Case T-1/08

Buczek Automotive sp. z o.o.

v

European Commission

(State aid – Restructuring of the Polish steel industry – Recovery of public debts – Decision declaring the aid incompatible with the common market and ordering its recovery – Action for annulment – Interest in bringing proceedings – Admissibility – Concept of State aid – Private investor test)

Summary of the Judgment

1.      Actions for annulment – Natural or legal persons – Interest in bringing proceedings – Commission decision finding aid to be incompatible with the common market – Fixing of the amounts to be recovered from various recipients

(Art. 230, fourth para., EC)

2.      State aid – Concept – Advantage resulting from the failure of the authorities to apply, for the purposes of recovering public debts, for a declaration of insolvency in respect of an undertaking in financial difficulty

(Art. 87(1) EC)

3.      State aid – Concept – Assessment according to the criterion of the private investor – Recovery of public debts from an undertaking in financial difficulty

(Art. 87(1) EC)

4.      Acts of the institutions – Statement of reasons – Obligation – Scope – Commission decision on State aid – Characterisation of the adverse effect on competition and of the effect on trade between Member States – Merely reproducing the wording of Article 87(1) EC – Inadequate grounds

(Arts 87(1) EC and 253 EC)

1.      An action for annulment brought by a natural or legal person is admissible only in so far as the applicant has an interest in the annulment of the contested measure. Such an interest presupposes that the annulment of the contested measure must of itself be capable of having legal consequences and that the action must be likely, if successful, to procure an advantage for the party who brought it.

So far as concerns a decision of the Commission declaring State aid incompatible with the common market and ordering its restitution, an undertaking has an interest in obtaining the annulment of the decision concerned in so far as the Commission orders the recovery of an amount from it. However, it cannot be held in the present case that it also has an interest in the annulment of the decision, in its entirety, relating to the fixing of the amounts to be recovered from the other recipients of the aid.

(see paras 34-35, 37-38)

2.      With regard to the condition relating to the presence of an advantage for the purposes of Article 87(1) EC, the concept of aid is wider than that of a subsidy because it embraces not only positive benefits, such as subsidies themselves, but also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, without being subsidies in the strict sense of the word, are therefore similar in character and have the same effect. Moreover, Article 87 EC does not distinguish between measures of State intervention by reference to their causes or aims but defines them in relation to their effects.

In the case of an undertaking in financial difficulty, in debt to public creditors, the fact that the Polish authorities do not opt to apply for a declaration of insolvency in respect of the undertaking and simply pursue, and indeed pursue with diligence, the legal procedures for the recovery of public debts may represent an advantage. Indeed, all insolvency proceedings, whether they result in the recovery of the company declared insolvent or in its liquidation, have – at the very least – the objective of discharging the liabilities of that company. In that context, the freedom of the company declared insolvent to manage both its assets and its business is limited. Accordingly, by failing to apply for a declaration of insolvency in respect of the undertaking, the authorities allow that company to have a period of time in which it could make use of its assets freely and continue to trade, thus conferring on it an advantage liable to constitute State aid.

(see paras 68-69, 77)

3.      In order to determine whether a State measure constitutes aid for the purposes of Article 87 EC, it is necessary to establish whether the recipient undertaking receives an economic advantage which it would not have obtained under normal market conditions. To that end, as far as non‑recovered public debts are concerned, the public bodies must be compared to a private creditor who is seeking to obtain payment of sums owed to it by a debtor in financial difficulties.

When a firm faced with a substantial deterioration of its financial situation proposes an agreement or series of agreements for debt arrangement to its creditors with a view to remedying the situation and avoiding liquidation, each creditor must make a decision having regard to the amount offered to it under the proposed agreement, on the one hand, and the amount it expects to be able to recover following possible liquidation of the firm, on the other. Its choice is influenced by a number of factors, including the creditor’s status as the holder of a secured, preferential or ordinary claim, the nature and extent of any security it may hold, its assessment of the chances of the firm being restored to viability, as well as the amount it would receive in the event of liquidation. It is for the Commission to determine, for each public body in question, having regard inter alia to the abovementioned factors, whether the debt remissions granted by them were manifestly more generous than those which would have been granted by a hypothetical private creditor in a situation comparable vis-à-vis the undertaking concerned to that of the public body in question and seeking to recover the sums owed to it. In a case in which a debt arrangement agreement has not been concluded, a hypothetical private creditor is faced with a choice between, on the one hand, the foreseeable proceeds from the legal procedure for the recovery of debts and, on the other hand, the amount it expects to be able to recover following insolvency proceedings initiated in respect of the company.

Since there is no obligation on national authorities seeking to recover public debts to make use of all the methods of recovery at their disposal, the only obligation to which they are subject, in order for their intervention to fall outside the classification as State aid, is to behave how a private creditor would have behaved under normal market conditions.

Where there are several methods of recovery, it is necessary to compare the respective merits of the different methods in order to determine which method a private creditor would have chosen and the Commission, despite the wide discretion which must be acknowledged to it, as regards a complex economic assessment, cannot avoid justifying the conclusion which it claims to have reached at the end of that comparison by relevant material evidence.

As limited as its power of review is, the European Union judicature must, inter alia, establish whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the relevant information which must be taken into account and whether it is capable of substantiating the conclusions drawn from it.

(see paras 70, 82-85, 87, 89)

4.      So far as concerns the classification of aid, the obligation to state reasons requires the Commission to indicate the reasons why it considers that the aid in question falls within the scope of Article 87(1) EC. With regard to the conditions relating to the effect on trade between Member States and the distortion or threatened distortion of competition, a succinct discussion of the facts and legal considerations taken into account in the assessment of those conditions is sufficient. The Commission is not required to carry out an economic analysis of the actual situation on the relevant market, of the market share of the applicant, of the position of competing undertakings and of trade flows of the products and services in question between Member States, since it had explained how the aid in question distorted competition and affected trade between Member States. Nevertheless, even in cases where it is clear from the circumstances in which the aid has been granted that it is liable to affect trade between Member States and to distort or threaten to distort competition, the Commission must at least set out those circumstances in the statement of reasons for its decision.

The statement of reasons contained in a decision on State aid is insufficient for the purposes of Article 253 EC where, with regard to the effect on trade between the Member States and the distortion or threatened distortion of competition, it merely reproduces the wording of Article 87(1) EC and does not contain any discussion, however succinct, of the facts and legal considerations taken into account in the assessment of those conditions, not even in the description of the circumstances in which the measure was adopted.

(see paras 101-102, 105-107)