Action brought on 6 May 2010 - Deutsche Telekom v Commission

(Case T-207/10)

Language of the case: German

Parties

Applicant: Deutsche Telekom AG (Bonn, Germany) (represented by: A. Cordewener and J. Schönfeld, lawyers)

Defendant: European Commission

Form of order sought

Annulment of Commission Decision C (2009) 8107 final corr. of 28 October 2009 (as amended on 8 December 2009) in relation to the provision for the protection of the legitimate expectations of the Spanish investors detailed in Article 1(2) and (3) thereof;

An order for the defendant to pay the costs of the proceedings.

Pleas in law and main arguments

The applicant challenges Commission Decision C (2009) 8107 final corr. of 28 October 2009, in which the Commission decided that the aid scheme in the form of the tax provision in Article 12(5) of the Spanish Company Tax Act ('TRLIS') concerning the tax amortization of financial goodwill for the acquisition of significant shareholdings in foreign companies was, as regards aid granted to beneficiaries which realise intra-Community acquisitions, incompatible with the common market. The contested decision sets out which aid is to be recovered by the Kingdom of Spain.

In support of its action the applicant submits, first of all, that the tax relief connected with the application of Article 12(5) TRLIS was procedurally unlawful since, contrary to the first sentence of Article 88(3) EC (first sentence of Article 108(3) TFEU), the Kingdom of Spain failed to inform the Commission in advance of the relevant law and, contrary to the prohibition of implementation laid down in the third sentence of Article 88(3) EC (third sentence of Article 108(3) TFEU) actually applied that law. In addition, Article 12(5) TRLIS is to be regarded as substantially unlawful since, in accordance with Article 87(1) EC (Article 107(1) TFEU), the provision is not compatible with the common market and an authorisation under Article 87(2) or (3) EC (Article 107(2) or (3) TFEU) is out of the question.

Second, in respect of the consequences which follow from a declaration that a national law aid provision is incompatible with Community law, the applicant claims that the Member State concerned is required to recover such aid from the beneficiaries. In that regard, the applicant submits that this fundamental principle is expressly set out, in particular, in the first sentence of Article 14(1) of Regulation (EC) No 659/99. ¹

Finally, the applicant claims that, in the present case, there is no reason why recovery should not be ordered as there is no expectation on the part of the Spanish aid recipients which is worthy of protection. In that regard, it submits, inter alia, that the Commission wrongly applied the general principle that primary law takes precedence and the second sentence of Article 14(1) of Regulation No 659/99 in basing the exception which it granted to certain groups of Spanish investors on the principle of the protection of legitimate expectations. The applicant complains, on the one hand, that the principle of the protection of legitimate expectations is not applicable to the beneficiaries since the Spanish State failed to correctly notify the Commission of Article 12(5) TRLIS. On the other hand, it claims that the conditions were not met for granting protection to the legitimate expectations of the beneficiaries. Furthermore, the Community interest in reinstating fair market conditions by recovering the aid granted outweighs the individual interests of the beneficiaries in retaining tax advantages in relation both to past and future years.

____________

¹ - 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).