JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber,Extended Composition)

15 September 1998 (1)

(State aid - Public service television - Complaint - Action for declaration offailure to act - Commission's duty to investigate - Time-limit - Procedure underArticle 93(2) - Serious difficulties)

In Case T-95/96,

Gestevisión Telecinco SA, a company governed by Spanish law, established inMadrid (Spain), represented by Santiago Muñoz Machado, of the Madrid Bar, withan address for service in Luxembourg at the Chambers of Carlos Amo Quiñones,2 Rue Gabriel Lippmann,

applicant,

v

Commission of the European Communities, represented initially by Gérard Rozet,Legal Adviser, and Fernando Castillo de la Torre, of its Legal Service, and then byMr Rozet and Juan Guerra Fernández, of its Legal Service, acting as Agents, withan address for service in Luxembourg at the office of Carlos Gómez de la Cruz, ofits Legal Service, Wagner Centre, Kirchberg,

defendant,

supported by

French Republic, represented by Catherine de Salins, Deputy Director of theDepartment of Legal Affairs at the Ministry of Foreign Affairs, and GauthierMignot, Secretary for Foreign Affairs, acting as Agents, with an address for servicein Luxembourg at the French Embassy, 8B Boulevard Joseph II,

intervener,

APPLICATION for a declaration under Article 175 of the EC Treaty that theCommission failed to fulfil its obligations under the Treaty, first, by failing to adopta decision in relation to the complaints made by the applicant against the Kingdomof Spain for breach of Article 92 of the Treaty and secondly by failing to initiatethe procedure provided for under Article 93(2) of the Treaty, alternatively, forannulment under Article 173 of the Treaty of the Commission's decision allegedlycontained in a letter of 20 February 1996,

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (Third Chamber, ExtendedComposition),

composed of: V. Tiili, President, C.P. Briët, K. Lenaerts, A. Potocki and J.D.Cooke, Judges,

Registrar: H. Jung,

having regard to the written procedure and further to the hearing on 10 March1998,

gives the following

Judgment

Background to the dispute

1.

    There are 10 television companies in Spain, of which three are in the private sectorand seven of which are public service broadcasters.

2.

    The main source of finance for the private television companies is revenuegenerated by advertising. The public television companies, on the other hand, areonly partially funded by advertising. They are managed either directly by the Statethrough the intermediary of the public body RTVE, or governed by an indirectsystem of management which has branches in various regional channels created forthat purpose in the various autonomous Spanish communities.

3.

    From the start of their activities, all the public television companies have received,in varying proportions, funds from the authorities within whose jurisdiction they fall.So, they receive funds from two sources; advertising revenue and State grants.

4.

    The applicant, Gestevisión Telecinco SA, a company incorporated under Spanishlaw in Madrid (Spain), is one of the three private commercial companies. On 2March 1992, it lodged with the Commission a complaint (hereinafter 'the firstcomplaint‘) seeking to have the grants which the regional television companiesreceive from their respective autonomous communities declared incompatible withthe common market within the meaning of Article 92 of the EC Treaty (hereinafter'the Treaty‘).

5.

    By letter dated 30 April 1992 the Commission acknowledged receipt of thatcomplaint and informed the applicant that it had 'decided to ask the Spanishauthorities for specific information in order to determine [...] whether or not thepractices complained of were compatible with the Community provisions relatingto State aid‘. A request for information in that form was sent to the Spanishauthorities on the same day.

6.

    On 25 November 1992, the applicant sent a letter to the Commission with a viewto obtaining information on progress in relation to its complaint. In a letter dated3 December 1992, the Commission informed it that, by letter dated 28 October1992, it had reminded the Spanish authorities of their duty to reply to the requestfor information which had been sent to them.

7.

    On 12 November 1993, the applicant lodged another complaint seeking to have thesubsidies granted by the central Spanish State to the public body RTVE declaredincompatible with the common market under Article 92 of the Treaty (hereinafter'the second complaint‘).

8.

    On 24 November 1993, the applicant sent a letter to Mr Van Miert, the memberof the Commission with responsibility for competition matters, informing him of theexistence of the two abovementioned complaints, of the fact that the aid beingchallenged in those complaints had not been notified, and of the irreversibleconsequences of the Commission's slowness in dealing with those complaints.

9.

    In December 1993, the Commission instructed a firm of outside consultants to carryout a study of the funding of public television companies in the Community as awhole.

10.

    In February 1994, it responded to a telephone request for information from theapplicant by saying that it had decided to await completion of that study beforecontinuing its investigation into the complaints concerned and so before taking anydecision to initiate a procedure under Article 93(2) of the Treaty.

11.

    On 12 May 1995, it divulged, in response to a further telephone request forinformation, that the report from the outside firm of consultants, which had beencorrected following various delays in its drafting, was to be sent to it before the endof the month. It received the final report in question during October 1995 at thelatest.

12.

    However, by the beginning of February 1996, it had still not ruled on theapplicant's complaints. Consequently, in a registered letter dated 6 February 1996,received on 8 February 1996, the applicant formally called upon the Commissionto rule on the two complaints in accordance with Article 175 of the Treaty and toinitiate the procedure under Article 93(2) of the Treaty.

13.

    In a letter dated 20 February 1996, the Commission replied as follows:

'Having considered your complaint in the light of Article 92 et seq. of the Treatyand following completion of a study commissioned in December 1993 on thefunding of public television in other Member States, the Directorate-General forCompetition, by letters dated 18 October 1995 and 14 February 1996, requested theSpanish authorities to provide a number of further details and explanationsnecessary for investigating this case‘.

14.

    After that letter, the Commission did not adopt a decision on the two complaintsfiled by the applicant.

Procedure

15.

    The applicant brought this action by an application lodged with the Registry of theCourt of First Instance on 17 June 1996.

16.

    By application lodged with the Registry of the Court of First Instance on 8November 1996, the French Republic applied to intervene in support of thedefendant. That application was granted by an order of the President of the ThirdChamber (Extended Composition) dated 4 February 1997.

17.

    Upon hearing the report of the Judge-Rapporteur, the Court of First Instance(Third Chamber, Extended Composition) decided to open the oral procedurewithout preparatory inquiry. However, as a measure of organisation of procedure,provided for in Article 64 of the Rules of Procedure, the parties were requested torespond to certain questions at the hearing.

18.

    The parties made their submissions and replied to the questions posed by the Courtof First Instance at the hearing on 10 March 1998.

Forms of order sought

19.

    The applicant requests that the Court of First Instance should:

-    declare that the Commission failed to fulfil its obligations under the Treatyby not adopting a decision on the two complaints lodged by it and by notinitiating the procedure laid down in Article 93(2) of the Treaty;

-    alternatively, annul the Commission's decision contained in its letter of 20February 1996;

-    order the defendant to pay the costs;

-    order the intervener to pay its own costs and the costs incurred by theapplicant as a result of its intervention.

20.

    The Commission requests that the Court of First Instance should:

-    declare the claim for a declaration of failure to act inadmissible,alternatively, dismiss it as unfounded;

-    declare the claim for annulment inadmissible;

-    order the applicant to pay the costs.

21.

    The French Republic supports the form of order sought by the Commission.

Failure to act

Arguments of the parties

Admissibility

22.

    The Commission states first of all that the decision it will adopt at the end of theadministrative procedure, pursuant to Article 92 et seq. of the Treaty, will be sentto the Kingdom of Spain. The procedure for supervising State aid is based ondialogue between the Commission and the Member State concerned, unlike theprocedure for applying Articles 85 and 86, which follows different rules under whicha complainant has a decisive role (judgment of the Court of First Instance in CaseT-277/94 AITEC v Commission [1996] ECR II-351, paragraph 71). Since thecomplainant does not have any status in this context, it is inconceivable that adecision should be addressed to it directly (Opinion of Advocate General Tesauroin Case C-198/91 Cook v Commission [1993] ECR I-2487).

23.

    Furthermore, the provisions of the third paragraph of Article 175 of the Treatycannot be interpreted so broadly as to allow interested third parties the possibilityof bringing an action. In this regard, the defendant observes that the capacity tobring an action under Article 175 of the Treaty is more limited than the capacityto bring an action under Article 173 of the Treaty. Only the person to whom anact is potentially addressed has the capacity to bring an action under Article 175and that is not the position here (judgment of the Court in Case 246/81 LordBethell v Commission [1982] ECR 2277, paragraph 16, and judgment in AITEC vCommission, cited above, paragraph 62).

24.

    Secondly, the Commission considers that the fact of this action being inadmissibledoes not necessarily mean that the applicant is deprived of the right to legalprotection. It observes that it does not have exclusive jurisdiction to adjudge aState measure to be State aid. National courts can also rule on this question inorder to determine the consequences of the illegality of measures in question undernational law (judgments of the Court of Justice in Case 78/76 Steinike and Weinlig[1977] ECR 595, paragraph 14, Case C-354/90 Fédération Nationale du CommerceExtérieur des Produits Alimentaires et Syndicat National des Négociants etTransformateurs de Saumon [1991] ECR I-5505 and Case C-39/94 SFEI and Others[1996] ECR I-3547, paragraphs 31 to 53). It also challenges the applicant's claimthat it has no remedies under Spanish law.

25.

    Finally, the Commission states that the legal protection afforded by the Court ofFirst Instance cannot in any event serve to cure the deficiencies in legal protectionat national level (Opinion of Advocate General Gulmann in Cases C-15/91 andC-108/91 Buckl and Others v Commission [1992] ECR I-6061, paragraph 27, andjudgment of the Court of First Instance in Case T-398/94 Kahn Scheepvaart vCommission [1996] ECR II-477, paragraph 50).

26.

    The applicant observes that, more than four years after the lodging of the firstcomplaint and more than two and a half years after the second, the Commission'sfailure to define its position in relation to the two complaints and to initiate aprocedure under Article 93(2) of the Treaty persists.

27.

    It points out that, in a letter dated 6 February 1996, received on 8 February 1996,it formally called upon the Commission to take action under the second paragraphof Article 175 of the Treaty. It considers that, in view of the excessive length oftime which elapsed from the time when the two complaints were lodged, theCommission wrongfully failed to act and was under a duty to define its positionwithin two months. That period expired without the Commission having definedits position.

28.

    In its letter of 20 February 1996, the Commission did not adopt a position. On thecontrary, it avoided taking any position on the basis that it had requestedsupplementary information from the Spanish Government and that the complaintswere still being examined. The Court has ruled in this regard that where aninstitution is called upon to define its position, a letter from that institution statingthat the questions raised are in the process of being considered does not amountto the definition of a position releasing the institution from its wrongful failure toact (judgment of the Court in Joined Cases 42/59 and 49/59 Snupat v High Authority[1961] ECR 99).

29.

    The applicant further observes that the Commission seeks to justify its inaction bythe unacceptable argument that the preliminary investigation into the Statemeasures to which the complaints relate is not yet complete. Such a method ofproceeding infringes the fundamental right to effective legal protection.

30.

    The applicant also observes that the Commission was under a duty in this case toinitiate inter partes proceedings under Article 93(2) of the Treaty and then to ruleon the compatibility of the aid. Such steps and the resulting failure to adopt anysuch decisions affected it directly and individually in its capacity as complainant andas a competitor of the companies benefiting from the aid (judgment of the Courtof Justice in Case 169/84 Cofaz and Others v Commission [1986] ECR 391;judgments of the Court of First Instance in Case T-49/93 SIDE v Commission[1995] ECR II-2501 and Case T-95/94 Sytraval et Brink's France v Commission[1995] ECR II-2651). The coherence of the Community system of legal protectionrequires that its locus standi in this case should also be recognised.

31.

    The applicant also observes that the conditions for admissibility under Article 175of the Treaty are comparable to those imposed by Article 173 of the Treaty, as theCourt stated in its judgment in Case 15/70 Chevalley v Commission [1970] ECR975).

32.

    It also takes the view that there is no possibility of bringing an action before thenational court in this case since the aid of which it complains is granted pursuantto budgetary laws against which an individual cannot bring an action under Spanishlaw. Furthermore, the fact that the beneficiaries of the aid are public companiesmeans that the instruments implementing those laws are internal and unpublishedand also incapable of challenge. Even if that were not the case, no national courtwould be bold enough to hold that the grants made to the public televisioncompanies amounted to State aid, knowing that the matter had been before theCommission for four years without it having initiated an inter partes procedureunder Article 93(2) of the Treaty. Finally, because of the attitude of theCommission in this case, no national court could require the grants concerned tobe repaid if they were found to be incompatible (judgment of the Court of Justicein Case 223/85 RSV v Commission [1987] ECR 4617).

33.

    The French Republic, as intervener, referring to the operative part of the judgmentin SFEI and Others, cited above, challenges the applicant's argument that nonational court would be minded to classify a measure which has been the subjectof investigation by the Commission for several years as State aid. Under theoperative part of that judgment, a national court may rule on such a question evenif it is pending before the Commission at the same time. Moreover, the nationalcourt may request clarification from the Commission or refer a question to theCourt of Justice for a preliminary ruling under Article 177 of the Treaty.

Substance

34.

    The applicant emphasises that it is settled case-law that the procedure underArticle 93(2) of the Treaty is indispensable where the Commission experiencesserious difficulties in assessing whether aid is compatible with the common market. The Commission cannot confine itself to the preliminary stage provided for byArticle 93(3) so as to take a favourable decision in relation to aid unless it is in aposition to reach the firm view, following a preliminary investigation, that the aidis compatible with the Treaty (judgments in Cook v Commission, cited above, andCase 84/82 Germany v Commission [1984] ECR I-1451; and in SIDE v Commission,cited above).

35.

    In this case, the length of time which elapsed from the time when the complaintswere lodged in itself shows that the Commission is having serious difficulties inassessing the compatibility of the aid concerned with the common market. The factthat it requested an external report on the funding methods for public televisioncompanies only confirms that hypothesis. Even once that report was produced, theCommission continued to experience difficulties in assessing the aid concernedgiven that, several months later, it had still not adopted a position in relation to thefacts complained of and was still requesting supplementary information from theSpanish authorities.

36.

    In its judgment in Case 120/73 Lorenz [1973] ECR 1471 the Court of Justicefurthermore recognised that the Commission has a reasonable period of twomonths to make an initial assessment of any aid notified to it. The Commissionalso has a duty to carry out a preliminary investigation within a reasonable periodwhere a Member State has not only failed to notify the aid but also implementedit in breach of its Community obligations.

37.

    In adopting the attitude which it has assumed in this case, the Commission is alsofailing to observe its procedural rights under the Treaty in the context of theprocedure under Article 93(2) of the Treaty. The applicant's rights can only berespected if it is able to challenge decisions made by the Commission withoutinitiating the procedure under Article 93(2) (judgments of the Court of Justice inCook v Commission, cited above, and judgment of the Court in Case C-225/91Matra v Commission [1993] ECR I-3203). Those procedural rights are alsomeaningless if the Commission is allowed to prolong its preliminary investigationinto State measures indefinitely.

38.

    The applicant further disputes that the obligation to initiate an administrativeprocedure under Article 93(2) is subject to a prior finding of aid under Article92(1) of the Treaty. The Commission's administrative practice shows that it has inthe past initiated such procedures where it was in doubt as to whether the Statemeasures in question could be regarded as aid (judgment in Sytraval and Brink'sFrance v Commission, cited above, paragraph 79). In any event, in its judgment inCase T-106/95 FFSA and Others v Commission [1997] ECR II-229, the Court ofFirst Instance stated that granting public funds to a company constituted State aideven if Article 92 might subsequently prove to be inapplicable by virtue of Article90(2) of the Treaty.

39.

    Finally, the applicant considers that account must be taken of the fact that, sinceno procedure has been initiated under Article 93(2), the Spanish authorities are stilldisbursing the contested grants to the Spanish public television companies eventhough those grants were challenged several years ago. The applicant submits that,in these circumstances, the Commission was under a duty to act which it has failedto fulfil contrary to the Treaty.

40.

    The Commission argues that, whilst it is true that it has not made any decision asto the existence of State aid or the initiation of the procedure under Article 93(2)of the Treaty, it has none the less taken a number of actions to enable it to analyseall facets of a particularly complex problem, common as it is to a large number ofMember States.

41.

    It points out that it entered into correspondence with the Spanish authoritiesbetween 30 April 1992 and 8 February 1993 and that it subsequently commissioneda study on the exploitation and operation of public television channels in theCommunity in December 1993. Following receipt of that study, it again enteredinto correspondence with the Spanish authorities between 18 October 1995 and 5July 1996. During the period when the study was being drafted, it temporarilyrefrained from taking other initiatives which might overlap with the study.

42.

    In these circumstances, the procedure relating to the measures concerned cannotbe considered as having been 'suspended‘. In fact, most of the period of two anda half years which passed between the time when the second complaint was lodgedand the time when the applicant called upon the Commission to act was spent onproducing the external study referred to above.

43.

    The Commission points out that neither the Treaty nor secondary legislationprovides for a time-limit within which it is obliged to react to a complaint relatingto non-notified State aid.

44.

    In this case, account must also be taken of the complexity, both legal and political,of the matter in question. The manner in which this case was dealt with called fora particularly cautious approach because of the recent opening-up of televisualactivity to competition. The first complaint was the first ever of its kind and relatedto seven different regional grants. The complaints lodged by the applicantfurthermore raised delicate problems relating to effects on intra-Community trade,offsetting the cost of public service obligations and classification in terms of aid,particularly because of the lack of accounting transparency prevailing at times inthe public companies in question.

45.

    The time taken in dealing with this case cannot therefore be considered asconstituting a wrongful failure to act, contrary to the rules of the Treaty and inparticular to the obligation to initiate the procedure under Article 93(2) of theTreaty.

46.

    The Commission also draws attention to the serious repercussions which a decisionto initiate the procedure under Article 93(2) of the Treaty would have on publictelevision companies throughout the Community. Indeed, in such a case, the grantof such aid would have to be suspended (judgment of the Court of Justice in CaseC-312/90 Spain v Commission [1992] ECR I-4117), a step which would be contraryto the principle of sound administration.

47.

    Finally, it states that it must first of all rule on the question whether the contestedgrants can be classified as aid within the meaning of Article 92(1) of the Treatybefore being able to rule on their compatibility with the common market. In thatconnection, it disputes that it has developed a practice whereby it initiates theprocedure under Article 93(2) in order to determine whether the State measurescan be classified as 'aid‘ within the meaning of Article 92(1) of the Treaty.

48.

    It concludes from those considerations that it was not able to define its position orto take the decisions requested by the applicant at the time when it was formallycalled upon to do so. In this regard, it refers to the Opinion of Advocate GeneralEdward in Case T-24/90 Automec v Commission [1992] ECR II-2223.

Findings of the Court

Preliminary observations

49.

    Article 93 of the Treaty provides for a special procedure of constant review andsupervision of state aid by the Commission. In relation to new aid which MemberStates may intend to institute, there is a procedure without which no aid can beconsidered properly granted and the Commission must be informed of any plansto grant or alter aid prior to such plans being put into effect.

50.

    The Commission then proceeds to carry out a preliminary investigation into theplanned aid. If, at the end of that investigation, it appears that a plan is notcompatible with the common market, it must initiate the procedure provided forin the first subparagraph of Article 93(2) of the Treaty forthwith.

51.

    In the context of that procedure, a distinction must therefore be drawn between,on the one hand, the preliminary stage of investigating aid, instituted under Article93(3) of the Treaty, whose aim is solely to enable the Commission to form an initialview on the compatibility, in part or in whole, of the aid in question and, on theother hand, the analysis stage referred to in Article 93(2) of the Treaty, which isintended to give the Commission full information on all the details of the case (seethe judgments in Cook v Commission, cited above, paragraph 22, and Matra vCommission, cited above, paragraph 16).

52.

    The procedure under Article 93(2) is indispensable if the Commission experiencesserious difficulties in assessing whether aid is compatible with the common market. The Commission cannot therefore limit itself to the preliminary phase under Article93(3) and take a favourable decision on a State measure which has not beennotified unless it is in a position to reach the firm view, following an initialinvestigation, that the measure cannot be classified as aid within the meaning ofArticle 92(1) or that the measure, whilst constituting aid, is compatible with thecommon market. On the other hand, if the initial analysis has resulted in theCommission taking the contrary view or has not even enabled all the difficultiesraised by the assessment of the measure in question to be overcome, the institutionhas a duty to gather all necessary views and to that end to initiate the procedureunder Article 93(2) (see, on this point, the judgments of the Court of Justice inGermany v Commission, cited above, paragraph 13, Cook v Commission, citedabove, paragraph 29, Matra v Commission, cited above, paragraph 33 and CaseC-367/95 P Commission v Sytraval et Brink's France [1998] ECR I-0000, paragraph39).

53.

    Where interested third parties submit complaints to the Commission relating toState measures which have not been notified under Article 93(3), the Commissionis bound, in the context of the preliminary stage referred to above, to conduct adiligent and impartial examination of the complaints in the interests of soundadministration of the fundamental rules of the Treaty relating to State aid, whichmay make it necessary for it to examine matters not expressly raised by thecomplainants (judgment in Commission v Sytraval et Brink's France, cited above,paragraph 62).

54.

    Finally, it must be remembered that the Commission has exclusive jurisdiction todetermine whether aid is incompatible with the common market (judgments inSteinike and Weinlig, cited above, paragraphs 9 and 10, and Fédération Nationaledu Commerce Extérieur des Produits Alimentaires and Syndicat National desNégociants et Transformateurs de Saumon, cited above, paragraph 14).

55.

    It follows from all those rules that, at the end of the preliminary stage of theinvestigation into a State measure, the Commission has a duty to adopt one of thefollowing three decisions vis-à-vis the Member State concerned: it may decide thatthe State measure at issue does not constitute 'aid‘ within the meaning of Article92(1) of the Treaty; or it may decide that the measure, although constituting aidwithin the meaning of Article 92(1), is compatible with the common market underArticle 92(2) or (3); or it may decide to initiate the procedure under Article 93(2).

56.

    As the law so stands, it is appropriate first of all to consider whether the claim fora declaration that the Commission has failed to act is admissible and then, ifappropriate, whether it is well founded.

Admissibility

57.

    Under the third paragraph of Article 175 of the Treaty, any natural or legal personmay complain to the Court of Justice that an institution of the Community hasfailed to address to that person any act other than a recommendation or anopinion.

58.

    In its judgment in Case C-68/95 T. Port [1996] ECR I-6065, paragraph 59, the Courtstated that, just as the fourth paragraph of Article 173 allows individuals to bringan action for annulment against a measure of an institution not addressed to themprovided that the measure is of direct and individual concern to them, the thirdparagraph of Article 175 must be interpreted as also entitling them to bring anaction for failure to act against an institution which they claim has failed to adopta measure which would have concerned them in the same way.

59.

    The Commission is therefore wrong to consider that the claim for a declaration offailure to act is inadmissible on the sole ground that the applicant is not thepotential addressee of any measures it might adopt in this case (see paragraph 55above).

60.

    In this case, it is appropriate to examine to what extent the measures which theCommission allegedly failed to adopt can be considered to be of direct andindividual concern to the applicant.

61.

    In that connection, it follows from the judgment of the Court of First Instance inCase T-435/93 ASPEC and Others v Commission [1995] ECR II-1281, paragraph 60,that an undertaking must be considered to be directly affected by a decision of theCommission relating to State aid where there is no doubt that the nationalauthorities intend to implement their plan to grant aid. In the present case, it iscommon ground that the various grants at issue have already been granted by theSpanish authorities concerned and continue to be granted. In those circumstances,it must be considered as established that the applicant is directly affected.

62.

    As to whether it is individually affected, it is settled case-law that natural or legalpersons are individually concerned by a decision where that decision affects themby reason of the attributes peculiar to them or by reason of factual circumstancesdifferentiating them from all other persons (judgment of the Court in Case 25/62Plaumann v Commission [1963] ECR 197, 226; judgments of the Court of FirstInstance in Joined Cases T-481/93 and T-484/93 Exporteurs in Levende Varkens andOthers v Commission [1995] ECR II-2941, paragraph 51, and in Case T-266/94Skibsværftsforeningen and Others v Commission [1996] ECR II-1399, paragraph 44).

63.

    It is therefore appropriate to consider in this case whether the applicant would beindividually affected by a decision which the Commission might adopt in relationto the Member State concerned at the end of the preliminary stage of investigation,to the effect that the State measure at issue does not constitute aid, or to the effectthat it does constitute aid but is compatible with the common market, or to theeffect that it necessitates the procedure under Article 93(2) of the Treaty to beinitiated.

64.

    It is settled case-law that where, without initiating the procedure under Article93(2), the Commission finds, on the basis of Article 93(3), that a State measuredoes not constitute aid, or that such a measure, although constituting aid, iscompatible with the common market, the persons concerned, beneficiaries of theprocedural guarantees laid down in Article 93(2), may secure compliance therewithonly if they are able to challenge such a Commission decision before theCommunity judicature (see, most recently, the judgment in Commission v Sytravalet Brink's France, cited above, paragraph 37, and, previously, the judgments in Cookv Commission, cited above, paragraph 23, and Matra v Commission, cited above,paragraph 17). The same would apply, in this case, in the event that theCommission took the view that the grants made to the Spanish public televisioncompanies amounted to aid but that they did not fall within the prohibition laiddown in Article 92 of the Treaty by virtue of Article 90(2) thereof (judgment inFFSA and Others v Commission, cited above, paragraphs 172 and 178, confirmedon appeal by order of the Court of Justice in Case C-174/97 P FFSA and Others vCommission [1998] ECR I-1303).

65.

    The persons concerned for the purposes of Article 93(2) of the Treaty, who arethus to be considered as directly and individually concerned, are those persons,undertakings or associations whose interests might be affected by the grant of theaid, in particular competing undertakings and trade associations (see the judgmentin Case 323/82 Intermills v Commission [1984] ECR 3809, paragraph 16).

66.

    In the present case, the Commission has not disputed that the applicant is a partyconcerned within the meaning of Article 93(2), this position ensuing from its statusas manager of one of the three private television channels in competition with thepublic television channels to which the contested grants were made and from thefact that both complaints lodged by it prompted the preliminary investigationcarried out by the Commission in relation to those grants.

67.

    Furthermore, the applicant properly brought an action before the Communityjudicature which has sole jurisdiction, to the exclusion of any national court, todetermine whether the Commission failed, in breach of the Treaty, to initiate theprocedure under Article 93(2) of the Treaty, which is a necessary precondition forthe adoption of a final decision which would be of direct and individual concern tothe applicant, such as a decision declaring compatible with the common market, anaid whose classification has until that point raised serious difficulties.

68.

    In that connection, the possible existence of a remedy at domestic level, wherebythe applicant could challenge the grant of the disputed allowances to the publicchannels, cannot affect the admissibility of the applicant's claim for a declarationof failure to act (see the judgment in Kahn Scheepvaart v Commission, cited above,paragraph 50).

69.

    Accordingly, the failure by the Commission to take any decision following itsinitiation of the preliminary investigation procedure in relation to the grants madeby the various Spanish State bodies to the public television companies must beconsidered to be of direct and individual concern to the applicant.

70.

    It follows that the claim for a declaration that the Commission failed to act isadmissible.

Substance

71.

    In order to rule on the substance of the claim for a declaration that theCommission has failed to act, it is necessary to determine whether, at the timewhen the Commission was formally called upon to define its position within themeaning of Article 175 of the Treaty, it was under a duty to act (orders of theCourt of First Instance in Case T-126/95 Dumez v Commission [1995] ECR II-2863,paragraph 44 and Case T-286/97 Goldstein v Commission [1998] ECR II-0000,paragraph 24).

72.

    Since it has exclusive jurisdiction to assess the compatibility of State aid with thecommon market, the Commission must, in the interests of sound administration andthe fundamental rules of the Treaty relating to State aid, conduct a diligent andimpartial examination of a complaint alleging aid to be incompatible with thecommon market (see the judgment in Commission v Sytraval et Brink's France, citedabove, paragraph 62).

73.

    As regards the period within which the Commission must rule on such a complaint,it is appropriate to note that, in relation to Article 85 of the Treaty, the Court ofFirst Instance has already ruled that the Commission cannot postpone indefinitelydefining its position in relation to an application for clearance under Article 85(3)(judgment in Joined Cases T-213/95 and T-18/96 SCK and FNK v Commission[1997] ECR II-1739, paragraph 55), an area in which it has exclusive jurisdiction. In that case, the Court of First Instance held it to be a general principle ofCommunity law that the Commission must act within a reasonable time in adoptingdecisions following administrative procedures relating to competition policy (ibid.,paragraph 56, and the cases cited therein).

74.

    It follows that the Commission cannot prolong indefinitely its preliminaryinvestigation into State measures in relation to which there has been a complaintunder Article 92(1) of the Treaty where it has, as in this case, agreed to initiatesuch an investigation.

75.

    Whether or not the duration of an administrative procedure is reasonable must bedetermined in relation to the particular circumstances of each case and, especially,its context, the various procedural stages to be followed by the Commission, thecomplexity of the case and its importance for the various parties involved(judgments of the Court of First Instance in Case T-73/95 Oliveira v Commission[1997] ECR II-381, paragraph 45, and in SCK and FNK v Commission, cited above,paragraph 57).

76.

    In this case, it is appropriate first of all to examine whether the Commission should,as the applicant claims, have undertaken a preliminary investigation of the disputedgrants made to the public television companies within a 'reasonable time‘ of twomonths, such as the period specified in the judgment in Lorenz, cited above(paragraph 4).

77.

    In referring to a period of two months, that judgment was based on the need totake into account the legitimate interests of the Member State concerned in quicklyascertaining for certain the position as to the legality of measures which have beennotified to the Commission.

78.

    That consideration cannot be entertained where the Member State concerned hasimplemented aid without having notified the Commission beforehand. If the Statehad doubts as to whether the aid planned was State aid, it would be at liberty tosafeguard its interests by informing the Commission of the planned aid which would place the Commission under an obligation to define its position within a period oftwo months (judgment in SFEI and Others, cited above, paragraph 48).

79.

    So, the two-month period referred to in Lorenz cannot apply as it stands in a casesuch as this, where the aid in dispute has not been notified to the Commission.

80.

    Next, it is appropriate to note that the applicant's first complaint was lodged on 2March 1992 and the second complaint on 12 November 1993. It follows that, atthe time when the Commission was formally called upon to act pursuant to Article175 of the Treaty, that is to say on 8 February 1996, the date when the applicant'sletter of 6 February 1996 inviting the Commission to act was received, theCommission's preliminary investigation had so far taken 47 months for the firstcomplaint and 26 months for the second.

81.

    Those periods are so long that they should have been sufficient to enable theCommission to close the preliminary stage of investigation into the aid in questionand thus be in a position to adopt a decision thereon (see paragraph 55 above),unless it could show exceptional circumstances justifying such periods.

82.

    In that connection, the Commission points out that the first complaint was the firstof its kind it had ever received, that Member States may legitimately pursue non-commercial aims in the televisual sector and that delicate problems were raised inrelation to the effect on intra-Community trade and the offsetting of costs ofperforming public-service obligations under Article 90(2) of the Treaty. At thehearing, it referred to the existence of the Protocol on the System of PublicBroadcasting in the Member States annexed to the EC Treaty by the Treaty ofAmsterdam of 2 October 1997 (OJ 1997 C 340, p. 109).

83.

    However, it is apparent from the submissions and pleadings of the parties that theonly real difficulty facing the Commission in this case relates to the extent to whichthe disputed grants made to the Spanish public television companies are intendedto compensate them in respect of specific public-service obligations imposed uponthem by national legislation. When assessing that issue, the Protocol cited abovecannot be taken into consideration as it was adopted almost 19 months after theapplicant called upon the Commission to act, which was even before the opening,on 29 March 1996, of the inter-Governmental conference which led to the Treatyof Amsterdam being concluded.

84.

    The Commission furthermore attempts to justify the length of the delays inquestion by reference to the steps it took after the applicant filed its complaints.

85.

    On this point, it is appropriate to note that before the applicant called upon theCommission to act, it twice, on 30 April 1992 and 18 October 1995, formallyrequested information from the Spanish authorities in relation to the grants inquestion. In December 1993, it also commissioned a firm of consultants to producean in-depth study on the funding of public television companies in the Communityas a whole.

86.

    However, those steps in no way justify the Commission having prolonged to theextent that it did its preliminary investigation into the aid in question, therebyconsiderably exceeding the period of deliberation reasonably necessary to assess theaid under Article 90(2) of the Treaty. Accordingly, and even if it is accepted thatthe above Protocol annexed to the EC Treaty by the Treaty of Amsterdam showsthe politically sensitive nature of the subject-matter in question for the MemberStates, the Commission should, at the time when it was called upon to act, havebeen in a position to adopt a decision declaring that the grants in question did notconstitute aid, or that they did constitute aid but were compatible with the commonmarket or that serious difficulties obliged it to initiate the procedure under Article93(2), thus allowing all parties concerned, and in particular the Member States, tosubmit their observations. Furthermore, it could equally have adopted within theperiods concerned, a hybrid decision combining, according to the circumstances,one or more of the decisions of principle set out above in respect of differentaspects of the State measures in question (see, on this point, the judgments in Case74/76 Iannelli & Volpi [1977] ECR 557, paragraphs 14 to 17, and Case T-107/96Pantochim v Commission [1998] ECR II-311, paragraph 51).

87.

    At this stage, it is now appropriate to consider further the extent to which theCommission defined its position upon the applicant's request to act contained inits letter of 20 February 1996.

88.

    The applicant has rightly pointed out that that letter does not in any way define theCommission's position in relation to the complaints in question because theCommission simply states that, having examined the complaints and followingcompletion of an outside study, it asked the Spanish authorities for supplementaryinformation. A letter from an institution called upon to act under Article 175 ofthe Treaty stating that the questions raised are being examined does not in factamount to the defining of a position such as to release it from its duty to act(judgments in Snupat v High Authority, cited above, and Case 13/83 Parliament vCouncil [1985] ECR 1513, paragraph 25).

89.

    It is, furthermore, common ground that the Commission had still not adopted anyof the decisions mentioned above at the time when this action was beingconsidered.

90.

    It follows from the foregoing that the Commission had, by 8 April 1996, failed toact, this date being two months from receipt by it, on 8 February 1996, of the lettercalling upon it to act on the ground that it refrained from adopting a decisiondeclaring that the State measures in question did not amount to aid within themeaning of Article 92(1) of the Treaty, or that those measures were to be classifiedas aid within the meaning of Article 92(1) but were compatible with the commonmarket under Article 92(2) and (3), or that the procedure until Article 93(2) of theTreaty had to be initiated, or from adopting a combination of these various possibledecisions according to the circumstances.

91.

    Therefore, the claim for a declaration of failure to act must be considered to bewell founded.

92.

    Accordingly, as it was only made in the alternative, there is no reason to rule onthe claim for annulment.

Costs

93.

    Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to beordered to pay the costs if they have been applied for in the successful party'spleadings.

94.

    Since the Commission is the unsuccessful party, it will be ordered to pay the costsincurred by the applicant, as sought by the applicant, other than the costs incurredas a result of the intervention by the French Republic.

95.

    Pursuant to Article 87(4) of the Rules of Procedure, the French Republic shall bearits own costs. In addition, it shall bear the costs incurred by the applicant as aresult of its intervention.

On those grounds,

THE COURT OF FIRST INSTANCE (Third Chamber, Extended Composition)

hereby:

1.    Declares that the Commission failed to fulfil its obligations under the ECTreaty by failing to adopt a decision following the two complaints lodgedby the applicant on 2 March 1992 and 12 November 1993;

2.    Orders the Commission to pay the applicant's costs other than thoseincurred as a result of the intervention by the French Republic;

3.    Orders the French Republic to bear its own costs together with the costsincurred by the applicant by reason of its intervention.

TiiliBriët Lenaerts Potocki Cooke

Delivered in open court in Luxembourg on 15 September 1998.

H. Jung

V. Tiili

Registrar

President

1: Language of the case: Spanish.