Joined Cases T-81/07 to T-83/07

KG Holding and Others

v

Commission of the European Communities

(State aid – Restructuring aid granted by the Netherlands authorities to KG Holding NV – Decision declaring the aid incompatible with the common market and ordering its recovery – Actions for annulment – Partial inadmissibility – Recovery of aid from recipient undertakings declared bankrupt – Community guidelines on State aid for rescuing and restructuring firms in difficulty)

Summary of the Judgment

1.      Acts of the institutions – Statement of reasons – Obligation – Scope – Commission decision on State aid – Characterisation of adverse effect on competition and affecting of trade between Member States

(Arts 87(1) EC and 253 EC)

2.      State aid – Adverse effect on competition – Operating aid

(Art. 87(1) EC)

3.      State aid – Commission decision to initiate the formal investigation procedure in respect of aid – Purpose of the procedure

(Art. 88(2) EC; Council Regulation No 659/1999, Art. 6)

4.      Competition – Community rules – Undertaking – Definition – Entity providing services for jobseekers – Included

5.      State aid – Recovery of unlawful aid – Obligation – Recipients in difficulty or bankrupt

(Arts 10 EC and 88(2) EC)

6.      Actions for annulment – Decision on State aid – Complaints not raised during the administrative procedure – Admissibility

(Arts 88(2) EC and 230 EC)

1.      A Commission decision on state aid which sets out sufficiently clearly the facts and legal considerations which are of substantive importance in the structure of the contested decision and which gives a statement of reasons that enables the addressees of the decision and the Community Court to ascertain the reasons why the Commission considers that it cannot be excluded that the operation in question might lead to distortion of competition and affect trade between Member States satisfies the requirement to state reasons under Article 253 EC.

(see paras 66-67)

2.      Aid which is intended to relieve an undertaking of the expenses which it would normally have had to bear in its day-to-day management or its usual activities in principle distorts competition. That is true of aid for restructuring an undertaking in difficulty the effect of which was to convert a loan into own funds.

(see para. 75)

3.      Under Article 6 of Regulation No 659/1999 on the application of Article 88 EC, the decision to initiate the formal State aid investigation procedure must give the interested parties the opportunity effectively to participate in the formal procedure, during which they will have the opportunity to put forward their arguments. The sole purpose of the procedure provided for in Article 88(2) EC is to oblige the Commission to take steps to ensure that all persons who may be concerned are notified and given an opportunity of putting forward their arguments.

(see para. 117)

4.      The concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. Any activity consisting in offering goods and services on a given market is an economic activity. In that respect an entity whose principal activity consists in the provision of services in connection with finding employment for jobseekers, integrating people living with disabilities into the labour market, helping employers to find the right staff for specific posts and general staff placement services must be regarded as being engaged in an economic activity.

(see paras 178-179)

5.      Where undertakings in receipt of unlawful State aid become insolvent, restoration of the previous situation and removal of the distortion of competition resulting from aid unlawfully paid may, in principle, be achieved by registration as one of the liabilities of the undertaking in liquidation of an obligation relating to repayment of the aid concerned. The mere fact that the undertaking has gone bankrupt does not therefore call into question the principle that unlawful aid must be recovered.

Furthermore, where there is a Commission decision ordering recovery of aid, any procedural or other difficulties in regard to the implementation of that decision cannot affect its lawfulness. In the event of difficulties, the Commission and the Member State concerned must respect the principle underlying Article 10 EC, which imposes a duty of genuine cooperation on the Member States and the Community institutions, and must work together in good faith with a view to overcoming difficulties whilst fully observing the Treaty provisions, and in particular the provisions on State aid.

(see paras 192-193, 200)

6.      In the context of an action brought against a decision on State aid, the fact that the applicants did not submit any observations to the Commission during the administrative procedure. However, the applicants’ arguments are not inadmissible merely because they were not raised during the administrative procedure. The right of a person to bring proceedings cannot be restricted simply because, although that person could, in the course of the administrative procedure, have submitted observations on an assessment communicated when the Article 88(2) EC procedure was opened and then repeated in the contested decision, he did not do so.

(see para. 195)