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

(ERDF Reduction of financial assistance Change in the financing plan without the consent of the Commission Concept of significant change Article 24 of Regulation (EEC) No 4253/88 Actions for annulment)

In Joined Cases T-349/06, T-371/06, T-14/07, T-15/07 and in Case T-332/07,

Federal Republic of Germany, represented by M. Lumma and, in Cases T-349/06, T-371/06, T-14/07 and T-15/07, also by C. Schulze-Bahr, acting as Agents, assisted by C. von Donat, lawyer,

applicant,

Commission of the European Communities, represented by G. Wilms and L. Flynn, acting as Agents,

defendant,

ACTION for the annulment of Decisions C (2006) 4193 final and C (2006) 4194 final of 25 September 2006, Decisions C (2006) 5163 final and C (2006) 5164 final of 3 November 2006 and Decision C (2007) 2619 final of 25 June 2007 reducing the financial assistance from the European Regional Development Fund (ERDF) for Objective 2 1997 1999 of the RESIDER- Nordrhein-Westfalen Operational Programme 1994 -1999, for the Operational Programmes for Nordrhein-Westfalen in the framework of the common SME (small and medium-sized enterprises) and RECHAR II initiatives, and for the Operational Programme for Community structural assistance in the Objective 2 regions of Land Nordrhein-Westfalen for the period 1994 1996 respectively,

composed of O. Czúcz (Rapporteur), President, J.D. Cooke and I. Labucka, Judges,

Registrar: K. Andová, Administrator,

having regard to the written procedure and further to the hearings on 26 February 2008 (T-349/06, T-371/06, T-14/07 and T-15/07) and 10 June 2008 (T-332/07),

gives the following

Legal context

1. From 1989 to 1999, the rules concerning the implementation of the economic and social cohesion provided for in Article 158 EC were laid down in Council Regulation (EEC) No 2052/88 of 24 June 1988 on the tasks of the Structural Funds and their effectiveness and on coordination of their activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1988 L 185, p. 9). That regulation was the principle measure governing the Structural Funds and in particular, the European Regional Development Fund (ERDF). Regulation No 2052/88 was amended, inter alia, by Council Regulation (EEC) No 2081/93 of 20 July 1993 (OJ 1993 L 193, p. 5).
2. Article 1 of Regulation No 2052/88 sets out the priority objectives which Community action through the Structural Funds is to attain.
3. Article 4 of Regulation No 2052/88 concerns complementarity, partnership and technical assistance. It provides as follows:

'1. Community operations shall be such as to complement or contribute to corresponding national operations. They shall be established through close consultations between the Commission, the Member State concerned and the competent authorities and bodies ... designated by the Member State at national, regional, local or other level, with all parties acting as partners in pursuit of a common goal. These consultations shall hereinafter be referred to as the 'partnership'. The partnership shall cover the preparation and financing, as well as the ex ante appraisal, monitoring and ex post evaluation of operations.

The partnership will be conducted in full compliance with the respective institutional, legal and financial powers of each of the partners.

...'

4. Article 5(2) of Regulation No 2052/88 is entitled 'Forms of assistance'. Article 5(2)(a) provides that '[i]n the case of the Structural Funds ..., financial assistance may be provided [inter alia] in [the form of] part-financing of operational programmes'. Article 5(5) defines the expression 'operational programme' as 'a consistent series of multiannual measures which may be implemented through recourse [inter alia] to one or more Structural Funds'.
5. Pursuant to Articles 8 to 10 and 11a of Regulation No 2052/88, the plans to be drawn up by the Member States are to include, inter alia, a description of an appropriate strategy to achieve the objectives referred to in Article 1 of the regulation, the priorities selected for that purpose, quantified where they lend themselves to quantification, and an indication of the planned use of the assistance available under the Funds. According to the same provisions, the Commission is to establish, on the basis of all those plans, through the partnership referred to in Article 4(1) of the regulation and in agreement with the Member State concerned, the Community support framework, which is to cover, in particular, the priorities adopted for Community assistance and the indicative financing plan, with details of the amount of assistance and its source.
6. On 19 December 1988, the Council adopted Regulation (EEC) No 4253/88 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1988 L 374, p. 1). Regulation No 4253/88 was amended by Council Regulation No 2082/93 of 20 July 1993 (OJ 1993 L 193, p. 20).
7. Article 8(3) of Regulation No 4253/88 repeats certain provisions of Articles 8 to 10 and 11a of Regulation No 2052/88 and provides that '[e]ach Community support framework shall include', inter alia, 'the priorities for joint Community and national action in relation to the objectives referred to under Article 1 of [Regulation No 2052/88], their specific objectives, quantified where they lend themselves to quantification' and 'an indicative financing plan specifying the financial allocations envisaged for the various forms of assistance'.
8. Article 14 of Regulation No 4253/88 concerns the processing of applications for assistance. It provides, inter alia, as follows:

'1. Applications for assistance from the Structural Funds ... shall be prepared by the Member State or by the competent ... authorities designated by it and shall be submitted to the Commission ...

2. Applications shall contain the information [needed], including a description of the proposed measure ...and specific objectives. Applications shall also include ... the proposed ... financing plan

3. The Commission shall examine applications with a view in particular to:

...

assessing the contribution of the proposed operation to the achievement of its specific objectives and, in the case of an operational programme, the consistency of the constituent measures,

checking that the administrative and financial mechanisms are adequate to ensure effective implementation,

determining the precise arrangements for providing assistance from the Fund or Funds concerned ... .

The Commission shall decide on assistance from the Funds ... provided that the requirements of this Article are fulfilled ...'

9. Article 24 of Regulation No 4253/88, entitled 'Reduction, suspension and cancellation of assistance', provides as follows:

'1. If an operation or measure appears to justify neither part nor the whole of the assistance allocated, the Commission shall conduct a suitable examination of the case in the framework of the partnership, in particular requesting that the Member State or authorities designated by it to implement the operation submit their comments within a specified period of time.

2. Following this examination, the Commission may reduce or suspend assistance in respect of the operation or a measure concerned if the examination reveals an irregularity or a significant change affecting the nature or conditions for the implementation of the operation or measure for which the Commission's approval has not been sought.

3. Any sum received unduly and to be recovered shall be repaid to the Commission...'

10. Finally, Article 25 of Regulation No 4253/88 concerns monitoring of the implementation of assistance; Article 25(5) provides as follows:

'The monitoring committee shall ... adjust ..., in conformity with available resources and budgetary rules, the financing plan envisaged, including any transfers between Community sources of finance and the consequential adjustments of the rates of assistance ...

These amendments shall be notified immediately to the Commission and the Member State concerned. They shall become effective as soon as confirmation has been provided by the Commission and the Member State concerned; such confirmation shall be given within a period of 20 working days from receipt of this notification, the date of which will be confirmed by the Commission by acknowledgement of receipt.

Other amendments required shall be decided by the Commission, in collaboration with the Member State concerned, after the monitoring committee has delivered its opinion.'

Background to the dispute

Decisions granting financial assistance

11. By Decision C (94) 3379 of 14 December 1994, the Commission approved, in the form of a single programming document, the Community support framework and operational programme for Community structural assistance in the Objective 2 regions of Land Nordrhein-Westphalen for the period from 1994 1996. The decision was amended on several occasions and, in its final version, granted financial assistance from the ERDF in the amount of EUR 241 292 000 and extended the time-limit for the implementation of the projects to 31 December 2000.
12. By Decision C (95) 1427 of 11 July 1995, the Commission granted Community financial assistance for an operational programme in the framework of the Community SME (small and medium-sized enterprises) initiative for the period 1994 1996 and concerning Land Nordrhein-Westphalen. The decision was amended on several occasions. The final version of the decision granted financial assistance from the ERDF in the amount of EUR 8 206 000.
13. By Decision C (95) 1738 of 27 July 1995, the Commission granted Community financial assistance to an operational programme in the framework of the Community initiative RESIDER II for the purpose of economic conversion in the steel-making areas of Land Nordrhein-Westfalen for the period from 28 November 1994 to 31 December 1997. The decision was amended on several occasions. The final version of the decision extended the life of the programme to 31 December 1999 and fixed the amount of the financial assistance at EUR 152 184 777, of which EUR 75 063 840 was to be paid by the ERDF.
14. By Decision C (95) 1739 of 27 July 1995, the Commission approved the grant of financial assistance for an operational programme in the framework of the Community initiative RECHAR II, intended to convert the mining areas of Land Noderhein-Westfalen, for the period from 28 November 1994 to 31 December 1997. This decision was also amended on several occasions. The final version of the decision extended the period of the grant to 31 December 1999 and fixed the amount of the financial assistance to be paid out of the ERDF at EUR 52 237 708.
15. By Decision C (97) 1120 of 7 May 1997, the Commission approved, in the form of a single programming document, the Community support framework and operational programme for Community structural assistance in the Objective 2 regions of Land Nordrhein-Westphalen for the period from 1 January 1997 to 31 December 1999. The decision was amended on several occasions and, in its final version, granted financial assistance from the ERDF in the amount of EUR 324 534 806 and extended the time-limit for the implementation of the projects to 30 September 2002.
16. Article 4 of Decision C (94) 3379 of 14 December 1994 and Decision C (97) 1120 of 7 May 1997 provides that the detailed arrangements for the grant of financial assistance, including that to be paid out of the Funds, to the various priorities axes and measures are to be set out in the financing plan for each programme. The second paragraph of Article 2 of the three other decisions states that the detailed arrangements for the grant of the assistance, including the contribution of the Funds to the various sub-programmes and the measures which are an integral part of the programmes are to be set out in the financing plan annexed to each decision. The financing plans for the various programmes are to be broken down into priorities and measures.

Administrative procedure

17. Having regard to the closure, on 31 December 1999, of the programmes financed by the Structural Funds, for the programming period 1994 1999, the Commission adopted, on 9 September 1999, Guidelines for the financial closure of operational assistance (1994-1999) from the Structural Funds (the 'Guidelines') and transmitted them to the Member States. In the German version, the Guidelines stated the following:

'6. Financing plans

6.1 The financing plan may not be amended after the final date for commitments.

6.2 The financial closure of programmes must be carried out on the basis of the version of the financing plan in effect (generally, a financing plan broken down into three levels, namely, programme, sub-programme and measure). The accounts submitted by the Member States should show the same level of detail as the financing plan annexed to the decisions approving the operational interventions and, therefore, must generally show expenditure actually incurred, broken down to the level of measures.

The contribution of each Fund by measure may be exceeded by 20% as long as the total amount of the sub-programme, as set out in the current financing plan, has not increased.

However, increases in the measures within a sub-programme may not exceed 10% of the contribution of each Fund to the total amount of that sub-programme, as set out in the financing plan.

It should be noted that the flexibility clause is applicable only within the same Fund and where there are no sub-programmes, the 10% margin applies at programme level.'

18. In order to reduce the number of applications for amendments to programmes and financing plans, the Commission's representative in the monitoring committee for Objective 2 called on the Member States, at committee meetings held on 11 and 12 November 1999, to make greater use of the flexibility clause contained in point 6.2 of the Guidelines.
19. After considering the projects in respect of which applications for financing had been submitted during the last quarter of 1999, the German authorities in charge of programmes noted the presence of applications for financing of certain future measures in excess of the funds which had been allocated to them in the financing plans whereas, for other measures, the applications were for less that had been expected. Consequently, the national authorities decided to transfer funds between the various measures of each programme, so that the funds which were not used for the measures for which they had been intended could be used to finance projects falling under other measures. Those transfers did not entail the total amount of the assistance allocated to each programme being exceeded but led to an increase in the amount allocated to certain priority axes and a decrease in the amount allocated to others.
20. While the programmes were being implemented, the EDRF's financial contribution was paid in stages, in accordance with the applications for payment and the detailed arrangement for implementation annexed to the programmes. When programmes had been implemented, the Federal Republic of Germany applied to the Commission for payment of the balance of the funds due for each programme.
21. By letter of 3 June 2003, the Commission informed the Federal Republic of Germany that the flexibility clause laid down in point 6.2 of the Guidelines permitted the transfer of funds only between measures falling under the same priority axis and that transfers between axes were not permitted.
22. By letter of 25 February 2004, the Federal Republic of Germany replied to the Commission's letter of 3 June 2003 and challenged the interpretation of point 6.2 of the Guidelines contained therein.
23. By letter of 23 March 2004 concerning all the programmes for which Community financial assistance had been granted, the Regional Policy Directorate General (DG) of the Commission informed the Federal Republic of Germany that it did not intend to maintain its objections concerning the application of the flexibility clause. The Regional Policy DG stated that, consequently, the balance of the credits which had been committed under the ERDF would be released. The Federal Republic of Germany replied to that letter by letter of 26 April 2004, asking the Commission to send it the closure statements for each programme.

The contested decisions

24. In Decision C (2006) 4193 final of 25 September 2006, the Commission reduced the financial contribution of the ERDF under Objective 2 of the 1997 1999 programme for Nordrhein-Westfalen by EUR 5 488 569.24.
25. In Decision C (2006) 4194 final of 25 September 2006, the Commission reduced the financial contribution of the ERDF for the Operational Programme RESIDER programme for Nordrhein-Westfalen 1994 1999 by EUR 2 268 988.33.
26. In Decision C (2006) 5163 final of 3 November 2006, the Commission reduced the financial contribution of the ERDF for the Operational Program for Land Nordrhein-Westfalen in the framework of the Community SME initiative by EUR 981 529.62.
27. In Decision C (2006) 5164 final of 3 November 2006, the Commission reduced the financial contribution of the ERDF for the Operational Programme for Nordrhein-Westfalen in the framework of the Community initiative RECHAR II by EUR 2 322 116.26.
28. In Decision C (2006) 2619 final of 25 June 2007, the Commission reduced the financial contribution of the ERDF under the operational programme for Objective 2 for Land Nordrhein-Westfalen by EUR 5 958 401.64.
29. In those five decisions (the 'contested decisions'), the Commission gave the same reasons for the reduction in the Community assistance. The Commission stated that, in principle, programmes subsidised out of Community funds must be implemented in accordance with the decisions granting the assistance and with the financial tables approved by it and that no amendments were possible after the final date laid down for commitments, once the end of the programming period had been reached. The Commission stated that, as the end of that period came nearer, it became clear that the national authorities could not, during the implementation of the programme, guarantee a level of implementation identical to that set out in the financial tables annexed to the decisions approving the funds and that, consequently, it had informed its departments and the Member States that a certain degree of flexibility would be applied at the time of closure, in accordance with point 6.2 of the Guidelines. However, in the Commission's view, exceeding the thresholds laid down in point 6.2 of the Guidelines constitutes a significant change within the meaning of Article 24(2) of Regulation No 4253/88, in respect of which the Member States were required to submit an application not later than the last day for making commitments. With regard to the extent of the flexibility provided for in point 6.2 of the Guidelines, the Commission stated that point 6.2 permitted financial flexibility only between measures falling under the same priority axis since, if it introduced flexibility between priority axes, it would permit changes in the amounts fixed in the financing plans. It stated that the English and French version of the Guidelines indicated that flexibility applied at three levels (programme, sub-programme/priority axis and measure) and that, although the German version refers only to sub-programmes, it cannot, having regard to the principle of equal treatment, apply the Guidelines differently on the basis of whether the programmes concerned the Federal Republic of Germany or other Member States. Finally, the Commission stated that, in this case, contrary to the claim of the national authorities, the programmes at issue were structured at three levels, namely, programme, sub-programme/priority axis and measure, and that the national authorities themselves considered that the priority axes constituted sub-programmes when they indicated, in the financial tables, the amounts corresponding to the priority axes or the sub-programmes but not to the measures part-financed by the ERDF.
30. The Commission concluded that the Community assistance at issue should be reduced on the ground that, since the national authorities did not comply with the financial tables and exceeded the flexibility thresholds, significant changes had been made without the Commission's approval being sought.

Procedure and form of order sought

31. By applications lodged at the Registry of the Court of First Instance on 4 December 2006 (Cases T-349/06 and T-371/06), 15 January 2007 (Cases T-14/07 and T-15/07) and 4 September 2007 (Case T-322/07), the Federal Republic of Germany brought the present actions.
32. By order of the President of the Fourth Chamber of 16 January 2008, Cases T-349/06, T-371/06, T-14/07 and T-15/07 were joined for the purposes of the oral procedure and the judgment pursuant to Article 50 of the Rules of Procedure of the Court of First Instance.
33. The Federal Republic of Germany claims that the Court should:

Annul the contested decisions;

Order the Commission to pay the costs.

34. The Commission contends that the Court should:

Dismiss the actions;

Order the Federal Republic of Germany to pay the costs.

Law

35. Since the present cases are related, and having heard the parties, the Court considers it convenient to join Case T-332/07 to Cases T-349/06, T-371/06, T-14/07 and T-15/07 for the purposes of the judgment pursuant to Article 50 of the Rules of Procedure.
36. The Federal Republic of Germany relies, essentially, on a plea in law common to all the cases, alleging an infringement of Article 24 of Regulation No 4253/88. It faults the Commission, on the one hand, for considering that the transfers carried out by the national authorities were 'significant changes' which it had not approved and, on the other, for not exercising the discretion conferred on it by that provision so as to decide whether the financial assistance was justified.
37. In Case T-332/07 the Federal Republic of Germany also puts forward a plea alleging an error in the assessment of the facts, and that plea must be considered first.

The plea alleging an error in the assessment of the facts put forward in Case T-332/07

Arguments of the parties

38. The Federal Republic of Germany claims that the Commission wrongly assessed the facts by stating, in the seventeenth recital to the decision challenged in Case T-332/07, that the ERDF expenditure for part of the measures provided for in the programme at issue, namely measures 3.1, 3.3 and 5.1, was lower than indicated in the current financing plan. It states that the application for payment covered the entire balance which was still due and there was no application, in regard to those measures, for payment of only part of the ERDF assistance provided for in the financing levels which had been fixed. It states that the final beneficiaries received from the German authorities far greater amounts than those which the Commission decided to pay, since the national part of the financing had sometimes been increased. Consequently, it considers that the Commission should have paid an ERDF contribution equal to that provided for in the financing plan, in accordance with what had been applied for.
39. The Commission denies that it wrongly assessed the facts.

Findings of the Court

40. It must be stated that the only document on the file in the present case in which appear the details of the expenditure actually incurred, broken down to the level of measures, as is required by point 6.2 of the Guidelines, is the table annexed to the contested decision. However, that document seems to have been drawn up, at least partially, by the Commission since the amounts which the latter had decided to pay after consideration of the application for payment are also mentioned therein. It follows that, in the absence of other evidence, the Court is not in a position to consider whether, in the abovementioned application for payment and, in particular, in the statement of expenditure, the Federal Republic of Germany asked, as it claims, for payment of the entire ERDF contribution provided for in the financing plan for the measures at issue or whether, as the Commission contends, it claimed amounts below those provided for in the said plan. In any event, even supposing that the table annexed to the contested decision was the statement of the expenditure actually incurred submitted to the Commission by the Federal Republic of Germany in its application for payment, it must be stated that it is clear from that document that the Federal Republic of Germany declared therein that the beneficiaries had received a lesser amount of ERDF funds than had been provided for in the financing plan.
41. It must be added that the statement that the beneficiaries received significantly larger amounts from the German authorities than the Commission decided to pay is not sufficient to establish that the Commission made an erroneous assessment of the facts. The Commission does not contest that fact and itself states, in the seventeenth recital to the contested decision, that the total expenditure for the measures at issue was higher than was provided for in the financing plan. However, although, notwithstanding that increase in expenditure, the German authorities mentioned in their application for payment amounts below those provided for in the financing plan, the Federal Republic of Germany cannot complain that the Commission made an erroneous assessment of the facts where it adopts its decision on the basis of that payment application. Since the Federal Republic of Germany has not proved that it indicated in its payment application that the amounts of the ERDF contributions were equal to those provided for in the financing plan, the present plea in law cannot be accepted.

The plea alleging an infringement of Article 24 of Regulation No 4253/88

Arguments of the parties

42. The Federal Republic of Germany claims that the Commission infringed Article 24 of Regulation No 4253/88 inasmuch as it reduced the financial assistance at issue even though the conditions laid down in that provision had not been fulfilled.
43. In the first place, the Federal Republic of Germany claims that the financing plans are not binding and, of their very nature, are of a provisional character. Consequently, it considers that every change should not be regarded as a significant change. It considers that changes to an operational programme are significant only if they affect the overall structure of the programme or compromise the realisation of the development objectives set in the Commission decision approving the Community assistance.
44. In the present case, it considers that the transfers carried out by national authorities cannot be regarded as significant changes whether from the point of view of quality or from the point of view of quantity. It therefore argues that those transfers, which represent only a small part of the total volume of Community assistance granted from the ERDF, did not compromise the realisation of the objectives which the programmes approved by the Commission sought to attain and changed neither the overall amount of the financial assistance provided by the EDRF nor the levels of the ERDF contribution in favour of the various measures. Consequently, it considers that they do not go beyond the legal and financial framework fixed by the decisions granting the assistance.
45. In the second place, the Federal Republic of Germany contests the Commission's claim in the contested decisions that, in the absence of an application to amend the decisions granting the assistance, the failure to respect the financial tables, going beyond the thresholds authorised by the flexibility clause, must be regarded as a significant change because it changes the relative significance of the various priority axes or measures. It claims in that regard that the Commission cannot consider that the transfers which were carried out constitute significant changes solely on the ground that they did not comply with the Guidelines. It claims that the Guidelines seek merely to set out the changes which may be carried out without seeking approval from the Commission and do not define what is a significant change and what is not.
46. Thus, it claims that the Guidelines do not explain why the transfer between measures of 20% of the assistance provided by a Fund does not constitute a significant change within the meaning of Article 24 of Regulation No 4253/88 whereas a transfer between the axes of the programme would be such a change. The Guidelines also do not indicate why the boundaries between the axes are so important for the implementation of programmes that, in order to attain the objectives fixed, no transfer must be made between measures falling under different axes. Similarly, the Federal Republic of Germany considers that the Guidelines do not make it possible to determine the conditions under which ERDF assistance is no longer justified and whether exceeding the thresholds laid down must be regarded, in all cases, as a significant change and, if so, why.
47. In the third place, the Federal Republic of Germany claims that the Commission cannot, in any event, object to the transfers which have been carried out since those transfers were in accordance with the Guidelines and it had informed the Member States that it would accept changes which had not been formally approved but which were in accordance with the Guidelines. In support of that claim, the Federal Republic of Germany, argues that the programmes at issue were not divided into sub-programmes and that, consequently, the flexibility clause must be understood as meaning that the limit of 10% of the amount of the sub-programme referred to in the third paragraph of point 6.2 of the Guidelines applies either to a single fund or to the whole of each programme. It considers that even if the most restrictive of those two interpretations was adopted, it would merely mean that the increases should not lead to increases in ERDF financial assistance. It states that those limits were complied with in the application for payment of the outstanding balance.
48. With regard to the argument in the contested decisions that it is clear from the various language versions of the Guidelines that 'axes of the programme' must be assimilated to what the Guidelines designate as 'sub-programmes', the Federal Republic of Germany claims that the flexibility clause in point 6.2 of the Guidelines must be placed in its context and interpreted in relation to the spirit and purpose of the provision in question (Case C-257/00 Givane and Others [2003] ECR I-345, paragraph 38).
49. It therefore points out that, in order to determine whether the flexibility clause should be applied, in the absence of sub-programmes, at the level of programmes or priority axes, the role of sub-programmes and priority axes must be considered in the programming context.
50. It claims in that regard, first, that sub-programmes are provided for solely when it is necessary to separate part of a programme from the rest of it, for example, when the programme receives financial assistance from several Structural Funds, and it considers that, consequently, the prohibition contained in point 6.2 of the Guidelines on making transfers between sub-programmes must be regarded as a prohibition on the transfer of financing granted from different Structural Funds or for different regions. It claims that since, in this case, there was no transfer between different funds, nothing justifies limiting transfers to the level of priority axes.
51. Secondly, it states that since Community law lays down no obligation to apply the maximum amounts to the various priority axes, it is neither necessary nor logical to limit the flexibility clause contained in point 6.2 of the Guidelines to the level of axes of the programme.
52. Thirdly, it states that the axes of the programme were drawn up well before the Commission adopted the Guidelines and that, consequently, if the Commission had wished to limit the application of the flexibility clause to the level of priority axes, it should have taken account of the criteria with which they were defined.
53. In any event, the Federal Republic of Germany claims that the arguments put forward by the Commission in the contested decisions in support of the conclusion that the limits laid down in point 6.2 of the Guidelines had been exceeded are wrong. Thus, it claims, on the one hand, that the forms to which the contested decisions refer contain nothing which leads to the conclusion that 'axes' may be assimilated to 'sub-programmes' and that Article 8(3) of Regulation No 4253/88, referred to by the Commission in its defence, does not require a separation between priority axes in such a way that the transfers at issue would constitute a significant change. It also claims that the reference to other language versions of the Guidelines is not a sufficient statement of reasons since the German version is unequivocal and the English and French versions do not provide convincing support for the Commission's interpretation. In addition, the reference to the closure of programmes in other Member States also does not constitute a sufficient statement of reasons since the Federal Republic of Germany is unfamiliar with those programmes and cannot assess their legality.
54. In the fourth place, the Federal Republic of Germany considers that if the changes carried out are not covered by the guidelines, the Commission should have considered whether they were significant and, if they were, whether they justified reducing the Community assistance. It considers that, in any event, merely regarding a change as significant does not in itself justify the reduction of Community assistance, since the failure to have submitted it in advance to the Commission merely constitutes an infringement of procedural rules. In Cases T-349/06, T-371/06, T-14/07 and T-15/07, it argues, more specifically, that the principle of proportionality does not permit the Commission to base the reduction of financial assistance granted to the programmes at issue on an infringement of rules of form or procedure.
55. It considers that the Commission should have considered whether the transfers ought to have been authorised having regard to the fact that, in particular, those transfers did not compromise the general objective of the programmes nor that of the Community assistance and that they concerned amounts below those contained in other applications for amendments which the Commission had accepted previously. In Cases T-349/06, T-371/06, T-14/07 and T-15/07, the Federal Republic of Germany argues that the Commission ought also to have taken account of the fact that, on the one hand, from the middle of October 1999, it was not in a position to consider new applications for amendments and, on the other by issuing the Guidelines, it gave the national authorities a legitimate expectation that they had the necessary flexibility in regard to the indicative financing plans.
56. With regard, first, to the fact that the transfers did not compromise the general objective of the programmes nor that of the Community assistance, the Federal Republic of Germany claims, in particular, that if those objectives can be attained under the best conditions or conditions equivalent thereto by using the funds in a way other than that provided for in the decision approving them, the Commission should not be able to make the attainment of the development objective more difficult by withholding approved financing. In addition, the Federal Republic of Germany considers that the contested decisions are contrary to the partnership principle inasmuch as they prevent the national authorities from taking their responsibilities in regard to the actual use of the funds during the last quarter of the programming period by reason of the rigidity of the financing plans. It indicates in that regard that the purpose of ERDF financing is not to promote the Commission's projects but to support those of the Member States and that the implementation of the programmes requires a certain flexibility since the projects being implemented in the framework of the programme are not known in advance.
57. Secondly, with regard to the fact that the Commission was not able, at the end of 1999, to consider applications for amendments, the Federal Republic of Germany claims that, for that reason, the national authorities had to continue to consider the projects submitted to them without being able to involve the Commission's departments and that occurred at the very time that the programmes were being closed and most projects had been submitted. It considers that the impossibility of amending programmes between the middle of October and the end of December 1999 meant that programmes had to be completed in an unsatisfactory manner, which is contrary to the interest of the Community.
58. Thirdly, with regard to the fact that by transmitting the Guidelines to the Member States, the Commission gave rise to a legitimate expectation on the part of the national authorities that they had the necessary flexibility in regard to the indicative financial plans, the Federal Republic of Germany claims that the Commission should have taken account of the fact that it had itself called upon the Member States not to submit applications for amendment, that the German version of the Guidelines clearly could be interpreted only as permitting transfers between axes in the programmes and that, at the closure of the programmes, it gave those axes a meaning that they did not have at the time at which they were approved.
59. The Commission contests all those arguments.

Findings of the Court

60. With regard, first, to the Federal Republic of Germany's allegation that the financing plans were merely indicative and provisional, it is clear from the applicable legislation, as interpreted in the case-law, that, as the Commission argues, any financial assistance paid out of the Structural Funds must be applied in accordance with the decision approving it and, in particular, in accordance with the financial table annexed to that decision since that table constitutes a programming instrument reflecting the common position of the Commission and the national authorities.
61. Thus, it must be stated, first of all, that, unlike Articles 8 to 10 and 11a of Regulation No 2052/88 and Article 8(3) of Regulation No 4253/88, which concern the Community support framework, the provision of the latter regulation concerning operational programmes, namely Article 14, does not provide that the financing plan which must be annexed to the application is merely indicative.
62. Secondly, it is clear from Article 21(1) of Regulation No 4253/88, which provides that payments of financial assistance are to be made in accordance with the corresponding budgetary commitments, that the financial closure of assistance must be carried out, in particular, on the basis of the current financing plan (judgment of 27 June 2007 in Case T-65/04 Nuova Gela Sviluppo v Commission, not published in the ECR, paragraphs 36 and 37). The same requirement is clear from Article 4 of Decision C (94) 3379 of 14 December 1994 and Decision C (97) 1120 of 7 May 1997, and from the second paragraph of Article 2 of the other decisions granting assistance (see paragraph 16 above).
63. Thirdly, it should be pointed out that Article 25(5) of Regulation No 4253/88 lays down the procedure to be followed for making amendments to the financing plan. That provision provides that amendments to financing plans are decided either by the Monitoring Committee or by the Commission, in co-operation with the Member State, after the Monitoring Committee has delivered its opinion. In the case in which amendments are decided on by the Monitoring Committee, they must be immediately notified to the Commission and the Member State concerned and take effect only after confirmation both by the Commission and by the Member State. Failure to comply with that provision justifies in itself the reduction of financial assistance (see, by analogy, the judgment of 22 November 2006 in Case T-282/04 Italy v Commission, not published in the ECR, paragraphs 72 and 78).
64. It follows that, contrary to what the Federal Republic of Germany claims, amendments to a financing plan approved by the Commission which are implemented without the latter's consent lead, in principle, to a reduction in the assistance granted to the programme at issue, regardless of their significance in terms of quality or in terms of quantity.
65. With regard, in the second place, to the arguments put forward by the Federal Republic of Germany challenging the fact that the exceeding of the limits laid down in the Guidelines is a sufficient ground to consider that the transfers at issue constitute significant changes, it is clear from the considerations set out in paragraphs 60 to 64 above that such arguments must be rejected since the applicability of Article 24 of Regulation No 4253/88 to such transfers follows, in any event, from the legislation applicable and from the decisions granting assistance.
66. In the third place, with regard to the arguments put forward by the Federal Republic of Germany to the effect that the Commission cannot object to the changes carried out since they comply with the Guidelines, it should be pointed out that the transfers between different measures carried out by the German authorities did not presuppose an increase of more than 20% in the amount allocated by each of the financing plans to measures the amount of which has been increased, but result in an exceeding of the amount allocated to the axes by the financing plans. It should also be noted that the German version of point 6.2 of the Guidelines, appearing in paragraph 17 above, makes no reference to priority axes and that, a fortiori, it does not expressly provide that transfers between different axes are not permitted. Under those circumstances, when considering whether the arguments put forward are well founded, the case-law requires that point 6.2 of the Guidelines must be interpreted literally, historically, contextually and teleologically (see, in regard to method, Case T-251/00 Lagardère and Canal+ v Commission [2002] ECR II-4825, paragraph 72 et seq., and Joined Cases T-22/02 and T-23/02 Sumitomo Chemical and Sumika Fine Chemicals v Commission [2005] ECR II-4065, paragraph 41 et seq..
67. As regards, first, a literal interpretation, it must be borne in mind that as Community legislation is drafted in various languages and the different language versions are all equally authentic, an interpretation of a provision of Community law involves a comparison of the different language versions (Case 283/81 CILFIT and Others [1982] ECR 3415, paragraph 18, and Sumitomo Chemical and Sumika Fine Chemicals v Commission, cited above in paragraph 66, paragraph 42). The need for a uniform interpretation of Community regulations necessitates that one language version should not be considered in isolation, but that it should be interpreted and applied in the light of the versions existing in the other official languages (Case 19/67 van der Vecht [1967] ECR 345 at 353), even if that means that the provision at issue has to be interpreted and applied in a manner at variance with the natural and usual meaning of the words used in one or more linguistic versions, contrary to the requirements of legal certainty (see, to that effect, Case 80/76 North Kerry Milk Products [1977] ECR 425, paragraph 11).
68. In the present case, it must be observed that there is indeed a difference between the German version and the other language versions of point 6.2 of the Guidelines. In all the versions, the first paragraph of that point indicates that financial closure of the programmes must be carried out on the basis of the version of the financing plan in effect and that that plan is generally broken down into three levels. All versions mention 'programme' and 'measures' as the first and third levels. However, for the intermediate level, the German version indicates only 'sub-programme' (Unterprogramm) whereas the other versions indicate 'sub-programme/priority axis' ('delprogram/prioriteret in Danish, 'programme/priority axis' in English, 'subprograma/eje prioritario' in Spanish, 'alaohjelma/toimintalinja' in Finnish, 'sous-programme/axe prioritaire' in French, 'subprogramma/prioritaire doelstelling' in Dutch, 'subprograma/eixo prioritário' in Portuguese, and 'underprogram/prioriterat område' in Swedish). There is no difference between the language versions in regard to the other provisions of point 6.2 of the Guidelines since the second, third and fourth paragraphs of that point, in all language versions, use only the expression 'sub-programme'.
69. Consequently, the question arises whether the reference in the first paragraph of point 6.2 of the Guidelines in languages other than German to 'sub-programme/priority axis' is necessary to understand that provision, as it seems to have been understood by the Member States who consulted the other language versions, as meaning that the reference in the other paragraphs of that point only to 'sub-programme' is to be taken as including priority axes. In order to answer that question, it must be determined, by means of contextual, historical and teleological interpretations, whether the 'sub-programmes' and the 'priority axes' constitute, essentially, two different terms used to designate the intermediate level of programmes, as the Commission contends, or whether they are two totally different programming elements which should not have been assimilated for the purposes of applying the Guidelines, as the Federal Republic of Germany claims.
70. Secondly, in regard to contextual interpretation, it must be observed that the context in which point 6.2 of the Guidelines is placed is constituted not merely by the other provisions of those guidelines, which deal with subjects other than the financial closure of programmes and contain nothing of use in interpreting point 6.2, but also by all the provisions applicable to the financial assistance at issue and in particular, the decisions granting that assistance. Whereas, upon reading the programmes which were approved by the said decisions, it is clear that the structure of those programmes is divided into priority axes or priorities and that they are not divided into sub-programmes, three of the five decisions granting assistance, namely Decision C (95) 1427 of 11 July 1995, Decision C (95) 1738 of 27 July 1995 and Decision C (95) 1739 of 27 July 1995 (see paragraphs 12 to 14 above) indicate in Article 2 thereof that the detailed arrangements for the grant of financial assistance, including the participation of the Funds in the various sub-programmes (Teilprogramm) and in the measures which are an integral part of those programmes, are set out in the financing plans annexed to the said decisions.
71. Even if the German term used in the guidelines (Unterprogramm) is not identical to that appearing in the decisions granting assistance mentioned in paragraph 70 above (Teilprogramm), it is clear from those decisions that the Commission considered, from the time at which the programmes were approved and not merely at the time that the programmes were closed, that the 'sub-programmes' and the 'priority axes' constituted a single programming level, namely the intermediate level between programmes and measures. Since it must, ultimately, be decided, in the present case, whether the Guidelines drawn up by the Commission could reasonably be understood by the national authorities responsible for the implementation of the programmes as meaning that the prohibition on transfers between 'sub-programmes' also implied a prohibition on transfers between 'priority axes' and that, consequently, any transfer between axes had to be the subject of a formal application for an amendment, it must be considered that, independently of the precise definition of the terms 'sub-programmes' and 'priority axes', the wording of the decisions granting the assistance should have permitted the national authorities to understand that the term 'sub-programme' used by the Commission in all the paragraphs of the German version of the guidelines must be understood as also referring to the 'priority axes' of programmes or, at the very least, to entertain doubts as to the meaning of point 6.2 of the Guidelines.
72. With regard to historical and teleological interpretations, it must be pointed out that since any change in the financing plans carried out without the Commission's consent is likely to lead to a reduction of the assistance (see paragraph 64 above), the Guidelines must be understood as seeking to facilitate the closure of programmes in the sense that the Commission, by virtue of the discretion granted to it by Article 24 of Regulation No 4253/88 to decide whether or not to reduce or suspend Community assistance, would accept a certain degree of flexibility and that, consequently, changes fulfilling the conditions laid down would not give rise to a reduction even though those changes had not been submitted to the Commission for approval. It follows that point 6.2 of the Guidelines must be interpreted restrictively, so that the number of changes in respect of which the Commission announced its intention not to reduce the assistance granted and which could therefore, in practice, be carried out, is as limited as possible. It must be borne in mind that Regulation No 4253/88 lays down a formal procedure for amendments to financial plans, which is binding both on the Member States and on the Commission, and that, therefore, the number of situations in which the Member States could be dispensed from following that procedure without risking a reduction of the assistance should be reduced as far as possible.
73. In the light of the foregoing, it must be held that the transfers between the priority axes of programmes by the German authorities were not covered by the Guidelines.
74. The other arguments put forward by the Federal Republic of Germany do not rebut that conclusion. The Federal Republic of Germany claims that a prohibition on the transfer of amounts between axes is not justified because such transfers do not substantially affect the realisation of the programmes and the objectives to be attained. However, it must be stated that although those considerations are relevant in determining whether the transfers could have been approved by the Commission if they had been submitted to it, they are not relevant to a consideration of the compatibility of the transfers with point 6.2 of the Guidelines. What falls to be determined in the present case is not whether the transfers between axes could have been accepted by the Commission if they had been submitted to it but whether, by reason of the Guidelines, it was possible not to give notice of them to the Commission without thereby entailing a reduction of the assistance.
75. With regard, in the fourth place, to the Federal Republic of Germany's allegation that the Commission should have exercised its discretion under Article 24(2) of Regulation No 4253/88 in deciding whether the assistance granted was justified, it must be pointed out, first, that notwithstanding the Commission's statement in the contested decisions that the Guidelines define what it considers to be a significant change, the Guidelines cannot be interpreted as defining the cases in which the Commission considers that an amendment to the financing plans does not justify a reduction of the assistance. It should be borne in mind that the possibility of reduction where there has been an amendment to the financing plan flows from the applicable legislation itself and from the decisions granting Community assistance to the programmes at issue in the present cases and does not depend on the Commission's discretion. On the other hand, the Commission can decide that certain changes will not lead to a reduction by reason of circumstances related to the end of the programming period and inform the Member States thereof in order to ensure the transparency of its closure decisions and equality between the Member States. However, in accordance with the case-law, once the Commission had informed the Member States of the manner in which it intended to exercise its discretion, it could not depart from that position without infringing the principle of equal treatment (see, to that effect, Joined Cases C-189/02 P, C'202 C-202/02 P, C-205/02 P to C-208/02 P and C-213/02 P Dansk Rørindustri and Others v Commission [2005] ECR I-5425, paragraph 211). By considering, as the Federal Republic of Germany asks, whether the changes could have been approved if they had been notified to the Commission at the proper time, the Commission would have given the Federal Republic of Germany an advantage over the Member States which had not made any changes which did not fulfil the conditions laid down in the Guidelines without seeking the approval of the Commission.
76. In any event, it must be held that the Federal Republic of Germany has not established that the Commission infringed the principle of proportionality in deciding to reduce the financial assistance at issue.
77. With regard, first, to the argument that the transfers did not compromise the general objective of the programmes or of the Community assistance, it must be pointed out that, in accordance with the case-law, showing that a project was implemented is not sufficient to justify the payment of financial assistance (see, to that effect, Case C-240/03 P Comunità montana della Valnerina v Commission [2006] ECR I-731 paragraphs 77 and 78). The system of subsidies provided for under Community rules is based, in particular, on the performance by the beneficiary of a series of obligations to which payment of the intended financial assistance is made subject. If the beneficiary does not perform all its obligations, such as those concerning compliance with the legal and financial framework, Article 24 of the regulation in question permits the Commission to reconsider the extent of its obligations under the decision granting assistance. It is also clear from settled case-law that the infringement of obligations whose observance is of fundamental importance to the proper functioning of a Community system may be penalised by forfeiture of a right conferred by Community legislation without there being thereby any infringement of the principle of proportionality (Case T-216/96 Conserve Italia v Commission, T-216/96 [1999] ECR II-3139, paragraphs 101 and 103, and Case T-199/99 Sgaravatti Mediterranea v Commission [2002] ECR II-3731, paragraphs 134 and 135).
78. In the present case, it must be stated that if it is accepted, as the Federal Republic of Germany asks, that the Commission should not have reduced the assistance at issue by reason of the fact that the objectives of the programmes and of the said assistance have been attained, then the Federal Republic of Germany will not have been sanctioned for its failure to fulfil its obligation to implement the said programmes in accordance with the financing plans approved by the Commission. That solution would thus deprive the obligation of its content, since it would be sufficient for the national authorities to prove that the programmes had been successfully implemented in order to obtain the full amount of the allocated financing.
79. Moreover, the Federal Republic of Germany cannot invoke the principle of partnership, laid down in Article 4 of Regulation No 2052/88 (see paragraph 3 above) as a ground on which to seek payment of the full amount of the financial assistance. Although it is certainly true, as the Federal Republic of Germany points out, that the objective of Community part-financing is to promote, not the Commission's projects, but those of the Member States, it is also true that Article 274 EC makes the Commission responsible for implementing the Community budget and the regulations applicable to the Structural Funds provide that it is required to approve the financing plans in its decisions granting assistance and to approve directly or indirectly all amendments to those plans. In that context, it must be stated that the solution sought by the Federal Republic of Germany, although it takes account of the powers of the national authorities, fails to take account of the powers granted to the Commission by the applicable legislation. However, Article 4(1) of Regulation No 2052/88 provides specifically that 'Community operations ... shall be established through close consultations between the Commission, the Member State concerned and the competent authorities and bodies ... designated by the Member State' and those close consultations are to cover the preparation, the financing, the monitoring and the evaluation of the operations and are to be conducted in full compliance with the respective institutional, legal and financial powers of each of the partners.
80. Secondly, with regard to the argument that the Commission, from mid-October 1999, was unable to consider new applications for amendments, it is sufficient to note that the Commission challenges that claim by indicating that it adopted 418 decisions concerning amendments in the last two months of 1999 and that it also dealt with applications for amendments submitted by the Member States after mid-October 1999, including one concerning Land Nordrhein-Westfalen. It adds that the applications which could not be dealt with before 31 December 1999 by reason of the late date at which they had been submitted were accepted even after that date if they did not affect the Community budget.
81. Thirdly, with regard to the arguments that the Commission encouraged the national authorities not to submit new applications for amendments and that the German version of the Guidelines clearly indicate that the transfers at issue did not need to be approved by the Commission, it must be pointed out that, in the circumstances of the present case, it must have been sufficiently clear to the national authorities that the Commission regarded the priority axes mentioned in the financing plans at issue as sub-programmes within the meaning of point 6.2 of the Guidelines and that, consequently, notwithstanding any possible lack of clarity in the German version of the Guidelines, those authorities should have understood that the Commission would not accept transfers between priority axes without its approval being sought pursuant to Article 25(5) of Regulation No 4253/88. It must be pointed out in regard to the Federal Republic of Germany's argument that the Commission should have taken account of the fact that the number of projects submitted increases at the end of the programming period, which increases the number of amendments which must be made in the financing plans, that this is precisely why the Commission sent the Guidelines to the Member States and called upon them to apply point 6.2 thereof in order to reduce the number of applications for amendments.
82. In the light of the foregoing, it must be held that the Federal Republic of Germany has not proved that the Commission infringed Article 24(2) of Regulation No 4253/88. Consequently, the actions must be dismissed in their entirety.

Costs

83. Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Federal Republic of Germany has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.

On those grounds,

THE COURT OF FIRST INSTANCE (Fourth Chamber)

hereby

1. Joins Case T-332/07 to Cases T-349/06, T-371/06, T-14/07 and T-15/07 for the purposes of the judgment;

2. Dismisses the actions;

3. Orders the Federal Republic of Germany to pay the costs.




Czúcz

Cooke

Labucka

Delivered in open court in Luxembourg on 9 September 2008.

E. Coulon

O. Czúcz

Registrar

President

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* Language of the case: German.