Action brought on 19 February 2009 - Italy v Commission

(Case T-84/09)

Language of the case: Italian

Parties

Applicant: Italian Republic (represented by: L. Ventrella, avvocato dello Stato)

Defendant: Commission of the European Communities

Form of order sought

The applicant claims that the Court should :

annul the Decision of 8 December 2008, notified under document number C (2008) 7820 on 9 December 2008, excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), in so far as it makes certain corrections at Italy's expense.

Pleas in law and main arguments

The Italian Government contests before the Court of First Instance of the European Communities Commission Decision C (2008) 7820 of 8 December 2008 excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF).

In particular, the Commission has excluded from Community financing under the Guarantee Section of the EAGGF a number of categories of expenditure incurred by the Italian State in the financial years from 2003 to 2007.

The action brought by Italy focuses in particular on three aspects of the contested decision :

its application of a number of one-off financial corrections in respect of campaigns to inform the public and promote agricultural products in the internal market (EC 94/2002) and in non-member countries (EC 2879/2000), for the financial years from 2004 to 2007, amounting in total to EUR 4 678 229.78;

its application of one-off financial corrections in respect of production aid for olive oil and table olive production, for the financial years from 2003 to 2006, amounting in total to EUR 105 536 076.42;

its application of financial corrections because of late payments and the overshooting of financial ceilings, amounting to EUR 12 020 178 for the financial year 2005 and EUR 44 567 569.37 for the financial year 2006.

With regard to point (i), it is submitted in the application that the Commission's position is vitiated by breach of essential procedural requirements (Article 253 EC), such breach consisting in the lack of an inter partes stage in the procedure, the absence of a preliminary investigation and failure to state sufficient reasons, as well as breach of the principle of proportionality and distortion of the facts.

Among other things, in the present case, since it was not alleged that there was a total lack of controls or that the controls were wholly inefficient, the Commission's application of a one-off 10% correction is wholly disproportionate and unjustified, thereby rendering the contested decision manifestly unlawful also from this point of view.

With regard to point (ii), the Commission applied one-off financial corrections (10% and 5%) in respect of the financial years 2001-2002 and 2002-2003, amounting in total to EUR 105 536 076.42.

It is submitted in the application on this point that the decision is vitiated by breach of essential procedural requirements (article 253 EC) in the form of failure to state sufficient reasons, breach of the principle of proportionality and infringement of Articles 26 and 28 of Regulation No 2366/98 (original version and the version as amended by Regulation No 1780/03). In particular, the Italian Government considers, inter alia, that the Commission did not give due consideration - and fails to give adequate reasons for this - to the explanations furnished from time to time by the Italian authorities, especially regarding the general approach of the penalty system in Italy and the full accomplishment of the geographical information system (GIS) for olive cultivation. In any case, the one-off amount of the penalty imposed by the Commission is unjustified and manifestly disproportionate in that, according to the Italian Government, even if it were to be shown that there had been a total failure to comply with the Community rules, the risk would not in any event exceed EUR 22 504 075.39.

As regards point (iii), the Commission - on grounds which are inappropriate, insufficient and the product of circular reasoning - adopted the view that it could not accept the justifications offered by the Italian State in the course of the procedure and before the Dispute Settlement Body, 'because the 4% reserve made available under Article 4(2) of Commission Regulation (EC) No 296/96 (Article 9 of Commission Regulation (EC) No 883/2006) should have been sufficient for bringing legal actions, for dealing with controversial cases and for introducing additional controls'. In that connection, the Italian Government states that the 4% limit is not to be understood as absolute: in view of the fact that its purpose is to protect the Community's finances from fraud, it can be exceeded whenever - as in the present case - there are sound reasons for fearing that there is a risk of fraud involving more than 4%. That is the only interpretation of that rule that is consistent with the rationale underlying it.

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