Case T‑487/11

(publication by extracts)

Banco Privado Português, SA

and

Massa Insolvente do Banco Privado Português, SA

v

European Commission

(State aid — Financial sector — Bank loan backed by a State guarantee — Aid intended to remedy a serious disturbance in the economy of a Member State — Article 107(3)(b) TFEU — Decision declaring the aid to be incompatible with the internal market — Guidelines on State aid to rescue and restructure distressed undertakings — Compliance with the Commission’s notices concerning aid to the financial sector in the current financial crisis — Legitimate expectations — Obligation to state reasons)

Summary — Judgment of the General Court (Fourth Chamber), 12 December 2014

1.      State aid — Concept — Legal nature — Interpretation on the basis of objective factors — Judicial review — Scope

(Art. 107(1) TFEU)

2.      State aid — Concept — Grant attributable to the State of an advantage by means of State resources — Advantages involving a diminution of the State budget or risking such a diminution — State guarantee — Included

(Art. 107(1) TFEU)

3.      State aid — Effect on trade between Member States — Adverse effect on competition — Criteria for assessment

(Art. 107(1) TFEU)

4.      State aid — Prohibition — Exceptions — Aid capable of being regarded as compatible with the internal market — Aid to remedy serious disturbance in the economy of a Member State — Discretion of the Commission — Judicial review — Limits

(Art. 107(3)(b) TFEU)

5.      State aid — Decision of the Commission finding aid incompatible with the internal market and ordering its recovery — Determination of the obligations of the Member State — Obligation to recover — Scope — State guarantee — Restitution of the economic advantage

(Art. 108(2), first para., TFEU; Council Regulation No 659/1999, Art. 14(1))

6.      State aid — Recovery of unlawful aid — Calculation of the amount to be recovered — Aid granted in the form of an individual guarantee — Determination of the aid element where the guarantee has no market price — Obligation to calculate the aid element in the same way as the grant equivalent of a soft loan

(Art. 108(2), first para., TFEU; Council Regulation No 659/1999, Art. 14(1); Commission Notice 2008/C 155/02)

7.      State aid — Recovery of unlawful aid — Possible legitimate expectation on the part of the recipient — Protection — Conditions and limits

(Art. 108(2), first para., TFEU)

8.      EU law — Principles — Equal treatment — Different treatment objectively justified — Criteria for assessment

1.      See the text of the decision.

(see para. 46)

2.      See the text of the decision.

(see paras 50-52)

3.      See the text of the decision.

(see paras 60-62)

4.      The derogation set out in Article 107(3)(b) TFEU and, therefore, the notion of ‘serious disturbance in the economy of a Member State’ must be interpreted narrowly. The Commission enjoys a wide discretion when applying this provision, the exercise of which involves assessments of an economic and social nature which must be made within a Community context. The European Union Courts, in reviewing whether that freedom was lawfully exercised, cannot substitute their own assessment in the matter for that of the competent authority, but must confine themselves to examining whether the authority’s assessment is vitiated by a manifest error or by misuse of powers.

The Commission cannot be accused of a manifest error of assessment, of disregarding the limits of its broad discretion under Article 107(3)(b) TFEU, in the context of the communication entitled ‘The application of State aid rules to measures taken in relation to financial institutions’, or of departing unlawfully from the rules it imposed on itself in that regard where it accurately follows the rules contained in that communication in order to declare the aid in question to be incompatible with the internal market.

(see paras 83, 91)

5.      Under Article 14(1) of Regulation No 659/1999, which intends to implement the first subparagraph of Article 108(2) TFEU, where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary, unless such recovery would be contrary to a general principle of EU law. The withdrawal of unlawful aid through recovery is the logical consequence of finding that it is unlawful. Consequently, the Member State to which a decision requiring recovery of unlawful aid is addressed is obliged to take all measures necessary to ensure implementation of that decision. In that regard, the Member State concerned must succeed in actually recovering the sums owed.

The purpose of the recovery obligation is to re-establish the situation that existed on the market prior to the granting of the aid. More specifically, the recovery of aid that is incompatible with the internal market aims to remove the distortion of competition caused by the competitive advantage the recipient of the aid has enjoyed in the market compared with its competitors, thereby restoring the situation prior to the payment of the aid.

Paragraphs 15 and 25(a) and (c) of the Guidelines on State aid for rescuing and restructuring undertakings in difficulty, the general principles of which are applicable pursuant to paragraph 10 of the communication on financial institutions, do not express any views on the purpose or on the substantive or temporal scope of recovery orders, or on the detailed rules concerning them.

However, by restricting the possibility of authorising aid to rescue aid ‘in the form of loan guarantees or loans’ of a ‘temporary and reversible’ nature, paragraphs 15 and 25 of the rescue and restructuring guidelines are based on the general premiss that any advantage granted provisionally by means of rescue aid, in any form whatsoever, must be repaid if the conditions for authorisation to which its provisional grant is subject are not or are no longer met. This interpretation is consistent with the reversibility and the spirit of rescue aid, which is intended only to enable the distressed undertaking to withstand a short-term critical situation, at the end of which it either manages to recover by itself, triggering the obligation to reimburse the aid, or submits a restructuring or liquidation plan. In the case of a State guarantee, this principle necessarily requires repayment of the economic advantage that the guarantee entailed for the beneficiary for the duration of its grant; its mere withdrawal with immediate effect is not sufficient for that purpose and, moreover, is at odds with the notion of recovery.

(see paras 97, 98, 101, 102)

6.      In State aid matters, it follows from point 4.2 of the Commission Notice on the application of Articles 87 and 88 EC to State aid in the form of guarantees that if the Commission finds that no market price for the guarantee in question is available, it is required to calculate the aid element ‘in the same way as the grant equivalent of a soft loan’, and it may not — because of the limit it imposed on the exercise of its own discretion — depart from that obligation or calculation method.

(see para. 109)

7.      In the matter of recovery of State aid, in view of the mandatory nature of the review of State aid by the Commission, undertakings to which aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in Article 108 TFEU, a diligent business operator being normally be able to determine whether that procedure has been followed. In particular, where aid is implemented without prior notification to the Commission, with the result that it is unlawful under Article 108(3) TFEU, the recipient of the aid cannot have at that time a legitimate expectation that its grant is lawful.

In that context, the mere fact that the decision authorising an emergency aid measure designed to keep an insolvent financial institution afloat did not expressly refer to the possibility of a declaration of incompatibility at a later point in time leading to the immediate recovery of the advantage granted is not sufficient to create such legitimate expectations where the Commission’s subsequent approach has complied with the relevant rules as to the temporary and reversible character of rescue aid and the decision initiating the formal investigation procedure unequivocally states that, in the absence of a restructuring plan for an insolvent financial institution, the provisional authorisation for the aid in question, as given in the decision authorising an emergency aid measure designed to keep an insolvent financial institution afloat, was unlikely to be confirmed or continued by the decision to be adopted at the end of the administrative procedure.

Nor can an aid beneficiary argue that failure to submit a restructuring plan is entirely attributable to the Member State. Even if that were true, and irrespective of the reasons why the plan was not notified to the Commission, the Commission cannot be held responsible for that failure or for having caused the beneficiary to entertain a legitimate expectation in that context, particularly where it has taken all appropriate steps to urge the Member State to submit a restructuring plan to it as soon as possible.

An argument that the recovery order amounts to a ‘penalty’ against the aid beneficiary and seriously harms the interests of its investors and creditors is also irrelevant and, in any event, unfounded in law. An order for recovery of unlawful aid is not a penalty in the strict sense of the term, but seeks only to restore the situation prior to the grant of the aid.

Furthermore, an aid beneficiary may not, in principle, entertain a legitimate expectation that the aid is lawful when it has been granted in breach of the obligation to give prior notice to the Commission and of the prohibition on implementing that aid under Article 108(3) TFEU and was, therefore, unlawful.

Lastly, the obligation of the Member States to recover aid that is unlawful and incompatible with the internal market is not curtailed or called in question by the fact that the beneficiary is insolvent.

(see paras 125, 129, 130, 132-134)

8.      See the text of the decision.

(see para. 139)