Court of First Instance dismisses actions brought by British Steel and Wirtschaftsvereinigung Stahl against a Commission decision authorising State aid to Irish Steel
The financial position of Irish Steel, a 100% State-owned steel company, deteriorated between 1990 and 1995.
In 1996 the Commission authorised State aid from the Irish Government to Irish Steel for restructuring and privatisation. The aid in question, linked therefore to the sale of Irish Steel, was worth IEP 38.928 million. In its decision, the Commission did not insist on reduction of production capacity as in practice this would have forced Irish Steel's closure, since it had only one rolling mill. It did, however, impose certain conditions in return for the aid received, particularly in relation to the range of products manufactured and the volume of additional sales.
British Steel, a United Kingdom company, and Wirtschaftsvereinigung Stahl, a German association, both brought proceedings for annulment of that decision.
The Court of First Instance emphasised, first, that the contested decision was based on provisions of Community law. Since the early 1980's there has been a Community State aid code authorising certain categories of aid to the steel industry, which makes no provision for aid for restructuring. The Court held, however, that that does not prevent the Commission from exercising its discretion under Article 95 of the ECSC Treaty to determine whether a particular form of aid not listed by the Code is nevertheless consistent with the objectives of the Treaty.
The Court held that the Commission did not commit a manifest error of assessment in treating the difficult economic situation of the region concerned as a material consideration in reaching its decision.
Lastly, it held that the Commission is under no obligation to impose capacity reductions as a pre-condition for the grant of State aid in this area. It must only require such counterpart measures as are needed to curb the anti-competitive effects of the aid. The Court found that the production and sales restrictions placed on Irish Steel by way of counterpart measures were sufficient to prevent distortion of competition.
The Court also dismissed Wirtschaftsvereinigung Stahl's argument, based on the Commission's previous decisions refusing ECSC State aid, that the authorisation was discriminatory.
The actions were therefore dismissed.
Unofficial document for media use which does not bind the Court of First Instance. Available in : English, French and German.
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