Case T‑210/02
British Aggregates Association
v
Commission of the European Communities
(State aid – Environmental tax on aggregates in the United Kingdom – Commission decision not to raise objections – Actions for annulment – Admissibility – Person individually concerned – Selective character – Obligation to state the reasons on which the decision is based – Diligent and impartial examination)
Summary of the Judgment
1. Actions for annulment – Natural or legal persons – Measures of direct and individual concern to them
(Arts 88(2) EC and 230, fourth para., EC)
2. Actions for annulment – Natural or legal persons – Measures of direct and individual concern to them
(Arts 88(2) and (3) EC and 230, second and fourth paras, EC)
3. State aid – Definition – Selective nature of the measure
(Art. 87(1) EC)
4. State aid – Definition
(Arts 6 EC, 87(1) EC and 88(2) and (3) EC)
5. State aid – Definition
(Art. 87(1) EC)
6. State aid – Commission decision not to raise objections, at the end of the preliminary investigation stage, against a sectoral environmental levy
(Arts 88(2) and (3) EC and 253 EC)
7. State aid – Definition – Selective nature of the measure
(Arts 87(1) EC and 91 EC)
8. State aid – Examination by the Commission – Preliminary review and main review
(Art. 88(2) and (3) EC; Council Regulation No 659/1999, Arts 4(4) and 13(1))
9. State aid – Administrative procedure – Obligations of the Commission – Diligent and impartial examination of the complaints
(Art. 88(3) EC)
1. The fact that an association of undertakings has lodged a complaint in relation to alleged State aid with the Commission and expressed a desire to intervene in the procedure as a party concerned within the meaning of Article 88(2) EC is not, of itself, sufficient to give it locus standi to bring proceedings for the annulment of the contested decision not to initiate the formal investigation procedure. In particular, the fact that that complaint, together with others, led the Commission to investigate the State aid measure in the contested decision does not mean that that association should be treated as a negotiator whose position has been affected by that decision.
(see para. 46)
2. Under the procedure for monitoring State aid laid down by Article 88 EC, the preliminary stage of the procedure for reviewing aid under Article 88(3), which is intended merely to allow the Commission to form a prima facie opinion on the partial or complete conformity of the aid in question, must be distinguished from the investigation stage envisaged by Article 88(2). It is only under the latter, which is designed to enable the Commission to be fully informed of all the facts of the case, that the Treaty imposes an obligation on the Commission to give the parties concerned notice to submit their comments.
Where, without initiating the formal investigation procedure laid down under Article 88(2) EC, the Commission finds, by a decision taken on the basis of Article 88(3), that an aid is compatible with the common market, the persons intended to benefit from those procedural guarantees may secure compliance with them only if they are able to challenge that decision by the Commission before the Court. For those reasons, the Court will declare to be admissible an action for the annulment of such a decision, brought by a person who is concerned within the meaning of Article 88(2) EC, where he seeks, by instituting proceedings, to safeguard the procedural rights available to him under the latter provision. The parties concerned, within the meaning of Article 88(2) EC, who are thus entitled under the fourth paragraph of Article 230 EC to institute proceedings for annulment, are those persons, undertakings or associations whose interests might be affected by the grant of the aid, in particular competing undertakings and trade associations.
By contrast, if the applicant calls into question the merits of the decision appraising the aid as such, the mere fact that it may be regarded as concerned within the meaning of Article 88(2) EC cannot suffice to render the action admissible. It must then demonstrate that it has a particular status, that is to say, that decision affects it by virtue of certain attributes which are peculiar to it or by reason of circumstances in which it is differentiated from all other persons and thus distinguishes it individually just as in the case of the person to whom the decision is addressed. That is the case in particular where the applicant’s market position is substantially affected by the aid to which the contested decision relates.
Accordingly, proceedings brought by an association of undertakings challenging the validity of a Commission decision not to raise objections at the end of the preliminary investigation procedure relating to State aid are admissible where that measure is liable substantially to affect the position of at least one of its members on the market. In such a case, the association is entitled to raise any of the pleas of illegality listed in the second paragraph of Article 230 EC, and not only the duty to initiate the formal investigation procedure.
(see paras 49-54, 68)
3. In order to constitute State aid for the purposes of Article 87(1) EC, a measure must, in particular, be capable of conferring a selective advantage, to the exclusive benefit of certain undertakings or certain sectors of activity. That article applies to aid which distorts or threatens to distort competition ‘by favouring certain undertakings or the production of certain goods’. That provision does not distinguish between the reasons for or the objectives of a measure which reduces the burdens normally imposed on an undertaking, but defines that measure by reference to its effects. It follows that neither the fiscal nature nor the economic or social aim or the objectives of protection of the environment or of human safety can suffice to remove it completely from the outset from the scope of the article.
When reviewing the selective nature of a measure, it is the task of the Community Court to determine whether the Commission was right to consider that the differentiation between undertakings, as regards advantages or burdens, introduced by the measure in question, arises from the nature or the general system of the overall scheme which applies. Where such a differentiation is based on objectives other than those pursued by the overall scheme, the measure in question will, in principle, be considered as satisfying the condition of selectivity laid down under Article 87(1) EC.
(see paras 105-107)
4. An environmental levy is an autonomous fiscal measure which is characterised by its environmental objective and its specific tax base. It seeks to tax certain goods or services so that the environmental costs may be included in their price and/or so that recycled products are rendered more competitive and producers and consumers are oriented towards activities which better respect the environment. It is open to the Member States, which, in the current state of Community law, retain, in the absence of coordination in that field, their powers in relation to environmental policy, to introduce sectoral environmental levies in order to attain certain environmental objectives. In particular, the Member States are free, in balancing the various interests involved, to set their priorities as regards the protection of the environment and, as a result, to determine which goods or services they decide to subject to an environmental levy.
It follows that, in principle, the mere fact that an environmental levy constitutes a specific measure, which extends to certain designated goods or services, and cannot be seen as part of an overall system of taxation which applies to all similar activities which have a comparable impact on the environment, does not mean that similar activities, which are not subject to the levy, benefit from a selective advantage. In particular, the fact that an environmental levy imposed on certain specific products does not apply to those similar activities does not put it in the same position as a measure of tax relief taking the form of an exception to the system of burdens normally imposed on undertakings, since an environmental levy can be distinguished precisely by its particular scope and purpose, and thus cannot in principle be related to any overall system.
In that legal framework, since environmental levies constitute by their nature specific measures adopted by the Member States as part of their environmental policies, a field in which they retain their powers in the absence of measures for harmonisation, it is for the Commission, when assessing an environmental levy for the purposes of the Community rules on State aid, to take account of the environmental protection requirements referred to in Article 6 EC. That article provides that those requirements are to be integrated into the definition and implementation of, inter alia, arrangements which ensure that competition is not distorted within the internal market.
Moreover, when reviewing a decision of the Commission not to initiate the formal investigation procedure provided for under Article 88(2) EC, the role of the Court must be limited, having regard to the broad discretion which the Commission has in the application of Article 88(3) EC, to checking that the rules on procedure and the statement of reasons have been complied with, that the facts are materially accurate, and that there has been no manifest error of assessment and no misuse of powers.
(see paras 114-118)
5. In the context of the assessment under the Community rules relating to State aid of an environmental levy imposed by a Member State which is, in principle, a burden on the commercial exploitation of virgin aggregates, that is to say granular material on first extraction used in the construction sector, and which is intended to maximise the use of recycled aggregates and other alternative materials to virgin aggregate, to promote the efficient use of virgin aggregate and to internalise the environmental costs of the aggregate extraction that the levy seeks to address in accordance with the ‘polluter-pays’ principle, the fact that materials exploited commercially for use otherwise than as aggregates do not fall within the sector which is subject to the levy does not give rise to State aid. The exemption of those materials does not represent a derogation in any way from the system of the environmental levy under consideration. In particular, the decision to impose an environmental levy only in the aggregates sector, and not generally in all the sectors involving the operation of quarries and mines having the same impact on the environment, falls within the power of the Member State in question to set its priorities in the economic, fiscal and environmental fields. Such a choice, even if based on a desire to maintain the international competitiveness of certain sectors, does not therefore undermine the consistency of the environmental levy with the environmental objectives pursued.
In addition, it is open to the Member State concerned, as part of its environmental policy, freely to determine the materials used as aggregates which it considered appropriate to tax and to exclude, having regard to the environmental objectives pursued, certain materials from the scope of the environmental levy even though they are used as aggregates after they are extracted inasmuch as, in the light of the environmental objectives pursued, the exemption of those materials allows their use as alternatives for those virgin aggregates subject to the levy and may, as a result, contribute to a rationalisation of the extraction and use of the latter.
Lastly, the imposition of the environmental levy on certain materials which cannot be replaced by alternative products can reasonably meet the objective of the levy, which seeks to internalise the environmental costs of the production of virgin aggregates, where its amount corresponds approximately to the environmental costs linked to the extraction of aggregates.
The imposition of the levy on products arising from the extraction of materials which cannot be replaced by alternative products can also be justified by the ‘polluter-pays’ principle and by the objective of the levy of encouraging a more rational extraction and treatment of aggregates, so as to reduce the proportion of low-quality aggregates.
(see paras 124, 127-128, 130, 135-137, 139)
6. The requirement to provide reasons for a decision taken in regard to State aid cannot be determined solely on the basis of the interest which the Member State to which that decision is addressed may have. In particular, the Commission is under a duty, when approving a measure after the preliminary investigation procedure laid down under Article 88(3) EC, to provide a summary of the principal reasons for that approval, so that interested third parties may be aware of the basis for it and be in a position to decide whether to bring an appeal against the decision, so as to avail themselves of the procedural rights conferred on them by Article 88(2) EC.
As regards, more particularly, a Commission decision to terminate the preliminary investigation procedure where it is found that the State aid objected to by a complainant does not exist, the Commission must at least provide the complainant with an adequate explanation of the reasons why the factual and legal material relied on in the complaint has failed to demonstrate the existence of State aid. The Commission is not required, however, to define its position on matters which are manifestly irrelevant or insignificant or plainly of secondary importance.
A Commission decision not to raise objections against a sectoral environmental levy, taken at the end of the preliminary investigation procedure and which succinctly sets out the essential grounds on which it is based, cannot be considered to be vitiated by a failure to state adequate reasons as regards an association representing well-informed economic operators, having regard to the freedom of the Member States to determine their fiscal and environmental policy by imposing an environmental levy.
(see paras 142-143, 146)
7. Since an environmental levy on the commercial exploitation of aggregates, which is charged against products and not on the income of producers, constitutes an indirect tax, governed, as such, by the principle of taxation in the country of destination laid down under Article 91 EC, the exemption which is available to exporters is justified by the internal logic of the tax system, so that it cannot be considered as conferring a selective advantage on exporters and is not subject to the application of Article 87(1) EC.
In granting such an exemption, the Member State concerned is making use of the opportunity available to it to grant priority to considerations linked to the structure of the tax scheme concerned over the environmental objectives pursued, and the fact that other Member States take a different approach is irrelevant.
(see paras 151-153)
8. The Commission’s duty first to examine a potentially unlawful aid with the Member State, if necessary by requesting information from it, cannot relieve that institution of its duty to initiate the formal investigation procedure in particular where, in the light of the information obtained, it continues to face serious difficulties in assessing the measure concerned. That duty arises directly from Article 88(3) EC and is, moreover, expressly confirmed by the provisions of Article 4(4) in conjunction with Article 13(1) of Regulation No 659/1999 laying down detailed rules for the application of Article [88 EC], where the Commission finds, having carried out a preliminary investigation, that the unlawful measure raises doubts as to its compatibility.
The procedure under Article 88(2) EC is obligatory where the Commission experiences serious difficulties in establishing whether or not aid is compatible with the common market. The Commission cannot therefore limit itself to the preliminary procedure under Article 88(3) EC and take a favourable decision on a State measure unless it is in a position to reach the firm view, following an initial investigation, that the measure cannot be classified as aid within the meaning of Article 87(1) EC or that the measure, whilst constituting aid, is compatible with the common market. On the other hand, if the initial analysis results in the Commission taking the contrary view of the aid’s compatibility with the common market, the Commission has a duty to gather all necessary views and to that end to initiate the procedure under Article 88(2) EC.
The fact that the Commission took account of the interest of the Member State concerned in a rapid decision does not mean that the applicant is entitled to assume, without more, that the Commission took into account criteria other than that relating to the absence of serious difficulties of analysis in deciding not to initiate the formal investigation procedure.
(see paras 165-166, 168)
9. Where interested third parties submit complaints to the Commission relating to State measures which have not been notified under Article 88(3) EC, the Commission is bound, in the context of the preliminary procedure referred to in that provision, to conduct, in the interests of the proper application of the fundamental rules of the Treaty relating to State aid, a diligent and impartial examination of those complaints.
In the absence of any other indications, the mere fact that the contested decision was adopted rapidly does not mean that there was a failure to undertake a sufficiently thorough analysis.
(see paras 177-178)