OPINION OF ADVOCATE GENERAL
CAMPOS SÁNCHEZ‑BORDONA
delivered on 22 February 2024 (1)
Case C‑40/23 P
European Commission
v
Kingdom of the Netherlands
(Appeal – State aid – Articles 107 and 108 TFEU – Regulation (EU) 2015/1589 – Article 4(3) – Declaration as to the compatibility with the internal market of a measure which has not been classified as State aid – Principle of legal certainty)
1. By this appeal, the European Commission challenges the judgment of the General Court of 16 November 2022, Kingdom of the Netherlands v Commission, (2) which annulled Decision C(2020) 2998 final. (3)
2. The General Court held that the Commission had exceeded its powers in declaring in that Decision that a measure not previously classified as ‘aid’ within the meaning of Article 107(1) TFEU was compatible with the internal market.
3. The dispute between the Commission and the Netherlands Government gives the Court of Justice the opportunity to rule for the first time (unless I am mistaken) on a question relevant to the rules governing the monitoring of aid granted by States, as laid down in Articles 107 and 108 TFEU and outlined in Regulation (EU) 2015/1589. (4)
I. Background to the dispute
4. The background to the dispute is set out in paragraphs 2 to 18 of the judgment under appeal and can be summarised as follows:
– On 27 March 2019, the Netherlands authorities, acting in accordance with Directive (EU) 2015/1535, (5) notified the European Commission of a draft law prohibiting the use of coal for the production of electricity.
– That draft law, which was not notified to the Commission in accordance with Article 108(3) TFEU, sought to reduce carbon dioxide (CO2) emissions. It provided for the possibility of awarding compensation for the damage caused to a coal-fired power plant disproportionately affected, as compared with other power plants, by the prohibition on using coal for the production of electricity.
– Having been notified of that draft law pursuant to Directive 2015/1535, the Commission, acting on its own initiative, began to examine the information concerning alleged aid.
– The Commission asked the Netherlands authorities for certain information. In their various responses, those authorities stated, repeatedly, that the compensation provided for by that law did not constitute State aid within the meaning of Article 107(1) TFEU.
– That law was adopted on 11 December 2019 and entered into force on 20 December 2019. At that time, there were five coal-fired power plants in the Netherlands. (6)
– As the Hemweg 8 power plant, because of its characteristics, (7) did not qualify for the transitional period of five to ten years granted to the other four power plants, and was obliged to close at the end of 2019, its owner (Vattenfall) obtained compensation in the amount of EUR 52.5 million from the Netherlands Minister for Economic Affairs and Climate Policy.
– On 12 May 2020, the Commission adopted the Decision, in which it concluded that the measure by which Vattenfall was compensated for the closure of Hemweg 8 was compatible with the internal market, in accordance with Article 107(3)(c) TFEU.
– Paragraph 48 of the Decision stated, with respect to the possible existence of State aid, that, ‘on the basis of the information provided by the Dutch authorities, it [could] not be concluded with a sufficient degree of certainty that a right to compensation of EUR 52.5 mio. exist[ed] …’. The Commission inferred from this that it could not be excluded that the measure under examination ‘confers State aid on the undertaking concerned’.
– In paragraph 49 of the Decision, the Commission stated that, in any event, ‘a definitive conclusion as to whether the measure provide[d] the operator with an advantage and thus constitute[d] State aid pursuant to Article 107(1) TFEU [did] not have to be drawn because even if State aid were involved, the Commission consider[ed] that the measure [was] compatible with the internal market’. (8)
II. Procedure before the General Court and the judgment under appeal
5. On 27 July 2020, the Kingdom of the Netherlands brought an action against the Decision before the General Court.
6. In support of its action, the Kingdom of the Netherlands relied on five pleas in law:
– The first three were put forward ‘in the event that the contested decision is to be understood as necessarily having the effect of classifying the measure at issue as State aid’. (9)
– The fourth and fifth pleas in law challenged ‘the contested decision on the ground that it does not rule on the question of whether or not the measure at issue constitutes State aid’. (10) They allege, respectively, that: (a) the Commission lacks competence to declare a measure compatible with the internal market in accordance with Article 107(3) TFEU if it has not previously classified that measure as State aid; and (b) that the principle of legal certainty has been infringed.
7. The General Court upheld the last two pleas in law and annulled the Decision.
8. The arguments on the basis of which it upheld the fourth plea in law were, in essence, as follows:
– ‘The use of the term ‘aid’ in Article 107(3) TFEU means that the compatibility of a national measure with the internal market may not be examined until after that measure has been classified as aid’. (11)
– ‘According to settled case-law, if the Commission is unable to conclude, following an initial examination, that the State measure in question either is not “aid” within the meaning of Article 107(1) TFEU or, if classified as aid, is compatible with the Treaty, or where that procedure does not enable it to overcome all of the difficulties involved in determining whether the aid is compatible, the Commission is under a duty to initiate the procedure under Article 108(2) TFEU, without having any discretion in that regard’. (12)
– ‘Only a measure falling within the scope of Article 107(1) TFEU, that is to say a measure classified as State aid, may be considered by the Commission to be compatible with the internal market’. (13)
– That conclusion is borne out by Article 4 of Regulation 2015/1589, interpreted in the light of the case-law of the Court of Justice.
– It follows from the foregoing that ‘Article 4 of Regulation 2015/1589, applicable in the present case pursuant to Article 15(1) of that regulation …, sets out an exhaustive list of the decisions which the Commission may adopt following the preliminary examination of the national measure at issue, which do not include the possibility of adopting a decision declaring a national measure to be compatible with the internal market without the Commission having previously ruled on the classification of that measure as State aid’. (14)
– In the present case, ‘it is common ground that the Commission had doubts about classifying the measure at issue as aid …, and so … decided not to rule on that question in the contested decision, while at the same time concluding that the measure at issue was compatible with the internal market’. Consequently, ‘the Commission adopted a decision contrary both to Article 107(3) TFEU and to Article 4(3) of Regulation 2015/1589’. (15)
– In short, ‘by finding in the contested decision that the measure at issue was compatible with the internal market, without having previously ruled on the question of whether such a measure constituted aid, the Commission exceeded its powers’. (16)
9. As regards infringement of the principle of legal certainty, the General Court upheld the fifth plea in law on the basis of the following lines of reasoning:
– ‘The Commission stated in the contested decision that the measure at issue was compatible with the internal market. However, that measure was not classified, even though … this is a prerequisite for examining the compatibility of that measure with the internal market’. (17)
– ‘In the event that competitors of Vattenfall were to bring proceedings before the national courts in connection with the lawfulness of the measure at issue and those courts classified that measure as State aid within the meaning of Article 107(1) TFEU, Article 108(3) TFEU would then have been infringed, on the ground that the measure at issue was not notified to the Commission, and it would fall to the Kingdom of the Netherlands to seek interest from Vattenfall in respect of the period of illegality’. (18)
– ‘The failure to classify the measure at issue left the Kingdom of the Netherlands in an uncertain position as regards the grant of new aid under the rules on the cumulation of aid’. (19)
– ‘It cannot therefore be concluded that the contested decision gave the Kingdom of the Netherlands, as the addressee of the contested decision, a precise understanding of its rights and obligations and enabled it to act accordingly’. (20)
– ‘In those circumstances, it must be held that the Commission, in deciding not to adopt a position on whether the measure at issue should be classified as State aid within the meaning of Article 107(1) TFEU, infringed the principle of legal certainty’. (21)
III. Appeal and procedure before the Court of Justice
10. In its appeal, registered at the Court of Justice on 26 January 2023, the Commission claims that the Court should:
– Set aside the judgment under appeal.
– Reject the fourth and fifth pleas in law put forward in the proceedings before the General Court.
– Exercise the power conferred by the second sentence of the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union to give judgment in the matter and dismiss the appeal in its entirety as unfounded.
– Order the Kingdom of the Netherlands to pay the costs.
11. The Commission bases its appeal on a single ground of appeal, which it divides into two parts. These allege, respectively: (a) misinterpretation of Article 107(3) TFEU and Article 4(3) of Regulation 2015/1589; and (b) an error of law in the interpretation of the principle of legal certainty.
12. In the event that the judgment under appeal is set aside, the Commission claims that the first three pleas in law should be declared inadmissible or at least unfounded, and that the fourth and fifth pleas in law should be rejected as unfounded.
13. The Netherlands Government contends that the appeal should be dismissed and that the Commission should be ordered to pay the costs.
14. The appellant and the respondent lodged a reply and a rejoinder, respectively.
IV. Assessment
A. First part of the ground of appeal, alleging misinterpretation of Article 107(3) TFEU and Article 4(3) of Regulation 2015/1589
1. Arguments of the Commission and the Kingdom of the Netherlands
15. The Commission submits that the judgment under appeal relied on an excessively restrictive interpretation of Article 107(3) TFEU and Article 4(3) of Regulation 2015/1589 in finding that the Commission lacked competence to adopt the Decision.
16. According to the Commission:
– The General Court starts from the (unfounded) premiss that competence should be expressly provided for in a specific provision of Regulation 2015/1589.
– An interpretation of the provisions cited, in the light of their objectives, would confirm that none of them makes the prior classification of a measure as State aid a prerequisite for a ruling on its compatibility with the internal market.
– Conversely, the interpretation adopted by the General Court entails all of the disadvantages associated with the uncertainty inherent in an unnecessarily extended procedure in situations where the incompatibility of a measure with the internal market can be ruled out in advance.
17. The Netherlands Government contends that the judgment under appeal should be corrected. In its submission:
– The concept of ‘aid’ within the meaning of Article 107(1) TFEU is determinative of the powers enjoyed by the Commission. According to case-law, the Commission must, first, examine whether State aid is present and, next, assess whether it is compatible with the internal market.
– In certain situations, it may be simpler to establish whether a measure is compatible with the internal market than to determine whether it constitutes State aid. However, the Commission would only be able to rule out incompatibility if there were no difference of opinion between the Member State and the Commission with respect to the status of the measure in question as State aid.
– Since, in the present case, this is the subject of litigation and the measure at issue was not notified, the Commission could not, as guardian of the Treaties, fail to comply with an essential requirement of the rules on State aid.
2. Analysis
18. Although the issue raised by this first part of the ground of appeal appears, in principle, simple in its description, it is shown to be intricate and complex in the answer it requires.
19. I should say here and now that, in my view, the General Court erred in finding that the Commission had ‘exceeded its powers’ (22) in a decision in which the Commission had, on the contrary, exercised the powers conferred on it by Articles 107 and 108 TFEU and Regulation 2015/1589.
20. According to the General Court, the Commission does not in any circumstances have the competence to adopt a decision in which it declares a State measure to be compatible with the internal market if it has not previously classified that measure as State aid.
21. In my view, that position is vitiated by an error of law which must be corrected. (23)
22. The powers conferred on the Commission by Articles 107 and 108 TFEU include the power to terminate a preliminary examination procedure (conducted under Article 4 of Regulation 2015/1589) without raising any objections to the national measure under examination. That is what happened in this instance.
23. It is a different matter if the Commission, in proceeding in this way, adopts a decision vitiated by an invalidating defect (other than lack of competence) in applying Article 107(3)(c) TFEU to a measure under examination without having previously ascertained whether that measure constitutes State aid. (24)
24. This appeal must therefore leave aside the question of the Commission’s competence and focus on whether the rules on the monitoring of State aid (Articles 107 and 108 TFEU and Regulation 2015/1589) must be interpreted strictly, or, conversely, support the acceptance of the position put forward by the Commission, which advocates a teleological and functional interpretation of the tasks entrusted to it as guarantor of competition in the internal market.
25. The arguments in favour of a strict interpretation such as that adopted by the General Court and defended by the Netherlands Government in this appeal are not few in number or unsupported by robust reasoning.
26. In my view, however, situations such as that in this case call for a re-reading of the applicable legislation that combines its literal meaning with a teleological construction and, ultimately, supports the conclusion that the Decision is valid.
27. I shall look first at the interpretation on which the judgment under appeal is based.
(a) Strict interpretation
28. The General Court begins by interpreting Articles 107 and 108 TFEU in a logical sequence:
– First and foremost, it must be established whether the measure in question constitutes ‘aid’, that is to say whether the public funds or benefits granted to an undertaking or a sector of production serve no purpose other than the mere wish to provide assistance or an advantage. (25)
– If the Commission has doubts about whether the measure under examination is to be classified as ‘aid’ within the meaning of Article 107(1) TFEU, it must initiate the formal investigation procedure provided for in Article 108(2) TFEU.
29. That same sequence of tasks could be inferred from Article 4 of Regulation 2015/1589, concerning notified aid. (26) As the General Court notes, (27) the fact that State aid is to be examined in two successive stages concerning different matters is confirmed in the provisions contained in that article, under which:
– First, the Commission must find, ‘after a preliminary examination’, that the planned measure notified by a Member State ‘does not constitute aid’ (paragraph 2).
– ‘Where the Commission, after a preliminary examination, finds that no doubts are raised as to the compatibility with the internal market of a notified measure, in so far as it falls within the scope of Article 107(1) TFEU, it shall decide that the measure is compatible with the internal market (“decision not to raise objections”). The decision shall specify which exception under the TFEU has been applied’ (paragraph 3). (28)
– ‘Where the Commission, after a preliminary examination, finds that doubts are raised as to the compatibility with the internal market of a notified measure, it shall decide to initiate proceedings pursuant to Article 108(2) TFEU …’ (paragraph 4).
30. It would therefore follow from Articles 107 and 108 TFEU, read in conjunction with Article 4 of Regulation 2015/1589, that the adjudication of aid is a process in which it is necessary: (a) first, to establish the existence of State aid; and (b) next, to assess whether that aid, although in principle unlawful, is compatible with the internal market.
31. Acceptance of the foregoing approach, which is the approach taken in the judgment under appeal, would mean that the Commission could not take a decision on the compatibility of the measure at issue with the internal market without having previously decided that it constituted State aid within the meaning of Article 107(1) TFEU.
32. I recognise that there is solid support for that interpretation in the applicable legislative texts. In my view, however, for the reasons I shall set out below, it is not the only possible interpretation, nor the one that must be applied to this case. What is more, even though that interpretation would appear to be borne out by a not insignificant number of judgments of the Court of Justice, it is debatable whether that case-law is capable of being extrapolated to cases such as this.
(b) Interpretation derived from the case-law of the Court of Justice?
33. It should be noted, before I go any further, that the approach advocated by the judgment under appeal has not as yet (unless I am mistaken) been taken in any explicit ruling given by the Court of Justice in circumstances similar to those of this dispute.
34. As the Commission has noted, (29) the judgment in British Aggregates v Commission, cited in paragraph 54 of the judgment under appeal, refers, in the part mentioned by the General Court, to the scope of the (exhaustive) judicial review of the Commission’s findings as to the status of a measure as State aid. That judgment is not a ruling on the Commission’s competence to declare a measure compatible with the internal market without previously determining whether that measure constitutes State aid. (30)
35. The same is true of the judgment of 24 May 2011, Commission v Kronoply and Kronotex, (31) paragraphs 43 and 44 of which are cited in paragraph 58 of the judgment under appeal:
– First, the aforementioned paragraphs 43 and 44 are confined to reproducing, in essence, Article 4 of Regulation (EC) No 659/1999. (32)
– Second, the Commission decision in that case had confirmed the existence of State aid to which the Commission decided not to raise any objections at the end of the preliminary examination of the compatibility of that measure with the internal market. The substantive issue concerned the material on the basis of which the Commission declared that measure compatible.
36. Indeed, there is no shortage of rulings in which the Court of Justice does, it is true, state that the classification of a measure as State aid must form the subject of a decision prior to the adjudication as to its compatibility with the internal market. To my mind, however, these assertions are made incidentally and are not necessarily relevant to the reasoning for the decision adopted in each case by the Court of Justice.
37. The judgment of 16 March 2021, Commission v Poland, (33) states, for example, that ‘the Commission is required to initiate the formal investigation procedure if, following the preliminary examination referred to in Article 4 of Regulation 2015/1589, it was unable to satisfy itself that the notified measure is compatible with the internal market. The same applies where the Commission entertains doubts as to the actual classification as “aid”, within the meaning of Article 107(1) TFEU of that measure’. (34)
38. However, that judgment concerned actions brought, respectively, against the initiation of a formal investigation procedure by the Commission, and against the subsequent decision classifying the tax measure at issue as State aid that was incompatible with the internal market.
39. The judgment of 24 November 2020, Viasat Broadcasting UK, (35) states that ‘the question whether a measure must be categorised as State aid arises upstream of the question which involves examining, where necessary, if incompatible aid, within the meaning of Article 107 TFEU, is nevertheless necessary to the performance of the tasks assigned to the beneficiary of the measure at issue, under Article 106(2) TFEU … Therefore, the Commission must, before any consideration of a measure under that provision, be in a position to review whether that measure constitutes State aid …’ (36)
40. The issue in those proceedings, however, was whether it was appropriate to ‘pay interest in respect of the period during which the aid measures from which it benefitted were implemented unlawfully before the adoption of the final decision of the European Commission declaring those aid measures compatible with the internal market’.
41. Finally, the judgment of 31 January 2023, Commission v Braesch and Others, (37) states that, ‘where the Commission finds, at the conclusion of the preliminary examination stage established in Article 108(3) TFEU, that the notified measure constitutes “State aid”, for the purposes of Article 107(1) TFEU, which does not raise any doubts as to its compatibility with the internal market, it is to adopt a decision … by which it declares that that measure is compatible with the internal market, under Article 107(3) TFEU’.
42. On that occasion once again, the Court of Justice did not address the matter at issue here. The Commission decision with which that dispute was concerned had found that certain measures constituted ‘State aid’, within the meaning of Article 107(1) TFEU, that could be considered compatible with the internal market for reasons of financial stability, in accordance with Article 107(3)(b) TFEU. (38)
43. As regards previous decisions of the General Court, the Commission notes that, in the judgment of 20 June 2019, (39) that court recognised that the Commission could assess the compatibility of a State measure with the internal market ‘on the assumption that that measure constitutes State aid’. It thus accepted that the Commission may adopt a decision declaring a measure compatible with the internal market without needing to have previously taken a decision on the classification of that measure as State aid. (40)
44. The question raised in these proceedings has not as yet been disposed of (unless, once again, I am mistaken) by the Court of Justice, which has not been faced with a case in which the issue is the competence of the Commission to declare compatible with the internal market a measure not previously classified as State aid within the meaning of Article 107(1) TFEU.
(c) Integrated and functional interpretation
45. In my view, an alternative interpretation to that put forward up to now may be adopted if it is assumed that the lawfulness of any State aid is conditional upon the adjudication as to its compatibility with the internal market.
46. Given the circumstances of this case, the decisive question, as I have already said, is not so much whether the Commission is competent to declare that a measure is compatible with the internal market, as the conditions under which it may declare it to be incompatible.
47. As I see it, Articles 107 and 108 TFUE confer a general competence on the Commission to maintain the integrity of competition in the internal market. It is given that competence so to ensure that Member States do not distort or threaten to distort competition by granting aid financed from State resources. (41)
48. Proof of the existence of that competence can be found in the content of Article 12(1) of Regulation 2015/1589: ‘the Commission may on its own initiative examine information regarding alleged unlawful aid from whatever source’. (42)
49. The authority provided for in that article shows that the Commission has a duty to undertake active supervision with a view to safeguarding the integrity of competition in the internal market. That duty is not confined to the examination of aid projects notified by the Member States or to complaints that may be made to it by interested parties, but extends generally to any measures of a public nature which are capable of distorting competition in the internal market.
50. In the light of that general duty of supervision, silence on the part of the Commission in the face of a measure which has not been notified to it, which has not been the subject of a complaint by an interested party, or which, whatever the route by which it has come to the Commission’s attention, has not aroused suspicion such as to prompt the Commission to act on its own initiative, boils down ultimately to an implicit declaration of compatibility with the internal market, that is to say, an assumption that the measure in question is not one that is liable to distort competition.
51. In the same vein, I would recall that, in accordance with Article 4(6) of Regulation 2015/1589, where the Commission has not taken a decision in accordance with paragraphs 2, 3 or 4 of that article, within the period laid down in paragraph 5 of that article, the Commission is deemed to have authorised a measure. In other words, authorisation is construed as granted in the absence of an explicit ruling one way or the other by the Commission on the status of the national measure as aid.
52. Now, I would agree with the Commission (43) that it is difficult to understand why the outcome which it can trigger by its inaction (authorisation of the measure in question, through its silence, notwithstanding the absence of a previous adjudication as to the status of that measure as aid) is one which it cannot bring about by taking the express decision not to raise objections to that same measure because it considers it to be compatible with the internal market, whether or not it constitutes State aid.
53. Unlike in the case of a declaration of compatibility, which, as I have said, does not inevitably require a prior definition of the measure under examination as aid, the Commission may issue an explicit declaration as to the incompatibility of public aid only in specific cases, that is to say, where, under Article 107 TFEU and following the procedures provided for in Article 108 TFEU, that particular declaration falls to be made, in respect of measures constituting aid within the meaning of Article 107(1) TFEU. More specifically, in respect of measures that satisfy every aspect of the definition of aid contained in that provision, and must immediately thereafter be assessed from the point view of incompatibility with the internal market. (44)
54. So far as concerns the situation at issue in the present case, it follows that, where the Commission finds unequivocally, in the course of a preliminary examination, that the measure at issue is not incompatible with the internal market, it is simply discharging its general obligation to ensure the integrity of competition.
55. Whether or not it constituted aid within the meaning of Article 107(1) TFEU, the crucial point, in any event, was that the measure at issue did not have any undue adverse effects on competition (45) and trade between Member States, and contributed towards the attainment of a clearly defined objective in the common interest (preserving the environment by reducing pollutant emissions).
56. If the Commission had reached the opposite conclusion and had found, prima facie, that that measure might be incompatible with the internal market, it would have had to open the formal investigation procedure provided for in Article 108(2) TFEU. Under that procedure, the Commission, after finding that the measure in question is in every respect (46) State aid within the meaning of Article 107(1) TFEU, could, if appropriate, issue a declaration of unlawfulness.
57. I also agree with the Commission (47) that Article 107 TFEU does not specify the order in which that institution must approach the examination of whether a national measure is State aid or is compatible with the internal market for the purposes of adopting a decision such as that at issue here. The General Court’s interpretation of that provision unduly restricts the opportunities for taking action which it makes available to the Commission.
58. This approach, as well as being consistent with the general competence conferred on the Commission to protect the internal market from any distortions brought about by public aid, is naturally sympathetic to the requirements of the principle of sound administration, as the Commission itself argues.
59. After all, it would make little sense to devote the scarce resources of an EU institution to conducting a (sometimes intricate and complex) formal investigation procedure such as that provided for in Article 108(2) TFEU for the sole purpose of determining whether a State measure is in the nature of aid, when a rigorous preliminary examination (48) can unequivocally rule out the possibility that that measure is incompatible with the internal market, even if it does constitute aid. (49)
60. In short, the first part of the ground of appeal must, in my view, be upheld, since the Commission was competent to adopt the Decision, which is not vitiated by any invalidating defect for having declared the national measure at issue to be compatible with the internal market (and for not having raised any objections to it), whether or not that measure is in the nature of State aid.
B. Second part of the ground of appeal
1. Arguments of the Commission and the Kingdom of the Netherlands
61. The Commission alleges that the judgment under appeal commits an error of law in its interpretation of the principle of legal certainty. It puts forward the following arguments in support of its claim:
– In stating that the measure at issue is compatible with the internal market, the Decision operates in the interests of legal certainty. In particular, it makes clear that the Commission will not open the formal investigation procedure or order the recovery of the contested compensation.
– Conversely, the approach taken by the General Court assumes that, in circumstances such as this, the Commission will have to carry out a detailed and complex examination in order to determine whether the measure in question constitutes aid, thus diminishing rather than strengthening legal certainty.
– In accordance with the case-law of the Court of Justice, (50) although the Commission must inform the Member State concerned if it considers a measure to be compatible with the internal market, it is by contrast under no obligation to take a decision if it concludes in the course of the preliminary examination that there is no need to initiate the procedure under Article 108(2) TFEU.
– Consequently, if the principle of legal certainty is not impaired by the fact that the Commission does not adopt a decision (and, therefore, does not adopt a position on the measure’s classification as State aid), neither would that principle be infringed if, as is the case here, the Commission decides not to raise objections, on the ground that the measure in question is compatible with the internal market (without adopting a position on its classification as State aid).
– Even if the Commission had concluded that there was no State aid, competitors would have had the opportunity to contest that finding. Similarly, they would have been able to claim interest for the period of illegality, even if the Commission had found that the measure was State aid or had not examined it.
– Regulation 2015/1589 does not impose an obligation to initiate a preliminary examination of an unnotified measure. Any legal uncertainty present in this case would be attributable to the Kingdom of the Netherlands and the company compensated, who decided, respectively, to pay and accept the compensation without notifying it to the Commission.
– The allegation as to the uncertainty that would be created in the event of cumulation with subsequent payments is purely hypothetical and entirely unconvincing.
– Even if it had found State aid to be present, the Commission might not have quantified its precise amount, contrary to what the General Court maintained.
62. The Netherlands Government submits that the Commission was not competent to adopt the contested decision and has therefore infringed the principle of legality, thereby also infringing the principle of legal certainty. It adds to the foregoing the following arguments:
– In not adopting a decision on the existence of aid, the Commission has put the Netherlands Government in a position of uncertainty, since the situation and the legal relationships concerned are neither clear nor foreseeable. It is difficult to understand why legal certainty would be impaired, rather than strengthened, by a detailed examination of the matter, and no explanation is given as to why that examination would necessarily be lengthy and complex.
– It is irrelevant that no proceedings have been brought before the national court at this stage, since the opportunity to bring such proceedings is one of the reasons why the Decision infringes the principle of legal certainty.
– Cumulation of the measure in question with subsequent payments is often hypothetical, given that it is a future event, but what matters is that it is possible and that Member States must take it into account.
2. Analysis
63. If it were to be accepted, as I am proposing, that the Commission is competent to declare compatible with the internal market a measure which it has not previously classified as aid within the meaning of Article 107(1) TFEU, the Decision would have been adopted in accordance with the principle of legality. It would by the same token have complied with the principle of legal certainty.
64. If, as I have tried to explain, the Commission may declare a public financing measure to be compatible with the internal market (but not – I would reiterate – declare it to be incompatible without previously classifying it as aid within the meaning of Article 107(1) TFEU), that declaration has the effect, in fact, of ruling out the very existence of any unlawful aid, from the perspective of EU law.
65. The unlawfulness of (hypothetical) public aid is irrevocably dependent on its compatibility with the internal market. Only aid which, in adversely affecting trade between Member States, is not only public but also distorts or threatens to distort competition will be incompatible with the internal market and, therefore, unlawful.
66. Consequently, finding that such a measure – whether or not it ultimately constitutes State aid – is compatible with the internal market is tantamount to determining that, if it were aid, it would not be unlawful aid within the meaning of Article 107(1) TFEU.
67. That being the case, the declaration of compatibility with the internal market that is contained in the Decision carries an implicit confirmation that there is no unlawful aid within the meaning of Article 107(1) TFEU.
68. Accordingly, I can see no reason to find that the principle of legal certainty has been infringed in this case.
69. First, in not raising any objections to the measure in question, the Decision confirms its validity and, indirectly, the assessment of the Netherlands Government, thus giving the green light to the unreserved implementation of the measure from the perspective of EU law.
70. Second, the concern surrounding a future and hypothetical national judicial ruling classifying as aid contrary to Article 107(1) TFEU the measure which the Commission has declared to be compatible with the internal market and, therefore, lawful from the perspective of EU law, seems to me to be unfounded. The Commission decision containing that declaration is not open to review by the national courts.
71. The General Court concurs with the position of the Netherlands Government in finding, in paragraph 65 of the judgment under appeal, that Vattenfall’s competitors could bring proceedings before the national courts with a view to obtaining from them an order ‘classif[ying] [the measure at issue] as State aid within the meaning of Article 107(1) TFEU’. However, as I have just stated, the Commission decision effectively precludes that possibility.
72. Third, neither do I foresee the possibility of subsequent issues arising in connection with any future cumulation of new aid, on the ground of non-compliance with the rules requiring account to be taken of the total amount of aid received or imposing certain limits on that cumulation. (51)
73. The hypothetical nature of that censure is apparent, amongst other reasons, from the fact that there is no record of the Netherlands Government formally notifying the Commission of the (subsequent) decisions arising from the application of the Law prohibiting the use of coal for the production of electricity. (52) If that is the case, I do not see how a cumulation of aid as described could subsequently arise.
74. In short, I consider that the second part of the ground of appeal should also be upheld.
C. Final settlement of the dispute
75. Article 61 of the Statute of the Court of Justice of the European Union states that, if the appeal is well founded, the Court of Justice must quash the judgment under appeal and may give final judgment in the matter where the state of the proceedings so permits.
76. In my opinion, the state of the proceedings would permit final judgment to be given by the Court of Justice.
77. The first three pleas for annulment relied on by the Netherlands Government before the General Court were raised in the event that the Decision had the effect of categorising the measure at issue as State aid. However, as the General Court recognised in refraining from analysing them, (53) those three pleas are based on an incorrect premiss: the Decision does not adopt a position on the nature of the measure concerned, but simply states that, even if that measure did constitute State aid, it would be compatible with the internal market.
78. The fourth and fifth pleas in law alleged, respectively, that the Commission lacked competence to adopt the Decision and that the principle of legal certainty had been infringed. In the light of all of the foregoing, those two pleas in law are unfounded.
79. It is therefore appropriate to dismiss the action brought by the Netherlands Government.
D. Costs
80. In accordance with Article 184 of the Rules of Procedure of the Court of Justice, since the Commission has applied for costs, these are to be imposed on the Kingdom of the Netherlands.
V. Conclusion
81. In the light of all of the foregoing, I propose that the Court should:
– Uphold the appeal.
– Set aside the judgment of the General Court of 16 November 2022, Kingdom of the Netherlands v Commission (T‑469/20, EU:T:2022:713).
– Exercise the power provided for in Article 61 of the Statute of the Court of Justice of the European Union to give final judgment in the case, and dismiss the action for annulment brought by the Kingdom of the Netherlands as unfounded.
– Order the Kingdom of the Netherlands to pay the costs.