ORDER OF THE COURT OF FIRST INSTANCE (Fifth Chamber)
24 September 2009 (*)
(State aid – Recapitalisation of a public service broadcaster following a first decision ordering recovery of incompatible State aid – Decision not to raise any objections – Annulment of the first decision – No need to adjudicate)
In Case T-12/05,
SBS TV A/S, formerly TV Danmark A/S, established in Skovlunde (Denmark),
SBS Danish Television Ltd, formerly Kanal 5 Denmark Ltd, established in Hounslow, Middlesex (United Kingdom),
represented initially by D. Vandermeersch, T. Müller-Ibold, K. Nordlander and H. Peytz, and subsequently by D. Vandermeersch, H. Peytz and K.‑U. Karl, lawyers,
applicants,
supported by
Viasat Broadcasting UK Ltd, established in West Drayton, Middlesex (United Kingdom), represented by S. Hjelmborg and M. Honoré, lawyers,
intervener,
v
Commission of the European Communities, represented by N. Kahn and M. Niejahr, acting as Agents,
defendant,
supported by
Kingdom of Denmark, represented by J. Molde, acting as Agent, and by P. Biering and K. Lundgaard Hansen, lawyers,
and by
TV 2/Danmark A/S, established in Odense (Denmark), represented by O. Koktvedgaard and M. Thorninger, lawyers,
interveners,
APPLICATION for annulment of Commission Decision C (2004) 3632 final of 6 October 2004 relating to the recapitalisation of TV 2/Danmark A/S,
THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fifth Chamber),
composed of M. Vilaras (Rapporteur), President, M. Prek and V.M. Ciucă, Judges,
Registrar: E. Coulon,
makes the following
Order
Background to the dispute
1 TV 2/Danmark A/S (‘TV2 A/S’) is a public company which was set up in December 2003 to replace the public body TV 2/Danmark (‘TV2’) as broadcaster entrusted with the Danish public broadcasting service.
2 SBS TV A/S and SBS Danish Television Ltd (collectively ‘SBS’) together with Viasat Broadcasting UK Ltd (‘Viasat’) are commercial broadcasters which compete with TV2 A/S on the television advertising market.
3 Following a complaint by SBS, the Commission of the European Communities, by its Decision 2006/217/EC of 19 May 2004 on measures implemented by Denmark for TV2/Danmark (OJ 2006 L 85, p. 1, corrigendum OJ 2006 L 368, p. 112), stated that ‘[t]he aid granted between 1995 and 2002 [by the Kingdom of Denmark] to [TV2] in the form of licence fee resources and the other measures described in this Decision is compatible with the common market under Article 86(2) EC with the exception of an amount of [Danish kroner] 628.2 million’ (Article 1 of Decision 2006/217). The Commission ordered the Kingdom of Denmark to recover that sum, together with interest, from TV2 A/S (Article 2 of Decision 2006/217).
4 By letter of 23 July 2004 the Kingdom of Denmark informed the Commission that it would implement Decision 2006/217. However, in that letter, the Kingdom of Denmark, considering that that implementation would result in the bankruptcy of TV2 A/S, notified the Commission of a planned recapitalisation of that company.
5 On 28 July, and on 2, 3 and 13 August 2004, four actions for annulment were brought against Decision 2006/217.
6 Two of those actions for annulment, brought by TV2 A/S and the Kingdom of Denmark, lodged under case numbers T‑309/04 and T‑317/04 respectively, sought the annulment of Decision 2006/217 and, in the alternative, the annulment of Article 2 of that decision, ordering the recovery of Danish kroner (DKK) 628.2 million from TV2 A/S, or paragraphs 3 and 4 thereof, relating to the inclusion of interest in the amount to be recovered.
7 The other two actions for annulment, brought by Viasat and SBS and lodged under case numbers T‑329/04 and T‑336/04 respectively, sought the annulment of Decision 2006/217 in so far as it determined that there was State aid partially compatible with the common market.
8 By letter of 4 August 2004, the Commission asked the Danish authorities a number of questions, to which they replied by letter of 19 August 2004.
9 On 6 October 2004 the Commission adopted Decision C(2004) 3632 final relating to the recapitalisation of TV2 A/S (‘the contested decision’) pursuant to Article 4(3) 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).
10 The contested decision was communicated to SBS on 16 November 2004; the decision was the subject, on 12 July 2005, of a brief notice in the Official Journal of the European Union (OJ 2005 C 172, p. 3).
11 In the contested decision, the Commission in essence concluded that the recapitalisation measures notified by the Kingdom of Denmark were necessary to restore, following the implementation of Decision 2006/217, the capital needed by TV2 A/S to fulfil its public service obligations and that, consequently, to the extent that those recapitalisation measures implied elements of State aid pursuant to Article 87(1) EC, they were compatible with the common market pursuant to Article 86(2) EC (recitals 53 and 55 of the contested decision).
12 The Commission also took note of the commitment by the Kingdom of Denmark to prevent any overcompensation to TV2 A/S as a consequence of the planned recapitalisation in the event that the actions against Decision 2006/217 resulted in the annulment of that decision (recital 54 of the contested decision).
Procedure
13 By application lodged at the Registry of the Court of First Instance on 7 January 2005, SBS brought the present action.
14 By documents of 8 and 21 April 2005, TV2 A/S and the Kingdom of Denmark applied for leave to intervene in support of the form of order sought by the Commission, and Viasat applied for leave to intervene in support of the form of order sought by SBS. By orders of the President of the Fifth Chamber of the Court of First Instance of 22 June 2005, those applications to intervene were granted.
15 By letters of 29 April, 17 May and 15 June 2005, SBS applied for confidential treatment of certain parts of the application with respect to Viasat, the Kingdom of Denmark and TV2 A/S. After those applications had been withdrawn by letters of 15 July and 17 August 2005, the President of the Fifth Chamber of the Court of First Instance, on 1 March 2007, made an order that there was no need to adjudicate.
16 By document of 11 November 2005, SBS applied for joinder of this case with Case T‑16/05 Viasat Broadcasting UK v Commission. The parties lodged observations on that application within the periods prescribed.
17 By its judgment of 22 October 2008 in Joined Cases T-309/04, T-317/04, T‑329/04 and T‑336/04 TV 2/Danmark and Others v Commission [2008] ECR II‑0000 (‘the TV2 judgment’), the Court of First Instance annulled Decision 2006/217.
18 On 4 November 2008, the Court of First Instance requested the parties to submit their observations on the inferences to be drawn, in the present case, from the TV2 judgment. The parties acceded to that request within the periods prescribed.
Forms of order sought
19 SBS, supported by Viasat, claims that the Court should:
– annul the contested decision;
– order the Commission to pay the costs.
20 The Commission, supported by the Kingdom of Denmark and TV2 A/S, contends that the Court should:
– dismiss the application;
– order SBS to pay the costs.
Law
21 Under Article 113 of its Rules of Procedure, the Court of First Instance may at any time, of its own motion, after hearing the parties, declare that the action has become devoid of purpose and that there is no longer any need to adjudicate on it. Under Article 114(3) of the Rules of Procedure, the remainder of the proceedings is to be oral, unless the Court decides otherwise.
22 In the present case, the Court considers, as regards the inferences to be drawn from the TV2 judgment for the present action, that it has sufficient information from the documents submitted and the explanations given by the parties during the written procedure and, in particular, in their observations in reply to the Court’s question of 4 November 2008, so that there is no need to open the oral procedure.
Arguments of the parties
23 In its reply of 25 November 2008 to the Court’s question of 4 November 2008, the Commission submits that the contested decision is expressly linked to Decision 2006/217 and cites, in this respect, recital 54 of the contested decision relating to the commitment by the Kingdom of Denmark to prevent any overcompensation to TV2 A/S as a consequence of the planned recapitalisation in the event that the actions against Decision 2006/217 resulted in the annulment of that decision.
24 The Commission states the question of whether the annulment of Decision 2006/217 will have implications for the quantum of aid authorised under the contested decision cannot be answered definitively yet, but considers it unlikely that the contested decision will cease to be of legal interest to the parties concerned by it. The Commission adds that, although it does not agree with the reasoning of the Court of First Instance in the TV2 judgment on all points, it considers that the most appropriate course of action in all the circumstances is not to lodge an appeal against the TV2 judgment but to adopt a new decision, which will address the grounds related to the reasoning of Decision 2006/217 on which the Court annulled that decision. It does not rule out the possibility that the Kingdom of Denmark and TV2 A/S might challenge that new decision before the Court of First Instance, if it were again to find the existence of State aid and order its recovery.
25 The Commission submits in essence that the most appropriate course of action for the Court of First Instance is to examine this action and, in that context, the legality of the contested decision.
26 In its observations of 21 November 2008, the Kingdom of Denmark states that, if the TV2 judgment is not appealed, it is for the Commission to decide, pursuant to Article 233 EC, how the case is to be dealt with further. This will entail the initiation of a new investigation procedure and a new decision, with the possibility of new rounds of legal proceedings.
27 The Kingdom of Denmark submits that if the result of that further handling of the case is that it may be established definitively that the State aid is not to be recovered, the present case will become devoid of purpose. Such a finding will necessarily entail that the recapitalisation measures, which are less than the amounts repaid, are even less incompatible State aid which must be repaid. Moreover, the Kingdom of Denmark has undertaken not to return automatically to TV2 A/S the amounts recovered.
28 In its observations of 25 November 2008, TV2 A/S submits that the importance of the TV2 judgment for this action depends on whether that judgment will be the subject of an appeal. It is in principle of the opinion, like the Kingdom of Denmark, that this action will only be devoid of purpose when there is a final decision to the effect that it did not receive State aid that is incompatible with the common market and that must be repaid. Although it wishes to obtain a swift, final decision in this case, TV2 A/S is not, in the light of the TV2 judgment, opposed to a suspension of the proceedings if the Court of First Instance were to find this expedient.
29 In its observations of 25 November 2008, SBS refers to the commitment mentioned at recital 54 of the contested decision and states that it is its understanding that the recovery from TV2 A/S pursuant to Decision 2006/217 will not in any event be reversed in full or in part as a consequence of the annulment of Decision 2006/217. SBS maintains that the level of recapitalisation approved by the Commission is too high and submits that, irrespective of any appeal against the TV2 judgment, it will be necessary for the Court to give judgment on this action.
30 In its observations of 12 January 2009, Viasat claims that the TV2 judgment merely implies an obligation on the Commission to conduct renewed investigations. It states that it intends to assist the Commission in those renewed investigations and expects them and the new decision to be taken to cover the years 2003 to 2004 as well, in respect of which Viasat states that it lodged a complaint with the Commission on 1 November 2004.
31 In the light of those renewed investigations, Viasat states that it cannot be excluded that the Commission will conclude that the overcompensation granted is greater than DKK 628.2 million and that the decision of the Kingdom of Denmark to recapitalise TV2 A/S is still relevant and necessary. Viasat therefore does not consider that the TV2 judgment renders it irrelevant or unnecessary to adjudicate on the legality of the contested decision.
32 Lastly, Viasat refers to the commitment mentioned at recital 54 of Decision 2006/217 and submits that, even if the Commission ultimately concludes that all the aid paid between 1995 and 2002, but also in 2003 and 2004, is compatible with the common market, which Viasat doubts, that conclusion will not in any case lead to reimbursement of the sums recovered pursuant to Decision 2006/217.
Findings of the Court
33 In Decision 2006/217, the Commission found that the measures implemented by the Kingdom of Denmark for TV2 between 1995 and 2002 constituted State aid within the meaning of Article 87(1) EC which was incompatible with the common market in the amount of DKK 628.2 million, and it ordered the Kingdom of Denmark to take all the measures necessary to recover that amount, with interest, from TV2 A/S.
34 It is common ground that Decision 2006/217, in so far as it orders that recovery, is, given that the Kingdom of Denmark chose not to allow TV2 A/S to go into bankruptcy, the basis for the notification by that Member State of certain recapitalisation measures of that company and subsequently for the contested decision, by which the Commission decided not to raise any objections in respect of those measures.
35 There is therefore a close link between Decision 2006/217 and the contested decision in that the obligation to recover constitutes the premiss of the notified recapitalisation and, therefore, of the contested decision.
36 In the contested decision, the Commission moreover took note of a commitment by the Danish authorities to prevent any overcompensation to TV2 A/S as a consequence of the planned recapitalisation in the event that the actions brought before the Court of First Instance against Decision 2006/217 resulted in the annulment of that decision (recital 54 of the contested decision).
37 In the TV2 judgment, the Court of First Instance annulled Decision 2006/217 on the ground that it was vitiated by an inadequate statement of reasons, the cause of that inadequacy being the Commission’s breach of its own obligation to examine issues which had a direct bearing on the question whether State aid was granted (TV2 judgment, paragraph 234).
38 As a result of that annulment of Decision 2006/217, the question of the existence of State aid for TV2 in respect of the period from 1995 to 2002 and, if such aid did exist, of any incompatibility, in whole or in part, of that aid with the common market, remains open.
39 Accordingly, the cause – namely the existence of an obligation to recover incompatible State aid of a principal sum of DKK 628.2 million – of the recapitalisation measures, of their examination and of their validation in the contested decision, no longer exists.
40 The Court notes moreover that the Commission itself essentially recognises that effect of the TV2 judgment, when, in its observations of 25 November 2008, it observes that ‘the question of whether the annulment [of Decision 2006/217] will have implications for the quantum of aid authorised under the [contested] decision cannot be answered definitively yet’. Moreover, in its defence, the Commission states that if Decision 2006/217 were annulled in accordance with the Kingdom of Denmark’s arguments in Case T-317/04, it is plain that it would have grounds for withdrawing the contested decision.
41 That amounts to an admission by the Commission that the TV2 judgment means that both its analysis in the contested decision and its conclusion that the recapitalisation measures in question are compatible with the common market to the extent that they imply State aid pursuant to Article 87(1) EC can no longer be considered relevant. That flows directly from the annulment of Decision 2006/217 and is no way affected by the fact that the Kingdom of Denmark entered into the commitment referred to at recital 54 of the contested decision.
42 Moreover, the Court observes that the mere fact that Decision 2006/217 had not been annulled when the contested decision was adopted cannot cause the subsequent annulment of that decision in the TV2 judgment to be deprived of retroactive effect (see, by analogy, Case T‑80/02 Tetra Laval v Commission [2002] ECR II‑4519, paragraph 40). In this respect, in Joined Cases 97/86, 99/86, 193/86 and 215/86 Asteris and Others v Commission [1988] ECR 2181, paragraph 30, the Court of Justice confirmed the retroactive effects of judgments by which measures are annulled (Tetra Laval v Commission, paragraph 39).
43 It follows from the foregoing considerations that, as a result of the annulment of Decision 2006/217, the contested decision, in so far as it is based on premisses which no longer exist, is itself deprived of any substance and meaning. Although the specific circumstances of the present case prompted the Commission to adopt two decisions, it is apparent that those decisions constitute two aspects of the same legal issue relating to the classification as State aid within the meaning of Article 87(1) EC and, if so, to the determination of their compatibility with the common market, of the measures implemented by the Kingdom of Denmark for TV2 and subsequently TV2 A/S. The annulment of Decision 2006/217 therefore entails for the Commission a fresh examination of all the measures implemented by the Kingdom of Denmark for TV2 and subsequently TV2 A/S.
44 In those circumstances, the Court must hold that this action has become devoid of purpose and that there is no need to give a decision on it.
Costs
45 Under Article 87(6) of the Rules of Procedure, where a case does not proceed to judgment, the costs are to be in the discretion of the Court of First Instance.
46 In the light of the circumstances of the present case, the Court decides that each party is to bear its own costs.
On those grounds,
THE COURT OF FIRST INSTANCE (Fifth Chamber)
hereby orders:
1. There is no need to give a decision in the present action.
2. Each party shall bear its own costs.
Luxembourg, 24 September 2009.