Action brought on 14 January 2011 - Netherlands v Commission

(Case T-16/11)

Language of the case: Dutch

Parties

Applicant: Kingdom of the Netherlands (represented by: C. Wissels, M. de Ree and M. Noort, acting as Agents)

Defendant: European Commission

Form of order sought

Annul Article 1 of Commission Decision 2010/668/EU of 4 November 2010 excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) in so far as Article 1 of that decision concerns the Netherlands and relates to the financial correction in the (total) amount of EUR 28 947 149.31 applied in respect of the expenditure declared for the years 2003 to 2008 in the context of the quota system in relation to the production of potato starch;

Order the Commission to pay the costs.

Pleas in law and main arguments

By Decision 2010/668/EU the Commission applied a flat rate correction of 10% to the amounts declared by the Netherlands authorities which were paid in the years 2003 to 2008 under the European aid scheme in respect of potato starch. According to the Commission, the Netherlands authorities paid the aid to the starch manufacturer and the potato producer before the latter was paid the full amount of the minimum price for the potatoes supplied.

The Netherlands Government takes the view that the minimum price was paid in full before the aid for the starch manufacturer and the potato producer was granted. The minimum price was paid, on the one hand, by setting off part of the minimum price against an outstanding (private-law) claim by the manufacturer against the producer and, on the other hand, by a transfer of the balance of the minimum price to a (bank) account nominated by the producer.

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

1.    First plea: infringement of Article 7(4) of Regulation No 1258/99 ¹ and of Article 31 of Regulation No 1290/2005, ² in conjunction with Article 5 of Regulation No 1868/94, ³ Article 11 of Regulation No 97/95, ⁴ Article 10 of Regulation No 2236/2003, ⁵ Article 26 of Regulation No 2237/2003 ⁶ and Article 20 of Regulation No 1973/2004, ⁷ in that expenditure was excluded from financing even though the conditions for the grant of the premium and the direct aid were met, because the minimum price was paid by means of set-off and transfer.

2.    Second plea: infringement of Article 7(4) of Regulation No 1258/99 and of Article 31 of Regulation No 1290/2005, in conjunction with Article 5 of Regulation No 1868/94, Article 11 of Regulation No 97/95, Article 10 of Regulation No 2236/2003, Article 26 of Regulation No 2237/2003 and Article 20 of Regulation No 1973/2004, in that expenditure was excluded from financing even though the minimum price was available to the producers before the premium and direct aid were granted.

3.    Third plea: infringement of Article 7(4) of Regulation No 1258/99, Article 8 of Regulation No 1663/95, ⁸ Article 31 of Regulation No 1290/2005, Article 11 of Regulation No 885/2006 ⁹ and also of the rights of the defence in that expenditure was excluded from financing even though the inter partes procedure prescribed under those provisions was not followed in respect of all the findings on which that exclusion was based.

4.    Fourth plea: infringement of Article 7(4) of Regulation No 1258/99 and of Article 31 of Regulation No 1290/2005, in conjunction with Article 11 of Regulation No 97/95, Article 10 of Regulation No 2236/2003, Article 26 of Regulation No 2237/2003 and Article 20 of Regulation No 1973/2004 in that expenditure was excluded from financing even though payment of the minimum price could be monitored by the recipient States through the paying agency.

5.    Fifth plea: infringement of Article 7(4) of Regulation No 1258/99, Article 31(2) of Regulation No 1290/2005 and the principle of proportionality in that a flat rate correction of 10% was applied even though the only shortcoming is an erroneous starting point for the application and monitoring of the condition regarding payment of the minimum price.

____________

¹ - Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing of the common agricultural policy (OJ 1999 L 160, p. 103).

² - Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1).

³ - Council Regulation (EC) No 1868/94 of 27 July 1994 establishing a quota system in relation to the production of potato starch (OJ 1994 L 197, p. 4).

⁴ - Commission Regulation (EC) No 97/95 of 17 January 1995 laying down detailed rules for the application of Council Regulation (EEC) No 1766/92 as regards the minimum price and compensatory payment to be paid to potato producers and of Council Regulation (EC) No 1868/94 establishing a quota system in relation to the production of potato starch (OJ 1995 L 16, p. 3).

⁵ - Commission Regulation (EC) No 2236/2003 of 23 December 2003 laying down detailed rules for the application of Council Regulation (EC) No 1868/94 establishing a quota system in relation to the production of potato starch (OJ 2003 L 339, p. 45).

⁶ - Commission Regulation (EC) No 2237/2003 of 23 December 2003 laying down detailed rules for the application of certain support schemes provided for in Title IV of Council Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers (OJ 2003 L 339, p. 52).

⁷ - Commission Regulation (EC) No 1973/2004 of 29 October 2004 laying down detailed rules for the application of Council Regulation (EC) No 1782/2003 as regards the support schemes provided for in Titles IV and IVa of that Regulation and the use of land set aside for the production of raw materials (OJ 2004 L 345, p. 1).

⁸ - Commission Regulation (EC) No 1663/95 of 7 July 1995 laying down detailed rules for the application of Council Regulation (EEC) No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section (OJ 1995 L 158, p. 6).

⁹ - Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ 2006 L 171, p. 90).