Page last updated at 16:07 GMT, Wednesday, 15 April 2009 17:07 UK

EU acts to curb Italy milk scam

Milk churn (file pic)
The EU has acted against Italy five times over milk quotas

The EU's anti-fraud body Olaf has welcomed an Italian court ruling on a milk quota scam, which has paved the way for recovering millions of euros.

Olaf says Italian dairies have been avoiding paying fines imposed by the EU for exceeding annual milk quotas.

But the Italian Supreme Court ruled in January that the seizure of milk producers' assets worth 21m euros (£19m; $28m) was justified.

Some dairies had simulated transactions by using fake companies, Olaf says.

Olaf says it gave "significant assistance" to the Italian judicial authorities, contributing to the temporary seizure of the assets.

But in a statement last September, the commission said Italian milk producers owed the EU about 1bn euros in accumulated fines.

Each year the European Commission sets national milk quotas - and Italy has repeatedly complained that its quota level is too low.

The quota system was introduced in 1984 to support milk prices and tackle the problem of overproduction, which had led to huge surpluses.

The EU plans to phase out milk quotas by 2015, but before then the commission plans to allow a one-percentage-point annual quota increase.

The commission has acted against the Italian authorities five times for infringement of the milk quota regime.

An Olaf spokesman, Joerg Wojahn, told BBC News it was important that the Italian Supreme Court had recognised the milk producers' scheme as "fraudulent, in the sense of criminal law, and not just minor irregularities".

"Real criminal proceedings leading to punishment can be pursued now," he said. "The ruling gives a basis for following up a larger number of cases."

No such scheme is being investigated in any other EU member state, he added.

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