Joined Cases T-267/08 and T-279/08
Région Nord-Pas-de-Calais and Communauté d’agglomération du Douaisis
v
European Commission
(State aid – Construction of railway equipment – Repayable advances – Decision declaring the aid incompatible with the common market and ordering its recovery – Alteration of heads of claim – Rights of defence – Duty to state reasons – State resources – Whether imputable to the State – Criterion of private investor – Undertaking in difficulties)
Summary of the Judgment
1. Procedure – Decision replacing the contested decision during the proceedings – New factor – Extension of the initial pleadings
2. Acts of the institutions – Statement of reasons – Obligation – Scope – Commission decision on State aid
(Art. 296 TFEU; Commission Notice 97/C 273/03)
3. State aid – Examination by the Commission – Administrative procedure – Commission obligation to give the parties concerned, and therefore the infra-State bodies, notice to submit their comments – Limits
(Art. 108(2) TFEU)
4. State aid – Examination by the Commission – Decision to open the formal investigation procedure under Article 108(2) TFEU – Duty to state reasons – Scope
(Art. 108(2) TFEU; Council Regulation No 659/1999, Art. 6)
5. Acts of the institutions – Withdrawal – Unlawful acts – Decision declaring State aid incompatible with the common market vitiated by an insufficient statement of reasons – Adoption of a new decision – No obligation to reopen the formal investigation procedure
6. State aid – Concept – Aid coming from State resources – Funding by resources submitted to public control – Included
(Art. 107(1) TFEU)
7. State aid – Concept – Grant of an advantage to the beneficiaries – Loan of money subject to repayment attracting interest – Assessment in relation to the agreed interest rate
(Art. 107(1) TFEU)
8. State aid – Prohibition – Exceptions – Aid which may be considered compatible with the common market – Discretion of the Commission – Possibility of adopting guidelines
(Art. 107(3) TFEU; Commission Notice 2004/C 244/02)
9. State aid – Prohibition – Exceptions – Aid which may be considered compatible with the common market – Aid for restructuring a firm in difficulty – Identification of firms in difficulty
(Art. 107(3) TFEU; Commission Notice 2004/C 244/02, point 11)
10. State aid – Examination by the Commission – Recognition of the position of a firm in difficulty for the purposes of granting the benefit of an exemption from the prohibition on aid
11. State aid – Concept – Assessment according to the private investor criterion
(Art. 107(1) TFEU)
12. Acts of the institutions – Withdrawal – Unlawful acts – Commission decisions on State aid – Adoption of a new decision with the addition of new factors seeking to respond to the criticisms of the parties concerned – Infringement of the right to a fair hearing – None
1. When, during the proceedings, one decision is replaced by another having the same subject-matter, this must be considered a new factor allowing the applicant to adapt its pleas in law and claims for relief. It would indeed be contrary to the due administration of justice and the requirements of procedural economy to oblige the applicant to make a fresh application. Moreover, it would be inequitable if the defendant institution were able, in order to counter criticisms of a decision contained in an application made to the Union judicature, to amend the contested decision or to substitute another for it and to rely in the proceedings on such an amendment or substitution in order to deprive the other party of the opportunity of extending his original pleadings to the later decision or of submitting supplementary pleadings directed against that decision.
(see para. 23)
2. A decision declaring State aid to a company in difficulty incompatible with the common market satisfies the requirements of Article 296 TFEU, as regards the method used by the Commission to calculate the amount of the aid since it is not confined to mere references to a Commission Communication on the reference rates but includes a detailed description of the chosen calculation method and an in-depth analysis of the undertaking’s financial position and of the absence of sureties, and as regards the reasons given for the premium applicable to the reference rate, relies on an analysis of financial market practice on the basis of empirical research into the premiums seen on the market for different categories of risks relating to undertakings or to transactions.
(see paras 50, 52-53)
3. In the course of an administrative procedure regarding State aid instituted under Article 108(2) TFEU, case-law confers, in essence, on the interested parties, which include intra-State entities dispensing the aid at issue, the role of information sources for the Commission. It follows that, far from enjoying the same rights of defence as those which individuals against whom a procedure has been instituted are recognised as having, the parties concerned have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case.
Accordingly, an applicant may not plead infringement of the principle of sound administration on the ground that the Commission did not specifically solicit the applicant’s comments regarding the aid investigation procedure. Nor does the Commission have any duty to forward the observations or the information which it has received from the government of the Member State concerned to the interested parties.
(see paras 71, 74-75, 88)
4. Under Article 6 of Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty, where the Commission decides to initiate the formal investigation procedure, it is permissible for its decision merely to summarise the relevant issues of fact and law, to include a preliminary assessment as to the aid character of the State measure in question and to set out its doubts as to the measure’s compatibility with the common market.
Thus, a decision to initiate the procedure must give interested parties the opportunity effectively to participate in the formal investigation procedure, during which they will have the opportunity to put forward their arguments. For that purpose, it is sufficient for the parties concerned to be aware of the reasoning which has led the Commission to conclude provisionally that the measure in issue might constitute new aid incompatible with the common market.
(see paras 80-81)
5. In the event of the withdrawl of the original decision, the procedure for replacing an illegal measure may thus be resumed at the very point at which the illegality occurred, and the Commission is not required to recommence the procedure by going back further than that precise point.
As regards a decision declaring State aid incompatible with the common market and ordering its recovery, the inadequate statement of reasons which led to the withdrawl of the original decision does not date from the commencement of the procedure, if that was not unlawful in any way. Although the formal investigation procedure having preceded the adoption of the decision which was withdrawn was conducted lawfully, it was not reopened prior to the new decision being adopted.
The addition of further evidence to the new decision cannot call this fact into question if such an addition is intended to respond in more detail to the objections which gave rise to the original decision.
(see paras 83-85)
6. In the scope of Article 107(1) TFEU the possible funding of the measures at issue which do not come from fiscal or parafiscal contributions cannot prevent these measures being classified as State aid. The decisive criterion as far as concerns State resources is public control, and Article 107(1) TFEU encompasses all financial means, whether they result from mandatory contributions or not, which the public sector can actually use to support undertakings.
(see para. 111)
7. In the case of a loan of money subject to repayment attracting interest, any interest which an undertaking might have to pay in return for a loan does not necessarily undo the advantage gained by that undertaking. There is in fact a burden on the budget of the local authority having granted the loan, since the latter could have obtained a more favourable rate of yield if it had lent this sum under normal market conditions or if it had held or invested it elsewhere. In such a situation, the aid amounts to the difference between the interest which would have been paid if the interest rate corresponding to normal market conditions had been applied and the interest which was actually paid.
(see para. 112)
8. Under Article 107(3) TFEU the Commission has a wide discretion. None the less, in order to exercise that discretion, it may adopt rules of guidance, such as the Community guidelines on State aid for rescuing and restructuring firms in difficulty, so long as those rules do not depart from the provisions of the Treaty. Where such a measure has been adopted, the Commission is governed by it. It is therefore for the Court to check that the Commission has observed the rules which it adopted.
However, since the wide discretion conferred upon the Commission, clarified, where appropriate, by the guidance rules adopted, involves complex economic and social appraisals having to be carried out in a Community context, the Court has limited control over these. It confines its review to determining whether the rules governing procedure and the requirement for a statement of reasons have been complied with, whether the facts are accurately stated and whether there has been any manifest error of assessment or any misuse of powers.
(see paras 129-132)
9. Since point 11 of the Community guidelines on State aid for rescuing and restructuring firms in difficulty indicates that a ‘firm may still be considered to be in difficulties, in particular where the usual signs of a firm being in difficulty are present, such as increasing losses [and] diminishing turnover …’, the Commission was fully entitled to presume that an undertaking showing negative capital and reserves and net losses was a firm in difficulty.
The Commission is not obliged to take account of factors subsequent to the grant of the State aid measures at issue. It must take account of the situation existing at the time when the measure was taken, because, if it took subsequent factors into account, it would be conferring an advantage on Member States which fail in their obligation to give notice at the planning stage of aid which they intend to grant. Moreover, an improvement in the situation of the beneficiary undertaking during the year in which the measures at issue were granted cannot affect the assessment of the situation of that undertaking at the time at which the measure was granted, in particular because it is not inconceivable that the existence of that guarantee may have influenced that development.
(see paras 135, 141, 143-144, 146)
10. In so far as the European Union legal order does not, in principle, aim to define concepts on the basis of one or more national legal systems unless there is express provision to that effect and in the absence in the relevant guidelines of any reference to national legal systems, it is not appropriate, in the context of the application of the EU rules on State aid, and to determine whether it was lawful for the Commission to take the case-law of a Member State into account, to assess the classification of a firm in difficulty.
(see para. 150)
11. In order to determine whether a State measure constitutes aid, it is necessary to establish whether the recipient undertaking receives an economic advantage which it would not have obtained under normal market conditions. For this purpose, the relevant criterion is whether the undertaking receiving the aid could have obtained the amounts in question on the capital market. In particular, the relevant question is whether a private investor would have entered into the transaction in question on the same terms.
(see paras 158-159)
12. The European Union institutions are entitled, subject to the principles of the protection of legitimate expectations and of legal certainty and on condition that they do so within reasonable time-limits, to withdraw, on the ground that it is unlawful, a decision granting a benefit to its addressee. That entitlement for the European Union institutions to withdraw an unlawful decision must apply a fortiori where it is a question of an unlawful measure which does not create rights. In such cases, the Commission is not precluded from withdrawing the decision by considerations relating to the protection of the legitimate expectations and vested rights of the person to whom the decision was addressed.
In respect of the addition of new information to the new decision, the Commission has added it with the intention of responding in more detail than in the original decision to the arguments submitted by the applicants in connection with their court proceedings, that consideration of arguments submitted by the applicants themselves cannot constitute an infringement of the rights of defence in the course of the contentious procedure.
(see paras 189-190, 192)