Case T‑409/21
Federal Republic of Germany
v
European Commission
Judgment of the General Court (Eighth Chamber, Extended Composition) of 24 January 2024
(State aid – Aid granted by certain provisions of the amended German Law on the cogeneration of heat and electricity – Reform of the arrangements for support for cogeneration – Decision declaring the aid compatible with the internal market – Concept of ‘State aid’ – State resources)
1. Aid granted by a Member State – Concept – Aid from State resources – Concept of State resources – Funds financed by a levy or other compulsory surcharges under the national legislation and managed and apportioned in accordance with that legislation – Sums remaining constantly under public control and available to the competent national authorities – Alternative criteria
(Art. 107(1) TFEU)
(see paragraphs 34-36)
2. Aid granted by a Member State – Concept – Aid from State resources – Concept of State resources – Legal obligation for the electricity network operators to pay financial support to operators of heat and electricity cogeneration plants – Mere option for the network operators to pass on to their customers the additional costs resulting from that obligation by means of a surcharge – Included – Conditions – Financial support financed by a levy or other compulsory surcharges under the national legislation and managed and apportioned in accordance with that legislation – Condition not satisfied
(Art. 107(1) TFEU)
(see paragraphs 56-90)
3. Aid granted by a Member State – Concept – Aid from State resources – Concept of State resources – Legal obligation for the electricity network operators to pay financial support to operators of heat and electricity cogeneration plants – Included – Conditions – Sums remaining constantly under public control and available to the competent national authorities – Condition not satisfied
(Art. 107(1) TFEU)
(see paragraphs 95-100)
4. Aid granted by a Member State – Concept – Aid from State resources – Concept of State resources – Legal obligation for the electricity network operators to pay financial support to operators of heat and electricity cogeneration plants – Funds moving from private entities to private entities and remaining private throughout their life cycle – No transfer of State resources
(Art. 107(1) TFEU)
(see paragraphs 101-118)
5. Aid granted by a Member State – Concept – Aid from State resources – Concept of State resources – Legal obligation for the electricity network operators to pay financial support to operators of heat and electricity cogeneration plants – Mere option for the network operators to pass on to their customers the additional costs resulting from that obligation by means of a surcharge – Ceiling on the surcharge for hydrogen producers – No renouncement of State resources
(Art. 107(1) TFEU)
(see paragraphs 121-126)
Résumé
In an action for annulment brought by the Federal Republic of Germany, the General Court annuls the decision of the European Commission classifying as State aid various measures adopted by that Member State in support of electricity production by combined heat and power (‘CHP’) plants. (1) In doing so, the Court clarifies the condition, laid down in Article 107(1) TFEU, that only interventions by the State or through State resources can be classified as State aid within the meaning of that provision.
Between 2019 and 2021, the Federal Republic of Germany notified the Commission of certain legislative amendments providing, first, for measures of financial support for the operators of CHP plants and other installations connected with the cogeneration of heat and electricity (together, ‘the CHP operators’) and, secondly, for capping a surcharge that could be imposed, in that context, on hydrogen producers.
In the contested decision, the Commission concluded that those measures constituted State aid within the meaning of Article 107(1) TFEU that were nonetheless compatible with the internal market under Article 107(3)(c) TFEU.
In support of its classification of the notified measures as State aid, the Commission considered, in particular, that those measures were granted through State resources. By its action for annulment, the Federal Republic of Germany challenges the Commission’s conclusion.
Findings of the Court
The Court observes that the classification of a measure as State aid, within the meaning of Article 107(1) TFEU, requires that a number of conditions be satisfied, including that there be intervention by the State or through State resources.
According to the case-law, funds financed by a levy or other compulsory surcharges under the national legislation and managed and apportioned in accordance with that legislation (first criterion) and sums that constantly remain under public control, and therefore available to the competent national authorities (second criterion), may be categorised as State resources. Those two criteria are alternative criteria of the concept of ‘State resources’ within the meaning of Article 107(1) TFEU.
First, as regards the measures of financial support for the CHP operators, the Commission considered in the contested decision that those measures were financed from the proceeds of a de jure mandatory levy imposed by the State, managed and apportioned in accordance with the provisions of the legislation (first criterion).
In that regard, the Court observes that the measures of support for the CHP operators notified by the Federal Republic of Germany are characterised by the existence of ‘two levels’ in the electricity supply chain, the ‘first level’ corresponding to the relationship between the CHP operators and the network operators, and the ‘second level’ to the relationship between those network operators and their customers.
In the context of the ‘first level’ of the supply chain, the notified measures establish a legal obligation for the network operators, which are private entities, to pay financial support to the CHP operators. In the context of the ‘second level’, those network operators may, without being required to do so by law, pass on the financial burden resulting from that obligation to their customers by means of a surcharge.
In the light of those clarifications, the Court finds that the Commission erred in law in considering that the obligation imposed on the network operators to pay sums to the CHP operators, at the ‘first level’ of the supply chain, was sufficient to substantiate the finding of a levy or other mandatory surcharge of such a kind as to establish the involvement of State resources, without it being necessary to identify a further mandatory contribution at another ‘level’ of the supply chain, as the surcharge at the ‘second level’ of the supply chain is not a de jure mandatory surcharge.
The existence of a levy or of another de jure mandatory surcharge concerns the origin of the funds used in order to grant an advantage, in that it permits the finding that State funds were used to finance that advantage. It is not to be confused with the allocation of those funds in accordance with the law. The de jure obligation imposed on the network operators at the ‘first level’ of the supply chain concerns only the allocation of the funds in accordance with the law, but gives no indication of the origin of the funds used by the network operators in order to comply with that obligation.
In that context, the Commission cannot claim that the State takes ownership of the network operators’ resources, since the latter are not necessarily the ultimate debtors of the financial burden occasioned by the measures to support the CHP operators.
In addition, the fact that the German law sets out in detail the procedure for the allocation of the financial support to the CHP operators is not capable of establishing a transfer of State resources, only the imputability of those support measures to the State.
Consequently, the Court finds that the Commission was wrong to rely on the first criterion set out above, relating to the existence of a levy or of other mandatory surcharges, to conclude that the measures of financial support to the CHP operators were financed through State resources.
The Court also finds that the Commission erred in law in precluding the application of the case-law resulting from the judgment of 13 March 2001, PreussenElektra. (2)
In the contested decision, the Commission had precluded the application of that case-law on the ground that the measures to support the CHP operators did not constitute a measure of ‘mere price regulation’. Contrary to the Commission’s conclusion, however, the decisive factor for precluding the existence of a transfer of State resources, according to the case-law resulting from the judgment in PreussenElektra, is not whether the measures at issue constitute a measure of ‘mere price regulation’, but the fact that the private entities in question were appointed by the State to manage a State resource.
Thus, in order to preclude the application of the case-law resulting from the judgment in PreussenElektra, the Commission ought to have established that the advantage for the CHP operators was not granted by the network operators from their own financial resources, but that they were appointed by the State to manage a State resource, which the Commission failed to demonstrate.
Nor could the Commission properly rely on the practical effect of Article 107(1) TFEU to restrict the application of the case-law resulting from the judgment in PreussenElektra to cases of ‘mere price regulation’, since that article cannot be applied to State conduct which is not covered by that article, such as, in the present case, a measure decided upon by the State but financed by private undertakings.
Secondly, as regards capping the surcharge that can be imposed on hydrogen producers by the network operators, the Commission considered that it constituted a renouncement of State resources that could be characterised as a transfer of State resources.
However, the Court notes that the surcharge in question does not constitute a State resource according to the first criterion set out above, as it is not de jure mandatory. It follows that the reduction of that surcharge for hydrogen producers is also incapable of constituting a renouncement of State resources.
In the light of the foregoing, the Court upholds the action for annulment in so far as the Commission incorrectly found that the set of measures notified by the Federal Republic of Germany constituted State aid financed through State resources.