ORDER OF THE COURT OF FIRST INSTANCE (Third Chamber)
1 October 2007 (*)
(Action for annulment – Directive 2003/87/EC – Scheme for greenhouse gas emission allowance trading – National allocation plan for emission allowances for Slovakia in respect of the period from 2008 to 2012 – Commission rejection decision – Lack of direct concern – Inadmissibility)
In Case T‑27/07,
U.S. Steel Košice s.r.o., established in Košice (Slovakia), represented by E. Vermulst, lawyer, and C. Thomas, Solicitor,
applicant,
v
Commission of the European Communities, represented by D. Lawunmi and U. Wölker, acting as Agents,
defendant,
ACTION for annulment of the Commission Decision of 29 November 2006 concerning the national allocation plan for greenhouse gas emission allowances notified by Slovakia for the period from 2008 to 2012 in accordance with Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32),
THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),
composed of M. Jaeger, President, J. Azizi and E. Cremona, Judges,
Registrar: E. Coulon,
makes the following
Order
The Act of Accession
1 The Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded (OJ 2003 L 236, p. 33) (‘the Act of Accession’) provides, in Article 24, for transitional measures, which are laid down in Annex XIV in respect of the Slovak Republic (OJ 2003 L 236, p. 915).
2 Point 2(a) of Title 4 (Competition policy) of Annex XIV provides:
‘Notwithstanding Articles 87 [EC] and 88 [EC], Slovakia may apply until the end of the fiscal year 2009 [a] corporate … tax exemption … to one beneficiary in the steel industry, provided that the following conditions are fulfilled:
(i) the aid beneficiary caps its production of flat products and its sales of flat products (hot-rolled, cold-rolled and coated) in the enlarged EU ...;
(ii) the beneficiary does not extend its range of groups of finished products existing on 13 December 2002;
(iii) the total aid granted to the beneficiary … does not exceed a total of USD 500 million. This aid can only be granted once and may not be extended or renewed under any circumstances. All aid granted to the same beneficiary during the transitional period must be included within the level of USD 500 million;
(iv) the beneficiary meets the terms of the privatisation contract regarding the maintenance of employment levels.
...’.
3 Point 2(b) of Title 4 of Annex XIV to the Act of Accession obliges the Slovak Republic to supply half-yearly reports containing information relating to the recipient undertaking, the last report to be submitted by the end of April 2010 unless agreed otherwise by the Commission, the Council and the Slovak Republic.
4 Point 2(d) of Title 4 of Annex XIV to the Act of Accession provides:
‘If the total aid reaches the maximum admissible level set out in subparagraph (a)(iii) before the end of the fiscal year 2009, the tax exemption shall be discontinued and the normal corporate income tax shall be due by the beneficiary for that part of the company’s earnings whose exemption from the tax would result in exceeding the maximum admissible level.’
5 Point 2(e) of Title 4 of Annex XIV to the Act of Accession contains the following:
‘If the beneficiary fails to meet the terms of the privatisation contract regarding the maintenance of employment levels, the aid shall be discontinued with immediate effect and the penalties provided for in the privatisation contract shall apply.’
Directive 2003/87
6 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32) established, with effect from 1 January 2005, a scheme for greenhouse gas emission allowance trading within the Community in order to promote reductions of greenhouse gas emissions, in particular emissions of carbon dioxide (‘CO2’), in a cost-effective and economically efficient manner (Article 1 of Directive 2003/87). The directive is based on the Community’s reduction obligations under the United Nations Framework Convention on Climate Change and the Kyoto Protocol. The latter was approved by Council Decision 2002/358/EC of 25 April 2002 concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of commitments thereunder (OJ 2002 L 130, p. 1). It entered into force on 16 February 2005.
7 Directive 2003/87 provides essentially that a permit must be obtained in advance for greenhouse gas emissions from the installations listed in Annex I thereto, including from those intended for the production and processing of ferrous metals (Articles 4 to 8), and that the emissions must be covered by allowances authorising the permit-holding operator to emit a certain quantity of greenhouse gases (Article 11), the allowances being allocated in accordance with national allocation plans (‘NAPs’) for an initial phase, from 2005 to 2007, and for subsequent five-year phases. If an operator manages to reduce its emissions, the excess allowances may be sold to other operators. Conversely, an operator of an installation the emissions of which are excessive may purchase the necessary allowances from an operator who has excess allowances.
8 The conditions and procedures under which the national authorities allocate allowances to operators of installations on the basis of an NAP are provided for in Articles 9 to 11 of Directive 2003/87.
9 Article 9(1) of Directive 2003/87 thus states:
‘For each period referred to in Article 11(1) and (2), each Member State shall develop [an NAP] stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them. The [NAP] shall be based on objective and transparent criteria, including those listed in Annex III, taking due account of comments from the public. …
… For … periods [referred to in Article 11(2)], the [NAP] shall be published and notified to the Commission and to the other Member States at least 18 months before the beginning of the relevant period.’
10 Article 9(3) of Directive 2003/87 provides:
‘Within three months of notification of [an NAP] by a Member State under paragraph 1, the Commission may reject that [NAP], or any aspect thereof, on the basis that it is incompatible with the criteria listed in Annex III or with Article 10. The Member State shall only take a decision under Article 11(1) or (2) if proposed amendments are accepted by the Commission. Reasons shall be given for any rejection decision by the Commission.’
11 According to the second sentence of Article 10 of Directive 2003/87, Member States are to allocate at least 90% of the allowances free of charge for the five-year period beginning on 1 January 2008.
12 Article 11(2) of Directive 2003/87, concerning the allocation and issue of allowances, provides:
‘For the five-year period beginning 1 January 2008, and for each subsequent five-year period, each Member State shall decide upon the total quantity of allowances it will allocate for that period and initiate the process for the allocation of those allowances to the operator of each installation. This decision shall be taken at least 12 months before the beginning of the relevant period and be based on the Member State’s [NAP] developed pursuant to Article 9 and in accordance with Article 10, taking due account of comments from the public.’
13 Annex III to Directive 2003/87 includes, inter alia, the following criterion:
‘…
5. The [NAP] shall not discriminate between companies or sectors in such a way as to unduly favour certain undertakings or activities in accordance with the requirements of the Treaty, in particular Articles 87 and 88 thereof.
…’
Facts
14 According to its own statements, the applicant is the only integrated steel producer in Slovakia. It generates around one-sixth of Slovak greenhouse gas emissions and is the ‘beneficiary in the steel industry’ within the meaning of point 2(a) of Title 4 of Annex XIV to the Act of Accession (see paragraph 2 above).
15 With regard to implementation of the rules in the Act of Accession, the Commission, the Slovak Government and the applicant discussed on several occasions the rights and obligations under point 2 of Title 4 of Annex XIV to the Act of Accession, including the production caps set. In that context, the Commission stated, in a letter of 1 October 2003 addressed to the Slovak Republic, that the applicant was free to produce and sell as much as it wanted when it wanted, but that the Slovak Republic could benefit from an exemption to the State aid rules only if certain conditions were met.
16 In a letter of 26 September 2005 to the Commission, the applicant took stock of two meetings it had had with it by stating that, once the USD 430 million cap was attained (see paragraph 2 above), its obligations under point 2 of Title 4 of Annex XIV to the Act of Accession would end, because it would no longer enjoy the benefits of the measure.
17 By letter of 11 October 2005, the Commission replied that it had no comments on the aforementioned letter from the applicant.
18 Following public consultation during which the applicant asked the Slovak Government for the allocation of a given quantity of allowances, on 18 August 2006 the Slovak Government notified its NAP for the period from 2008 to 2012 to the Commission. According to that NAP, the Slovak Republic intended to allocate an average of 41.3 million tonnes of CO2 equivalent per year in total, of which 11.7321676 million tonnes were to be allocated to the applicant. In explaining the quantity earmarked for the applicant, the Slovak Government stated that future emissions would be higher than those in 2005.
19 On 29 November 2006, the Commission adopted the decision concerning the NAP notified by the Slovak Republic for the period from 2008 to 2012, in accordance with Directive 2003/87 (‘the contested decision’).
20 In that decision, adopted under Article 9(3) of Directive 2003/87, the Commission states, in essence, that the Slovak authorities must reduce the total annual quantity of allowances provided for in the notified NAP by 10.387739 million tonnes of CO2 equivalent, in such a way that it corresponds to the production caps under Annex XIV to the Act of Accession.
21 The operative part of the contested decision reads as follows:
‘Article 1
The following aspects of the [NAP] of Slovakia for the first five-year period mentioned in Article 11(2) of [Directive 2003/87] are incompatible respectively with:
…
2. criterion [No] 5 of Annex III to [Directive 2003/87]: the proposed allocation to the extent that it exceeds the level corresponding to production limitations ensuing from Annex XIV to the Act of Accession;
…
Article 2
No objections shall be raised to the [NAP], provided that the following amendments to the [NAP] are made in a non‑discriminatory manner and notified to the Commission as soon as possible, taking into account the time-scale necessary to carry out the national procedures without undue delay:
…
2. the proposed allocation is modified in such a way that it corresponds to production limitations ensuing from Annex XIV to the Act of Accession;
…
Article 3
1. The total annual average quantity of allowances of 30.912261 million tonnes … to be allocated by Slovakia according to its [NAP] to installations listed therein and to new entrants shall not be exceeded.
2. The [NAP] may be amended without prior acceptance by the Commission if the amendment consists in modifications of the allocation of allowances to individual installations within the total quantity to be allocated to installations listed therein …
3. Any other amendments of the [NAP], apart from those made to comply with Article 2 of this Decision, must be notified … and require prior acceptance by the Commission pursuant to Article 9(3) of [Directive 2003/87].
Article 4
This Decision is addressed to Slovakia.’
22 That operative part is based, inter alia, on the following recitals:
‘17. … pursuant to criterion [No] 5 of Annex III to [Directive 2003/87], the Commission has examined the correspondence of proposed allocation with production limitations ensuing from Annex XIV to the Act of Accession. These product limitations constitute one of the conditions stipulated in [Title] 4 point 2 of Annex XIV to the Act of Accession under which the Slovak Republic is allowed to apply until the end of the fiscal year 2009 the corporate tax exemption up to the maximum specified aid amount to one beneficiary in the steel industry. The Commission finds that the proposed allocation does not consistently and systematically correspond to those limitations.
18. The Slovak authorities refer in the part of [the NAP] concerning the allocation method applied in the steel sector to the fact that the production limitations imposed in relation to provision of the tax credit cease to be valid at the end of 2007, presumably because by that time the maximum aid amount will be reached. The Commission disagrees, however, with this interpretation. The above-mentioned production limitations remain valid until the end of 2009, independently of whether the maximum amount of State aid resulting from the corporate tax exemption is reached earlier. The interpretation brought forward by the Slovak authorities is inconsistent with the logic of the State aid rules. Reaching the maximum aid amount earlier than foreseen cannot be a reason to relax the conditions that serve as a compensation to outweigh the distortion of competition generated by this aid.
19. The Commission therefore considers that the allocation proposed by the Slovak authorities for years 2008 and 2009 provides an undue advantage to one operator since it will partially correspond to production that it will not be allowed to produce. Allocating allowances beyond legal, economic or technical limitations is paramount to allocating beyond the level of expected needs. The Commission considers that where the proposed allocation exceeds the level corresponding to the production limitations, any operator concerned is unduly favoured, which contravenes criterion [No] 5 of Annex III to [Directive 2003/87]. Moreover, the Commission at this stage cannot exclude that any State aid involved in allocation exceeding this level may be found incompatible with the common market should it be assessed in accordance with Articles 87 [EC] and 88 [EC].
…
21. In order to bring the [NAP] in conformity with the criteria listed in Annex III to [Directive 2003/87], the plan should be amended. … Were the Slovak Republic to amend its [NAP] in a non-discriminatory manner in accordance with Article 2 of this Decision …, the Commission considers that any potential aid is likely to be compatible with the common market should it be assessed in accordance with Articles 87 [EC] and 88 [EC].’
23 Lastly, the Commission imposes on the Slovak Republic a reduction of 10.387739 million tonnes in the total quantity of allowances, stating in recitals 4 to 13 of the contested decision that the total quantity of allowances the allocation of which would be envisaged in the Slovak NAP – 40.3 million tonnes of CO2 equivalent per year – exceeds by 10.387739 million tonnes the quantity which would be consistent with assessments of actual and projected progress and is more than would be consistent with the potential reduction of emissions from activities covered by the Community scheme.
Procedure and forms of order sought
24 By application lodged at the Registry of the Court of First Instance on 7 February 2007, the applicant brought the present action.
25 By a separate document lodged on the same date, the applicant requested the Court of First Instance to decide the case by means of the expedited procedure pursuant to Article 76a of its Rules of Procedure. On 26 February 2007, the Commission lodged its observations on that request.
26 By decision of 29 March 2007, the Court of First Instance (Third Chamber) rejected the request for the case to be decided by means of the expedited procedure.
27 The applicant claims in its application that the Court should:
– annul the contested decision;
– order the Commission to pay the costs.
28 In support of its action, the applicant alleges, inter alia, infringement of point 2(a) of Title 4 of Annex XIV to the Act of Accession on the ground that the Commission disregarded the fact that the production caps provided for by that provision were necessarily limited to the period during which the Slovak Republic was exercising its right to grant a tax advantage, which advantage ceased to apply at the end of 2007. The applicant further alleges infringement of the principle of protection of legitimate expectations, as the Commission led it to entertain justified expectations regarding the removal of the aforementioned production caps.
29 The applicant also criticises the Commission for having made a calculation using a method which took absolutely no account of the appropriate total quantity of emissions in Slovakia and for having imposed it on the Slovak Republic, thereby usurping powers reserved solely for the Member States, instead of remaining within the more limited functions conferred on it by Article 9(3) of Directive 2003/87. Moreover, the contested decision is unlawful in that it follows from the application of an abstract mathematical formula which was imposed without public consultation and which did not take account of factors specific to Slovakia influencing emissions in the period from 2008 to 2012. The Commission in any event made a manifest error of assessment. Lastly, the contested decision is vitiated by a misuse of powers in that it was motivated by a wish to cause a shortage of allowances in order to drive up their prices.
30 By separate document lodged at the Registry on 19 March 2007, the Commission raised an objection of inadmissibility pursuant to Article 114 of the Rules of Procedure. The applicant lodged its observations on that objection on 11 April 2007.
31 The Commission contends that the Court should:
– dismiss the action as inadmissible;
– order the applicant to pay the costs.
32 In its observations on the objection of inadmissibility, the applicant claims that the Court should:
– dismiss the objection of inadmissibility;
– order the Commission to pay the costs.
Law
33 Under Article 114(1) of its Rules of Procedure, the Court of First Instance may give a decision on admissibility without considering the substance of the case, where a party has made an application to that effect. Under Article 114(3), unless the Court decides otherwise, the remainder of the proceedings is to be oral. In the present case, the Court considers that the information in the documents before it is sufficient and that there is no need to open the oral procedure.
Arguments of the parties
34 The Commission maintains that the action is inadmissible because the contested decision is not of direct concern to the applicant within the meaning of the fourth paragraph of Article 230 EC. First of all, the applicant is not directly affected by the contested decision and, second, it is the Member States and not the Commission which allocate the individual emission allowances to the operators; lastly, the Member States enjoy a margin of discretion in allocating emission allowances to individual operators.
35 The Commission explains, first, that the decision to allocate allowances to individual operators, far from being taken indirectly by the Commission itself, lies solely within the Member States’ sphere of competence. Articles 9 and 11 of Directive 2003/87 clearly lay down a two-stage process for the allocation of allowances, the first of which consists of the development and consideration of an NAP. Article 9(1) of Directive 2003/87 provides that the NAP must state the ‘total quantity of allowances’ that the Member State concerned ‘intends to allocate’ for the period in question and how it ‘proposes to allocate them’. Criterion No 10 of Annex III to Directive 2003/87 also refers to the NAP and requires it to contain ‘a list of the installations covered by this directive with the quantities of allowances intended to be allocated to each’. The Commission infers from this that the NAP developed pursuant to Article 9 of the directive cannot entail a legally binding commitment to allocate precisely those quantities indicated in that same NAP to the operators listed therein.
36 The Commission adds that the second stage is provided for in Article 11 of Directive 2003/87. It is only at that second stage that allocation of allowances to the operators of each installation can take place. That conclusion is borne out by the fact that Article 9(3) expressly provides that ‘[t]he Member State shall only take a decision under Article 11(l) or (2) if proposed amendments are accepted by the Commission’.
37 The Commission states that its role, as set out in Article 9(3) of Directive 2003/87, is limited and remote as regards the applicant. The system established by Directive 2003/87 provides Member States with autonomy for development of their NAPs. Decisions relating to the total quantity of allowances and how those allowances are to be allocated are made by the Member States. Directive 2003/87 entrusts the Commission simply with the task of assessing the NAP according to the criteria set out in Article 9(1) and Annex III. If no objections are raised, the Member State may implement its NAP, which of course remains its sole responsibility.
38 Moreover, the NAP itself does not give rise to direct legal consequences for the applicant’s position outside of a domestic framework of implementation. The contested decision cannot have a wider legal effect than the NAP itself. Thus, if the NAP does not give rise to direct consequences for the applicant’s position, it follows that the contested decision cannot be of direct concern to the applicant either.
39 The Commission submits, second, that the Member States enjoy a margin of discretion in the manner in which they decide to allocate the total quantity of allowances amongst individual operators. In addition to its role under the Treaty, the Commission is only charged by Article 9 of Directive 2003/87 with ensuring that the NAP as a whole is consistent with Article 10 thereof and with the criteria listed in Annex III thereto.
40 No provision of Directive 2003/87 requires Member States to allocate individual allowances exactly as indicated in the NAP submitted to the Commission pursuant to Article 9 of that directive. On the contrary, such a consequence would render nugatory the second stage of the allowance allocation procedure in Article 11 of Directive 2003/87 and the findings from the public consultation. Accordingly, the Slovak Republic must take measures at national level to implement the NAP in its national legal order. The appropriate remedy is thus for the applicant to challenge that implementation at national level.
41 Lastly, the Commission submits, third, that Article 11(1) of Directive 2003/87 provides that Member States must take into account the comments of the public in implementing the NAP at national level. The Slovak Republic thus enjoys a margin of discretion in that implementation. Article 3(2) of the contested decision also refers to the margin of discretion the Slovak Republic has for that purpose, since the NAP may be amended without prior acceptance by the Commission if the amendment consists in modification of the allowances allocated to certain installations within the total quantity to be allocated to individual installations.
42 The applicant notes that, in the contested decision, the Commission objects to the Slovak NAP, on the grounds that the total quantity of allowances provided for must be reduced by approximately 10.4 million tonnes to 30.9 million tonnes. The applicant submits that that decision is of direct concern to it, because it amounts to a rejection of the NAP under which the applicant is to receive allowances and a demand that it be modified. The reduction imposed entails a change in the quantity of allowances to be allocated to the applicant in order to reflect the Commission’s interpretation to the effect that the production and sales caps applicable to the applicant under Annex XIV to the Act of Accession continue to apply until 2009.
43 In response to the Commission’s line of argument concerning the two stages in the allocation procedure, the applicant states that the definitive allocation of allowances under Article 11 of Directive 2003/87 is legally required to take place in compliance with the NAP as approved by the Commission under Article 9(3) of that directive. Thus it is the Commission’s decision under Article 9(3) that controls the amount of allowances that are subsequently allocated by the Member State.
44 The applicant refers to Case T‑178/05 United Kingdom v Commission [2005] ECR II‑4807, paragraphs 55 and 56, in which the ruling applies to both ‘the total quantity of allowances that it will allocate’ and ‘the allocation of those allowances to the installations in question’. It infers therefrom that the allocation of allowances under Article 11 of Directive 2003/87 – namely the second stage referred to in the objection of inadmissibility – must be effected in accordance with the NAP, as approved by the Commission under Article 9(3) of that directive. Any proposed changes would have to be the subject of fresh notification to the Commission and approved in a new Article 9(3) decision.
45 The applicant concludes that the decision adopted pursuant to Article 9(3) of Directive 2003/87 controls whether particular allowances may be allocated, in the same way as a decision on the compatibility of a concentration under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1) controls whether a particular concentration may subsequently be implemented, and a decision on the compatibility of State aid under the procedure provided for in Articles 87 EC and 88 EC controls whether particular aid may subsequently be granted. In those fields it is well-established law that the undertakings concerned by the concentration in question, or the beneficiaries of the State aid, are directly concerned by the Commission’s decision.
46 In that context, the applicant states that, in recitals 17 to 21 of the contested decision, the Commission indeed found that the Slovak NAP, as notified, contained State aid to the applicant and this aspect was accordingly rejected pursuant to criterion No 5 of Annex III to Directive 2003/87. The Commission thus prevented the grant of what it deemed to be State aid to the applicant. It is well-established law that such decisions directly concern the beneficiaries of the proposed State aid, such as the applicant.
47 The applicant adds that the contested decision had the effect of prohibiting the allocation by the Slovak Government of allowances to the applicant and to other operators in accordance with the NAP notified on 18 August 2006. If the Commission had not rejected the NAP, the Slovak Government would have been required to allocate the allowances in accordance with that NAP. The only alternative would have been to make a new application to the Commission for a decision authorising an amendment to the NAP, as the Slovak Government would have had no discretion to amend its NAP unilaterally (United Kingdom v Commission, cited in paragraph 44 above, paragraph 55). Thus, had it not been for the contested decision, the Slovak Government would have implemented the NAP notified on 18 August 2006 and allocated the allowances set to the installations concerned, including the applicant. Since the contested decision prevented the Slovak Government from so doing, it was of direct concern to the applicant.
48 Moreover, in the contested decision, the Commission requires amendments as a condition for approval of a formal NAP notified in accordance with an approval procedure laid down by Community law. Under that procedure, the Commission’s approval is a legal precondition for the allocation of allowances to the applicant. The procedure under Directive 2003/87 establishes a legal situation in which, first, the Member State may not implement its NAP without first having notified it to the Commission and received the Commission’s approval and, second, the Member State’s allocation decisions implementing the NAP legally must be in accordance with the Commission’s approval decision.
49 Furthermore, in the contested decision, the Commission leaves no discretion for the Slovak Government, because it expressly prohibits it from implementing the NAP as notified. In paragraphs 55 to 59 of United Kingdom v Commission, cited in paragraph 44 above, the Court made it clear that a Member State has no discretion at all to depart from the NAP as approved by the Commission under Article 9(3) of Directive 2003/87, the adoption by a Member State of its definitive decision concerning ‘the total quantity of allowances that it will allocate’ and ‘the allocation of those allowances to the installations in question’, under Article 11 of the directive, being subject to the condition contained in Article 9(3) that any amendment to the NAP must be accepted by the Commission.
50 Regarding the role of the public consultations provided for in Article 11 of Directive 2003/87, the Court made it clear in United Kingdom v Commission, cited in paragraph 44 above (paragraphs 57 to 59), that those consultations may make the need for changes to the NAP apparent, but that such changes must be proposed to the Commission and approved in a new Article 9(3) decision.
51 Lastly, regarding the flexibility offered by Article 3(2) of the contested decision, which states that the Slovak NAP may be amended without prior acceptance by the Commission if the amendment concerns the allowances for individual installations and remains within the total quantity of allowances to be allocated, the applicant observes that that provision explicitly excludes any amendments to the total quantity of allowances to be allocated and thus cannot create any discretion with respect to this aspect of the decision. With respect to reallocation of allowances within the authorised total amount, that provision is not intended to prevail over the specific restrictions imposed by Articles 1(2) and 2(2) of the contested decision relating to the applicant’s allowances.
Findings of the Court
52 Under the fourth paragraph of Article 230 EC, any natural or legal person may institute proceedings against a decision which, although in the form of a decision addressed to another person, is of direct and individual concern to the former.
53 Since the contested decision is addressed to the Slovak Republic, it must be examined whether that decision is of direct concern to the applicant.
54 In that regard, it is necessary to recall the two cumulative criteria, identified in settled case-law, for direct concern within the meaning of the fourth paragraph of Article 230 EC.
55 First, the measure at issue must directly affect the legal situation of the person concerned. Second, that measure must leave no discretion to its addressees who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community rules alone without the application of other intermediate rules (Case C-386/96 P Dreyfus v Commission [1998] ECR I‑2309, paragraph 43, and Case T‑69/99 DSTV v Commission [2000] ECR II‑4309, paragraph 24). The second criterion is also satisfied where the possibility for addressees not to give effect to the Community measure is purely theoretical and their intention to act in conformity with it is not in doubt (Dreyfus v Commission, paragraph 44; see also, to that effect, Case 11/82 Piraiki-Patraiki and Others v Commission [1985] ECR 207, paragraphs 7 to 10).
56 It is next necessary to note the roles and powers allocated to the Commission and the Member States respectively under Directive 2003/87, particularly by Articles 9 to 11.
57 The essential purpose of Directive 2003/87 is to put in place a scheme for greenhouse gas emission allowance trading within the Community. This system is based upon NAPs developed by the Member States in accordance with criteria laid down by that directive. Each Member State was thus required to develop an NAP for the five-year period beginning on 1 January 2008. That NAP was to be published and notified to the Commission and to the other Member States at least 18 months before that date in accordance with Article 9(1) of Directive 2003/87. The NAP was required to state the total quantity of allowances which the Member State ‘intends to allocate for that period and how it proposes to allocate them’ (see paragraph 9 above and, to this effect, United Kingdom v Commission, cited in paragraph 44 above, paragraph 52).
58 Pursuant to Article 9(3) of Directive 2003/87, the Commission is empowered to reject an NAP, or any aspect thereof, within three months of its notification on the basis that it is incompatible with Article 10 of Directive 2003/87 or with the criteria listed in Annex III thereto (see paragraph 10 above). No other ground for rejection of an NAP is provided for in Directive 2003/87. As stated by the Court in paragraph 55 of its judgment in United Kingdom v Commission, cited in paragraph 44 above, Article 9(3) does not expressly require the adoption of a positive decision of approval of a notified NAP. If the Commission does not take a decision on the NAP within the time period laid down by that provision, the NAP is presumed to be compatible with Article 10 of Directive 2003/87 and with the criteria of Annex III thereto.
59 The definitive decision as to the total quantity of allowances to be allocated and the allocation of those allowances to the installations in question must be taken by each Member State under Article 11(1) or (2) of Directive 2003/87 and on the basis of the NAPs developed pursuant to Article 9 of the directive (United Kingdom v Commission, cited in paragraph 44 above, paragraph 53).
60 The Court therefore considers that it follows both from the wording of Directive 2003/87 and from the objectives of the system which it establishes that it is the decision of the national authorities taken pursuant to Article 11(1) or (2) of Directive 2003/87 allocating allowances to the operators of the installations concerned which affects the operators’ legal situation.
61 None of the arguments put forward by the applicant affects this conclusion.
62 Regarding the argument that in the contested decision the Commission requires the Slovak Republic to reduce by approximately 10.4 million tonnes the total quantity of allowances provided for in its NAP to bring that quantity down to 30.9 million tonnes, necessarily affecting the total quantity of individual allowances for the applicant, the Court notes that neither Directive 2003/87 nor the contested decision effects an automatic distribution of the total quantity of allowances amongst the individual installations, in the sense that the reduction of 10.4 million tonnes in the total quantity of allowances compared with the NAP notified on 18 August 2006 has resulted in given percentages or quantities of allowances being allocated to the applicant and to other Slovak individual installations.
63 On the contrary, under Article 3(2) of the contested decision, the Slovak Government is explicitly entitled to amend its NAP where the amendment concerns the allocation of allowances to certain installations, provided that the limits on the total quantity of allowances to be allocated to individual installations are complied with. Consequently, there is nothing in law to prevent the Slovak Government from granting a request from the applicant for allocation, on imperative economic grounds, of the same quantity of individual allowances as that proposed by the Slovak Government to be allocated to it on the basis of the notified NAP. Accordingly, as at the date on which the present proceedings were brought, the fear expressed by the applicant, to the effect that the divergence between the total quantity of allowances imposed by the contested decision and that provided for by the notified NAP will lead to a reduction in the quantity of its individual allowances, relates to a purely hypothetical scenario.
64 In so far as the applicant submits that each change envisaged by the Slovak Republic in the allocation of the specific allowances during the second stage of the allocation procedure must be notified to and approved by the Commission, it need merely be stated that this argument has no legal basis. Article 3(2) of the contested decision expressly confirms the discretion which the Slovak Government has in the allocation of specific allowances to individual installations, provided simply that it does not exceed the limits on the total quantity of allowances to be allocated.
65 As to the applicant’s general reference to the rules governing monitoring of State aid, the Court notes that the words ‘may reject’ employed in the first sentence of Article 9(3) of Directive 2003/87 imply a certain margin of discretion for the Commission, which it is not obliged to make use of in all circumstances, whereas the rules on State aid are based on a principle of general prohibition – linked to a presumption of unlawfulness – according to which aid within the meaning of Article 87(1) EC is, as a rule, incompatible with the common market. Article 9(3) of Directive 2003/87, by contrast, is not based on such a principle and is not intended to derogate from any general prohibition. Contrary to the applicant’s line of argument, those differences between the procedure for examining State aid and that for examining NAPs highlight a fundamental distinction between those two ex ante control systems. It follows that the legal effects of the measures taken by the Commission under those two systems, both in respect of the Member States and in respect of the undertakings concerned, must also be clearly distinguished.
66 The same holds true for the applicant’s reference to Regulation No 139/2004 on the control of concentrations between undertakings. Unlike the system provided for by Article 9(3) of Directive 2003/87, the system of control established by that regulation requires an explicit, rights-creating authorisation from the authorities if the notified proposed concentration is to be capable of implementation.
67 The applicant draws further argument from recitals 17 to 21 of the contested decision, which in its view indicate that the notified NAP was rejected because it involved State aid for the applicant. The applicant submits that it, the recipient of that proposed aid, is directly concerned by such a decision, as recognised by well established case-law on State aid.
68 The Court notes in this respect that the State aid in question consists of a tax exemption granted to the applicant under primary Community law, namely point 2(a) of Title 4 of Annex XIV to the Act of Accession, up to an amount of USD 500 million. The contested decision does not call into question the authorisation of that State aid, which may expressly be granted ‘notwithstanding Articles 87 [EC] and 88 [EC]’.
69 Regarding the production and sales caps intended to compensate for that State aid, it is true that the Commission, in recitals 17 to 21 of the contested decision, adopts a position contrary to that put forward by the applicant in respect of the duration of validity of those caps. However, the conclusions which the Commission seeks to draw therefrom relate only to the field of allocation of the allowances, while it addresses the field of State aid in a purely provisional and preliminary manner.
70 Although the Commission finds that the quantity of allowances provided for in the notified NAP does not correspond coherently and systematically to the production caps in question (recital 17), that the interpretation put forward by the Slovak authorities is incompatible with the logic of the State aid rules (recital 18) and that the allocation envisaged by those authorities for 2008 and 2009 confers an undue advantage on one operator, since that allocation will correspond in part to output it will not be able to produce (recital 19), the fact remains that the Commission merely concludes that ‘at this stage [it] cannot exclude that any State aid involved in allocation exceeding this level may be found incompatible with the common market should it be assessed in accordance with Articles 87 [EC] and 88 [EC]’ (recital 19).
71 Moreover, although in Articles 1 and 2 of the contested decision the Commission ‘requires’ the Slovak Republic to modify the proposed allocation in such a way that it corresponds to the production limitations ensuing from Annex XIV to the Act of Accession, the Commission merely states that, were the Slovak Republic to amend its NAP in accordance with Article 2 of the contested decision, it ‘considers that any potential aid is likely to be compatible with the common market should it be assessed in accordance with Articles 87 [EC] and 88 [EC]’ (recital 21 of the contested decision).
72 It follows from those cautious and general formulations that the Commission made merely a provisional assessment of the issue of production caps in the light of the rules on State aid. Such a provisional assessment cannot be interpreted as the adoption of a definitive position on the point. A decision based solely on Article 9(3) of Directive 2003/87 and not on Articles 87 EC and 88 EC, as is the case with the decision in the present case, allows the Commission to conduct only a prima facie assessment of the State aid aspects of the NAP in the light of the law on State aid, without prejudice to the eventual adoption of a formal decision for the purposes of the third sentence of Article 88(3) EC. Consequently, such a rejection decision adopted solely on the basis of Article 9(3) of Directive 2003/87 cannot have all the legal consequences of a decision taken pursuant to Article 88 EC and Article 4 or Article 7 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88 EC] (OJ 1999 L 83, p. 1).
73 It follows that the contested decision does not have the effect of placing the applicant in the same situation as a recipient of State aid which has been declared to be incompatible with the common market pursuant to a formal decision for the purposes of Article 88 EC. The applicant therefore cannot successfully rely on the case-law which has held that actions for annulment brought by such recipients are admissible.
74 Accordingly, the particularities of the present case relating to the production caps relied on by the applicant are not such as to affect the discretion which the Slovak Government has in the allocation of specific allowances to individual installations provided that the limits on the total quantity of allowances to be allocated are respected.
75 Moreover, that discretion could also be exercised, if necessary after a strengthening of national environmental protection policy, by the Slovak Government even contenting itself with a lower allocation of allowances and not exhausting the total quantity ‘accepted’ by the Commission. Article 176 EC provides that measures such as Directive 2003/87, adopted pursuant to Article 175 EC, are not to prevent any Member State from introducing more stringent protective measures provided that the latter are compatible with the Treaty and are notified to the Commission.
76 In any event, in the system provided for by Directive 2003/87, under which it is for the Member States to distribute the allowances amongst the installations in question in the exercise of their discretion, the definitive and direct determination of the rights and obligations of the operators of those installations can result only from the decision by the Member State adopted pursuant to Article 11(1) of that directive.
77 The Commission is therefore correct in observing that the appropriate remedy for those operators is to challenge at national level the decision on allocation of their individual allowances. In those proceedings, they may allege, where applicable, that the allocation decision was made pursuant to an unlawful act by the Commission.
78 Accordingly, there is nothing to indicate that the implementation of the contested decision by the Slovak Republic is purely automatic in nature and results from Community rules alone, as contemplated in the case-law referred to in paragraph 55 above. Since the Slovak Republic itself has brought an action for annulment of the contested decision (Case T‑32/04, currently pending before the Court of First Instance), nor does the present case come within the case-law, also referred to in paragraph 55 above, according to which an act also produces direct effects where the possibility for the Member State not to give effect to the Community measure is purely theoretical and its intention to act in conformity with it is not in doubt.
79 It follows from all the foregoing that the contested decision is not of direct concern to the applicant, since the allocation of the quantity of individual allowances within the limits of the total quantity of allowances is for the Slovak Government to decide freely on its own.
80 Consequently, the action is inadmissible.
Costs
81 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 applicant has been unsuccessful, it must be ordered to pay the costs, as applied for by the Commission.
On those grounds,
THE COURT OF FIRST INSTANCE (Third Chamber)
hereby orders:
1. The action is dismissed as inadmissible.
2. U.S. Steel Košice s.r.o shall pay the costs.
Luxembourg, 1 October 2007.