COMMISSION ν ITALY

Costs

24 Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs. The applicant has failed in all its submissions.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the parties ; Upon hearing the opinion of the Advocate-General ; Having regard to the Treaty establishing the European Economic Community, especially Articles 40 and 169; Having regard to the Protocol on the Statute of the Court of Justice ofthe European Economic Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

THE COURT

hereby:

1. Dismisses the application;

2. Orders the Commission of the European Communities to pay the costs.

Lecourt Monaco

Donner Strauß Mertens de Wilmars

Delivered in open court in Luxembourg on 17 .

A. Van Houtte R. Lecourt Registrar President

OPINION OF MR ADVOCATE-GENERAL GAND DELIVERED ON 29 JANUARY 19701

Mr President, the European Communities asks you to Members of the Court, rule that the Republic of Italy, 'by failing promptly to pay to exporters the refunds on By an application made under Article 169 products coming under the common of the Treaty of the Commission of organization of the market established

1 — Translated from the French.

35 OPINION OF MR GAND — CASE 31/69 after 1 ', has failed to fulfil an the opinion of the Management Committee obligation under the provisions of the concerned, the duty periodically to fix the Community regulations establishing a amount of the refund. The refund is the common organization of the agricultural same for the whole Community but it may markets. be varied according to the destination. It It must immediately be said that this case is granted at the request of the exporter. It appears to me to be a delicate one; thus, is paid when proof has been produced that before considering the arguments of the the products have been exported from the parties, I should like to recall briefly the Community; where the rate is varied reasons for and the content of the Commu­ according to the destination of the exported nity provisions which, according to the products, proof must be furnished that the Commission, the Italian Republic has failed product has reached the destination for to observe. which the refund was fixed. Regulation No 1041/67 of the Commission I of 21 (OJ 1967, Special Edition, p. 323), which entered into force The implementation of the agricultural on 1 , lays down more pre­ policy involves the establishment of a cisely the detailed rules for the application Community market within which prices are of those provisions for all the products guaranteed to producers and are protected subject to a single price system. It specifies by a common customs barrier separating what is to be understood by export from that market from the world market on the geographical territory ofthe Community which prices are in general lower than and by 'date of exportation'; it lays down European prices. It is thus important that the model of the export certificate and the stabilizing machinery provided for in indicates the supporting documents re­ Article 40 of the Treaty should come into quired if the refund is varied according to play in trade with third countries. With the destination. Finally, it provides that regard to exports, for example, refunds the Member States may pay the exporter in make up the difference between the prices advance all or part of the amount of the on the world market and those in the refund as soon as the customs export forma-­ Community and make it possible for lities are completed, provided that certain Community exporters to operate on a com­ guarantees are given. petitive footing on the world market. It is clear that the system thus established This system only gradually emerged. In its obliges the Member State in whose territory initial stage — that of a gradual alignment the customs formalities were completed to of markets — the payment of refunds and pay the refund fixed by the Community the fixing of their amounts were left to the authorities; similarly, it implies the ex­ discretion ofthe Member States, which were porter's right to collect this refund on the then reimbursed on the basis of what is double condition that he claims payment known as the lowest average refund. of the refund within the period fixed by Nevertheless the system had of necessity to Regulation No 1041/67 and furnishes the change on the transition from the gradual appropriate proof that the export has left alignment of the market to the common the geographical territory ofthe Community organization of a single market. This or that it has reached its destination. The transition took place, for example, on 1 July Italian Republic does not and never has 1967 in the case ofcereals, eggs, poultrymeat disputed this. and pigmeat, on 1 with regard to rice, on 1 July 1968 with regard to II sugar and on 29 July 1968 with regard to milk products. A full Community system What the Commission alleges against it and of refunds thus came about. Each of the what it considers as a failure to fulfil an basic regulations of the Council on the obligation under the Community regula­ products which I have indicated confers on tions establishing the common organization the Commission, acting in accordance with of the agricultural markets is the failure of

36 COMMISSION ν ITALY

the Italian Republic to pay the refunds lay down the administrative procedures to promptly. It is this delay in payment which allow exporters to receive the payments in justifies the application of the procedure advance referred to in Article 9 of Regula­ under Article 169. In fact, one is concerned tion No 1041/67. This was dealt with in the with regulations which, as such, are binding Ministerial Decree of 24 . and directly applicable in all the Member Those proceedings were still unofficial. But States, and the detailed rules of which have the situation was changed when by letter been fixed by the Council and by the of 12 July 1968 the Commission decided to Commission with sufficient clarity for their initiate the procedure of Article 169 of the practical application merely to require the Treaty. In fact, as far as it could see refunds States to adopt administrative measures had only then been paid in respect of very which can be taken within very short periods. small quantities of the products subject to The Commission states that this has the single market system. It quotes as an occasioned no difficulty for the other States. example a firm exporting wheat flour which In Italy, on the other hand, there have been was owed 2 367 million lire for the period persistent delays the duration of which it from 1 July to 30 . Ac­ enumerates and to which I shall return later. cording to the Commission, the delay thus This has caused serious difficulties in the caused in payment of the refunds consti­ administration of the Community market, tuted an infringement of the provisions of as a refund has a different economic effect Article 7 of Regulation No 139/67 on depending on whether it is paid quickly or cereals and the similar provisions in the after a long delay. It is also harmful to other sectors subject to the single market, Italian exporters who are obliged to seek and it called upon Italy to submit its credit at high rates pending the reimburse­ observations within a period of one month. ment of the sums to which they are entitled. Then, when no reply was received, on 30 Finally, it entails risks of distortion since it delivered a reasoned those exporters are encouraged to export opinion couched in terms almost identical through ports in other States such as with the application at present before you. Marseilles or Rotterdam. Here it is stated in particular that the letter The Commission has maintained this view of 22 April 1968 from the Italian Govern­ constantly throughout the discussions which ment confirms the failure to pay the refunds it had with the Italian authorities before it from 1 July 1967 and that this situation was made its application. In a letter of 27 not significantly altered after the Commis­ February 1968 its Representative wrote to sion sent its letter of 12 July 1968. This the Minister for Agriculture that according letter is worded in the usual way, inviting the to the information in his possession the Italian Republic to take the 'necessary refunds had not yet been paid in Italy 'with measures' within a period of two months regard to any product coming under the which might be prolonged 'so far as is single market system exported after 1 July necessary for the observations of the 1967', which does not seem however to have parliamentary procedures required by the been entirely true if reference is made to the national laws in force'. figures which the Commission supplied at If I have reviewed at some length the course your request. He declared furthermore that of the proceedings out of court, this is in he was of the view that it would be possible order to emphasize that the Commission's for the Italian Government 'swiftly to take complaint relates essentially to. the delay the measures necessary for a proper appli­ occurring in practice in disbursing sums the cation of the Community provisions'. payment of which is laid down by Commu­ The Minister replied to this on 22 April 1968 nity provisions. At no time has it been said that a Decree Law of 20 February 1968 that an Italian legislative or administrative contained basic provisions intended to make provision by hindering this payment in law available the refunds provided for by the or in fact is contrary to the regulations on regulations and had released 99 000 million the common organization of the markets. lire to meet the expenses arising in 1968. The ritual request to take the necessary Furthermore, ministerial circulars were to measures may equally well be understood as

37 OPINION OF MR GAND — CASE 31/69

referring to quicker treatment of claims or Community regulations. It thus takes as its instructions given for this purpose to the standpoint the view that there has been an departments or to amendments to be made infringement of Article 189 of the Treaty to provisions governing the procedure for which states that such regulations shall be payment. binding and directly applicable in all Member States. The Italian Government III admits that such an infringement might no doubt be alleged against it if, after the entry How does the Italian Government reply to into force of a regulation, it had introduced this argument? into its legislation provisions incompatible 1. First, it complained at the Bar that the with such a regulation and consequently Commission had widened the scope of the frustrating its application. Nevertheless matter beyond what is permitted by Article nothing of the sort has been alleged; the 169 of the Treaty. That is, in its letter of 27 argument is in another sphere, that of February 1968 it originally complained that alleged failure to act and it leads on to the the Italian Republic had failed to pay the following alternative view propounded by refunds for the products subject to the single the Commission and disputed by the market system since 1 July 1967, whilst the Italian Government. reasoned opinion extends this complaint to The Community regulations are exhaustive all the products which it lists, including with regard to the refunds but in that case, some which were only included in this if there is a failure to implement them when system after 1 July 1968. they have become part of national law, this This complaint seems to me unfounded. It would be the act of an official or of a group is no doubt true that the reasoned opinion of officials, not of the Member State, the could only deal with the points on which the subject of the Community; such failure Member State was invited to give its expla­ should be penalized within the framework nations; but, as I have said, the letter of 12 of each national legal system and on the July 1968, which marks the beginning of the basis of the remedies therein provided, but pre-litigation stage, referred to the almost it would be 'irrelevant' to the Community complete absence of refunds for products system. Alternatively, as the Italian Govern­ subject to the single market system exported ment thinks, although the disputed pro­ after 1 July 1967, referring to Article 7 of visions are directly and immediately appli­ Regulation No 139/67 which concerns cable, they assume a 'reference' to national cereals and to the similar provisions existing procedures governing payments by the in other sectors. The complaint was against State, but the application of those national a practice represented as common to procedures does not constitute an infringe­ products coming under the same regulations ment of the Treaty. and in this case it does not seem to me On the other hand, if one considers, as the contrary to Article 169 to note the alleged Commission appears to do, that the failure even for those products which were disparities between national provisions only made subject to such provisions governing the ultimate stage of the refunds between 12 July 1968 and the date of the distort the conditions of competition and reasoned opinion. that the resultant distortion needs to be eliminated, the Commission has erred in 2. Still in the course of the oral procedure, making its application as the matter is without formally raising the question of the governed by Article 101 of the Treaty. This Court's lack of jurisdiction, the Italian article provides for a consultation with the Government claimed that the Commission's Member States concerned and if such application exceeded the Court's jurisdic­ consultation does not result in an agreement tion. In this connexion it expounded a very the Council shall issue the necessary subtle argument which I hope will not be directives. distorted by setting it out as follows: the Subtle as this argument is, neither point is Commission complains that the defendant well founded. It is indeed true that the has failed to fulfil an obligation under the Commission does not allege that the

38 COMMISSION ν ITALY

Italian Republic's positive action constitutes by the malfunctioning of the departments an internal provision directly contrary to charged with the payment of the refunds or the Community regulations. But a failure by the lack of funds at their disposal. This to fulfil obligations under the Treaty may is therefore the point of view from which it equally consist in a failure to take action as must be considered whether the Italian in an action and, I would add, with greater Republic has in fact failed in its obligations, details to be given below, that it may also and I shall now consider the matter from arise from a delay. this aspect. With regard to the alternative put forward by the defendant, the conclusions which it IV seeks to draw are untenable. First of all, it is untrue that if a Community provision 1. This appears to be the first occasion on is directly applicable a failure to implement which you have had to give a ruling on a it within the national framework is the sole question of this nature. Until now it has responsibility of the official who is liable always been alleged against the Member according to national law, whilst the States that they had either brought into Member State is freed of all liability with being or continued legislation considered regard to the Community and the pro­ incompatible with the Treaty or with its cedures laid down by the Treaty by the mere implementing provisions. Since legal meas­ fact of making a token recognition of the ures were concerned, the problem could be direct applicability of the provisions. Nor viewed as purely legal. In order to find is it correct that, if such provisions require whether there had been a failure to fulfil an recourse to national procedures for their obligation, it was generally a question of implementation, Article 169 is thereby interpreting the Community provision and excluded. It must be recalled here that considering whether the national measure Article 5 of the Treaty provides that the was contrary to it. The solution to the Member States shall take all appropriate problem might be difficult to reach, but it measures, whether general or particular, to only required methods of reasoning already ensure fulfilment of the obligations arising familiar to a court and no place was left out of the Treaty or resulting from action for considerations of fact. taken by the institutions of the Community. Nevertheless, the obligations ofthe Member Consequently it is not disregarding the States are not restricted to ensuring that sovereignty or independence of the Member their legislation is compatible with the States to insist that they are liable under Treaty and the regulations. It is generally Community law for acts or failures to act the States which are charged with the or delays by officials under their control, practical implementation of Community if such acts, failures or delays hinder the provisions; they might be entrusted with implementation of the Treaty or of the various tasks and, as in the present case, regulations. Similarly they are bound to with the payment of benefits. Failure or take, where appropriate, the measures delay in performing such tasks may consti­ necessary to give full effect to Community tute a failure to fulfil obligations and provisions. thereby involve Article 169; to hold other­ Finally, I do not think that the argument wise would paralyse the operation of the derived by the Italian Republic from Article Community. But a delicate problem of 101 of the Treaty is decisive. Even if the appraisal may be raised if a provision does delay alleged against Italy in fact distorts not prescribe a definite period of time for the conditions of competition it has never the completion of the task entrusted to the been maintained that the distortion thus Member State, above all if this task involves produced was the result of a disparity the repetition of various actions, the pay­ between the legislation, rules or administra­ ment of several benefits: involuntary or tive provisions of the Member States. On short delay is excusable, whilst repeated or the contrary, it seems to follow from what I prolonged delays on the contrary appear to have said above, that this delay, if sub­ come under Article 169. Extreme caution stantiated, will prove to have been caused must be exercised here, as a number of

39 OPINION OF MR GAND — CASE 31/69 reasons, not all the fault of the Member complaint by the representative of the rice- State, may explain its apparent inertia and milling industry about the difficulties en­ it is always a delicate matter to claim to countered in obtaining payment of refunds judge from afar the functioning of its in Italy. services. The copious information received by the Commission's departments from Italian 2. The dispute before us shows the delicate exporters is also invoked, without however nature of this appraisal and the need to supplying further details. exercise great caution. The Commission On the other hand, it is more relevant that complains that the Italian Republic has two actions were initiated against the failed to pay the refunds 'promptly'. The Italian Minister for Finance by two un­ term is vague. In fact the Community named companies to recover considerable, regulations do not prescribe a definite though unspecified, sums payable as re­ period within which the payments must be funds. I do not dispute the existence of made. Indeed they provide, as I have said, those actions but only two have been cited that the refund shall be paid upon proof of and since the competent court has not ruled the export's leaving the geographical that they are well founded they can scarcely territory of the Community or of reaching be employed to prove the defendant's its destination, and payment in advance alleged delay. may be made as soon as the customs Finally, the Commission invokes in support formalities are completed. Those provi­ of its case the requests for payments in sions, however, leave a considerable dis­ advance made by the Italian Republic for cretion to Member States to determine the accounting periods 1967-1968 and 1968- which documents constitute proof of those 1969 which prove the non-payment of the various operations; consequently it is not refunds for certain products and part­ surprising that the decisions of States in payment for others. I shall not dwell on these matters display differences in the these documents which we shall come across relative speed with which the refunds are again later in another form. I shall also paid. leave aside the replies given by the Member Contrary to the Commission 's view, in this States, especially by the defendant, at an case the Italian Republic has never admitted investigation made in by the the alleged delay, and to read such an ad­ Commission on the delay in paying the mission into the letter sent on 22 April 1968 refunds. This investigation relates to the (that is, before the pre-litigation stage) by period prior to 1 July 1967 which is outside the Minister for Agriculture is to stretch the dispute. its meaning. Thus in its rejoinder the It appears that the Court found this evidence Commission is obliged to support its argu­ as unconvincing as I did since, after the ment by various documents which I shall opening of the oral procedure, it requested now consider. detailed information from the parties on I must say at the outset that these documents the progress made by the Italian authorities do not seem to me very persuasive. in paying the refunds from 1 July 1967 to First, there is nothing to support what the 1970. This information made it possible to rejoinder terms facts published in Italy in calculate the exact extent of the delay the specialist press. There is only an extract alleged against the defendant and to see from a journal of 6 referring whether it had put a new system into to another publication which further alludes operation. to information from Brussels to the effect You were given two replies. that delays in excess of a year sometimes One, from the Italian Government, relates occur in the Italian State's payment of to the amount of payments made during refunds for cereals. the periods 1 July 1967 to 30 , Secondly, the 'difficulties revealed by the 1 July 1968 to 30 and 1 industrial representatives of the producer to 31 , but gives compre­ Member States in the Management Com­ hensive figures which do not specify the mittees' are invoked. This concerns a date of the exportations which led to those

40 COMMISSION ν ITALY payments. During the oral procedure the made at that date. Commission expressed its dissatisfaction During the first half of 1968 the refunds with the schematic manner in which this amounted to 6 841 million lire of which only evidence was presented in that it did not 5 million related to operations in the give the clear picture which would have preceding six-monthly period. emerged from a comparison of the claim for With regard to the second half of 1968, the payment from all the exporters with the payments amounted to 10 442 million lire payments made; those are factors with of which 4 044 million pertained to the which it must remain unacquainted so long period from 1 July 1967 to 30 June 1968 and as the Member State does not reveal them. the Commission considers that this latter But it must not be forgotten that it is for the figure indicates a delay of one year. I cannot applicant to provide proof of the delay agree with this as the information regarding which it wishes the Court to find. The the dates when the exports were effected Commission claims that such proof is and the refunds paid are insufficiently further substantiated by the reply which it precise to justify such conclusions. Let us has given you in the form of a table of suppose for example that an export was payments of refunds drawn up on the basis effected on 1 for which a refund of the six-monthly requests for payments in was paid on 1 , that is, after advance lodged by the Italian Republic. three months; it would only appear in the Let us examine this table more closely. column for payments made for exports in It sets out in four columns the refunds paid the period from 1 July 1967 to 30 June 1968 for each product and for each of the four which is held to indicate a delay of one year. six-monthly periods between 1 July 1967, If we now pass on to the first half of 1969, the date of the first common organizations, we find 6 950 million lire of which 1 169 and 30 June 1969. For the first six-monthly million pertained to operations in the first period in 1968 it shows the total amount of half of the 1967/1968 period and are thus refunds for each product and the proportion held to reflect a delay of 18 months. The pertaining to the operations of the fore­ same reservations on this method of going six-monthly period; for the second calculation may be made here as in the case half of 1969 it gives the total amount and of the preceding six-monthly period, but in the part pertaining to the period from 1 July addition we find that of the said 1 169 1967 to 30 June 1968 thus indicating a delay million lire, 718 million pertain to refunds of a year; for the six-monthly period in 1969 for milk products. I find this quite in­ the total amount and the portion pertaining comprehensible as milk products were only to the same period from 1 July 1967 to 30 brought under the single market system on June 1968 thus indicating a delay of 18 29 July 1968 and consequently there cannot months. be any compulsory refunds for those pro­ This document indeed constitutes a laudable ducts, the only ones referred to in the attempt to follow as precisely as possible application, for the period 1967 to 1968. We the progress of the refunds and delays should, no doubt, understand the table, occurring in connexion with them. Never­ drawn up on the basis of requests for theless I do not think, after considering the payments in advance from the Italian table in detail, that the conclusions which Republic, as including refunds made the Commission draws from it can be ad­ optionally under the earlier system which mitted without reservations. might indeed be reimbursed by the Com­ In the first place, it should be noted that munity. But this finding deprives the figures during the second half of 1967, the first supplied by the Commission and the period considered, payments were made. consequences which it draws from them of They were inconsiderable which is normal much of their force. considering that the first common organiza­ What must be concluded from this? tions were established on 1 July 1967, but A general impression may perhaps be they were made despite the Commission's gained from the file to the effect that the allegation in its letter of 27 February 1968 refunds were not paid immediately, but to the effect that no payment had yet been what is the reason for this delay? Was it

41 OPINION OF MR GAND — CASE 31/69 caused by a lack of credits, by the inertia Consequently the outcome seems to me of the departments or merely by the clear. Whilst an abnormal delay, longer difficulties inherent in initiating machinery than a reasonable period, may constitute a the complexity of which is reflected by failure to fulfil an obligation under the Regulation No 1041/67? It is indeed difficult Treaty, for you to give a judgment to this to say. Nor do I consider very illuminating effect as you are empowered by Article 171, the comparisons which the Commission the Commission must provide you with the claims may be made with the dispatch certainty, not merely impressions, of the displayed by the other Member States; the delay. To censure the course of action of a data supporting those comparisons is too Member State, with the wide margin oferror old and moreover lacks figures. There thus involved in appraising a course of action, remains the information which the applicant is a responsibility not lightly to be under­ gave in response to the Court's request; taken. For my part I do not find the but far from supporting its argument, this Commission's argument sufficiently per­ information rather appears to show that it suasive for me to recommend you to under­ is impossible to draw really firm conclusions take such a responsibility. from it.

I am of the opinion that the application of the Commission of the European Communities should be dismissed and that the costs should be borne by that institution.

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