Case T‑219/14
Regione autonoma della Sardegna
v
European Commission
(State aid — Maritime transport — Public service compensation — Capital increase — Decision declaring aid incompatible with the internal market and ordering that it be recovered — Liquidation of the recipient undertaking — Continued interest in bringing proceedings — Failure to find that there was no need to adjudicate — Concept of aid — Service of general economic interest — Private investor test — Manifest error of assessment — Error of law — Plea of illegality — Obligation to state reasons — Rights of defence — Decision 2011/21/EU — Guidelines on State aid for rescuing and restructuring firms in difficulty — Union framework applicable to State aid in the form of public service compensation — Altmark judgment)
Summary — Judgment of the General Court (Eighth Chamber), 6 April 2017
1. Actions for annulment — Natural or legal persons — Admissibility criteria — Interest in bringing proceedings — Locus standi — Conditions cumulative in nature — Inadmissibility of the action where just one of those conditions not met
(Art. 263, fourth para., TFEU)
2. Actions for annulment — Actions by the Member States, the Parliament, the Council and the Commission — Admissibility not conditional upon establishing a legal interest in bringing proceedings
(Art. 263, second para., TFEU)
3. Actions for annulment — Natural or legal persons — Interest in bringing proceedings — Decision of the Commission finding an aid incompatible with the internal market and ordering its repayment — Action brought by the infra-State entity having granted the aid — Liquidation of the beneficiary — Admissibility — Conditions
(Arts 108 TFEU and 263, fourth para., TFEU)
4. Actions for annulment — Natural or legal persons — Measures of direct and individual concern to them — Commission decision finding aid incompatible with the internal market –Action by the infra-State entity the addressee of the decision — Admissibility — Conditions
(Arts 108 TFEU and 263, fourth para., TFEU)
5. Actions for annulment — Jurisdiction of the EU judicature — Assessment of the allocation of competences between the national authorities of a Member State — Not included
(Art. 263 TFEU)
6. Judicial proceedings — Application initiating proceedings — Formal requirements — Brief summary of the pleas in law on which the application is based — Similar requirements for submissions made in support of a plea — Imprecise formulation of a claim — Inadmissibility
(Rules of Procedure of the General Court (1991), Art. 44(1)(c))
7. Acts of the institutions — Statement of reasons — Obligation — Scope — Commission decision on State aid — Decision declaring aid incompatible with the internal market and ordering its repayment — Need to set out the facts and legal considerations of essential importance in the scheme of the decision — No requirement for a specific statement of reasons for each element raised by the persons concerned
(Arts 107(1) TFEU and 296 TFEU)
8. State aid — Examination by the Commission — Administrative procedure — Commission obligation to give the parties concerned, and therefore the infra-State entities, notice to submit their comments — Exclusion of those parties from rights of defence
(Art. 108(2) TFEU)
9. State aid — Concept — Measures designed to compensate for the cost of public service missions undertaken by an undertaking — Distinction between the Altmark test, designed to determine the existence of aid, and the test under Article 106(2) TFEU, for establishing the compatibility of aid with the internal market
(Arts 106(2) TFEU and 107(1) TFEU)
10. State aid — Concept — Measures designed to compensate for the cost of public service missions undertaken by an undertaking — Exclusion — Conditions set out in the Altmark judgment
(Art. 107(1) TFEU)
11. Competition — Undertakings entrusted with the operation of services of general economic interest — Compensation for the costs generated by the public service mission — Member States’ discretion — Limits — Review by the Commission — Judicial review — Limits
(Arts 106(2) TFEU and 107(1) TFEU)
12. State aid — Concept — Measures designed to compensate for the cost of public service missions undertaken by an undertaking — Second Altmark condition — Examination of the condition requiring the parameters on the basis of which the compensation is calculated to be established in an objective and transparent manner — Compensation measure subsequently granted — Classification as public service compensation — Exclusion
(Art. 107(1) TFEU)
13. State aid — Concept — Assessment having regard to Article 107(1) TFEU — Taking into account previous practice — Exclusion
(Art. 107(1) TFEU)
14. State aid — Concept — Measures designed to compensate for the cost of public service missions undertaken by an undertaking — Exclusion — Conditions set out in the Altmark judgment — Cumulative nature
(Art. 107(1) TFEU)
15. Actions for annulment — Subject-matter — Decision based on several pillars of reasoning, each sufficient to justify the operative part — Annulment of such a decision — Conditions
(Art. 263 TFEU)
16. State aid — Concept — Grant of an advantage to the beneficiaries — Concept of grant
(Art. 107(1) TFEU)
17. State aid — Examination by the Commission — Guidelines adopted in exercise of the Commission’s discretion — Legal nature — Indicative rules of conduct implying a self-limitation on the Commission’s discretion
(Art. 107(3)(c) TFEU; Commission Notice 2004/C 244/02)
18. State aid — Prohibition — Exceptions — Aid capable of being regarded as compatible with the internal market — Aid for rescuing a firm in difficulty — Guidelines on State aid for rescuing and restructuring firms in difficulty — Firm in difficulty — Concept
(Art. 107(3)(c) TFEU; Commission Notice 2004/C 244/02, point 9)
19. Competition — Undertakings entrusted with the operation of services of general economic interest — Compensation for the costs generated by the public service mission — Assessment of the compatibility of aid with the internal market — Criteria — Application to aid seeking the ensure the viability of a firm in difficulty — Exclusion
(Arts 106(2) TFEU and 107(3)(c) TFEU; Commission Decision 2012/21; Commission Notice 2004/C 244/02, point 9)
20. State aid — Concept — Assessment according to the criterion of the private investor — Capital contribution — State shareholder of an undertaking — State acting as a public authority — Distinction as regards application of the private investor criterion — Assessment factors for that criterion
(Art. 107(1) TFEU)
1. See the text of the decision.
(see para. 42)
2. See the text of the decision.
(see para. 43)
3. In order for of natural and legal persons to have a right to bring proceedings, that right must exist at the stage of lodging the action, which is a distinct condition of admissibility from locus standi. Like the subject matter of the action, the interest in bringing proceedings must continue until the final decision, failing which there will be no need to adjudicate. Such an interest requires that the annulment of that act must be capable, in itself, of having legal consequences and that the action may therefore, through its outcome, procure an advantage to the party which brought it.
In the case of an action brought by an infra-State entity against a Commission decision holding aid granted by that entity to be incompatible and unlawful and ordering its repayment, such a decision has an adverse effect on the applicant inasmuch as it could derive an advantage from the annulment of the contested decision. That annulment alone would automatically put an end to the legal consequences of that decision on the validity of the applicant’s acts by which it granted the disputed aid and its ensuing obligations, being the prohibition on implementation of those acts and the obligation to recover the aid at issue, thereby necessarily bringing about a change in its legal situation.
That conclusion is not called into question by the liquidation of the aid beneficiary in the course of the proceedings, since the contested decision has not been repealed or withdrawn, so that the action retains its purpose. Secondly, the contested decision continues to produce legal effects affecting the applicant, which have not become obsolete merely because the aid beneficiary has been placed under liquidation. The mere fact that the undertaking is in bankruptcy proceedings, including when those proceedings lead to the undertaking’s being liquidated, does not call into question the principle that unlawful aid must be recovered. In such a scenario, restoration of the previous situation and removal of the distortion of competition resulting from aid unlawfully paid may, in principle, be achieved by entry in the liabilities of the undertaking in liquidation of an obligation relating to repayment of the aid concerned. The applicant therefore at the very least remains under an obligation to ensure that its claims against the aid beneficiary by virtue of the part of the disputed aid previously paid remain entered in the latter’s Moreover, the question whether or not the beneficiary may pursue its economic activity and, consequently, the question whether the applicant has an interest in the pursuit of that activity are irrelevant for the issue whether the applicant has retained its interest in bringing proceedings. Similarly, since it is not in its capacity as a creditor of beneficiary, but as a public authority dispensing the disputed aid that the applicant may bring the action, the fact that it has no interest in annulment of the contested decision as a creditor of the beneficiary due to its being placed under liquidation has no bearing on the matter.
(see paras 45, 50, 56-58, 60, 63, 64)
4. As regards the locus standi of an infra-State body of a Member State which is the addressee of a decision of the Commission ruling on the compatibility and lawfulness of an aid measure implemented by that State, the latter may be held to be directly and individually concerned, within the meaning of the fourth paragraph of Article 263 TFEU, in certain circumstances. That authority must be held to be directly concerned when the contested decision is liable to have a direct impact on the measures by which the aid was granted adopted by it and on its aid recovery obligations, without the national authorities to whom the contested decision was notified having any discretion in the matter. That authority must be held to be individually concerned where it is the originator of the measure(s) covered by the contested decision and the decision prevents it from exercising its own powers as it sees fit, with the result that its interest in challenging the decision is distinct from that of the Member State concerned.
(see para. 47)
5. It is not for the EU institutions, in particular the EU Courts, to rule on the distribution of powers and respective obligations of the various national entities effected by the institutional rules under national law. Accordingly, an argument alleging that an infra-State entity had no power to grant State aid cannot be upheld.
(see paras 52, 65)
6. See the text of the decision.
(see paras 75, 76)
7. See the text of the decision.
(see paras 78, 79, 220)
8. See the text of the decision.
(see para. 86)
9. See the text of the decision.
(see para. 89)
10. See the text of the decision.
(see paras 91-94)
11. Member States enjoy a broad discretion not only for defining what they regard as services of general economic interest, but also for determining the compensation for the costs of providing that public service. Thus, in the absence of EU rules on services of general economic interest (SGEI), the Commission is not entitled to rule on the scope of the public service tasks assigned to the public operator, in particular the level of costs linked to that service, or the expediency of the political choices made in that regard by the national authorities, or on the economic efficiency of the public operator.
However, the broad discretion those national authorities are recognised as having is not unlimited. In particular, in the application of Article 106(2) TFEU, that broad discretion must not prevent the Commission from verifying that the derogation from the prohibition on State aid provided for therein may be granted. Moreover, the Commission’s discretion in the application of Article 106(2) TFEU to determine the compatibility of a State measure it has classified as State aid with the internal market involves complex assessments of an economic and social nature. Thus, the Court, in reviewing whether that discretion was lawfully exercised, cannot substitute its own assessment in the matter for that of the Commission. Lastly, in the application of Article 106(2) TFEU, the discretion of the Member States and the Commission may be limited by the directives and decisions that that institution is competent to adopt on the basis of that provision.
(see paras 101, 136-139)
12. It is, moreover, precisely because the determination of the compensation is subject to only restricted control by the EU institutions that the second Altmark condition requires that those institutions must be in a position to verify the existence of previously defined objective and transparent parameters, which must be defined in such a way as to preclude any abusive recourse to the concept of an SGEI on the part of the Member State having the effect of conferring on the public operator an economic advantage in the form of compensation. Thus, that condition leaves the Member States free to choose how to comply with it in practical terms, provided that the rules for determining the parameters for calculating the compensation remain objective and transparent. The Commission’s assessment for that purpose must be based on an analysis of the actual legal and economic considerations which governed the determination of those parameters.
In that regard, a compensation measure, which was granted subsequently in the light of the operating losses arising from that activity, cannot be considered public service compensation within the meaning of the Altmark judgment. Since no provision was made for such compensation beforehand, it could not be calculated, as required by the second Altmark condition, on the basis of objective and transparent parameters, themselves defined beforehand.
(see paras 102, 103, 108)
13. See the text of the decision.
(see paras 113, 200)
14. Whilst the conditions set out in the Altmark judgment are somewhat interdependent, the fact remains that those conditions must all be fulfilled distinctly in order for the disputed compensation measure not to be classified as aid. Given the cumulative and autonomous character of the Altmark conditions, the Commission is not required to examine all of those conditions if it finds that one of them has not been fulfilled and that, consequently, the measure in question must be classified as State aid. Where the Commission is correct in making such a finding, any potentially incorrect assessments it may have made in relation to one or more of the other Altmark conditions will not, in principle, lead to annulment of the contested decision.
(see paras 119, 124)
15. See the text of the decision.
(see para. 122)
16. State aid must be considered to be granted at the time that the competent national authorities adopt a legally binding act by which they undertake to pay the aid in question or when the right to receive it is conferred on the beneficiary under the applicable national rules.
(see para. 142)
17. See the text of the decision.
(see para. 177)
18. As evidenced by paragraph 9 of the Guidelines on State aid for rescuing and restructuring firms in difficulty, the concept of a firm in difficulty is an objective notion that must be assessed solely in the light of the specific indices of the financial and economic situation of the undertaking in question, showing that it is unable to stem losses which, without outside intervention by the public authorities, will almost certainly condemn it to going out of business in the short or medium term. Consequently, the underlying reason for the undertaking’s losses, in particular those associated with the performance of public service obligations, is not a decisive factor for determining whether or not the undertaking is in difficulty.
(see paras 178, 184)
19. In order for the conditions for the application of Article 106(2) TFEU to be fulfilled, it is sufficient that, in the absence of the rights or subsidies at issue, it would not be possible for the undertaking to perform the particular tasks entrusted to it or that the maintenance of those rights or subsidies is necessary to enable the holder of them to perform tasks of general economic interest which have been assigned to it under economically acceptable conditions. Consequently, in order for the derogation provided for in that provision to be applicable, it is necessary that the economic and financial situation of the recipient undertaking of those rights or subsidies at the time they are granted to it actually place it in a position where it can perform the public service tasks entrusted to it. Otherwise the derogation provided for by Article 106(2) TFEU could be rendered ineffective and therefore without justification, which would make Member States’ misuse of the concept of services of general economic interest unavoidable.
A firm in difficulty within the meaning of the Guidelines on State aid for rescuing and restructuring firms in difficulty is threatened imminently at the level of its very existence, so that it cannot be considered capable of performing in an appropriate manner the public service tasks entrusted to it as long as its viability is not ensured. In those circumstances, the subsidy granted to such a firm in difficulty in order to compensate for the losses resulting from the performance of those public service tasks cannot come within the derogation laid down in Article 106(2) TFEU but only, where applicable, the one laid down in Article 107(3)(c) TFEU. Under the conditions of application of Article 106(2) TFEU, which requires inter alia that the compensation be strictly proportional to the public service obligations, that compensation does not guarantee accomplishment of the corresponding tasks, due to the difficulties encountered by the undertaking. It may, however, be able to help the undertaking concerned to return to viability, provided that the conditions of application of Article 107(3)(c) TFEU, as explained in the Guidelines on aid for rescuing and restructuring, are fulfilled. Thus, the derogation from the rule prohibiting State aid laid down in that Treaty provision retains its effectiveness and, consequently, its justification.
Similarly, aid granted to an undertaking in difficulty entrusted with a public service task cannot, a fortiori, be authorised under Decision 2012/21 on the application of Article 106(2) TFEU to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest, which, by definition, can relate only to public service compensation deemed to be in line with the objectives of the derogation under Article 106(2) TFEU. For the same reasons, the public service compensation to which Decision 2012/21 is applicable is not placed in a situation comparable to that of the aid granted to public service providers in difficulty.
(see paras 194-196, 199)
20. See the text of the decision.
(see paras 226, 227, 235)