Court of Justice of the European Communities (including Court of First Instance Decisions)

The financial correction in respect of intervention measures in the beef and veal sector

'1. Tenderers may take part in the invitation to tender only if they undertake in writing to comply with all the provisions relating to the tender concerned.

2. Interested parties may participate in the invitation to tender issued by intervention agencies of the Member States in which this is opened either by lodging a written tender against a receipt or by any other written means of communication accepted by the intervention agency, with advice of receipt; they may submit one tender only per category in response to each invitation to tender.

3. Tenders shall specify:

(a) the name and address of the tenderer;

(b) the quantity tendered for, expressed in tonnes, of the products and categories specified in the notice of invitation to tender;

(c) the price tendered per 100 kilograms of products of quality R3 ...;

(d) the intervention centre or centres to which the tenderer intends to deliver the product.

...'

'1. Only the following may submit tenders:

(a) slaughterhouses for bovine animals approved in accordance with Directive 64/433/EEC, and not enjoying a derogation under Article 2 of Directive 91/498/EEC, whatever their legal status, and

(b) livestock or meat traders who have slaughtering undertaken therein on their own account and who are entered in a public register under an individual number.

2. In response to invitations to tender, interested parties shall forward tenders to the intervention agencies of the Member States in which they are opened, either by lodging a written bid against a receipt or by any other written means of communication accepted by the intervention agency, with advice of receipt.

Separate tenders shall be submitted for each type of invitation to tender.

3. Interested parties may submit only one tender per category in response to each invitation to tender.

The Member States shall ensure that tenderers are independent of each other in the terms of their management, staffing and operations.

Where there are serious indications to the contrary or that tenders are not in line with economic facts, tenders shall be deemed admissible only where the tenderer presents suitable evidence of compliance with the second subparagraph.

Where it is established that a tenderer has submitted more than one tender, all the tenders from that tenderer shall be deemed inadmissible.

4. ...'

'France

The competent paying agency, Ofival, accepted all offers providing they were submitted by a separate legal entity as evidenced by its own individual "Sirene" number. Ofival made no attempt to determine whether or not participants were linked and, because neither the offer nor the takeover documents indicated the place of slaughter, such a check would often have been futile in any case. The French authorities failed therefore to control the requirement under Article 9(2) of Regulation No 859/89.

In its examination of purchase files and summary adjudication documentation the EAGGF noted that:

- offers from different companies often gave the same address, telephone and telex numbers and had sometimes been signed by the same person;

- invoices sent by different companies to Ofival for payment were sometimes consecutively numbered although slightly different in appearance;

- over-deliveries under one company's contract (for which no payment is due according to Article 13(4) of Regulation No 859/89) had been transferred to another company's under-delivered contract, thereby avoiding any loss of purchase security;

- prices offered under the different bids often followed a pattern indicating some speculation on the part of the interested party.

The EAGGF concludes that Ofival must have been fully aware that many of the offers were linked but made no effort to prevent the acceptance of these offers, either by refusing them or drawing the Commission services' attention to the potential abuses. Furthermore, the EAGGF also considers that prices and quantities offered by these linked companies indicate an element of price speculation. Finally, the transfers of over-delivered quantities to the contracts of other companies (which were detected by the EAGGF only where administrative and/or accounting errors had been made, and which would normally go undetected) indicates deliberate evasion of the rules providing for the non-payment of over-deliveries and security forfeiture for under-deliveries.

Financial consequences are proposed at a flat rate of 2% applicable to 1992 expenditure.'

made it possible in fact to honour at least some of the tenders and therefore to recover the relevant securities.

Lawfulness of the practice followed in France

Absence of harm suffered by the EAGGF and breach of the principle of proportionality

'it would seem that, prior to the amendment of the regulations in 1993 and despite the practice of "multiple tendering", the Commission has remained in control of the situation by setting the quantities and prices accepted for intervention at an appropriate level'.

The correction in respect of intervention measures in the context of the public storage of cereals

- the cereals be sound, fair and of marketable quality, free from abnormal smell and live pests and meet minimum quality requirements (Article 2);

- all offers for intervention contain the name of the offerer, the cereal offered, the place of storage, the intervention centre to which the offer relates, the quantity, the main characteristics and harvesting year (Article 3(1));

- takeover by the intervention agency take place when the quantity and the standards have been established for the entire lot in respect of the goods delivered to the intervention store (Article 3(4));

- the quality characteristic be established on the basis of a representative sample (Article 3(5));

- the quantity may be established on the basis of the stock records in respect of goods taken over in the store (Article 3(6));

- a takeover note be issued by the intervention agency in respect of each offer (Article 3(8));

- the intervention agency check the quality of the stored product at least once a year (Article 5).

- quality checks on products on entry into storage;

- the identification of stocks in storage, in particular their differentiation from stocks stored under different arrangements;

- the late entry into the accounts of stock movements;

- the unavailability of accurate records of stocks held in each store on a particular date when checks were carried out;

- the unavailability at the head office of the physical inventories laid down in Community rules and of accounts recorded when checks were carried out;

- the unsatisfactory nature of stock records held by the storage bodies;

- the unsuitability of certain warehouses for intervention storage (impossibility of taking measurements, non-existent or dangerous gangways, open to the elements ...);

- the difficulty of reconciling plans with the actual measurements of warehouses.

'... according to persistent trade rumours, it would appear that stocked goods and market cereals are switched in particular upon the sale of stocks into intervention'.

The Commission went on: 'If it should transpire that those rumours are founded, very severe financial corrections will be imposed and you will be requested to impose penalties on traders and/or on storage bodies.'

- the delay in entering stocks into the accounts;

- certain inadequacies in checks;

- poor storage conditions and problems with the placing of signs;

- inadequate stock records.

Commission concluded that the prefinanced wheat had been mixed with the storage body's privately held wheat.

'it is certainly to be regretted that the Commission should give the impression of having retrospectively gone back on its original conclusions, which, here again, can only serve to corroborate the relevant Member State's observations as to the uncertainty of the clearance procedure. Moreover, the Commission's observations and conclusions would indeed be more solidly founded if they were based on a thorough examination of the system in France.

Nevertheless, the French authorities do not, essentially, deny that they should have modified significantly their previous procedure in order to fall into line with the Commission's requirements and that the Community inspections have identified various irregularities, which the French authorities have admitted and penalised.'

with Community legislation and that there has been a breach of the principles of legal certainty and proportionality.

The submission that the national management and control system was in accordance with Community legislation

Principle of legal certainty

The principle of proportionality

Costs