The Commission's decision not to open a formal investigation into a capital injection of LIT 3 000 billion to EniChem, on the grounds that it was not State aid, infringed the rights of third parties and therefore had to be annulled.

Between 1992 and 1994 ENI, a public undertaking in Italy, made a series of three capital injections, worth respectively, LIT 1 000 billion, LIT 794 billion and LIT 3 000 billion, to EniChem, one of its subsidiaries.

By its action BP (supported by the United Kingdom) sought the annulment of the Commission's decision of 27 July 1994 to approve State aid granted in the form of the first two capital injections and to declare that the third capital injection did not constitute aid.

BP's claims in respect of the first two capital injections were dismissed as inadmissible. So far as the third capital injection was concerned, the Commission argued that it did not constitute State aid within the meaning of the Treaty on the ground that it would have been undertaken by a private investor operating in a market economy.

Under Article 93(2) of the EC Treaty, the Commission must open a formal investigation if it has doubts whether a proposed State aid is compatible with the common market. The Court of First Instance held that this principle also applies where the question is whether or not a capital injection constitutes State aid.

In the present case, the Court first took the view that, where three such capital injections had been made by the same investor over a period of two years, the first two of which brought no return, the Commission had to determine whether the third could be treated separately from the other two and classed as a private investment.

The Court then examined the chronology of the series of capital injections, their purpose and the situation of the subsidiary at the time of each injection.

It concluded that the three payments had been made over a relatively short period; that each payment was part of a continuing programme for the restructuring of EniChem and that, after the first two capital injections, EniChem was still making significant losses which threatened its continuing viability.

In those circumstances, the Court held that the Commission should have had doubts as to the question whether the third injection was sufficiently distinct from the first two injections for it to be analysed in isolation from them.

The Court further held that the Commission's production, in the course of the proceedings, of contradictory calculations of the returns that the third injection would generate, and its inability to demonstrate what calculations it had made at the material time, showed that, in the present case, there were serious doubts as to whether, like the first two capital injections, that injection constituted State aid.

The Commission was therefore not in a position at the end of an initial examination to overcome all the difficulties raised by the question whether the third injection constituted aid within the meaning of the Treaty.

It followed that the Commission, in closing its initial examination on the third capital injection, despite its inability to surmount the difficulties regarding the question whether that injection constituted State aid, and without examining whether the injection could be approved as State aid compatible with the common market, had infringed the rights of the applicant under Article 93(2) of EC Treaty. The decision was therefore annulled.

It is now for the Commission to reconsider the matter and adopt the measures required for compliance with the judgment.

Note. An appeal, limited to points of law, may be brought before the Court of Justice against this judgment of the Court of First Instance within two months of its notification.