Opinion of Advocate General Saugmandsgaard Øe delivered on 21 February 2018

A. Regulation No 73/2009

5. Article 23, ‘Reduction of or exclusion from payments in the event of non-compliance with cross-compliance rules’, appears in Chapter 4 of Title II of Regulation No 73/2009, ‘Integrated administration and control system’, and provides as follows in paragraph 1:

‘Where the statutory management requirements or good agricultural and environmental condition are not complied with at any time in a given calendar year (hereinafter referred to as ‘the calendar year concerned’), and the non-compliance in question is the result of an act or omission directly attributable to the farmer who submitted the aid application in the calendar year concerned, the total amount of direct payments granted or to be granted, following application of Articles 7, 10 and 11 to that farmer, shall be reduced or excluded in accordance with the detailed rules laid down in Article 24.’

6. Article 24, in the same chapter of Regulation No 73/2009 and entitled ‘Detailed rules on reductions and exclusions in the event of non-compliance with cross-compliance rules’, provides:

‘1.

Detailed rules for the reductions and exclusions referred to in Article 23 shall be laid down in accordance with the procedure referred to in Article 141(2). In this context, account shall be taken of the severity, extent, permanence and repetition of the non-compliance found as well as of the criteria set out in paragraphs 2, 3 and 4 of this article.

2.

In the case of negligence, the percentage of reduction shall not exceed 5% and, in the case of repeated non-compliance, 15%.

…

3.

In the case of intentional non-compliance, the percentage of reduction shall not in principle be less than 20% and may go as far as total exclusion from one or several aid schemes and apply for one or more calendar years.

4.

In any case, the total amount of reductions and exclusions for one calendar year shall not be more than the total amount referred to in Article 23(1).’

7. Regulation No 73/2009 was repealed and replaced by Regulation (EU) No 1307/2013⁽⁴⁾ with effect from 1 January 2015.⁽⁵⁾ Regulation No 73/2009 nevertheless remains applicable ratione temporis to the facts of the main proceedings, which concern 2011.⁽⁶⁾

B. Regulation No 1122/2009

8. Article 70, ‘General principles and definition’, appears in Chapter III of Title IV of Part II of Regulation No 1122/2009, ‘Findings in relation to cross-compliance’, and provides as follows in paragraph 6:

‘Where more than one case of non-compliance with regard to various acts or standards of the same area of cross-compliance have been determined, those cases shall, for the purposes of the fixing of the reduction in accordance with Articles 71(1) and 72(1), be considered as one non-compliance.’

9. Article 71, contained in the same chapter of Regulation No 1122/2009 and entitled ‘Application of reductions in the case of negligence’ provides:

‘1.

Without prejudice to Article 77, where a non-compliance determined results from the negligence of the farmer, a reduction shall be applied. That reduction shall, as a general rule, be 3% of the total amount as referred to in Article 70(8).

However, the paying agency may, on the basis of the assessment provided by the competent control authority in the evaluation part of the control report in accordance with Article 54(1)(c), decide either to reduce that percentage to 1% or to increase it to 5% of that total amount or, in the cases referred to in the second subparagraph of Article 54(1)(c), not to impose any reductions at all.

…

5.

Without prejudice to cases of intentional non-compliance in accordance with Article 72, where repeated non-compliances have been determined, a percentage fixed in accordance with paragraph 1 of this Article with regard to the repeated non-compliance shall, in respect of the first repetition, be multiplied by the factor three. For this purpose, the paying agency shall, in the case where that percentage was fixed in accordance with Article 70(6), determine the percentage that would have been applied to the repeated non-compliance with the requirement or standard concerned.

In the case of further repetitions the multiplication factor three shall be applied each time to the result of the reduction fixed in respect of the previous repeated non-compliance. The maximum reduction shall, however, not exceed 15% of the total amount referred to in Article 70(8).

Once the maximum percentage of 15% has been reached, the paying agency shall inform the farmer concerned that if the same non-compliance is determined again, it shall be considered that he has acted intentionally within the meaning of Article 72. Where a further non-compliance is determined thereafter, the percentage reduction to be applied shall be fixed by multiplying the result of the previous multiplication, where applicable, before the limitation to 15% as provided for in the last sentence of the second subparagraph has been applied, by a factor of three.

6.

In the case where a repeated non-compliance is determined together with another non-compliance or another repeated non-compliance, the resulting percentage reductions shall be added together. Without prejudice to the third subparagraph of paragraph 5, the maximum reduction shall, however, not exceed 15% of the total amount referred to in Article 70(8).’

10. Article 72, contained in the same chapter of Regulation No 1122/2009 and entitled ‘Application of reductions and exclusions in cases of intentional non-compliance’ provides in paragraph 1:

‘Without prejudice to Article 77, where the non-compliance determined has been committed intentionally by the farmer, the reduction to be applied to the total amount referred to in Article 70(8) shall, as a general rule, be 20% of that total amount.

However, the paying agency may, on the basis of the assessment provided by the competent control authority in the evaluation part of the control report in accordance with Article 54(1)(c), decide to reduce that percentage to no less than 15% or, where appropriate, to increase that percentage to up to 100% of that total amount.’

11. Regulation No 1122/2009 was repealed and replaced by Delegated Regulation (EU) No 640/2014⁽⁷⁾ with effect from 1 January 2015.⁽⁸⁾ Regulation No 1122/2009 nevertheless remains applicable ratione temporis to the facts of the main proceedings, which concern 2011.⁽⁹⁾

A. Preliminary observations

20. By the first and second questions referred, which I suggest the Court should examine together, the referring court is enquiring, essentially, whether, in a situation such as that at issue in the main proceedings, in which there were found to be several instances of non-compliance within the same area of cross-compliance, Articles 70 to 72 of Regulation No 1122/2009 allow the reductions applicable for instances of repeated and unrepeated negligent non-compliance, on the one hand, and the reductions and exclusions applicable for cases of intentional non-compliance, on the other, to be added together. If the answer is in the negative, the referring court asks, by the third question referred, whether there is any different legal basis in EU law which would allow them to be aggregated.

21. Before embarking on examination of those questions, it is helpful briefly to set out the main characteristics of the system of reductions and exclusions for non-compliance with cross-compliance rules, laid down by Regulations No 73/2009 and No 1122/2009 (Section B).

22. I will then examine the questions referred for a preliminary ruling. I will set out in that regard the reasons why, in my view, Articles 70 to 72 of Regulation No 1122/2009, read in conjunction with Articles 23 and 24 of Regulation No 73/2009, should be interpreted as meaning that in a situation such as that at issue in the main proceedings, the reductions applicable for instances of negligent non-compliance, whether repeated or not, on the one hand, and the reductions and exclusions applicable for instances of intentional non-compliance, on the other, should be added together (Section C).

B. Main characteristics of the system of reductions and exclusions for non-compliance with cross-compliance rules, as laid down by Regulations No 73/2009 and No 1122/2009

23. Under the ‘cross-compliance’ system, which forms an integral part of EU support granted under direct payments, farmers who do not comply with certain statutory requirements (known as ‘cross-compliance rules’) are subject to reductions of or exclusion from direct support.⁽¹⁵⁾ That system of reductions and exclusions is intended to encourage farmers to comply with already existing EU legislation in the various areas of cross-compliance, in order to incorporate standards relating, inter alia, to animal welfare into the common agricultural policy (CAP).⁽¹⁶⁾

24. Article 23(1), first subparagraph, of Regulation No 73/2009 provides for a reduction of the total amount of direct payments granted or to be granted to a farmer who has submitted an aid application where the statutory management requirements or good agricultural and environmental conditions are not complied with during the calendar year in which the aid application was submitted.⁽¹⁷⁾ The reductions and exclusions are applied in accordance with the arrangements established in Article 24 of that regulation and Articles 70 to 72 of Regulation No 1122/2009, which establish more detailed rules relating to the reductions and exclusions.⁽¹⁸⁾

25. Article 24 of Regulation No 73/2009 and Articles 70 to 72 of Regulation No 1122/2009 draw a distinction between the penalties applicable, on the one hand, where there is negligence and, on the other hand, where there is intentional non-compliance.⁽¹⁹⁾ Indeed, under those articles, those two types of infringements trigger very different penalties.

26. As regards, first, the reductions applicable where there is (unrepeated) negligence, Article 24(2) of Regulation No 73/2009 caps the reduction at 5%. Article 71(1) of Regulation No 1122/2009 states that the percentage reduction applicable in the event of negligence is, as a general rule, 3%, but may be reduced to 1% and increased to 5%.⁽²⁰⁾

27. In terms more specifically of repeated negligence, Article 24(2) of Regulation No 73/2009 sets the maximum reduction at 15%. For those situations, Article 71(5) of Regulation No 1122/2009 lays down a rule of calculation, in respect of the first repetition, consisting essentially of multiplying by three the percentage fixed previously in accordance with Article 71(1) of that regulation. For subsequent repetitions, the percentage calculated for the previous repetition is each time multiplied by three, until the 15% ceiling is reached.⁽²¹⁾

28. As regards, secondly, the reductions applicable where there is intentional non-compliance, Article 24(3) of Regulation No 73/2009 provides that the percentage reduction cannot, in principle, be less than 20% and may go as far as total exclusion (that is to say, a 100% reduction) from one or several aid schemes and apply for one or more calendar years. Article 72(1) of Regulation No 1122/2009 provides that the percentage reduction is between 15% and 100%, and is generally set at 20%.⁽²²⁾

29. Lastly, Article 24(4) of Regulation No 73/2009 establishes a ceiling whereby, in any event, the total amount of reductions and exclusions for a calendar year cannot be more than the total amount of the direct payments granted or to be granted.

30. It emerges from the foregoing that the reductions and exclusions to be applied for non-compliance with the cross-compliance rules are governed both by Articles 23 and 24 of Regulation No 73/2009 and by Articles 70 to 72 of Regulation No 1122/2009, the former provisions establishing the principles and general criteria whilst the latter establish more detailed rules. On that basis I am of the view, in common with the Netherlands Government, that in order to respond to the questions the referring court is asking, it is necessary to take into account not only Articles 70 to 72 of Regulation No 1122/2009 but also Articles 23 and 24 of Regulation No 73/2009.⁽²³⁾

C. The first and second questions referred for a preliminary ruling

31. It is worth noting, at the outset, that, in the present case, the referring court found that the State Secretary for Economic Affairs had quite correctly established, on the one hand, the reduction of 15% for cases of negligent non-compliance, whether repeated or not, and, on the other hand, the 40% reduction for cases of intentional non-compliance.⁽²⁴⁾

32. By the first and second questions referred, which I propose the Court should examine together, the referring court is asking, essentially, whether those reductions of 15% and 40% can be added together, with the effect that a total reduction of 55% is applied for the farmer concerned.

33. In common with the Netherlands Government and the Commission, I am of the view that the reply to that question should be in the affirmative. I consider that Articles 70 to 72 of Regulation No 1122/2009, read in conjunction with Articles 23 and 24 of Regulation No 73/2009, should be interpreted as meaning that, in a situation such as that in the main proceedings, where there have been found to be several instances of non-compliance within the same field of cross-compliance, the reductions applicable for instances of negligent non-compliance, whether repeated or not, on the one hand, and those applicable for instances of intentional non-compliance, on the other, should be added together.

34. I base that view on the following observations.

35. First, as I have already indicated in this Opinion, Article 23(1) of Regulation No 73/2009 provides for a reduction in the total amount of the direct payments granted or to be granted where cross-compliance rules are not complied with. Article 24 of Regulation No 73/2009 and Articles 70 to 72 of Regulation No 1122/2009 draw a distinction between, on the one hand, instances of negligence and, on the other, instances of intentional non-compliance, and establish quite different penalties for those two types of infringement.⁽²⁵⁾

36. To my mind, it follows that, in a situation where there are found to be both instances of negligent non-compliance and instances of intentional non-compliance, the reductions to be applied for the instances of negligent non-compliance (determined in accordance with Article 24(2) of Regulation No 73/2009 and Article 71 of Regulation No 1122/2009), on the one hand, and the reductions and exclusions to be applied for instances of intentional non-compliance (determined in accordance with Article 24(3) of Regulation No 73/2009 and Article 72 of Regulation No 1122/2009), on the other, should be determined separately. Only with an approach of that kind is it possible to abide by the detailed rules attaching to each system of penalties, as regards, in particular, the reduction percentages and the ceilings to be applied for those two kinds of penalty.⁽²⁶⁾

37. Then, the reductions and exclusions established in that way must be added together up to the 100% ceiling under Article 24(4) of Regulation No 73/2009. The obligation to add them together is, in my submission, inherent to the system of reductions and exclusions established by Articles 23 and 24 of Regulation No 73/2009 and Articles 70 to 72 of Regulation No 1122/2009. Indeed, those articles would be deprived of any practical effect if the reductions determined for instances of negligent non-compliance were, so to speak, ‘absorbed’ by those determined for instances of intentional non-compliance (or vice versa). Furthermore, it should be noted that, if they are not added together, the ceiling under Article 24(4) of Regulation No 73/2009 would become completely meaningless.⁽²⁷⁾ I believe I have in that way answered the question as to the legal basis for aggregating the percentages, which the referring court raised in its second question referred.⁽²⁸⁾

38. Secondly, it should be noted that none of the articles of Regulation No 73/2009 or No 1122/2009 allows for any derogation from that principle that the percentages are added together in a situation such as that in the main proceedings, where several instances of non-compliance are found, within the same area of cross-compliance, of which some are repeated and unrepeated cases of negligence, and others are cases of intentional non-compliance. Specifically, the rules laid down in Article 70(6) and Article 71(6) of Regulation No 1122/2009, on which Mr Nooren’s heirs⁽²⁹⁾ rely, are not grounds for derogating from the principle that the reductions determined for instances of negligence, on the one hand, and the reductions and exclusions determined for instances of intentional non-compliance, on the other, must be added together.

39. As regards, first, Article 70(6) of Regulation No 1122/2009, it should be noted that according to this article, where more than one case of non-compliance with regard to various acts or standards of the same area of cross-compliance have been determined, those cases shall, for the purposes of the fixing of the reduction in accordance with Article 71(1) and Article 72(1) of that regulation, be considered as one non-compliance.⁽³⁰⁾

40. In my view, that article establishes that infringements should be ‘combined’ for the purposes of determining the respective penalties for, on the one hand, instances of negligence, under Article 71(1) of Regulation No 1122/2009 and, on the other hand, instances of intentional non-compliance, under Article 72(1) of that regulation. In other words, I regard that article as implying that all cases of negligence must be considered as a single case of negligence and that all cases of intentional non-compliance must be considered as a single case of intentional non-compliance, when fixing the respective penalties.⁽³¹⁾

41. On the other hand, nothing in the wording of Article 70(6) of that regulation indicates, to my mind, that a single penalty should be established for all the instances of non-compliance found, irrespective of their nature, as Mr Nooren’s heirs seem to be suggesting.⁽³²⁾ Such an interpretation would, moreover, conflict with the distinction drawn in Article 24 of Regulation No 73/2009 and in Articles 70 to 72 of Regulation No 1122/2009 between the penalties applicable in the event of negligence and those applicable in the event of intentional non-compliance. I would point out, in that context, that according to the Court’s settled case-law an implementing regulation must be given, if possible, an interpretation that is consistent with the provisions of the basic regulation.⁽³³⁾

42. In addition, it is important to note that Article 70(6) of Regulation No 1122/2009 does not apply to cases of repeated negligence. The wording of that article in fact refers only to Article 71(1) and Article 72(1) of that regulation which concern the reductions applicable in the event of unrepeated instances of negligence and the reductions applicable in the event of intentional non-compliance respectively. In contrast, that article makes no reference to Article 71(5) of the same regulation, on repeated instances of negligence. It follows that, in a situation such as that in the main proceedings, Article 70(6) of Regulation No 1122/2009 does not apply to repeated instances of negligence. The reduction to be applied in those cases must therefore, in any event, be fixed separately.

43. As regards, secondly, Article 71(6) of Regulation No 1122/2009, it should be noted that, as can be seen from its heading, Article 71 relates only to cases of negligence and that Article 71(6) concerns the specific situation in which a repeated non-compliance is determined together with another, repeated or unrepeated, non-compliance. Accordingly, that article does not apply to instances of intentional non-compliance and, in a situation such as that in the main proceedings, that article therefore cannot in any way affect the reductions and exclusions to be applied in respect of the cases found of intentional non-compliance.

44. It can be seen from the foregoing that neither Article 70(6) nor Article 71(6) of Regulation No 1122/2009, nor the combined application of both those articles, can be grounds for setting a single penalty capped at 15%, in a situation such as that in the main proceedings, as Mr Nooren’s heirs claim.⁽³⁴⁾

45. Such an interpretation is furthermore, in my view, illogical. Indeed, it would mean that the reduction to be applied in a situation where several cases of negligent non-compliance and several cases of intentional non-compliance are found, would be less than the reduction to be applied for a single case of intentional non-compliance which is, as a general rule, 20%, in accordance with Article 72(1) of Regulation No 1122/2009. Such an outcome would also be contrary to the objective pursued by the system of reductions and exclusions established by Articles 23 and 24 of Regulation No 73/2009 and Articles 70 to 72 of Regulation No 1122/2009, which seeks to encourage farmers to comply with the already existing EU legislation in the various areas of cross-compliance.⁽³⁵⁾

46. In a situation such as that in the main proceedings, applying Articles 23 and 24 of Regulation No 73/2009 and Articles 70 to 72 of Regulation No 1122/2009, gives rise, as I see it, to the following reductions and exclusions.

47. First of all, in accordance with Article 70(6) of Regulation No 1122/2009, it is necessary to combine, on the one hand, all the cases of unrepeated negligence and, on the other, all the cases of intentional non-compliance, and to establish separately for each of those two groups of infringements the reduction or exclusion to be applied under Article 71(1) (for the cases of unrepeated negligence), and Article 72(1) (for the cases of intentional non-compliance) of that regulation. Secondly, it is necessary to determine the reductions applicable for the cases of repeated negligence, under Article 71(5) of Regulation No 1122/2009. Thirdly, under Article 71(6) of that regulation, it is necessary to add together the percentage reductions determined, on the one hand, for the cases of unrepeated negligence and, on the other hand, for the cases of repeated negligence up to the 15% ceiling which that article lays down. Lastly, the reduction determined in that way for instances of negligence, whether repeated or not, on the one hand, and the reduction (or exclusion) determined for instances of intentional non-compliance, on the other, should be added together. According to Article 24(4) of Regulation No 73/2009, the total amount of the reductions and exclusions for one calendar year may not however be more than 100% of the total amount of the direct payments granted or to be granted. It is for the referring court to ascertain whether, in the present case, those procedures were followed when the 55% reduction was determined.

48. By way of conclusion, I believe it is helpful to make a number of comments about the Commission’s proposed reply to the questions referred for a preliminary ruling. The Commission proposes replying globally to those questions that Articles 70 to 72 of Regulation No 1122/2009 do not prevent the competent national authorities from also taking into account, in a situation where there are cumulatively one or more cases of intentional non-compliance within the meaning of Article 72(1) of that regulation, the existence of other cases of negligent non-compliance, whether repeated or not, or from applying, within the limits of that article, a single global reduction which also takes the existence of those other cases of negligent non-compliance into account, for a specific portion of the overall reduction percentage.

49. In other words, the Commission submits that, since Article 72(1) of Regulation No 1122/2009 establishes a reduction of up to 100% for cases of intentional non-compliance, the competent national authorities can, in a situation such as that in the main proceedings, where there are found to be both instances of negligent non-compliance, whether repeated or not, and cases of intentional non-compliance, fix a global reduction, under that article, which takes into account not only the cases of intentional non-compliance but also the cases of negligent non-compliance.

50. I am not persuaded by the Commission’s approach, for the following reasons.

51. First, that approach is not, in my view, consistent with the wording of Article 72(1) of Regulation No 1122/2009 according to which that article relates only to instances of intentional non-compliance. Furthermore, it also disregards the distinction drawn in Article 24 of Regulation No 73/2009 and in Articles 70 to 72 of Regulation No 1122/2009 between, on the one hand, the reductions to be applied in instances of negligence and, on the other hand, the reductions and exclusions to be applied in instances of intentional non-compliance.⁽³⁶⁾

52. Secondly, I consider that the Commission’s approach presents problems of legal certainty for the persons concerned, by leaving the national authorities too wide a margin of discretion to determine the ‘global reduction’ which should be applied in a situation such as that in the main proceedings. Indeed, were that approach to be adopted, it would be practically impossible for the persons concerned to predict the penalty which would be imposed on them in such a situation.⁽³⁷⁾ It should be borne in mind here that Articles 70 to 72 of Regulation No 1122/2009 are intended to establish detailed rules on the reductions and exclusions to be applied in the event of non-compliance with cross-compliance rules.⁽³⁸⁾ The Commission’s approach would have the effect of rendering those rules redundant, in a situation such as that in the main proceedings, in so far as they would, in reality, be ‘absorbed’ by the rule in Article 72(1) of Regulation No 1122/2009.

53. In conclusion, I propose that the Court should find that Articles 70 to 72 of Regulation No 1122/2009, read in conjunction with Articles 23 and 24 of Regulation No 73/2009, should be interpreted as meaning that, in a situation such as that in the main proceedings, where there have been found to be several instances of non-compliance within the same area of cross-compliance, the reductions applicable for instances of negligent non-compliance, whether repeated or not, determined in accordance with Article 24(2) of Regulation No 73/2009 and Article 71 of Regulation No 1122/2009, on the one hand, and the reductions applicable for instances of intentional non-compliance, determined in accordance with Article 24(3) of Regulation No 73/2009 and Article 72(1) of Regulation No 1122/2009, on the other, should be added together. According to Article 24(4) of Regulation No 73/2009, the total amount of the reductions and exclusions for one calendar year may not however be more than 100% of the total amount of the direct payments granted or to be granted.

54. In the light of that reply, it is not necessary to reply to the third question referred for a preliminary ruling.