Case T‑604/15
European Road Transport Telematics Implementation Coordination Organisation ‐ Intelligent Transport Systems & Services Europe (Ertico ‐ ITS Europe)
v
European Commission
Judgment of the Court (Fourth Chamber), 22 May 2019
(Seventh Framework Programme for research, technological development and demonstration activities — Recommendation 2003/361/EC — Decision of the Commission’s Validation Panel on qualification as a micro, small and medium-sized business — Request for review under sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838/EU, Euratom — No administrative appeal within the meaning of Article 22 of Regulation (EC) No 58/2003 — Rights of the defence — Principle of sound administration — Legal certainty — Legitimate expectations — Res judicata — Criteria for the definition of micro, small and medium-sized businesses in EU policies — Concept of an ‘enterprise’ — Concept of an ‘economic activity’ — Criterion of independence — Obligation to state reasons)
1. EU agencies — Research Executive Agency (REA) — Verification that participants in existing research programmes have the status of micro, small or medium-sized enterprise — Request for review by the Validation Panel — Review procedures — Separate from requests for review of the lawfulness of an act of the REA
(Council Regulation No 58/2003, Art. 22; Annex to Commission Decision 2012/838, sections 1.2.6 and 1.2.7)
(see paragraphs 30-38)
2. EU law — Principles — Rights of the defence — Right to be heard — Scope
(Charter of Fundamental Rights of the European Union, Arts 41, 47 and 48)
(see paragraphs 46-48, 63)
3. EU agencies — Research Executive Agency (REA) — Verification that participants in existing research programmes have the status of micro, small or medium-sized enterprise — Obligation to observe participants’ rights of defence — Scope
(Annex to Commission Decision 2012/838, sections 1.2.6 and 1.2.7)
(see paragraph 52)
4. EU law — Principles — Legal certainty — Concept
(see paragraph 68)
5. EU law — Principles — Protection of legitimate expectations — Conditions — Precise assurances given by the authorities
(see paragraph 69)
6. EU law — Principles — Principle of sound administration — Duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case — Scope
(Charter of Fundamental Rights of the European Union, Art. 41)
(see paragraph 70)
7. EU agencies — Research Executive Agency (REA) — Verification that participants in existing research programmes have the status of micro, small or medium-sized enterprise — Withdrawal of a first negative decision and replacement with a new decision — Lawfulness — Conditions
(Annex to Commission Decision 2012/838, sections 1.2.6 and 1.2.7)
(see paragraph 72)
8. EU agencies — Research Executive Agency (REA) — Verification that participants in existing research programmes have the status of micro, small or medium-sized enterprise — Determination of the size of an enterprise on the basis of the criteria in Recommendation 2003/361 — Lawfulness
(Annex to Commission Decision 2012/838, sections 1.1.3.1, 1.2.6 and 1.2.7; Annex to Commission Recommendation 2003/361, recital 3 and Article 1)
(see paragraphs 92-95)
9. EU agencies — Research Executive Agency (REA) — Verification that participants in existing research programmes have the status of micro, small or medium-sized enterprise — Determination of the size of an enterprise on the basis of the criteria in Recommendation 2003/361 — Application of an independence criterion — Refusal to recognise that an entity belonging de facto to a large economic group has the status of micro, small or medium-sized enterprise — Lawfulness
(Annex to Commission Decision 2012/838, sections 1.1.3.1, 1.2.6 and 1.2.7; Annex to Commission Recommendation 2003/361, recitals 9 and 12 and Article 1)
(see paragraphs 100-103, 106, 107)
10. EU agencies — Research Executive Agency (REA) — Verification that participants in existing research programmes have the status of micro, small or medium-sized enterprise — Determination of the size of an enterprise on the basis of the criteria in Recommendation 2003/361 — Concept of an ‘enterprise’ — Association of undertakings providing services to its members in return for membership fees paid by them — Included
(Arts 54 TFEU, 101 TFEU and 102 TFEU; Annex to Commission Recommendation 2003/361, Art. 1)
(see paragraphs 118, 119, 123-128, 130)
11. EU agencies — Research Executive Agency (REA) — Verification that participants in existing research programmes have the status of micro, small or medium-sized enterprise — Determination of the size of an enterprise on the basis of the criteria in Recommendation 2003/361 — Application of an independence criterion — Refusal to recognise that an entity receiving membership fees from its members and with resources broadly sufficient to meet its needs has the status of micro, small or medium-sized enterprise — Lawfulness — Satisfaction by the entity, taken in isolation, of all the criteria relating to staff headcount and financial ceilings, as set out in the recommendation — Irrelevant
(Annex to Commission Recommendation 2003/361, Arts 1 and 2)
(see paragraphs 140-146, 148-152)
12. Acts of the institutions — Statement of reasons — Obligation — Scope — Contradiction in the statement of reasons — Conditions — Effects
(Art. 296 TFEU)
(see paragraphs 166-168)
13. Action for annulment — Judgment annulling a measure — Effects
(Art. 266 TFEU)
(see paragraph 176)
14. Judicial proceedings — Costs — Taking into account of the requirements of equity — Order that the successful party bear its own costs and pay one half of the costs incurred by the applicant
(Rules of Procedure of the General Court, Arts 134(1), 135(1) and (2))
(see paragraph 182)
Résumé
In the judgment of 22 May 2019, Ertico — ITS Europe v Commission (T‑604/15), the Court rejected the application of European Road Transport Telematics Implementation Coordination Organisation — Intelligent Transport Systems & Services Europe (Ertico — ITS Europe), the applicant, seeking the annulment of the decision of 18 August 2015 (‘the contested decision’) of the Validation Panel under sections 1.2.6 and 1.2.7 of Decision 2012/838, in so far as that decision concludes that the applicant does not qualify as a micro, small or medium-sized enterprise within the meaning of Recommendation 2003/361. Furthermore, in the light of the particular circumstances of the case, the Commission was ordered to bear its own costs and to pay one half of those incurred by Ertico — ITS Europe.
The applicant is a cooperative company which provides a multisectoral platform to both private and public stakeholders in the intelligent transport systems and services sector.
Since 31 December 2006, the applicant had been considered to be a micro, small or medium-sized enterprise (‘an SME’) within the meaning of Recommendation 2003/361. That status enabled the applicant to receive, for several years, additional subsidies from the European Union, in particular within the context of the Seventh Framework Programme of the European Community for research, technological development and demonstration services (2007-2013).
In December 2013, in a review of the SME status of participants in existing research programmes, the Research Executive Agency (‘the REA’), in its capacity as the validation service for the SME status of participants, requested that the applicant provide information proving that it should still be entitled to SME status. Following a series of emails, the REA decided, on 27 January 2014, that the applicant could not be regarded as an SME.
The applicant contested that decision before the Validation Panel under sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838/EU. That action was dismissed by decision of 15 April 2014. That decision was subsequently withdrawn and the Validation Panel adopted the contested decision.
First, the Court found that sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 and Article 22 of Regulation No 58/2003 do not refer to one and the same review procedure. In the present case, the latter provision was not applicable. Therefore, in the present case, the applicant’s action was brought under sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838.
As regards the independence criterion in Recommendation 2003/361, the Court concluded that the criterion applied by the Validation Panel in the contested decision does not infringe Recommendation 2003/361, since the independence criterion must be interpreted in the light of its purpose of ensuring that the measures intended for SMEs genuinely benefit enterprises for which size represents a handicap and not enterprises belonging to a large group which have access to funds and assistance not available to competitors of equal size. In those circumstances, in order to include only enterprises that are genuinely independent SMEs, it is necessary to examine the structure of SMEs which form an economic group, the power of which exceeds the power of an SME, and to ensure that the definition of SMEs is not circumvented by purely formal means.
After finding that the contested decision is vitiated by an error of assessment in so far as it was concluded that the applicant was not an enterprise within the meaning of Article 1 of the Annex to Recommendation 2003/361, on the grounds, inter alia, that the annual membership fees paid to the applicant by its members, who are not SMEs, was consideration for services provided by the applicant, the Court held, nevertheless, that it was necessary to examine whether, taking into account the details of the present case, the Validation Panel was entitled to conclude that the applicant was not independent. It found that the Validation Panel did not misapply Recommendation 2003/361 in so far as it concluded that the applicant did not have to contend with the handicaps usually faced by SMEs, on the grounds, inter alia, that the amounts of those annual memberships fees were set according to the applicant’s expenses, which meant that the applicant could not qualify as an SME within the meaning of that recommendation, despite being an enterprise.
In addition, as the applicant is not considered to satisfy the independence criterion, it cannot claim that it satisfies the criteria relating to staff headcount and financial ceilings set out in Article 2 of the Annex to Recommendation 2003/361. In accordance with Article 6 of the Annex to Recommendation 2003/361, those criteria relating to staff headcount and financial ceilings cannot be determined on the basis of data relating solely to the applicant because it was not an independent enterprise and its members were enterprises that are not SMEs.
Finally, the Commission was ordered to bear its own costs and to pay one half of the costs incurred by Ertico ‐ ITS Europe. First, the interplay between appeal proceedings governed by sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 and by Article 22 of Regulation No 58/2003 does not emerge clearly from the provisions of Decision 2012/838, as was confirmed by the Commission at the hearing. Second, the description of the relevant proceedings before the Validation Panel contained in sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 had significant gaps, notably with regard to the time limits that apply in the proceedings, which made it even more difficult properly to understand the applicable rules. Consequently, the Court applied Article 135(2) of its Rules of Procedure.