — Condition — Democratic operation

(Council Regulation No 2200/96, Art. 11(1)(d); Commission Regulation No 1432/2003, Arts 4, 13(2)(b), and 14(2))

1.      It is apparent from a combined reading of the first subparagraph of Article 15(5) of Regulation No 2200/96 on the common organisation of the market in fruit and vegetables and Article 18(2)(c) of Regulation No 1433/2003 laying down detailed rules for the application of Regulation No 2200/96 as regards operational funds, operational programmes and financial assistance, that European Union financial assistance may be granted to a producer organisation in respect of an operational programme only on condition that evidence is provided that the expenditure under that programme has actually been incurred.

That rule does not exclude taking into account costs generated by the environmental management of packaging where such costs are borne directly by the distributors and indirectly by the producer organisations. The only evidence required is evidence to show that the costs in question are borne, directly or indirectly, by the producer organisations.

(see paras 19-20, 22)

2.      The European Union regulations concerning producer organisations are designed to ensure that such organisations operate democratically, in accordance with two principles. First, the producer members of the producer organisation must scrutinise their organisation and its decisions. Secondly, a producer organisation must include among its members at least five producers and none of those members may, in principle, have more than 20% of the voting rights.

In order to ensure that producer organisations operate democratically, it is necessary to take into account the identities of the individuals or legal persons holding the shares of the members of the producer organisations. If those identities are not checked it is possible that a particular individual or legal person holding the bulk, or even all, of the shares of several members of a producer organisation, so that it has control over those members, in particular over their decision-making processes, might be concealed behind those members. In such circumstances, the second principle referred to above is likely to be circumvented, since the apparent number of members of the producer organisation is not representative of the number of that organisation’s members that are genuinely independent.

In addition, under the second sentence of Article 14(2) of Regulation No 1432/2003 laying down detailed rules for the application of Regulation No 2200/96 regarding the conditions for recognition of producer organisations and preliminary recognition of producer groups, the increase by the Member State of the maximum percentage of 20% of the voting rights held by a single member must be proportionate to that member’s contribution to the value of the marketed production of the producer organisation. As a consequence, the Member State is required to take the necessary measures to prevent a single member from controlling more than 20% of the voting rights within the producer organisation.

(see paras 47-51, 53, 57, 59)