Action brought on 4 January 2011 - Portugal v Commission

(Case T-2/11)

Language of the case: Portuguese

Parties

Applicant: Portuguese Republic (represented by: L. Inez Fernandes, M. Figueiredo and J. Saraiva de Almeida, Agents)

Defendant: European Commission

Form of order sought

annulment of Commission Decision C (2010) 7555 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), the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD), in the part that applies to Portugal an individual financial correction to the POSEI measure, in the financial years 2005, 2006 and 2007, in the total amount of EUR 743 251.25.

-    order the European Commission to pay all the costs.

Pleas in law and main arguments

The applicant relies on four pleas in law: infringement of Article 11 of Regulation No 885/2006; ¹ error in the interpretation of recital 28 in the preamble to Regulation No 43/2003; ² infringement of Article 7(4) of Regulation No 1258/1999; ³ breach of the principles of equality and proportionality.

By its first plea, the applicant claims that the Commission infringed Article 1 of Regulation No 885/2006 insofar as it did not indicate any results of checks or any observations relating to the years 2005 and 2006, thereby preventing the Portuguese authorities from proving that its conclusions were inaccurate in relation to those years, or from correcting any deficiencies so as to comply with the Community rules and, therefore, denying them the benefit of the procedural guarantee granted to the Member States under that provision.

By its second plea, the applicant claims that the Commission misinterpreted recital 28 in the preamble to Regulation No 43/2003, in so far as it considered that the monitoring carried out by the Portuguese authorities was insufficient in the light of EU standards, given the level of irregularities noted, without explaining at any time, however, to what extent or for what reason this monitoring should have been different or more extensive while, at the same time, it considered this monitoring to be sufficient for the purposes of calculating the financial correction.

It adds that the Commission also infringed Article 7(4) of Regulation No 1258/1999, under which the Commission is to decide on the expenditure to be excluded from the Community financing where it finds that expenditure has not been effected in compliance with Community rules, by excluding from Community financing the expenditure incurred by the Portuguese Republic, having found, wrongly, that this had not been effected in compliance with those rules.

By its third plea, the applicant claims that the Commission infringed Article 7(4) of Regulation No 1258/1999 in that, during the clearance of the EAGGF-Guarantee accounts, it completely ignored the guidelines set out in Working Paper VI/5330/97 of 23.12.1997, which the Commission established and adopted for the purposes of applying that provision, particularly in relation to the calculation of the financial corrections.

Finally, the applicant claims that, owing also to the failure to observe the above-mentioned guidelines, the Commission breached the principles of equality and proportionality too. Thus, it breached the principle of equality in that it did not treat the situation of the Portuguese Republic in the same way as it treated other equal situations, in particular, by applying a financial correction rate of 5%, in accordance with those guidelines. It breached the principle of proportionality in that, precisely because it failed to observe those guidelines, the Commission applied much higher correction rates, that is, between 44.32% and 90.48%, which was explained on the basis of the financial loss at issue.

By that same line of reasoning, the Commission also infringed Article 7(4) of Regulation No 1258/1999, according to which 'The Commission shall evaluate the amounts to be excluded having regard in particular to the degree of non-compliance found. The Commission shall take into account the nature and gravity of the infringement and the financial loss suffered by the Community'.

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¹ - 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.

² - Commission Regulation (EC) No 43/2003 of 23 December 2002 laying down detailed rules for applying Council Regulations (EC) No 1452/2001, (EC) No 1453/2001 and (EC) No 1454/2001 as regards aid for the local production of crop products in the outermost regions of the European Union

³ - Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing of the common agricultural policy.