JUDGMENT OF THE COURT OF FIRST INSTANCE (Eighth Chamber)
1 July 2009 (*)
(State aid – Scheme for restructuring aid granted by the Republic of Poland to a steel producer – Decision declaring the aid to be in part incompatible with the common market and ordering its recovery – Protocol No 8 on the restructuring of the Polish steel industry – Action for annulment – Interest in bringing proceedings – Admissibility – Concept of beneficiary – Article 14(1) of Regulation (EC) No 659/1999)
In Case T‑291/06,
Operator ARP sp. z o.o., established in Warsaw (Poland), represented initially by J. Szymanowska, subsequently by J. Szymanowska and P. Rosiak, and finally by P. Rosiak, lawyers,
applicant,
v
Commission of the European Communities, represented by C. Giolito and A. Stobiecka-Kuik, acting as Agents,
defendant,
APPLICATION for the partial annulment of Commission Decision 2006/937/EC of 5 July 2005 on State aid C 20/04 (ex NN 25/04) in favour of Huta Częstochowa S.A. (OJ 2006 L 366, p. 1) inasmuch as it declares certain aid to be incompatible with the common market and orders the Republic of Poland to recover it,
THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Eighth Chamber),
composed of M.E. Martins Ribeiro, President, S. Papasavvas and A. Dittrich (Rapporteur), Judges,
Registrar: K. Pocheć, Administrator,
having regard to the written procedure and further to the hearing on 4 September 2008,
gives the following
Judgment
Legal context
1 Article 8 of Protocol No 2 on ECSC products to the Europe Agreement of 16 December 1991 establishing an association between the European Communities and their Member States, of the one part, and the Republic of Poland, of the other part (OJ 1993 L 348, p. 2; ‘Protocol No 2), provides as follows:
‘1. The following are incompatible with the proper functioning of the Agreement, in so far as they may affect trade between the Community and [the Republic of] Poland:
…
(iii) public aid in any form whatsoever except derogations allowed pursuant to the ECSC Treaty.
…
4. The Parties recognise that during the first five years after the entry into force of the Agreement, and by derogation [from] paragraph 1(iii), [the Republic of] Poland may exceptionally, as regards ECSC steel products, grant public aid for restructuring purposes provided that:
– the restructuring programme is linked to a global rationalisation and reduction of capacity in Poland,
– it leads to the viability of the benefiting firms under normal market conditions at the end of the restructuring period, and
– the amount and intensity of such aid are strictly limited to what is absolutely necessary in order to restore such viability and are progressively reduced.
The Association Council shall, taking into account the economic situation of [the Republic of] Poland, decide whether the period of five years could be extended.’
2 Decision No 3/2002 of the EU-Poland Association Council of 23 October 2002 extending the period set in Article 8(4) of Protocol No 2 (OJ 2003 L 186, p. 38) extended for a further period of eight years starting on 1 January 1997, or until the date of the Republic of Poland’s accession to the European Union, the period within which the Republic of Poland could exceptionally, in respect of ‘steel’ products, grant public aid for restructuring purposes under the conditions listed in Article 8(4) of Protocol No 2. Article 2 of that decision states:
‘[The Republic of] Poland shall submit to the Commission ... a restructuring programme and business plans that meet the requirements listed in Article 8(4) of Protocol [No] 2 and that have been assessed and agreed by its national State aid monitoring authority (the Office for Competition and Consumer Protection).’
3 Protocol No 8 on the restructuring of the Polish steel industry, annexed to the Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded (OJ 2003 L 236, p. 948; ‘Protocol No 8’), authorised the Republic of Poland, in derogation from the general rules on State aid, to grant aid for the restructuring of its steel sector in accordance with the detailed rules laid down in the restructuring plan and the conditions stipulated in that protocol. It provides inter alia as follows:
‘1. Notwithstanding Articles 87 [EC] and 88 [EC], State aid granted by [the Republic of] Poland for restructuring purposes to specified parts of the Polish steel industry shall be deemed to be compatible with the common market provided that:
– the period provided for in Article 8(4) of Protocol [No] 2 ... has been extended until the date of accession,
– the terms set out in the restructuring plan on the basis of which the abovementioned Protocol was extended are adhered to throughout the period 2002-06,
– the conditions set out in this Protocol are met, and
– no State aid for restructuring is to be paid to the Polish steel industry after the date of accession.
2. …
3. Only companies listed in Annex 1 (hereinafter referred to as “benefiting companies”) shall be eligible for State aid in the framework of the Polish steel restructuring programme.
4. A benefiting company may not:
(a) in the case of a merger with a company not included in Annex 1, pass on the benefit of the aid granted to the benefiting company;
(b) take over the assets of any company not included in Annex 1 which is declared bankrupt in the period up to 31 December 2006.
5. …
6. The restructuring aid granted to the benefiting companies shall be determined by the justifications set out in the approved Polish steel restructuring plan and individual business plans as approved by the Council. But in any case the aid paid out in the period of 1997-2003 and in its total amount shall not exceed PLN 3 387 070 000.
…
No further State aid shall be granted by [the Republic of] Poland for restructuring purposes to the Polish steel industry.
…
10. Any subsequent changes in the overall restructuring plan and the individual plans must be agreed by the Commission and, where appropriate, by the Council.
…
18. Should the monitoring show that:
…
(c) [the Republic of] Poland in the course of the restructuring period has granted additional incompatible State aid to the steel industry and to the benefiting companies in particular,
the transitional arrangements contained in this Protocol shall not have effect.
The Commission shall take appropriate steps requiring any company concerned to reimburse any aid granted in breach of the conditions laid down in this Protocol.’
4 Council Decision 2003/588/EC of 21 July 2003 on the fulfilment of the conditions laid down in Article 3 of Decision No 3/2002 (OJ 2003 L 199, p. 17) provides in its sole article:
‘The restructuring programme and business plans submitted to the Commission by [the Republic of] Poland on 4 April 2003 pursuant to Article 2 of … Decision No 3/2002 ... are in compliance with the requirements of Article 8(4) of ... Protocol [No] 2.’
5 Article 6(1) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88 EC] (OJ 1999 L 83, p. 1) states:
‘The decision to initiate the formal investigation procedure shall summarise the relevant issues of fact and law, shall include a preliminary assessment of the Commission as to the aid character of the proposed measure and shall set out the doubts as to its compatibility with the common market. The decision shall call upon the Member State concerned and upon other interested parties to submit comments within a prescribed period which shall normally not exceed one month. In duly justified cases, the Commission may extend the prescribed period.’
6 Article 7(5) of that regulation provides:
‘Where the Commission finds that the notified aid is not compatible with the common market, it shall decide that the aid shall not be put into effect (hereinafter referred to as a “negative decision”).’
7 Article 14 of Regulation No 659/1999 states:
‘1. 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 (hereinafter referred to as a “recovery decision”). The Commission shall not require recovery of the aid if this would be contrary to a general principle of Community law.
2. The aid to be recovered pursuant to a recovery decision shall include interest at an appropriate rate fixed by the Commission. Interest shall be payable from the date on which the unlawful aid was at the disposal of the beneficiary until the date of its recovery.
3. …’
8 Under Article 20(1) of that regulation:
‘Any interested party may submit comments pursuant to Article 6 following a Commission decision to initiate the formal investigation procedure. Any interested party which has submitted such comments and any beneficiary of individual aid shall be sent a copy of the decision taken by the Commission pursuant to Article 7.’
Facts of the dispute
9 This case concerns a restructuring operation in respect of the Polish steel producer Huta Częstochowa S.A. (‘HCz’). The restructuring of HCz took place between 2002 and 2005. To that end, HCz’s assets were transferred to new companies:
– in 2002, Huta Stali Częstochowa sp. z o.o. (‘HSCz’) was formed to continue HCz’s steel production. HSCz leased HCz’s production facilities from the receiver and took over the majority of the employees. The parent company of HSCz was Towarzystwo Finansowe Silesia sp. z o.o. (‘TFS’), a company wholly owned by the Polish Treasury;
– in 2004, the companies Majątek Hutniczy sp. z o.o. (‘MH’) and Majątek Hutniczy Plus (‘MH Plus’) were formed. Their shares were wholly owned by HCz. MH received HCz’s steel assets and MH Plus received certain other assets necessary for production;
– assets not linked to production (called ‘non-steel assets’) and the electricity company Elsen were transferred to Operator ARP sp. z o.o. (‘Operator’ or ‘the applicant’), a company answerable to Agencja Rozwoju Przemysłu S.A. (the Polish Industrial Development Agency, owned by the Polish Treasury) (‘ARP’), in order to settle public-law claims subject to restructuring (taxes and social security contributions).
10 By letter of 19 May 2004, the Commission informed the Republic of Poland that it had decided to initiate the formal investigation procedure in respect of the restructuring aid granted to the steel producer HCz. That decision was published in the Official Journal of the European Union on 12 August 2004 (OJ 2004 C 204, p. 6; ‘the decision to initiate’) in the authentic language (Polish), preceded by a summary in the other official languages. The Commission called on all interested parties to submit their comments on the facts and legal analysis set out in the decision to initiate. It received comments from the Republic of Poland and from four interested parties.
11 At the end of the procedure, the Commission concluded that, contrary to its initial doubts, the measures for the restructuring of HCz in accordance with the provisions of the Ustawa o pomocy publicznej dla przedsiębiorców o szczególnym znaczeniu dla rynku pracy (Law of 30 October 2002 on public aid for undertakings having special impact on the labour market, Dz. U. No 213, position 1800, as amended; ‘the Law of 2002’) did not constitute State aid within the meaning of Article 87(1) EC. By contrast, the Commission found that HCz had benefited on several accounts from State aid over the period from 1997 to 2002. The Commission found that that aid was in part compatible with the common market but ordered repayment of the part which it found to be incompatible with the common market, amounting to PLN 19 699 452 (‘the aid in question’).
12 On 5 July 2005 the Commission adopted Decision 2006/937/EC on State aid C 20/04 (ex NN 25/04) in favour of HCz (OJ 2006 L 366, p. 1; ‘the Decision’). Article 3 states:
‘1. The State aid which [the Republic of] Poland awarded to [HCz] between 1997 and May 2002 as operating aid and aid for employment restructuring amounting to PLN 19 699 452 is incompatible with the common market.
2. [The Republic of] Poland shall take all necessary measures to recover from [HCz], Regionalny Fundusz Gospodarczy, [MH] and [Operator] the aid referred to in paragraph 1 and unlawfully made available to [HCz]. All these companies shall be jointly and severally liable.
Recovery shall be effected without delay and in accordance with the procedures of national law provided that they allow the immediate and effective enforcement of the decision. The sums to be recovered shall bear interest from the date on which they were made available to [HCz] until their actual recovery. The interest shall be calculated in conformity with the provisions laid down in Chapter V of ... Regulation … No 794/2004.
3. …’
13 Pursuant to an agreement dated 30 September 2005, which came into effect on 7 October 2005, ISD Polska sp. z o.o. (at that time trading under the business name of ZPD Steel sp. z o.o.; ‘ISD’), a wholly-owned subsidiary of Industrial Union of Donbass Corp. (‘IUD’), purchased from HCz all of the shares in MH and MH Plus, along with 10 remaining subsidiaries of HCz. By a contract which was also dated 30 September 2005 and came into effect on 7 October 2005, ISD purchased from TFS all of the shares in HSCz. ISD thus became the owner of HSCz, MH, MH Plus and 10 other subsidiaries of HCz.
14 Following the sale, HCz changed its corporate name to Regionalny Fundusz Gospodarczy S.A. (‘RFG’). RFG still exists and continues to be wholly owned by the Polish Treasury, but only owns a few properties unconnected with the steel industry.
15 By letter of 17 February 2006, the Commission requested the Polish authorities to inform it of the interest rates applicable to recovery of the aid in question from the jointly and severally liable debtors referred to in Article 3(2) of the Decision. In their reply of 13 March 2006, the Polish authorities made a proposal regarding the appropriate recovery interest rates to be applied and the principles for calculating the interest. In particular, they proposed taking as a basis for the period from 1997 to 1999 the rate for Polish zloty five-year fixed-rate Polish Treasury bonds and, for the period from 2000 until the accession of the Republic of Poland to the European Union, the 10-year rate for those same bonds. Furthermore, in the light of the situation of the capital markets in Poland at that time, which was characterised by very high, but rapidly falling, interest rates, they requested that those rates be updated annually and that the interest should not be calculated on a compound basis.
16 In a letter of 7 June 2006 addressed to the Polish authorities, the Commission stated that the interest rate applicable to recovery of the aid in question had to be, for the whole of the period concerned, the rate for Polish zloty five-year fixed-rate Polish Treasury bonds and that, pursuant to Article 11(2) of Regulation No 794/2004, that interest rate had to be applied on a compound basis.
Procedure and forms of order sought
17 By application lodged at the Registry of the Court of First Instance on 18 October 2006, the applicant brought the present action.
18 Following the partial renewal of the Court of First Instance, the case was allocated to a new Judge-Rapporteur. That Judge-Rapporteur was subsequently assigned to the Eighth Chamber, to which this case was accordingly allocated.
19 Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Eighth Chamber) decided to open the oral procedure, to put certain written questions to the Commission and to request the Commission to lodge a number of documents. The Commission complied within the time-limit accorded.
20 The parties presented oral argument and replied to questions put by the Court at the hearing on 4 September 2008.
21 The applicant claims that the Court should:
– annul the first subparagraph of Article 3(2) of the Decision in so far as it concerns the applicant;
– order the Commission to pay the costs.
22 The Commission contends that the Court should:
– dismiss the action as unfounded;
– order the applicant to pay the costs.
Law
Admissibility
Arguments of the parties
23 The Commission stated at the hearing that the Republic of Poland had recovered the aid in question from RFG and ISD and that those entities had not commenced proceedings against the applicant. Moreover, in the privatisation agreement, IUD had stood surety for the repayment by MH of the aid in question. Consequently, the Commission argued, the applicant no longer had any interest in bringing proceedings.
24 The applicant claims that, under Polish law, entities which have actually repaid unlawful aid may apply to the applicant for reimbursement of the sums paid during a period of up to 10 years after payment. The applicant stresses that it is unaware whether there is a surety undertaking on the part of IUD to repay the aid in question and that it is unable to avail itself of stipulations contained in the privatisation agreement between the Polish Government and IUD.
Findings of the Court
25 According to well-established case-law, in order for an action for annulment brought by a natural or legal person to be admissible, that person must have a vested and present interest in the annulment of the contested act (order in Joined Cases T‑228/00, T‑229/00, T‑242/00, T‑243/00, T‑245/00 to T‑248/00, T‑250/00, T‑252/00, T‑256/00 to T‑259/00, T‑265/00, T‑267/00, T‑268/00, T‑271/00, T‑274/00 to T‑276/00, T‑281/00, T‑287/00 and T‑296/00 Gruppo ormeggiatori del porto di Venezia and Others v Commission [2005] ECR II‑787, paragraph 23).
26 The Commission, it is true, raised the plea of inadmissibility alleging a lack of interest in bringing proceedings only at the stage of the hearing. However, it should be borne in mind that the conditions governing admissibility of an action, in particular whether there is a legal interest in bringing proceedings, concern an absolute bar to proceedings (order in Gruppo ormeggiatori del porto di Venezia and Others v Commission, cited in paragraph 25 above, paragraph 22; see also, to that effect, the order in Case 108/86 d. M. v Council and ESC [1987] ECR 3933, paragraph 10). Therefore, pursuant to Article 113 of its Rules of Procedure, the Court may at any time, of its own motion, consider whether the applicant has an interest in obtaining annulment of the contested decision (see, to that effect, Case T‑141/03 Sniace v Commission [2005] ECR II‑1197, paragraph 22).
27 In the present case, the applicant’s interest in bringing proceedings cannot be denied merely by virtue of the fact that the aid in question was repaid by one of the other entities designated in the Decision as being jointly and severally liable for the repayment. The applicant has stated, without being contradicted on that point by the Commission, that, according to Polish law, entities which have actually repaid unlawful aid may assert a right of action in that regard during a 10-year period. In those circumstances, the applicant should be considered to have retained an interest in the annulment of the Decision, since, were its action to be upheld, it would be capable of removing any risk of proceedings against it.
28 With regard to the surety undertaking raised by the Commission at the hearing, suffice it to note that no document capable of establishing the existence of such an undertaking appears in the Court’s file.
29 Consequently, the plea of inadmissibility raised by the Commission must be rejected.
Merits
30 The applicant raises four pleas in law, alleging infringement of the rights of the defence, a failure to state reasons in the Decision, an erroneous interpretation of Article 87 EC, Article 88 EC and Article 14 of Regulation No 659/1999, and infringement of the principles of legal certainty and proportionality.
The plea in law alleging infringement of the rights of the defence
– Arguments of the parties
31 The applicant claims that, although the publication of a notice in the Official Journal constitutes, in principle, an adequate means of bringing to all interested parties’ attention the fact that a State-aid review procedure has been initiated, it is, nevertheless, necessary for the Commission to define sufficiently the scope of its examination so as not to render meaningless the interested parties’ right to submit their comments.
32 The applicant states, however, that the Commission’s communication concerning the initiation of the procedure was formulated in such a way that there was no ground for it to consider itself to be an interested party. The decision to initiate referred in particular to steel producers, whereas the operator responsible for dealing with public claims was described as a company not producing steel. Furthermore, it was only on 8 July 2005, that is to say, after the Decision had been adopted, that the applicant agreed to exercise the function of ‘operator’, with the result that it had no possibility of presenting its comments on the Commission’s findings.
33 Lastly, the applicant claims that the description of the aid in question which appears in the decision to initiate deals exclusively with the restructuring carried out after 2003, which the Commission, in the Decision, acknowledged did not involve State aid. Moreover, the Republic of Poland did not forward to the applicant the decision to initiate and also did not inform the applicant of the ongoing procedure.
34 The Commission disputes those arguments. It contends that the reasons set out in the decision to initiate were sufficient to enable the applicant, which was the sole entity in Poland authorised to fulfil the function of ‘operator’, to understand that, as the entity taking over HCz’s assets, it might be required to repay the aid in question.
– Findings of the Court
35 It must be stated at the outset that only the notifying State, as the addressee of the contested decision, may rely on true rights of defence. The other interested parties, such as the applicant, were associated with the administrative procedure but without, however, being able to rely on the same rights. By contrast, they have the procedural rights granted to interested parties by Article 88(2) EC (see, to that effect, Case T‑176/01 Ferriere Nord v Commission [2004] ECR II‑3931, paragraph 82, and Joined Cases T‑309/04, T‑317/04, T‑329/04 and T‑336/04 TV 2/Danmark and Others v Commission [2008] ECR II‑0000, paragraph 137).
36 It follows from the case-law that the review stage under Article 88(2) EC is designed to enable the Commission to be fully informed of all the facts of the case (Case C‑367/95 P Commission v Sytraval and Brink’s France [1998] ECR I‑1719, paragraph 38).
37 According to Article 6(1) of Regulation No 659/1999, the decision to initiate the formal investigation procedure must summarise the relevant issues of fact and law, must include a ‘preliminary assessment’ by the Commission of the proposed measure, and must set out the doubts as to its compatibility with the common market. In addition, that decision must call upon the Member State concerned and upon other interested parties to submit their comments.
38 As is apparent from the wording of Article 6(1), the Commission’s analysis is necessarily preliminary in nature. It follows that the Commission cannot be required to present a complete analysis of the aid in question in its notice of intention to initiate that procedure. The Commission must, however, define sufficiently the framework of its investigation so as not to render meaningless the right of interested parties to put forward their comments (Case T‑354/99 Kuwait Petroleum (Nederland) v Commission [2006] ECR II‑1475, paragraph 85).
39 In the present case, paragraphs 6, 32 and 51 of the decision to initiate, the Polish text of which was published in the Official Journal, show clearly that the Commission addressed the question whether that aid had been paid to HCz and HSCz on a number of occasions since 1997. In paragraph 6, it found that, ‘[o]n the basis of the information currently available, it appears that HCz has received public aid on a number of occasions since the beginning of the restructuring period in 1997’. In paragraph 32, it stated that ‘[i]n connection with that procedure, all aid granted to HCz since 1 January 1997 must be considered’. Therefore, it requested from the Polish authorities ‘[d]etailed information concerning the amounts and purpose of all the public aids granted by [the Republic of] Poland to HCz since 1997’ (paragraph 51).
40 Consequently, it is clear from the terms of that decision that the Commission launched an exhaustive procedure which covered all aid granted to HCz since 1997.
41 As regards, more specifically, the applicant, it was found in paragraph 18 of the decision to initiate that, according to the Law of 2002, a subsidiary of ARP, called ‘Operator’, was responsible in respect of public institutional claims. It is stated next in paragraph 19 of that decision that that implies that Operator, in exchange for the transfer of all collaterals of public creditors resulting from public institutional claims in the steel production sector, would take over a part of HCz’s assets not linked to steel production. The role of Operator is further clarified in footnote 48 to the decision to initiate. Lastly, in paragraph 51 of the decision to initiate, the Commission asks why the assets transferred to Operator and those retained in the regional funds amounted to PLN 203 million and PLN 159 million respectively.
42 The statement of reasons in the decision to initiate, which was adopted on 19 May 2004, thus enabled the applicant, which was formed on 5 April 2004, to understand that, as the entity taking over HCz’s assets, it might be required to repay the aid in question.
43 Moreover, as the applicant was the sole entity in Poland authorised to fulfil the functions of ‘operator’ within the meaning of the Law of 2002, it could not assert, for the purpose of establishing an infringement of its procedural rights, that it did not agree to exercise that function until 8 July 2005. This is a fortiori the case inasmuch as the president of ARP, which wholly owns the applicant, took part in the formal investigation procedure and had knowledge of all the evidence concerning HCz’s restructuring.
44 Consequently, the plea in law alleging infringement of the rights of the defence must be rejected.
The plea in law alleging a failure to state reasons
– Arguments of the parties
45 The applicant claims, with regard to the reasons which led the Commission to classify it as a beneficiary of the aid in question and, accordingly, as a debtor jointly and severally liable to settle the repayment obligation, that the Decision is brief to the point of terseness and does not enable it, as an interested party, to understand the reasoning which was followed.
46 This is a fortiori the case inasmuch as, in the Decision, the Commission indicated that the value of the public-law debts assumed exceeded the assets taken over. Consequently, the Commission’s argument that the applicant benefited from the aid in question and was for that reason under an obligation to repay it lacks any foundation.
47 The Commission states that those heads of complaint relate to the merits of the Decision and not to its reasoning.
– Findings of the Court
48 According to well-established case-law, it is necessary to make a distinction between the ground for complaint alleging the absence or inadequacy of a statement of reasons and that alleging that the statement of reasons for the decision was imprecise (because of an error as to the facts or in the legal assessment). The latter aspect falls under the examination of the substantive legality of the contested decision and not the infringement of procedural requirements and thus cannot give rise to an infringement of Article 253 EC (Commission v Sytraval and Brink’s France, cited in paragraph 36 above, paragraph 67, and Case T‑84/96 Cipeke v Commission [1997] ECR II‑2081, paragraph 47). Consequently, the Court cannot, when considering whether the obligation to state reasons has been fulfilled, examine the substantive legality of the reasons relied on by the Commission to justify its decision. In a plea based on a failure to state reasons or a lack of adequate reasons, objections and arguments which seek to challenge the merits of the contested decision are therefore misplaced and irrelevant (Case T‑349/03 Corsica Ferries France v Commission [2005] ECR II‑2197, paragraphs 58 and 59).
49 In the present case, the Commission stated in paragraph 146 of the Decision that the assets and liabilities of HCz had been divided among the three successor companies, namely RFG, MH and Operator, and that, therefore, the legal entity which received the aid in question was no longer limited to the legal entity constituted by HCz, but also extended to those other entities. The Commission thus provided the reason why it designated the applicant as an entity jointly and severally liable for repayment of the aid in question, although it did not designate it as a beneficiary of that aid.
50 In those circumstances, it cannot be concluded that there was a failure to state reasons in the Decision. To the extent to which the applicant disputes the accuracy of the reasons stated and the lawfulness of the provisions adopted, its arguments will be examined within the context of the following plea.
51 It follows that the plea in law alleging a failure to state reasons must be rejected.
The plea in law alleging an erroneous interpretation of Article 87 EC, Article 88 EC and Article 14 of Regulation No 659/1999
– Arguments of the parties
52 The applicant claims that the Commission exceeded the limits of its discretion in finding that the applicant was a beneficiary of the aid in question.
53 The mere fact that the applicant, which is not active in the steel sector, acquired certain assets from the company which received the aid in question is not a sufficient justification for finding that the financial advantages which the company which transferred those assets to the applicant had previously obtained as a result of the public aid from which that company had benefited were acquired by the applicant along with those assets. As the value of the public-law obligations which the applicant assumed exceeded the market value of the assets transferred to it, there is no basis for the claim that it obtained any financial advantage including an advantage constituting public aid. Where an undertaking which has benefited from unlawful State aid is bought at the market price, the purchaser of that undertaking cannot be considered to be the beneficiary of that aid (Case C‑277/00 Germany v Commission [2004] ECR I‑3925 (‘SMI’)).
54 The applicant claims that any recovery from it of the aid in question would ‘shake’ the foundations of the restructuring of the public-law obligations which had been meticulously calculated, analysed and accepted by the Commission and would proportionately reduce the financial means intended to finance those public-law obligations.
55 The applicant further states that it did not acquire the non-steel assets in application of the Law of 2002. It was possible only for the company’s debts to be taken over pursuant to that law. At the hearing, the applicant explained that it was only on 8 July 2005 that it gave its agreement to performing the functions of ‘operator’ within the meaning of the Law of 2002. Consequently, the designation of the applicant in Article 3 of the Decision was premature, since, at the moment of the Decision’s adoption, that agreement did not yet exist.
56 Moreover, indirect creditors with the right to obtain repayment could also address a claim to the applicant, in its capacity as joint and several debtor, for repayment of all of the aid in question as well as interest. There is, however, no contractual link between the applicant and MH or IUD which would entitle the applicant to claim against those undertakings for repayment of the aid in question.
57 The Commission states at the outset that, although it found that the restructuring of HCz, on the basis of the Law of 2002, had been carried out without additional State aid, since it fulfilled the requirements of the ‘private creditor test’, it also found that HCz had, during the period from 1997 to 2002, benefited from State aid which was in part incompatible with the common market.
58 The Commission is unable to share the view that the applicant acquired assets from HCz under market conditions. It is not possible to determine the highest price that a private investor operating on the market would have been ready to pay for those assets. All of the changes relating to the property which were carried out as part of the restructuring of HCz and the resulting division of its assets were transactions based on the provisions of the Law of 2002.
59 With regard to the joint and several obligation of HCz, RFG, MH and the applicant, it is, according to the Commission, for the Member State to ensure compliance with the order that the aid in question be recovered. The Commission seeks to point out that the initial market value of the assets taken over by the applicant, as cited in the Decision, differs from the accounting value which appears in Annex A.5. It was impossible for the Commission to establish the exact value of the assets. In any event, a Member State which finds itself unable to enforce a decision may apply to the Commission for assistance in overcoming those difficulties.
– Findings of the Court
60 Essentially, the applicant claims that, in the Decision, the Commission erroneously found it to be an entity jointly and severally liable to repay the aid in question.
61 In that regard, it should be borne in mind that, under Article 14(1) of Regulation No 659/1999, where negative decisions are taken in cases of unlawful aid, the Commission is required to decide that the Member State concerned is to take all necessary measures to recover the aid from the ‘beneficiary’.
62 In the present case, however, the Commission stated that the applicant was not a beneficiary of the aid in question. None the less, it designated the applicant as being jointly and severally liable to repay that aid.
63 It is true that, since Commission Decision 1999/720/EC, ECSC of 8 July 1999 on State aid granted by Germany to Gröditzer Stahlwerke GmbH and its subsidiary Walzwerk Burg GmbH (OJ 1999 L 292, p. 27), in which the Commission for the first time ordered the recovery of aid from undertakings which had acquired assets, the Commission has, in certain cases, found that the term ‘beneficiary’ within the meaning of Article 14(1) of Regulation No 659/1999 did not designate solely the original beneficiary of the aid but, where appropriate, any undertaking to which assets have been transferred in order to render the provisions of its recovery order inoperative.
64 The fact remains that, first, in order to widen the group of entities required to repay the aid there must be a transfer of assets. At the date on which the Decision was adopted, that is, 5 July 2005, such a transfer had not yet actually taken place, as the applicant gave its agreement to exercising the function of ‘operator’ in the restructuring procedure for HCz only several days later. It is, however, settled case-law that, in an action for annulment, the legality of the contested measure must be assessed on the basis of the elements of fact and of law existing at the time when the measure was adopted (see Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraph 7, and SMI, cited in paragraph 53 above, paragraph 39 and the case-law cited).
65 The Commission, it is true, contended at the hearing that the entire restructuring operation for HCz was based on the principle that assets would be transferred to the applicant and that the latter’s consent to this would be a mere formality. However, the applicant has correctly stated that, although the Law of 2002 provides for the role of ‘operator’, it does not specify who the ‘operator’ is and how many ‘operators’ may be created. Consequently, the ‘operator’ in the present case could have been an entity other than the applicant. Therefore, on the date on which the Decision was adopted, it was premature to include the applicant unconditionally in the group of entities required to repay the aid in question.
66 Second, the widening of the group of entities required to repay the aid can be justified only if the transfer of assets leads to the risk of circumvention of the effects of the recovery order, and in particular if, as a result of the takeover of assets, the original beneficiary of the aid is left like an ‘empty shell’ from which it is not possible to secure repayment of the unlawful aid (see, to that effect, Case T‑324/00 CDA Datenträger Albrechts v Commission [2005] ECR II‑4309, paragraph 98 et seq.). Moreover, that widening may be justified by the fact that the person or entity acquiring the assets retains the actual benefit of the competitive advantage connected with the receipt of the aid granted (SMI, cited in paragraph 53 above, paragraph 86).
67 In that regard, the Court of Justice has held that, where an undertaking that has benefited from unlawful State aid is bought at the market price, the purchaser cannot be regarded as having benefited from an advantage in relation to other market operators. The purchaser cannot therefore be required to repay such aid (see, to that effect, SMI, cited in paragraph 53 above, paragraphs 80 and 81). More specifically, in the case of the takeover of assets, the Court found, in CDA Datenträger Albrechts v Commission, cited in paragraph 66 above, that even though a purchase price in line with the market has been paid by the purchaser for the takeover of assets, the purchaser does not retain the actual benefit of the competitive advantage connected with the receipt of the aid granted to the vendor. In such a case, it cannot be found that the original beneficiary of the aid is left like an ‘empty shell’ from which it is not possible to secure repayment of the unlawful aid (see, to that effect, paragraphs 99 and 100 of that judgment) or that the purchaser has retained the actual benefit of the competitive advantage connected with the receipt of the aid.
68 Moreover, the Court of Justice has stated that, for the purposes of checking the financial conditions of a transfer, the national authorities may take into consideration, in particular, any expert’s report prepared at the time of the transfer (Case C‑214/07 Commission v France [2008] ECR I‑0000, paragraphs 59 and 60).
69 In the present case, the applicant claims that the value of the public-law obligations which it assumed exceeded significantly the market value of the assets transferred to it. It follows from recital 53 in the preamble to the Decision that an independent expert’s report assessed the market value of the assets which the applicant had received, that is to say, the land, the shares in the company Elsen and amounts owed, at PLN 156 million (the figure which appears in Annex A.5 differs only slightly in that regard). By contrast, the total value of the public-law obligations assumed legally by the applicant amounted to more than PLN 280 million. In those circumstances, the Commission could not assert, without further explanation, that there was a risk of circumvention or that the applicant had enjoyed the actual benefit of a competitive advantage connected with the receipt of the aid in question. At the very least, it should have explained why it regarded as irrelevant the fact that the assets had been acquired at a ‘price’ which appeared to exclude the benefit of such a competitive advantage. Given that the applicant is not a company belonging to the vendor’s group or even a company present on the steel production market, but fulfils the role of a buyer-back of debts and assets of undertakings in difficulty in order, in return, to satisfy the creditors of those undertakings, the Commission ought to have demonstrated more specifically a risk of circumvention and actual benefit to the applicant of a competitive advantage connected with the receipt of the aid in question.
70 Consequently, it was wrong to include the applicant in the group of entities jointly and severally liable to repay the aid in question.
71 It follows that the plea in law alleging an erroneous interpretation of Article 87 EC, Article 88 EC and Article 14 of Regulation No 659/1999 must be upheld.
72 It follows from all of the foregoing that the Decision must be annulled to the extent to which it concerns the applicant, without it being necessary to examine the final plea in law, alleging infringement of the principles of legal certainty and proportionality.
Costs
73 Under Article 87(2) of the Rules of Procedure of the Court of First Instance, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the applicant.
On those grounds,
THE COURT OF FIRST INSTANCE (Eighth Chamber)
hereby:
1. Annuls the first subparagraph of Article 3(2) of Commission Decision 2006/937/EC of 5 July 2005 on State aid C 20/04 (ex NN 25/04) in favour of Huta Częstochowa S.A. in so far as it concerns Operator ARP sp. z o.o.;
2. Orders the Commission to pay the costs.
Martins Ribeiro | Papasavvas | Dittrich |
Delivered in open court in Luxembourg on 1 July 2009.
[Signatures]
Table of contents
Legal context
Facts of the dispute
Procedure and forms of order sought
Law
Admissibility
Arguments of the parties
Findings of the Court
Merits
The plea in law alleging infringement of the rights of the defence
– Arguments of the parties
– Findings of the Court
The plea in law alleging a failure to state reasons
– Arguments of the parties
– Findings of the Court
The plea in law alleging an erroneous interpretation of Article 87 EC, Article 88 EC and Article 14 of Regulation No 659/1999
– Arguments of the parties
– Findings of the Court
Costs