Judgment of the General Court (Second Chamber) of 2 December 2014

a) Arguments of the parties

55 The Italian Republic maintains that, in substance, the checks carried out, albeit belatedly in some cases, were nevertheless reliable and effective, and that the Guarantee Section of the EAGGF and the EAGF were consequently not exposed to any risk. Therefore, by applying a financial correction and, a fortiori, a flat-rate financial correction, the Commission infringed the provisions of Article 11 of Regulation No 885/2006 and the guidelines contained in Document No VI/5330/97.

56 More specifically, first of all, notwithstanding the fact that some of the checks carried out by the national authorities were somewhat late, they made it possible to arrive at a definitive and reliable determination of the quantities of milk actually delivered and sold directly. The Italian Republic submits that it is clear from Annex II to Document No VI/5330/97 that a flat-rate financial correction may be applied only where the passage of time has necessarily compromised the a posteriori reconstruction of the volume of certain transactions. However, that is not so in the present case, since the checks carried out by the national authorities related, as is required by Article 11 of Regulation No 1392/2001, to commercial documents and other documents showing how the collected milk and milk equivalent had been used, which, in accordance with Article 14 of the same regulation, must be kept by purchasers for at least three years from the end of the year in which they are drawn up.

57 Secondly, the Italian Republic points out that, in its Special Report No 7/2010, the Court of Auditors of the European Union strongly criticised the Commission’s excessive use of the flat-rate financial correction approach. According to Document No VI/5330/97, that method should, it submits, be used only as a last resort where it is impossible to evaluate the impact of one or more errors detected in one or more specific cases of irregular transactions or on the basis of the examination of a representative sample of transactions.

58 The Commission contests the arguments put forward by the Italian Republic in support of its first plea.

b) Findings of the Court

59 The first plea is expressed as two complaints by which it is argued that, by applying a financial correction and, a fortiori, a flat-rate financial correction, the Commission infringed, first, Article 11 of Regulation No 885/2006 and, secondly, the guidelines contained in Document No VI/5330/97.

60 At the outset, in light of the case-law referred to in paragraph 50 above, the Court would observe, of its own motion, that the allegation of infringement of Article 11 of Regulation No 885/2006 is not supported, even in summary form, as is required by Article 44(1)(c) of the Rules of Procedure. Indeed, in its application, the Italian Republic failed to set out any argument capable of supporting that complaint. Nor was the complaint supported in its reply. A complaint of that kind must be declared inadmissible.

61 In any event, first of all, even if it were to be admitted that the complaint of infringement of Article 11 of Regulation No 885/2006 could be examined together with the allegation of infringement of the guidelines contained in Document No VI/5330/97 and in light of the arguments put forward in support of the first plea, it must be observed that, in accordance with the provisions of the second paragraph of Article 19 of Regulation No 885/2006, Article 11 of that regulation applies only from 16 October 2006 onwards.

62 Consequently, it would be necessary, in principle, to examine the first plea only in so far as it relates to the 2006/2007 milk year and not to the 2004/2005 and 2005/2006 milk years, which also gave rise to the application of a financial correction. However, as is clear from the correlation table set out in Annex V to Regulation No 885/2006, the provisions of Article 11 of Regulation No 885/2006 correspond to those of Article 8 of Regulation No 1663/1995. It is also clear from the Commission’s written pleadings that that institution itself acknowledges the correspondence between those provisions. It may, therefore, be concluded that, in the context of its first plea, the Italian Republic is essentially alleging, in relation to the 2004/2005, 2005/2006 and 2006/2007 milk years, infringement of, on the one hand, Article 8 of Regulation No 1663/1995 and Article 11 of Regulation No 885/2006 and, on the other, infringement of the guidelines contained in Document No VI/5330/97.

63 Secondly, it is clear from the arguments put forward by the Italian Republic in support of its first plea that, in essence, it submits that, notwithstanding the fact that some of the checks carried out by the Italian authorities were late and uncontested, the checks carried out into the quantities of milk declared in particular, they were nevertheless reliable and effective inasmuch as they made it possible to arrive at a definitive determination of the quantities of milk actually delivered and actually sold directly. The first plea must, therefore, be understood as alleging, in substance, that the Commission had been able to evaluate the losses incurred by the European fund in question (‘the Fund’), that is to say, the Guarantee Section of the EAGGF in 2005 and 2006 and the EAGF in 2007 and that, consequently, those funds had not been exposed to any risk such as to justify the application of a financial correction and the Commission had therefore had no grounds to apply a flat-rate financial correction.

64 It must be observed, first and foremost, that Article 19(3) of Regulation No 595/2004 provides that, for each 12-month period for which the Member States must implement a general control plan on the basis of risk analysis, checks are deemed to be completed once an inspection report of the controls — which must be completed no later than 18 months after the end of the 12-month period concerned — is available. Those provisions require that checks be completed within a fixed time-frame, without exception. It is thus clear from the very wording of the provisions in question that the time-limit for carrying out the checks is mandatory (see, by analogy, judgment of 9 October 2012 in Case T‑426/08 Italy v Commission, not published in the ECR, paragraph 74).

65 In the second place, it is clear from the case-law that the imposition of a precise time-limit for the completion of the checks contributes to achieving the objective of reducing the risk that sums due will not be recovered. Indeed, the time-limit forms part of the rules governing the performance of the checks and contributes to achieving the objective of dissuading both purchasers and producers making direct sales from under-declaring deliveries and direct sales so as not to have to pay an additional levy. Furthermore, such a time-limit reduces the risk that the data needed to carry out the checks will in fact no longer be available, despite the obligation imposed on operators to retain certain documents for a period of three years (Article 24 of Regulation No 595/2004). The time-limit also prevents the indefinite postponement of the checks, which could result in no checks being carried out and create a risk that levies due are not collected. Finally, the time-limit in question is intended to assist in the planning of future controls on the basis of a risk analysis, as provided for in Article 19(1) and (2) of Regulation No 595/2004. The mandatory nature of the time-limit laid down in Article 19(3) of Regulation No 595/2004 is thus also evident from the general structure of that article (see, by analogy, Italy v Commission, paragraph 64 above, paragraph 75).

66 In light of the considerations set out in paragraphs 64 and 65 above, it must be held, first, that, since the Italian authorities carried out some of the checks late, a point which, moreover, the Italian Republic does not dispute, the Commission was entitled both to regard the reliability of the data obtained on that occasion as having been impaired, in that the delay resulted in an increased risk of under-declaration of the quantities of milk produced, and to conclude that those irregularities exposed the Fund to a real financial risk.

67 Secondly, the Commission was entitled, in those circumstances, to apply a financial correction. It is also appropriate to point out in this connection that, since the Commission was no longer able to assess the quantities of milk produced objectively and thus to determine precisely the losses sustained by the Fund, it was entitled, in accordance with the guidelines contained in Document No VI/5330/97, to apply a flat-rate financial correction (Case C-418/06 P Belgium v Commission [2008] ECR I-3047, paragraph 136, and Case T‑46/09 Greece v Commission [2013] ECR, paragraph 49).

68 Thirdly, as regards the conclusions drawn by the Court of Auditors in its Special Report No 7/2010, according to which the Commission had made excessive use of flat-rate financial corrections, it must be observed that those conclusions, on which the Italian Republic relies in support of its first plea, are formulated in general terms and that, in any event, they in no way support the conclusion (contrary to the Court’s finding in paragraph 67 above) that, in the circumstances of the present case, the Commission’s application of a flat-rate financial correction contravened the applicable legal rules. They must, therefore, be disregarded as having no effect.

69 In light of all the foregoing considerations, the first plea must be dismissed as in part inadmissible and in part unfounded.

a) Arguments of the parties

70 In support of its second plea, alleging infringement of Articles 21 and 22(1)(b) of Regulation No 595/2004, the Italian Republic puts forward the following three arguments.

71 First, the Italian Republic argues that, since the checks carried out by the Italian authorities covered declared quantities of milk close to, or even in excess of, the 40% rate specified in Article 22(1)(b) of Regulation No 595/2004, the control system implemented posed no financial risk for the Fund.

72 Secondly, the Italian Republic maintains that the Commission’s decision to apply no correction in the regions in which the proportion of late checks was below 30%, a 2% correction in the regions in which the proportion was between 30% and 50%, and a 5% correction in the regions in which the proportion of late checks was greater than 50% was inconsistent with the guidelines contained in Document No VI/5330/97. According to the Italian Republic, the Commission thereby disregarded the objective quantity of milk produced that had actually been checked, whereas, under Regulation No 595/2004, that is an essential part of the checks on purchasers. The Commission’s approach precluded any objective assessment of the risk to the Fund.

73 Thirdly, the Italian Republic submits that, by adopting a criterion based on the percentage of checks carried out late, the Commission accorded the same importance, in each individual region, to checks on purchasers of negligible quantities of milk as it did to checks on purchasers of much larger quantities of milk. The approach adopted by the Commission therefore resulted in the imposition of financial corrections that were disproportionate to the objective significance of the risk to the Fund and which therefore breached the principle of equal treatment.

74 The Commission contests the arguments put forward by the Italian Republic in support of its second plea.

b) Findings of the Court

75 As regards the first argument, it should be recalled that, as was pointed out in the context of the Court’s examination of the first plea, first of all, it is not in dispute that some of the checks carried out by the national authorities were performed late, after the mandatory time-limit laid down by the legislation in force and, secondly, that irregularity, affecting the checks, exposed the Fund to a financial risk and thus gave the Commission grounds for applying a financial correction. Therefore, since the contested decision is based on the finding that the checks carried out by the national authorities were performed late, and in no way on the intensity of the checks, as defined in Article 22 of Regulation No 595/2004, the Court must reject the first argument, since it has no bearing on the consequences that must be drawn from the finding relating to the belated nature of the checks at issue.

76 As regards the second argument, the irregularity in the checks which the Commission found in the contested decision was that they were not carried out within the time-limit imposed for their performance. As is clear from the case-law referred to in paragraphs 65 and 67 above, one of the direct consequences of an irregularity of that nature is to jeopardise the precise calculation of the quantity of milk actually produced and, thus, the amount of any surplus justifying collection of the additional levy. Furthermore, in light of the guidelines contained in Document No VI/5330/97, given the lack of sufficiently reliable data from which to establish objectively the relevant quantity of milk produced, the Commission was entitled to apply a flat-rate financial correction, the very purpose of which is to reflect the loss likely to have been caused to the Fund by the identified deficiency in the checks in question.

77 It is clear from the foregoing considerations that the Italian Republic’s complaint that, by applying the flat-rate financial correction method, the Commission disregarded the objective quantity of milk produced that had actually been checked and infringed the guidelines contained in Document No VI/5330/97 is not justified.

78 As regards the third argument, it is appropriate to state at the outset that, whilst, under the provisions of Article 22 of Regulation No 595/2004, the intensity of the checks to be carried out by the Member States in respect of deliveries and direct sales, as referred to in Article 21 of the regulation, is set at a minimum of 40% of the quantity of milk declared before correction for the period concerned, Article 22(3) nevertheless provides that every purchaser is to be checked at least once every five years.

79 Consequently, first of all, the sample of purchasers to be checked by the Member States is determined on the basis of a rotation among purchasers, with no account being taken of the declared quantity of milk that each of them has purchased. Secondly, it is indeed possible that, where one check is carried out on a purchaser that has purchased a small quantity of milk, it will be necessary to select another purchaser that has purchased a significant quantity of milk in order to satisfy the requirement of checking 40% of the declared quantity of milk. However, that method of compensation, for arithmetical purposes, can in no way alter the consequences which the Commission must draw whenever it identifies irregularities in the way in which key controls are implemented by the Member States. In other words, regardless of the declared quantity of milk which a purchaser has purchased, if the Commission finds that the checks made on that purchaser were performed late, it must draw the legal consequences of that irregularity.

80 Primarily, it must be recalled that, in the area of the clearance of EAGGF accounts, whilst the Commission is entrusted with the task of checking whether the transactions financed by the Guarantee Section are carried out by the Member States in accordance with the applicable rules of EU law, the fact remains that it is the Member States that are best placed to collect and verify the data required for the clearance of EAGGF accounts, and consequently it is for the Member States to put forward the most detailed and comprehensive evidence that the figures are accurate and, if appropriate, that the Commission’s calculations are incorrect (Case C-48/91 Netherlands v Commission [1993] ECR I-5611, paragraph 17). In the case of the irregularity identified by the Commission, namely that the checks carried out by the Italian Republic were performed late, neither that State nor the Commission was in a position to establish objectively the quantity of milk produced, in particular by the operators in relation to which the checks were defective. Consequently, the third argument, which is that the Commission accorded the same significance to checks made on purchasers of negligible quantities of milk in a given region as it did to checks made on purchasers of much larger quantities, must be rejected.

81 That being so, in light of the considerations set out in paragraph 76 above, since the Commission was not in a position to establish objectively the quantity of milk produced in the region in question, it was entitled to apply a flat-rate financial correction in order reflect the loss likely to have been caused to the Fund. It cannot, therefore, be criticised for not having taken into account the quantities of milk to which the defective checks related. Moreover and in any event, the absence of reliable data on the quantities of milk produced that were checked makes it difficult to assess whether the applicable flat-rate financial correction was disproportionate, as alleged, to the quantities of milk to which the irregularity identified by the Commission related.

82 Consequently, the second plea must be dismissed as unfounded.

a) Arguments of the parties

83 In its application, the Italian Republic complains, in substance, that there is no legal basis for the application by the Commission of a flat-rate financial correction in the event of irregularity in the implementation of a scheme relating to assigned revenue and that it therefore acted in arbitrary fashion, infringing both the provisions of Article 11 of Regulation No 885/2003 and the guidelines contained in Document No VI/5330/97 as well as the principle of proportionality. In support of those three complaints which make up its third plea, the Italian Republic relies, in substance, on the following arguments.

84 First of all, the Italian Republic maintains that no provision of EU law provides a basis for the application of a flat-rate financial correction in the event of irregularities in checks relating to assigned revenue. Acts of the European Union such as Document No VI/5330/97 justify the application of a correction of that kind only where the absence or lack of key controls relates to expenditure incurred, and not to assigned revenue. Moreover, by contrast with the case of expenditure incurred, no act of EU law defines the detailed procedures for controls relating to assigned revenue or the degree of importance of such controls.

85 Secondly, the Italian Republic maintains, in substance, that in so far as concerns the risk of loss accruing to the Fund as a result of failure to recover assigned revenue, the level of milk production cannot be taken as a parameter. It is only once the amount of any overrun has been determined that the Commission may, in order to estimate such loss, apply to the levy theoretically due on account of the overrun the flat-rate financial correction rates laid down in Document No VI/5330/97. In the present case. However, ‘[t]he anomaly arises from the fact that the correction rates were applied to the theoretical amount of the levy calculated by applying the levy to the total quantity of milk produced in the milk years in question’. The Italian Republic adds that the Commission arbitrarily ‘used the financial correction rates to estimate the possible overrun of the quota and the consequent levy, adding it to the overrun of the national production quota and dividing it up for re-allocation to the individual regions subject to controls for the clearance of accounts’.

86 In its reply, in response to a purported misunderstanding on the Commission’s part of the scope of its third plea, as set out in the application, the Italian Republic stated that, by that plea, it took issue with the application of the financial correction by reference to the total quantity of milk produced in the regions in which irregularities had been identified, rather than by reference solely to the production of milk in connection with which checks on purchasers and producers were carried out late.

87 The Commission contests the arguments put forward by the Italian Republic in support of its third plea.

b) Findings of the Court

88 As a preliminary point, first of all, in light of the case-law referred to in paragraph 50 above, the Court would observe, of its own motion, that the third complaint, alleging breach of the principle of proportionality, is not supported, even in summary form, as is required by Article 44(1)(c) of the Rules of Procedure. Indeed, in both its application and its reply, as far as the third plea is concerned, the Italian Republic failed to set out any argument capable of supporting that complaint. It must therefore be declared inadmissible.

89 Secondly, it must be pointed out that it is clear from the provisions of Article 48(2) of the Rules of Procedure that no new plea in law may be introduced in the course of proceedings unless it is based on matters of fact or law which come to light in the course of the proceedings. However, a submission which may be regarded as amplifying a plea put forward previously, whether directly or by implication, in the originating application, and which is closely connected therewith, will be declared admissible (Joined Cases T-456/05 and T-457/05 Gütermann and Zwicky v Commission [2010] ECR II-1443, paragraphs 198 and 199).

90 In the present case, as regards the argument set out by the Italian Republic in its reply and referred to in paragraph 86 above, it must be held that, in so far as it seeks to show that the calculation of financial corrections should have been based solely on the production of milk in connection with which checks on purchasers and producers were carried out late, that argument was in no way put forward in the originating application.

91 In its application, the Italian Republic argued, first, that, in the case of assigned revenue, the level of milk production can in no way be taken into account. Secondly, it complained that the Commission had arbitrarily used ‘the financial correction rates to estimate the possible overrun of the quota and the consequent levy, adding it to the overrun of the national production quota and dividing it up for re-allocation to the individual regions subject to controls for the clearance of accounts’. However, it is in no way apparent from those two arguments that, at that stage of the proceedings, the Italian Republic maintained, even in substance, that the calculation of financial corrections should have been based solely on the production of milk in connection with which checks on purchasers and producers were carried out late.

92 Therefore, that argument, which does not constitute an amplification of the plea which it puts forward and is not on based on matters of fact or law which came to light in the course of the proceedings, must be declared inadmissible.

93 With regard to the first and second complaints made in support of the third plea, it is appropriate to examine each of the two arguments referred to in paragraphs 84 and 85 above.

a) Arguments of the parties

140 First of all, relying, in particular, on the conclusions reached by the Conciliation Body in its final report, which concern the region of Lazio, the Italian Republic maintains that the statement of reasons given for the level of corrections applied on account of the recurrence of the irregularities identified is insufficient.

141 The Italian Republic also considers that the correction applied by the Commission is inconsistent with the terms of Document AGRI/60637/2006. Since no definition of the notions of key controls and ancillary controls has been adopted in the field of milk quotas, the Commission was not entitled to regard the irregularities identified in the present case as relating to key controls.

142 Finally, since the 2003/2004 milk year did not give rise to a financial correction, the Commission was not entitled to apply the rule relating to recurrence to the financial corrections for the 2004/2005, 2005/2006 and 2006/2007 milk years. Consequently, the flat-rate financial correction applied in respect of the 2004/2005 milk year in the region of Lazio should have been 3%.

143 The Commission contests the arguments put forward by the Italian Republic in support of its fourth plea.

b) Findings of the Court

144 By its first complaint, referring, inter alia, to the conclusions drawn by the Court of Auditors in Special Report No 7/2010, the Italian Republic argues that the Commission failed to give sufficient reasons in the contested decision for its application of an increase, on the basis of Document AGRI/60637/2006, on account of the recurrence of the irregularities identified in the contested decision.

145 It must be recalled in this connection that the statement of reasons required by Article 296 TFEU must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Court of the European Union to exercise its power of review (see Case C-26/00 Netherlands v Commission [2005] ECR I-6527, paragraph 113, Case T-48/04 Qualcomm v Commission [2009] ECR II-2029, paragraph 174 and the case-law cited).

146 Furthermore, according to well-established case-law, in the particular context of the drafting of decisions relating to the clearance of accounts, the reasons given for a decision are to be considered sufficient if the Member State to which the decision is addressed was closely involved in the process by which the decision came about and was aware of the reasons for which the Commission took the view that the sum in dispute should not be charged to the EAGGF (Case C-263/98 Belgium v Commission [2001] ECR I-6063, paragraph 98, Case C-332/01 Greece v Commission [2004] ECR I-7699, paragraph 67, and the judgment of 30 September 2009 in Case T‑55/07 Netherlands v Commission, not published in the ECR, paragraph 125). That case-law must be applied by analogy to decisions imposing financial corrections on account of irregularities in checks relating to assigned income.

147 In the present case, first of all, the Commission stated in its summary report in a clear and unequivocal fashion the reasons for which it took the view that, since the irregularities identified in the checks carried out during the milk years in question were a recurrence of those which it had identified in Decision 2008/582/EC of 8 July 2008 excluding from Community financing certain expenditure incurred by the Member States under the Guarantee Section of the EAGGF and under the EAGF (OJ 2008 L 186, p. 39) relating to the 2002/2003 milk year in Italy, it was appropriate, on the basis of Document AGRI/60637/2006, to increase the flat-rate financial correction applied in the contested decision in respect of the 2005, 2006 and 2007 financial years. More specifically, the Commission stated in its summary report that, as a result of the investigation conducted in Italy in 2004 and bearing the reference LA/2004/01/IT, it had already identified irregularities — in particular, failures to comply with time-limits — in checks carried out by the national authorities in relation to the 2002/2003 milk year in the regions of Apulia, Trento, Abruzzi and Lazio. Since those irregularities had again been identified in some of those regions in the course of the investigations bearing the references LA/2006/08/IT and LA/2008/001/IT, the Commission had decided to apply the rule relating to recurrence following those investigations also.

148 Next, it must be observed that, throughout the administrative procedure in the present case, the Commission repeatedly drew the attention of the Italian Republic to the recurrent nature of the irregularities identified, in particular with reference to the conclusions drawn following the investigations bearing the references LA/2004/01/IT and LA/2006/08/IT and, consequently, to the possibility that the flat-rate financial correction applied would be increased in accordance with the terms of Document AGRI/60637/2006. That is clear, inter alia, from the Commission’s letter no 20272 of 20 August 2008 concerning the investigation bearing the reference LA/2008/001/IT, which it sent the Italian Republic in accordance with Article 11(1) of Regulation No 885/2006. It is also clear from the second and third paragraphs of point 1.4 of the minutes of the bilateral meeting of 15 January 2009. Similarly, in its letter of 24 March 2010, the Commission formally communicated to the Italian Republic, in accordance with Article 11(2) of Regulation No 885/2006, the financial consequences which it proposed to draw from the irregularities identified. In the penultimate paragraph of point 1.2 and in point 2.3 of that letter, the Commission mentioned the recurrent nature of the irregularities identified and consequently increased the flat-rate financial correction applied, in accordance with the terms of Document AGRI/60637/2006.

149 In light of the foregoing considerations, the Italian Republic having been closely involved in the process by which the contested decision was drawn up, it must be held that, in accordance with the case-law cited in paragraph 146 above, it was aware of the reasons for which the Commission applied an increase on the basis of Document AGRI/60637/2006. Consequently, the first complaint, by which it is alleged that no statement of reasons, or an insufficient statement of reasons was given, must be rejected as unfounded.

150 However, it is clear from the second and third complaints which the Italian Republic makes in support of its fourth plea that it also disputes the validity of the reasons given by the Commission.

151 As regards its second complaint, the Italian Republic maintains that, since no definition of key controls is given in Document AGRI/60637/2006, the Commission was not entitled to increase the financial correction under the terms of that document.

152 It must be recalled in this connection that Document VI/5330/97, which, as was noted in paragraph 119 above, applies to irregularities relating both to expenditure incurred and to assigned income, states:

‘Key controls are those physical and administrative checks required to verify substantive elements, in particular the existence of the subject of the claim, the quantity, and the qualitative conditions including the [observance] of time limits, harvesting requirements, retention periods, etc. They are performed on the spot, and by cross-checks to independent data such as land registers.’

153 The express purpose of Document AGRI/60637/2006 is to define the circumstances under which, in the context of the clearance of the accounts of the Guarantee Section of the EAGGF, it is appropriate to increase the flat-rate financial correction applied in accordance with Document VI/5330/97 in the event of recurrent shortcomings in control systems. It must therefore be held that it is light of the definition of the notion of key controls given in Document VI/5330/97 that the terms of Document AGRI/60637/2006 are to be given effect. The second complaint put forward in support of the fourth plea must therefore be rejected as unfounded.

154 As regards the third complaint, the Italian Republic maintains that, since the 2003/2004 milk year did not give rise to the application of a financial correction, the Commission was not entitled to apply the rule relating to recurrence to the irregularities identified in the subsequent milk years and to increase the financial correction applied in respect of those later milk years as a result.

155 It must first of all be noted in this connection that the Italian Republic does not dispute that the irregularities identified by the Commission in Decision 2008/582, relating to the 2002/2003 milk year, on the one hand, and those identified in the contested decisions, relating to the 2004/2005, 2005/2006 and 2006/2007 milk years, on the other, are similar, concern the same sector (namely the milk sector), are attributable to the same Member State, concern the same region (namely Lazio) and were regarded as decisive for the application of the rate of correction which was the subject of the increase.

156 However, it does maintain that, since the 2003/2004 milk year did not, as a result of the application of the 24 month rule laid down in Article 7 of Regulation No 1258/1999 and subsequently expressed in Article 31(4) of Regulation No 1290/2005, give rise to the application of a financial correction, the Commission was not entitled to apply the rule relating to recurrence to the financial corrections relating to the 2004/2005, 2005/2006 and 2006/2007 milk years.

157 That argument cannot succeed. According to the wording of paragraph 2 of Document AGRI/60637/2006, cited in paragraph 33 above, the rule relating to recurrence applies where irregularities found in the course of one milk year recur in ‘a period after the one for which the corrections are made’. It is clear from that wording and the use of the indefinite article rather than the definitive article, in both Italian (which is the language of the case in this instance) and English, before ‘period after the one for which the corrections are made’ that it is to be interpreted as meaning that the recurrence of the irregularities need not necessarily occur in the year immediately following the year in which the first financial correction was applied. Furthermore, to adopt such a narrow interpretation as that proposed by the Italian Republic would oblige the Commission to carry out annual checks in order to be able to increase a financial correction on the basis of Document AGRI/60637/2006.

158 In conclusion, the fourth plea must be dismissed as unfounded and, consequently, the action must be dismissed in its entirety.