Action brought on 3 March 2010 - Germany v Commission

(Case T-104/10)

Language of the case: German

Parties

Applicant: Federal Republic of Germany (represented by: J. Möller and C. von Donat, lawyer)

Defendant: European Commission

Form of order sought

Annul Commission Decision C(2009) 10561 of 18 December 2009 on the reduction of the contribution from the European Regional Development Fund (ERDF) granted by Commission Decision C(95) 2529 of 27 November 1995 and latterly by Commission Decision C(1999) 3557 of 15 November 1999 in respect of the RESIDER II Programme Saarland (1994-1999) in the Federal Republic of Germany;

Order the Commission to pay the costs.

Pleas in law and main arguments

By the contested decision the Commission reduced the overall contribution granted from the ERDF in respect of the Community initiative RESIDER II SAARLAND (1994-1999) in the Federal Republic of Germany.

The applicant relies on five pleas in law in support of its action.

In its first plea the applicant submits that there is no legal basis for the consolidation and extrapolation of financial corrections in the programming period 1994 to 1999.

Secondly, the applicant alleges infringement of Article 24(2) of Regulation (EEC) No 4253/88 ¹ as the conditions for a reduction have not been met. It submits, in particular, in that regard that the Commission misconstrued the notion of 'irregularity'. Furthermore, the Commission did not establish that the national authorities responsible for the administration of Structural Funds were in breach of their obligations under Article 23 of Regulation No 4253/88. There is insufficient definition, for an allegation of systematic irregularity, of the administrative and control systems to be submitted. The assumptions regarding systemic errors in relation to administration and control are, moreover, according to the applicant, based on erroneous findings of fact. The applicant also submits that important aspects of the factual background have been determined and assessed incorrectly.

In the alternative, the applicant submits by its third plea in law that the reductions put forward in the contested decision are disproportionate. The applicant claims in this respect that the Commission failed to exercise its discretion under Article 24(2) of Regulation No 4253/88. Furthermore, the flat-rate corrections applied are in excess of the (potential) risk of loss to the Community budget. The applicant maintains that, over and above that, correction rates were cumulated without the outcome in individual cases being checked by reference to the principle of proportionality. The applicant also takes the view that the extrapolation of errors is disproportionate because specific errors cannot be applied to a heterogeneous whole.

By its fourth plea the applicant submits that insufficient reasons were given for the contested decision. It submits in that regard that the derivation and grounds for the amount of the flat-rate reductions could not be deduced from the contested decision. In addition, there is nothing to indicate that the Commission sufficiently took into account the submission of the German authorities. Furthermore, the Commission failed to draw any conclusions from the weaknesses identified in the project assessments carried out by external assessors with regard to the conclusiveness of the findings.

Lastly, the applicant puts forward a fifth plea in law alleging that the defendant infringed the principle of partnership because it now relies on the 'datasheets on the eligibility of expenditure' which were only compiled during the current programming period. Furthermore, the Commission bases the contested decision on systemic failings in the administrative and control system, even though it confirmed, in the course of the programming period, that the administrative and control systems were capable of functioning.

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¹ - Council Regulation (EEC) No 4253/88 of 19 December 1988, laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1988 L 374, p. 1).