1. The Commission shall take a Decision provisionally reducing the monthly and intermediate payments referred to in Articles 14 and 26 of Regulation (EC) No 1290/2005 by 25 % if it concludes, either on the basis of the declaration or the report referred to in Article 1 of this Regulation or its own audit findings, and after giving the Member State concerned opportunity to submit its comments within a reasonable period of time, that:

Bulgaria or Romania does not comply with its obligations under Article 1(1) and (2);

the elements referred to in Article 1(1)(a) have not been set up;

although the elements referred to in Article 1(1)(a) have been set up, the IACS or the other elements necessary to ensure the correct payment of the support referred to in Article 3 are so seriously deficient as to affect the proper functioning of the overall system.

Bulgaria and Romania shall take all the necessary measures to remedy immediately any deficiencies identified.

2. The provisional reduction shall be applied in respect of the monthly and intermediate payments made from 1 December 2007 up to 30 November 2008.

3. The Commission shall prolong the provisional reduction for further periods of 12 months if one or more of the conditions referred to in paragraph 1 continue to be fulfilled.

4. The provisional reduction shall be without prejudice to any reductions or suspensions pursuant to Articles 17 and 27 of Regulation (EC) No 1290/2005.

COMMISSION REGULATION (EC) No 1423/2006 of 26 September 2006 establishing a mechanism for appropriate measures in the field of agricultural spending in respect of Bulgaria and Romania