Case T‑167/19
(published in extract form)
Tempus Energy Germany GmbH
and
T Energy Sweden AB
v
European Commission
Judgment of the General Court (Third Chamber), 6 October 2021
(State aid – Polish electricity market – Capacity mechanism – Decision not to raise any objections – Aid scheme – Article 108(2) and (3) TFEU – Concept of doubts – Article 4(3) and (4) of Regulation (EU) 2015/1589 – Serious difficulties – Article 107(3)(c) TFEU – Guidelines on State aid for environmental protection and energy 2014-2020 – Procedural rights of the interested parties – Obligation to state reasons)
1. Judicial proceedings – Intervention – Application seeking to support the form of order sought by one of the parties – Application raising an objection of public policy – Examination by the Court of its own motion
(Arts 108(2) and 263, fourth para., TFEU; Council Regulation 2015/1589, Arts 1(h), 4(3), and 6(1))
(see paragraphs 35, 36)
2. Action for annulment – Natural or legal persons – Acts of direct and individual concern to them – Commission decision finding State aid compatible with the internal market without opening the formal investigation procedure – Action by interested parties within the meaning of Article 108(2) TFEU – Action designed to safeguard the procedural rights of the persons concerned – Admissibility
(Arts 108(2) and 263, fourth para., TFEU; Council Regulation 2015/1589, Arts 1(h), 4(3), and 6(1))
(see paragraphs 37, 42)
3. State aid – Examination by the Commission – Administrative procedure – Person concerned for the purposes of Article 108(2) TFEU – Concept – Undertaking not in direct competition with the aid recipient – Necessity for that undertaking to demonstrate the specific effect of aid on its situation
(Art. 108(2) and (3) TFEU; Council Regulation 2015/1589, Art. 1(h))
(see paragraphs 38-40)
4. Action for annulment – Admissibility criteria – Natural or legal persons – Action brought by several applicants against the same decision – Capacity to act of one of them – Admissibility of the action as a whole
(Art. 263, fourth para., TFEU)
(see paragraph 41)
5. State aid – Planned aid – Examination by the Commission – Preliminary stage and main stage – Compatibility of aid with the internal market – Difficulties of assessment – Commission’s duty to initiate the main review procedure – Serious difficulties – Concept – Objective in nature – Burden of proof – Circumstances enabling the existence of such difficulties to be established – Consistent evidence relating to the conduct and duration of the preliminary examination procedure, the circumstances surrounding the adoption of the Commission’s decision and the content of the decision – Effect of the length and circumstances of the pre-notification phase – Lack of evidence
(Art. 108(2) and (3) TFEU; Council Regulation 2015/1589, Art. 4(3) and (4))
(see paragraphs 46-51, 63-72, 98, 99, 103, 106, 107, 114, 118, 123, 129, 132, 139, 143, 146, 147, 172, 179, 181, 187, 188, 192, 193, 198, 204, 207, 230, 232, 237, 239, 259, 268, 272, 285, 297)
6. State aid – Prohibition – Derogations – Discretion of the Commission – Adoption by the Commission of guidelines governing the compatibility of aid with the internal market – Consequences – Self-limitation of its discretion
(Art. 107(3)(c) TFEU; Commission Notice 2014/C 200/1)
(see paragraphs 76)
7. State aid – Prohibition – Derogations – Aid capable of being regarded as compatible with the internal market – Aid granted in the energy sector – Guidelines on aid for environmental protection and energy – Aid for generation adequacy – Criteria
(Art. 5(4) TEU; Arts 107(3)(c) and 194(1) TFEU; Commission Notice 2014/C 200/1)
(see paragraphs 90-98, 111, 117-122, 132, 137, 139, 180, 196, 197, 219, 220, 245, 246, 252, 283, 290)
8. EU law – Principles – Equal treatment – Different treatment objectively justified – Criteria for assessment
(see paragraphs 161-171, 218, 224, 225)
9. Approximation of laws – Measures of approximation – Common rules for the internal market in electricity – Directive 2009/72 – Participation of foreign capacity in the national capacity market through foreign transmission system operators – Exchanges between interconnected networks – Tasks of transmission system operators– Scope
(European Parliament and Council Directive 2009/72, Art. 12)
(see paragraphs 228, 230, 233)
Résumé
By decision of 7 February 2018, (1) the European Commission decided not to raise objections to an aid scheme notified by Poland, which provides for the payment of four billion Polish zlotys (PLN), spread over a period of 10 years, to capacity providers on the Polish electricity market (‘the notified aid scheme’). Without initiating the formal investigation procedure, the Commission, more specifically, considered that scheme to be compatible with the internal market pursuant to Article 107(3)(c) TFEU. (2)
The capacity mechanism thus authorised is intended to fill expected gaps on the Polish electricity market between electricity demand and capacity and, in so doing, ensure security of supply in a sustainable manner. In application of that mechanism, capacity providers are selected through centrally managed auctions, which are organised at regular intervals. In return for a steady payment for the duration of the agreement, providers are to ensure the provision of capacity during delivery periods and its actual provision during emergency periods. That capacity can be made available either by generating and providing electricity or, in the case of demand-side response (‘DSR’), by reducing demand at times of system stress.
Auctions are open to existing and new generators, DSR and storage operators, located in Poland or in the control area of neighbouring countries. The length of the capacity agreements to be granted is determined, in principle, in relation to the level of the investment expenditure of the capacity providers concerned. The steady payments are financed through a levy on electricity supplies, collected from final consumers.
The decision not to raise objections to the notified aid scheme has been challenged by Tempus Energy Germany GmbH and T Energy Sweden AB (together, ‘Tempus’), which sell DSR technology to individuals and professionals, inter alia in the German and Swedish electricity markets.
The action for annulment brought by Tempus is, however, dismissed by the General Court. In its judgment, it provides, in particular, details relating to the admissibility of an action for annulment brought against a decision of the Commission not to raise objections to a notified aid scheme, as well as clarifications as to the scope of certain provisions of the Guidelines on State aid for environmental protection and energy. (3)
Findings of the General Court
As regards, in the first place, the admissibility of the action for annulment brought by Tempus, the Court notes that Tempus is an interested party within the meaning of Article 108(2) TFEU and Article 1(h) of the Regulation laying down detailed rules for the application of Article 108 TFEU, (4) in so far as it was prevented, by the decision not to raise objections, from submitting its observations during a formal investigation procedure within the meaning of Article 108(2) TFEU.
In that regard, the Court rejects the argument according to which Tempus does not warrant the status of interested party on the ground that it is not a ‘direct competitor’ present on the Polish capacity market. To the extent that it has the firm intention and an inherent ability to enter it in the near future and that the notified aid scheme raises barriers making that entry more difficult, Tempus is at least a potential competitor on that market. Tempus has thus demonstrated, to the requisite legal standard, that its interests are liable to be affected by the aid scheme and that the grant both of the agreements and the capacity payments is likely to have a material impact on its situation. Tempus’s status as an interested party is, moreover, borne out by its status as an operator active on the adjacent German and Swedish electricity markets, which enables it to participate in the Polish capacity market.
Thus, in finding that the pleas for annulment relied on by Tempus are aimed at alleging the existence of serious difficulties which should have led the Commission to initiate the formal investigation procedure in order to safeguard its procedural rights which it would have enjoyed under Article 108(2) TFEU, the Court confirms that its action is admissible.
In the second place, the Court examines the substantive question of whether the preliminary examination carried out by the Commission in the present case had given rise to serious difficulties or doubts (5) as to the compatibility of the notified aid scheme with the internal market, with the result that it should have initiated the formal investigation procedure under Article 108(2) TFEU, without having any discretion in that regard.
After specifying that the existence of serious difficulties or doubts must be sought not only in the circumstances in which the Commission’s decision was adopted at the end of the preliminary examination but also in the assessments upon which it has relied, the Court dismisses all the arguments put forward by Tempus concerning the existence of serious difficulties or doubts as to the compatibility of the notified aid scheme with the internal market. Those arguments related, first, to the conduct and length of the procedure and, second, to the content of the decision not to raise objections and, more specifically, to the alleged erroneous, incomplete or insufficient nature of the assessment of the compatibility of the aid with the internal market in the light of the provisions of the Guidelines on State aid for environmental protection and energy protection.
In that latter regard, the Court notes, in particular, that, under the Guidelines on State aid for environmental protection and energy, Member States are required to balance the potentially conflicting objectives of security of energy supply against environmental protection, all the while observing the principle of proportionality. Thus, even though those guidelines lay down the more general objective of supporting the shift towards a resource-efficient, competitive low-carbon economy, (6) they cannot be interpreted as prohibiting aid measures for conventional power plants where these prove necessary to guarantee generation adequacy and therefore the security of energy supply, or as requiring them to give absolute priority to alternative techniques, such as DSR.