The case concerned the European Commission’s approval of an Italian support measure under the EU’s Common Agricultural Policy for farmers who practice crop rotation using certified seeds.

A French plant seed company opposed the Italian measure. It considered that the Italian report used to justify why the Italian crop rotation system had additional agri-environment benefits was scientifically flawed. It also claimed that the report had been prepared by a company with a conflict of interest. The complainant argued that the Commission should have carried out its own scientific assessment of the matter and should have withdrawn its approval of the crop rotation system. As the complainant considered that the Commission had taken no action in light of its concerns, it complained to the Ombudsman.

The Ombudsman inquired into the issue and found that the Commission had requested Italy to provide further information to support the view that the measure did have additional agri-environment benefits. Italy provided it with reassurances that its public research body had checked the scientific basis for considering that the measure gave rise to additional agri-environment benefits. The Ombudsman therefore found no maladministration by the Commission.  

The background to the complaint

1. The complaint was made by a French company that produces equipment for saving seeds.[1] The equipment allows farmers to use saved seeds for use in the following growing seasons, thus reducing the need for farmers to buy in seeds from specialised seed producers. In 2014, the company turned to the Commission in relation to a support measure introduced by Italy under the EU’s Common Agricultural Policy to support farmers who practice crop rotation using certified seeds for the cultivation of durum wheat. The company (hereinafter ‘the complainant’) considered that the scientific report underpinning the Italian measure was flawed and that its author was in a conflict of interest situation. It requested that the Commission withdraw its approval of the measure.

2. Under the EU’s Common Agricultural Policy, farmers generally receive income support through direct payments. Direct payments are payments which are “decoupled” (meaning, not linked) from agricultural production but linked to land considered eligible for aid. However, as an exception to the general principle that farmers receive direct payments, the EU‘s Common Agricultural Policy provides each Member State with the possibility to use a certain percentage of its dedicated EU budget ceiling to grant what used to be called “specific support”[2] to farmers.[3] Specific support is coupled with production and is intended to support certain types of farming/agricultural sectors, which are important for the protection or enhancement of the environment or for improving the quality and marketing of agricultural products, and which experience certain difficulties. Under the EU rules in force at the point in time relevant for the present case, Member States could, among others, grant specific support for agricultural activities with additional agri-environment benefits.[4] The idea behind the Common Agricultural Policy’s specific support scheme was that Member States are best placed to identify agricultural sectors and regions where farmers are in need of coupled support to maintain their production levels. The EU legislature thus gave Member States a wide margin of discretion in designing specific support measures and tailoring them to their particular needs. At the same time, the Member States chose themselves whether or not to make use of the coupled support scheme available under the EU’s Common Agricultural Policy. The EU legislature assigned the Commission a minor role with regard to specific support measures. Before 2013, Member States generally simply needed to notify their specific support measures to the Commission. However, because of their link to the EU’s rural development policy (see point 12 below), Member States’ specific support measures for agricultural activities with additional agri-environment benefits were subject to the Commission’s approval.[5] Following the 2013 reform of the EU’s Common Agricultural Policy, the Commission no longer has any mandate to approve or reject any kind of specific support measures – now called ‘voluntary coupled support’[6] –, not even in relation to measures which are important for environmental reasons.[7]

3. In 2009, Italy decided to create a specific support measure to encourage crop rotation in certain regions. Crop rotation is a practice of growing different types of crops in the same area in sequenced seasons. The Commission approved the measure in 2010.[8] The following year, Italy informed the Commission that it wished to amend its crop rotation support measure by requiring farmers to use certified seeds for the cultivation of durum wheat. Italy justified the amendment by referring to a scientific report, which had been prepared for the Italian government by a spin-off company of an Italian university. According to the report, the use of certified seeds, as opposed to the use of farm saved seeds, reduced the use of herbicides and lowered CO₂ emissions. The Commission approved[9] the amended crop rotation support measure.

4. In 2014, the complainant raised with the Commission its concerns about the merits of the report underpinning the amendment of the crop rotation support measure and about a conflict of interests on the part of the company which produced that report. In response, the Commission contacted the Italian authorities. The Italian authorities requested its national research body[10] to produce an expert opinion on the report. The expert opinion confirmed the report’s scientific conclusions. Italy thus decided not to review its amended crop rotation support measure. Moreover, the Commission took the view that it was for the Italian authorities to deal with the alleged conflict of interest situation.

5. The complainant was not satisfied with the Commission's action and response. It insisted that the Commission should have carried out its own scientific assessment of the amended crop rotation support measure.  

6. In December 2014, the complainant turned to the Ombudsman.

The inquiry

7. The Ombudsman opened an inquiry into the complaint’s concern that the Commission had failed to adequately examine the information put forward by the complainant to challenge the scientific soundness and the impartiality of the scientific report underpinning Italy’s amended crop rotation support measure.

The complainant wished the Commission to withdraw its decision[11] approving Italy’s amended crop rotation support measure.

8. When opening the inquiry, the Ombudsman asked the Commission to provide clarifications on the extent and scope of its legal and practical control over Member States’ requests for the approval of specific support measures for agricultural activities with additional agri-environment benefits. In particular, the Ombudsman asked the Commission to explain what it could do in case of doubts about the information provided by the Member States.

9. In the course of the inquiry, the Ombudsman received the reply of the Commission setting out its views on the complaint. The complainant was invited to comment on the Commission’s reply but chose not to do so. In conducting the inquiry, the Ombudsman has taken into account the arguments and opinions put forward by the parties.

Did the Commission fail to take appropriate action on the basis of the information submitted by the complainant?

Arguments presented to the Ombudsman

10. In its correspondence with the Commission, the complainant argued that the report underpinning Italy’s amended crop rotation support measure was scientifically flawed. It put forward a number of arguments to contest the report’s conclusions and argued that the requirement for farmers to use certified seeds does not add any additional agri-environment benefit to the crop rotation support measure as originally introduced. The complainant also argued that the author of the report, company H, had a conflict of interest because of its involvement in the sale of certified seeds. The complainant also contended that the report had been commissioned by a trade organisation representing the commercial seeds industry. In the complainant’s view, the Commission should therefore not have accepted the report as a justification for the amendment of the crop rotation support measure.

11. In its complaint to the Ombudsman, the complainant argued that the Commission should have carried out its own assessment of the scientific merits of the report underpinning Italy’s amended crop rotation support measure so as to verify whether the amended measure was capable of attaining the environmental objective pursued by it. Given that specific support measures for agricultural activities with additional agri-environment benefits required the Commission’s approval, the Commission should not automatically validate such measures upon a Member State’s request. At the very least, the Commission should, the complainant argued, have reviewed the science of the report when confronted with the complainant’s concerns. It was not appropriate for the Commission to simply forward the information provided by the complainant to the Italian authorities. Neither was it appropriate for the Commission to declare that it was not competent to deal with the conflict of interest situation.

12. The Commission stated that it was for the Member States to decide if they wanted to grant specific support to farmers and, if so, to design a particular support measure in light of the applicable legal rules. Member States could also decide to amend their specific support measures. The Commission stated that specific support measures for agricultural activities with additional agri-environment benefits were subject to the Commission’s approval because of their link to the EU’s rural development policy, an area where the Commission needed to ensure that measures complied with the World Trade Organisation’s “green box” rules[12]. When a Member State notified such a specific support measure to the Commission for approval, it also submitted technical explanations in support of its measure. The Commission stated that its role was to assess the information presented by the Member State so as to verify whether a specific support measure complied with the applicable legal rules[13].[14] Thus the Commission did assess the relevance of the information and arguments put forward by a Member State to justify why a specific support measure entailed additional agri-environment benefits.

13. With regard to the measure at issue, the Commission stated that it had requested the Italian authorities to provide additional information and clarifications before approving the original support measure. Italy’s decision to amend the crop rotation support measure, by requiring farmers to use certified seeds for the cultivation of durum wheat, was supported by science. According to the Commission, the information and justifications submitted by Italy in support of the amendment answered its comments, which it had made on Italy’s very first notification of the original crop rotation measure. It thus approved the amended crop rotation support measure. The Commission stressed that as long as a notified support measure continued to comply with the applicable legal rules, it was not for the Commission to judge the usefulness of an amendment introduced by a Member State.

14. The Commission also pointed out that it does not, in principle, question either the authenticity of the Members States’ documents or the veracity of their content. In case of doubts, the Commission can always ask a Member State for additional information and evidence, as it did in the present case. In light of the concerns put forward by the complainant, the Commission contacted the Italian authorities responsible for the design of the crop rotation support measure and asked them to comment on the merits of the mandatory recourse to certified seeds for the cultivation of durum wheat. The Commission later informed the complainant that the Italian authorities requested its national research body to produce an expert opinion on the report underpinning the amendment of the crop rotation support measure. The expert opinion confirmed the scientific conclusions of the report and found that the complainant had not proposed an alternative quantifiable method to compare the environmental effects of the use of certified seeds with the use of farm saved seeds. Italy thus decided not to review its amended crop rotation support measure. Likewise, the Commission concluded, on the basis of the additional information provided by Italy, that there was no conclusive scientific evidence that would have allowed it to withdraw its approval of the amended crop rotation support measure.

The Ombudsman's assessment

15. The EU legislation that was in force at the time when Italy introduced, and later amended, its specific support measure for crop rotation provided that Member States were entitled to use a certain amount of EU funds to grant specific support to their farmers. Such specific support was possible in order to address environmental and animal welfare issues, to improve the quality and marketing of agricultural products, and to provide a buffer against the consequences of the phasing-out of milk quotas and the decoupling of support to farmers in particularly sensitive sectors.[15] The EU legislature[16] thereby decided that it was for the Member States to design their specific support measures. While the EU legislature laid down the conditions that such measures had to meet[17], the EU legislature gave the Member States a wide margin of discretion in this regard.[18] It is understood that the rationale underlying the EU legislature’s choice was that the Member States were thought to be best placed to identify regions and/or agricultural sectors in need of targeted support.[19] As a corollary, the EU legislature assigned the Commission a minor role with regard to specific support measures. Among the different types of specific support measures, only measures for agricultural activities with additional agri-environment benefits, such as the Italian crop rotation support measure in question, were subject to the Commission’s approval.[20]

16. The Commission was given a role in relation to Member States’ specific support measures for agricultural activities with additional agri-environment benefits because of these measures’ link to the EU’s rural development policy, an area where the Commission must check that measures comply with World Trade Organisation rules[21]. However, the EU legislature did not itself lay down the conditions for the Commission’s approval of specific support measures for agricultural activities with additional agri-environment benefits. Rather, it entrusted the Commission with defining the conditions for its approval of such specific support measures[22]. The Commission adopted a Commission Regulation[23] laying down detailed rules for the implementation of the EU legislature’s rules on, among other things, specific support measures.[24] The Commission Regulation provides that the Commission shall assess a specific support measure for farmers exercising agricultural activities with additional agri-environment benefits for compliance with the applicable legal framework, that is, the rules adopted by the EU legislature and the Commission’s own detailed implementation rules[25].[26] The factual basis for the Commission’s assessment was the standardised information that Member States were obliged[27] to provide to it, which must include, among other things, the title of the measure and the geographical area covered by it; a description of the measure and the expected environmental impact in relation to environmental needs and priorities as well as specific verifiable objectives[28]. The Commission has stated that its assessment included checking for a causal link between the features of a particular support measure and the objectives it was designed to achieve.[29] However, it is clear that the Commission’s assessment of a notified support measure with additional agri-environment benefits did not, and did not have to, entail an independent scientific review by the Commission of how the measure was designed.

17. In keeping with the rationale that the Member States are the masters of their specific support measures, the Commission, if it considered that a notified measure did not comply with the applicable legal rules, requested the Member State to revise the design of the measure. The Commission could ask Member States for additional information and/or clarifications in relation to a notified support measure, including scientific information, should the Commission have had doubts about the merits of the information submitted in support of the measure. If, upon re-notification, the Commission considered that the design of a measure had been properly revised, it approved the measure. However, if the Commission maintained its view that a specific support measure with additional agri-environment benefits did not comply with the applicable legal rules, it refused approval.[30]

18. The Ombudsman considers that, in case of serious doubts in relation to a document submitted by a Member State in support of a specific support measure with additional agri-environment benefits, the Commission could ask the Member State concerned to look into any potential problems that may have occurred in the process of preparing its submission.

19. Under this scheme, the Commission did refuse to approve certain specific support measures notified to it by Member States.[31] It also approved certain support measures only after having received additional information and/or clarifications from a Member State or after a Member State had re-designed a measure.[32] The Italian crop rotation support measure in question is an example of this.

20. When Italy first notified its crop rotation support measure in 2009, the Commission took the view that Italy had not provided all the required information in support of its measure and it thus requested Italy to submit a complete file. Once Italy had notified a complete description of the support measure, the Commission, following an examination of the measure, requested that Italy revise the design of the measure in light of the Commission’s comments. Some of the Commission’s comments related to the mandatory use of certified seeds for durum wheat.[33] It was only upon Italy’s re-notification of its revised support measure that the Commission deemed the crop rotation support measure to comply with the applicable legal rules and that it thus gave its approval.[34] [35] In the Ombudsman’s view, there is thus no doubt that the Commission fully respected its role in assessing and approving the original crop rotation support measure.

21. In 2011, Italy decided to amend the support measure by introducing the requirement for farmers to use certified seeds[36] for durum wheat. It notified the amended support measure to the Commission, together with supporting scientific information. The Commission states that the notified information complied with the comments and requests that the Commission had made in relation to the envisaged mandatory use of certified seeds in Italy’s first notification of the support measure. Given that the Commission thereby had enough information to conclude that the amended support measure complied with the applicable legal rules, the Commission approved the measure as amended.

22. The Commission also took action when the complainant raised the concerns that the scientific report that underpinned the amendment of the crop rotation support measure was flawed and had been drawn up by a company with a conflict of interest. It forwarded the information submitted by the complainant to the Italian authorities, and asked them to examine the information and to comment on it. Italy in turn sought an expert opinion from its national public research body. Given that at least a question mark was posed regarding the independence of the report initially submitted by the Italian authorities to support the use of certified seed, it was appropriate that Italy took steps to verify the scientific assessment using a public research body, the independence of which has not been challenged. The expert opinion of the public research body confirmed the scientific conclusions of the report underpinning the amended crop rotation support measure. Had the national research body not checked and validated the scientific justifications underpinning the amendment of the support measure, the Ombudsman notes that it would have been appropriate for the Commission to ask Italy for clarifications to ensure that the report was not tainted by any conflict of interests. It would have been in the power of the Commission to withdraw its approval of the measure if it were not satisfied with the response of Italy. However, given that the Commission was satisfied with the scientific basis for the measure, following the confirmation by the national research body, the issue of the alleged conflict of interest regarding the original report became irrelevant. It was thus not for the Commission, given the regulatory background, to take further action, including any action on the alleged conflict of interests.

23. The Ombudsman thus considers that the Commission took appropriate action.

24. The complainant may consider that the Commission did not have a strong enough role in relation to Member States’ specific support measures. However, this was a regulatory choice made by the EU legislature, the appropriateness of which the Ombudsman has no mandate to assess. Following the latest reform of the EU’s Common Agricultural Policy in 2013, the Commission no longer has any power to approve or to reject what are now called Member States’ ‘voluntary coupled support measures’ under the EU’s Common Agricultural Policy.

Conclusion

On the basis of the inquiry into this complaint, the Ombudsman closes it with the following conclusion:

There was no maladministration by the Commission.

The complainant and the Commission will be informed of this decision.

Strasbourg, 02/06/2017

 

Emily O'Reilly
European Ombudsman

 

 

[1] Seed saving is a traditional agricultural practice whereby part of the crop harvest is saved to be used as seeds in the subsequent season. The alternative to using farm saved seeds is to buy commercially produced seeds (‘certified seeds’). As a general rule, only certified seeds can be marketed in the EU. The EU’s seed certification scheme guarantees the identity, health and quality of the seeds. See footnote 36 below.

[2] Article 68 of Council Regulation 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003, OJ 2009 L 30, page 16.

[3] Article 68(1)(a)(v) of Council Regulation 73/2009 allowed Member States to use up to 10% of their national ceiling established for the single payment scheme for specific support measures.

[4] Article 68(1)(a)(v) of Council Regulation 73/2009.

[5] Article 68(2)(a)(ii) of Council Regulation 73/2009.

[6] See Regulation 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No 637/2008 and Council Regulation (EC) No 73/2009, OJ 2013 L 347, page 608, Chapter 1 of Title IV; Commission Delegated Regulation 639/2014 of 11 March 2014 supplementing Regulation (EU) No 1307/2013 of the European Parliament and of the Council establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and amending Annex X to that Regulation, OJ 2014 L 181, page 1, Section 1 of Chapter 5; and Commission Implementing Regulation 641/2014 of 16 June 2014 laying down rules for the application of Regulation (EU) No 1307/2013 of the European Parliament and of the Council establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy, OJ 2014 L 181, page 74, Section 1 of Chapter 4.

[7] For an overview of the currently applicable Common Agricultural Policy’s voluntary coupled support scheme, see: http://ec.europa.eu/agriculture/sites/agriculture/files/direct-support/direct-payments/docs/voluntary-coupled-support_en.pdf

[8] Commission Decision C(2010)1092 of 26 February 2010.

[9] Commission Decision C(2011)8585 of 25 November 2011.

[10] Consiglio per la Ricerca e la Sperimentazione in Agricoltura.

[11] Commission Decision C(2011)8585.

[12] Among other things, the WTO “green box” rules apply to direct income supports for farmers as well as to environmental protection and regional development programmes. For more information see: https://www.wto.org/english/tratop_e/agric_e/agboxes_e.htm

See also the European Parliament’s fact sheet on the EU’s Common Agricultural Policy and the WTO Agreement on Agriculture: http://www.europarl.europa.eu/atyourservice/en/displayFtu.html?ftuId=FTU_5.2.7.html 

[13] The relevant provisions of Council Regulation 73/2009 and Commission Regulation 1120/2009 laying down detailed rules for the implementation of the single payment scheme provided for in Title III of Council Regulation (EC) No 73/2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, OJ 2009 L 316, page 1.

[14] Regarding specific support measures for specific agricultural activities with additional agri-environment benefits, the Member States have to notify the information set out in Part B of Annex IV to Commission Regulation 1120/2009.

[15] Article 68(1) of Council Regulation 73/2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers.

[16] The Council of the European Union.

[17] Chapter 5 of Title III of Council Regulation 73/2009.

[18] See the European Court of Auditors’ special report no 10, 2013, “Common Agricultural Policy: Is the Specific Support Provided Under Article 68 of Council Regulation (EC) No 73/2009 well designed and implemented?”, points 20 and 24.

[19] See point V. of the Commission’s reply (executive summary) to the European Court of Auditors’ special report no 10, 2013, page 44.

[20] Article 68(2)(a) of Council Regulation 73/2009. Other types of specific support measures only have to be notified to the Commission. See Article 68 of Council Regulation 73/2009 in conjunction with Article 50(3) of Commission Regulation 1120/2009.

[21] Agri-environment measures that fall under the EU’s rural development policy are typically subject to approval by the Commission.

[22] According to Article 68(7) in conjunction with Article 141(2) of Council Regulation 73/2009, the Commission was to define the conditions for its approval with the assistance of the “Management Committee for Direct Payments”, a comitology committee made up of representatives of the Member States. The so-called “management procedure” applied in this case (see Article 4 of Council Decision 1999/468 of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission, OJ 1999 L 184, page 23, amended with Council Decision 2006/512/EC of 17 July 2006, OJ 2006 L 200, page 11.

[23] Commission Regulation 1120/2009 of 29 October 2009 laying down detailed rules for the implementation of the single payment scheme provided for in Title III of Council Regulation (EC) No 73/2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, OJ 2009 L 316, page 1, which repealed the Commission’s previously applicable Regulation 639/2009 of 22 July 2009 laying down detailed rules for the implementation of Council Regulation (EC) No 73/2009 as regards specific support, OJ 2009 L 191, page 17.

[24] The Management Committee for Direct Payments adopted an opinion in favour of the Commission’s Regulation in its 93^rd meeting of 17 June 2009.

[25] Council Regulation 73/2009 and Commission Regulation 1120/2009.

[26] Article 44(3) of Commission Regulation 1120/2009.

[27] Article 50(3) of Commission Regulation 1120/2009.

[28] Article 50(3) second subparagraph of and Part B of Annex IV to Commission Regulation 1120/2009.

[29] See point 39 of the Commission’s reply to the European Court of Auditors’ special report no 10, 2013, page 49.

[30] See Article 44(3) of Commission Regulation 1120/2009.

[31] See, for example, the European Court of Auditors’ special report no 10, 2013, point 26.

[32] See, for example, the European Court of Auditors’ special report no 10, 2013, point 23.

[33] Information submitted by the Commission together with its reply to the Ombudsman.

[34] Commission Decision C(2010)1092 of 26 February 2010.

[35] The re-designed crop rotation measure that Italy re-notified to the Commission, and which was subsequently approved by the Commission as the original measure, no longer included the feature of a mandatory recourse to certified seeds for durum wheat.

[36] The marketing of cereal seeds in the EU is regulated by Council Directive 66/402/EC of 14 June 1966, OJ 1966 2309, page 143, as well as by a number of implementing measures (see https://ec.europa.eu/food/plant/plant_propagation_material/legislation/specific_legislation_en). As a general rule, seeds are allowed to be marketed only if they have been officially examined and certified in accordance with the uniform EU certification scheme. The certification scheme guarantees the identity, health and quality of the seeds. The rationale behind the EU’s marketing requirements for seeds is that satisfactory results in cereal cultivation depend, to a large extent, on the use of seeds that have the appropriate genetic and external characteristics. Seeds which are not placed on the market, but used by farmers for their own cultivation needs, are not subject to the certification scheme. This means that farmers are allowed to use their farm saved seeds for their own cultivation. See also Council Regulation 2100/94 of 27 July 1994 on Community plant variety rights, OJ 1994 L 227, page 1.