Provisional text
JUDGMENT OF THE COURT (Second Chamber)
13 June 2024 (*)
(Appeal – State aid – Law prohibiting the use of coal for the production of electricity – Early closure of a coal-powered power plant – Award of compensation – Decision declaring the measure compatible with the internal market without stating whether State aid exists – Exercise of the European Commission’s powers)
In Case C‑40/23 P,
APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 26 January 2023,
European Commission, represented by I. Georgiopoulos, B. Stromsky and H. van Vliet, acting as Agents,
appellant,
the other party to the proceedings being:
Kingdom of the Netherlands, represented by M.K. Bulterman, A. Hanje, and M.J. Langer, acting as Agents,
applicant at first instance,
THE COURT (Second Chamber),
composed of A. Prechal, President of the Chamber, F. Biltgen, N. Wahl, J. Passer (Rapporteur) and M.L. Arastey Sahún, Judges,
Advocate General: M. Campos Sánchez-Bordona,
Registrar: A. Calot Escobar,
having regard to the written procedure,
after hearing the Opinion of the Advocate General at the sitting on 22 February 2024,
gives the following
Judgment
1 By its appeal, the European Commission asks the Court of Justice to set aside the judgment of the General Court of 16 November 2022, Netherlands v Commission (T‑469/20, EU:T:2022:713; ‘the judgment under appeal’), by which the General Court upheld the action brought by the Kingdom of the Netherlands for annulment of Commission Decision C(2020) 2998 final of 12 May 2020 on State aid SA.54537 (2020/NN) – Netherlands, Prohibition of coal for the production of electricity in the Netherlands (OJ 2020 C 220, p. 2; ‘the decision at issue’).
Legal context
2 Article 107(1) and (3)(c) TFEU provides:
‘1. Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.
…
3. The following may be considered to be compatible with the internal market:
…
(c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’.
3 Article 108(2) and (3) TFEU provides:
‘2. If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the internal market having regard to Article 107, or that such aid is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission.
…
3. The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the internal market having regard to Article 107, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision.’
4 Recital 7 of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 [TFEU] (OJ 2015 L 248, p. 9), which is worded in the same terms, in essence, as recital 7 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 [EC] (OJ 1999 L 83, p. 1), states:
‘The period within which the Commission is to conclude the preliminary examination of notified aid should be set at 2 months from the receipt of a complete notification or from the receipt of a duly reasoned statement of the Member State concerned that it considers the notification to be complete because the additional information requested by the Commission is not available or has already been provided. For reasons of legal certainty, that examination should be brought to an end by a decision.’
5 Article 4 of Regulation 2015/1589, which is worded in the same terms, in essence, as Article 4 of Regulation No 659/1999, provides:
‘1. The Commission shall examine the notification as soon as it is received. Without prejudice to Article 10, the Commission shall take a decision pursuant to paragraphs 2, 3 or 4 of this Article.
2. Where the Commission, after a preliminary examination, finds that the notified measure does not constitute aid, it shall record that finding by way of a decision.
3. Where the Commission, after a preliminary examination, finds that no doubts are raised as to the compatibility with the internal market of a notified measure, in so far as it falls within the scope of Article 107(1) TFEU, it shall decide that the measure is compatible with the internal market (‘decision not to raise objections’). That decision shall specify which exception under the [FEU Treaty] has been applied.
4. Where the Commission, after a preliminary examination, finds that doubts are raised as to the compatibility with the internal market of a notified measure, it shall decide to initiate proceedings pursuant to Article 108(2) TFEU (‘decision to initiate the formal investigation procedure’).
5. The decisions referred to in paragraphs 2, 3 and 4 of this Article shall be taken within [two] months. That period shall begin on the day following the receipt of a complete notification. The notification shall be considered as complete if, within [two] months from its receipt, or from the receipt of any additional information requested, the Commission does not request any further information. The period can be extended with the consent of both the Commission and the Member State concerned. Where appropriate, the Commission may fix shorter time limits.
6. Where the Commission has not taken a decision in accordance with paragraphs 2, 3 or 4 within the period laid down in paragraph 5, the aid shall be deemed to have been authorised by the Commission. The Member State concerned may thereupon implement the measures in question after giving the Commission prior notice thereof, unless the Commission takes a decision pursuant to this Article within a period of 15 working days following receipt of the notice.’
6 Article 6(1) of Regulation 2015/1589 provides:
‘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 internal 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.’
Background to the dispute
7 The background to the dispute was set out in paragraphs 2 to 18 of the judgment under appeal and can be summarised as follows:
8 On 27 March 2019, the Netherlands authorities notified the Commission of a draft law prohibiting the use of coal for the production of electricity, in accordance with Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 laying down a procedure for the provision of information in the field of technical regulations and of rules on Information Society services (OJ 2015 L 241, p. 1). That draft law, which sought to reduce carbon dioxide (CO2) emissions in the Netherlands and provided for compensation for the damage caused to a coal-fired power plant disproportionately affected, as compared with other power plants, by the prohibition on using coal for the production of electricity, was not notified to the Commission under Article 108(3) TFEU.
9 Following the notification of the draft law under Directive 2015/1535, the Commission, acting on its own initiative, began to examine the information concerning alleged aid.
10 On 11 December 2019, the Kingdom of the Netherlands adopted the Wet verbod op kolen bij elektriciteitsproductie (Law prohibiting the use of coal for the production of electricity) (Stb. 2019, No 493). Article 4 of that law provided for the possibility of awarding compensation to a power plant disproportionately affected, as compared with other power plants, by the prohibition on using coal for electricity production. On that basis, Vattenfall NV, the operator of one of the five coal-fired power plants in the Netherlands, namely the Hemweg 8 power plant, received compensation from the Netherlands State in the amount of EUR 52.5 million (‘the measure at issue’). Because of its poor environmental technical characteristics, that power plant, unlike the other four coal-fired power plants in the Netherlands, was deprived of the benefit of the transitional period laid down by that law and was therefore obliged to close early.
11 On 12 May 2020 the Commission adopted the decision at issue. As regards the existence of State aid, it stated, in recital 48 of that decision, that, ‘on the basis of the information provided by the Dutch authorities, it [could] not be concluded with a sufficient degree of certainty that a right to compensation of EUR 52.5 mio. exist[ed]’. The Commission inferred from this that it could not be ‘excluded that the measure under examination [conferred] State aid on the undertaking concerned’. However, the Commission considered, in recital 49 of that decision, that, ‘a definitive conclusion as to whether the measure provide[d] the operator with an advantage and thus constitute[d] State aid pursuant to Article 107(1) TFEU [did] not have to be drawn because even if State aid were involved, [it] consider[ed] that the measure [was] compatible with the internal market’. The Commission concluded ‘that the measure [at issue] [was] compatible with the internal market pursuant to Article 107(3)(c) [TFEU]’.
The procedure before the General Court and the judgment under appeal
12 By application lodged at the Registry of the General Court on 21 July 2020, the Kingdom of the Netherlands brought an action for annulment of the decision at issue.
13 That Member State put forward five pleas in law. The first three pleas were raised in the event that, notwithstanding its wording, the decision at issue had the effect of classifying the measure at issue as State aid. The fourth and fifth pleas, directed against that decision in so far as it did not make such a classification, alleged that (i) the Commission had no power to declare a measure compatible under Article 107(3) TFEU without first having classified it as State aid, and (ii) the principle of legal certainty had been infringed, respectively.
14 By the judgment under appeal, the General Court, after finding that the Commission had not made a decision, in the decision at issue, as to whether the measure at issue constituted aid within the meaning of Article 107(1) TFEU, upheld the action in respect of the fourth and fifth pleas for annulment.
Forms of order sought by the parties
15 By its appeal, the Commission claims that the Court should:
– set aside the judgment under appeal;
– itself give final judgment in the matter and dismiss the action in its entirety as unfounded; and
– order the Kingdom of the Netherlands to pay the costs.
16 The Kingdom of the Netherlands contends that the Court should:
– dismiss the appeal; and
– order the Commission to pay the costs.
The appeal
17 In support of its appeal, the Commission puts forward a single ground of appeal comprising two parts, the first alleging misinterpretation of Article 107(3) TFEU and Article 4(3) of Regulation 2015/1589 and the second alleging an error of law in the interpretation of the principle of legal certainty.
The first part of the single ground of appeal
Arguments of the parties
18 The Commission maintains that, by holding that it has no power to decide that a measure is compatible with the internal market without first having found that that measure constituted State aid, the General Court failed to have regard, by an unduly restrictive literal interpretation of those provisions, to Article 107(3) TFEU and Article 4(3) of Regulation 2015/1589.
19 The Commission submits that neither paragraph 1 nor paragraph 3 of Article 107 TFEU lays down procedural rules and nor do they relate to the powers conferred on the Commission in respect of State aid review. Their sole purpose is to prohibit certain measures and to specify that measures which meet certain criteria are authorised. The General Court is therefore wrong to state that those two provisions prohibit the adoption of decisions such as the decision at issue. The term ‘aid’ contained in Article 107(3) TFEU is used in a broad sense and not for the purpose of designating State aid in the technical sense of that term, in such a way that it cannot be ruled out that that term may also cover measures whose classification as State aid remains uncertain. The judgment of 22 December 2008, British Aggregates v Commission (C‑487/06 P, EU:C:2008:757, paragraph 113), cited by the General Court, contains no indication as to what the Commission must do if it is convinced that a measure is compatible but has not yet reached a conclusion as to whether that measure constitutes State aid.
20 According to the Commission, as regards Article 4(3) of Regulation 2015/1589, the use of the expression ‘in so far as it falls within the scope of Article 107(1) TFEU’ does not mean either that the compatibility of a measure may be examined only where that measure has been classified as State aid, since the words ‘in so far as’ must be understood, in their ordinary sense, as equivalent to those of ‘to the extent that’ and such a subordinating conjunction must be read in relation to the principal statement that the Commission is to ‘decide that the measure is compatible with the internal market’. The only finding required for the Commission to be able to take a decision not to raise objections relates to the fact that the measure does not raise doubts as to its compatibility with the internal market.
21 Furthermore, the Commission asserts that other provisions of Regulation 2015/1589, although they include the term ‘State aid’, allow Member States or the Commission to follow the procedure laid down in that regulation also for measures not established as being State aid. That is the case, for example, with Article 2 of that regulation, which provides for the notification by Member States of any plans for new State aid.
22 The Commission submits, moreover, that the interpretation thus adopted by the General Court concerning Article 4(3) of Regulation 2015/1589 creates an impasse, since it prevents the Commission from making any decision at the end of its preliminary examination. In circumstances such as those in the present case, the Commission is prevented from adopting any decision since it is not in a position either to initiate a formal investigation procedure, on the basis of Article 4(4) of that regulation, in the absence of doubts as to the compatibility of the measure at issue with the internal market, or to find, on the basis of Article 4(2) of that regulation, that that measure does not constitute aid, in the absence of sufficient certainty as to the right of the beneficiary of that measure to be compensated.
23 According to the Commission, the General Court was wrong, in paragraph 58 of the judgment under appeal, to rely on the judgment of 24 May 2011, Commission v Kronoply and Kronotex (C‑83/09 P, EU:C:2011:341), in support of the finding that Article 4(3) of that regulation sets out an exhaustive list of the decisions which the Commission may adopt at the end of the preliminary examination. That judgment does not contain any definitive interpretation to that effect, but confirms, by contrast, that the Commission was not entitled, in the present case, to initiate the formal investigation procedure with the sole aim of establishing that the measure at issue was State aid, in the absence of doubts as to the compatibility of that measure with the internal market.
24 The Commission maintains, moreover, that Article 4(6) of Regulation 2015/1589 provides that, where it has not taken a decision within the prescribed period, a measure is to be deemed to have been authorised, even if it was not previously demonstrated that that measure constituted State aid. The Commission should therefore be able, under Article 4(3) of that regulation, to decide that a measure is compatible with the internal market without such a prior demonstration.
25 Similarly, by providing that the decision to initiate the formal investigation procedure is to include a ‘preliminary assessment’ as to whether the measure constitutes aid, Article 6(1) of that regulation confirms that, when the Commission has to decide how it closes the preliminary examination procedure, it is entirely possible that it may not have adopted a definitive position on the existence of aid.
26 Lastly, the Commission asserts that the General Court did not take into account the rationale and consequences of the system for review of State aid provided for in Articles 107 to 109 TFEU and the provisions of Regulation 2015/1589, in particular Article 4(3), which seek to establish a balance between, on the one hand, the need for Member States and interested parties to obtain clarification as to the classification of a measure as State aid and, on the other hand, the need to obtain swift authorisation for that measure. In certain situations, it may be simpler to establish whether a measure is compatible with the internal market than to determine whether it constitutes State aid. By deciding, in such situations, not to raise objections without initiating a formal investigation procedure, the Commission complies with the principle of good administration. In that regard, an analogy may be drawn with the approach taken by the Court of Justice in the judgment of 26 February 2002, Council v Boehringer (C‑23/00 P, EU:C:2002:118, paragraphs 51 and 52).
27 The Commission argues that the Court of Justice has already stated that the preliminary examination is not intended to enable the Commission to give an exhaustive and definitive opinion on the compatibility of the measure in question with the Treaty, but only to form a ‘prima facie opinion’, and that that opinion must relate principally to the compatibility of that measure with the internal market, irrespective of whether it may be classified as State aid (judgment of 11 December 1973, Lorenz, 120/73, EU:C:1973:152, paragraph 3).
28 The Netherlands Government disputes the Commission’s arguments and asks the Court to reject the first part of the single ground of appeal.
Findings of the Court
29 The present part of the single ground of appeal raises, in essence, the question whether, by the judgment under appeal, the General Court was wrong to hold that Article 107(3) TFEU and Article 4(3) of Regulation 2015/1589 require the Commission to classify a measure as State aid before deciding that that measure is compatible with the internal market.
30 After recalling, in paragraphs 51 and 52 of the judgment under appeal, the wording of Article 107(1) and (3)(c) TFEU, the General Court stated, in paragraph 53 of that judgment, that the use of the term ‘aid’ in Article 107(3) TFEU implies that the compatibility of a national measure with the internal market can only be assessed once that measure has been classified as State aid.
31 In paragraph 54 of the judgment under appeal, the General Court added, referring to the judgment of 22 December 2008, British Aggregates v Commission (C‑487/06 P, EU:C:2008:757, paragraph 113), that it is settled case-law, where the Commission is unable to conclude, following an initial examination, that the State measure in question either is not ‘aid’ within the meaning of Article 107(1) TFEU or, if classified as aid, is compatible with the Treaty, or where that procedure does not enable it to overcome all of the difficulties involved in determining whether the aid is compatible, the Commission is under a duty to initiate the procedure under Article 108(2) TFEU, without having any discretion in that regard.
32 In paragraph 55 of the judgment under appeal, the General Court concluded from those considerations that only a measure falling within the scope of Article 107(1) TFEU, being a measure classified as State aid, may be considered by the Commission as being compatible with the internal market.
33 In paragraphs 56 to 60 of the judgment under appeal, it stated that that conclusion is supported by the provisions of Article 4 of Regulation 2015/1589 which, read in the light of the case-law of the Court of Justice, in particular the judgment of 24 May 2011, Commission v Kronoply and Kronotex (C‑83/09 P, EU:C:2011:341, paragraphs 43 and 44), set out an exhaustive list of the decisions which the Commission may adopt following the preliminary examination, decisions which do not include a decision declaring the measure under examination compatible with the internal market without the Commission having first decided whether to classify that measure as State aid.
34 The Commission submits that the General Court’s literal interpretation of Article 107(3) TFEU is unduly restrictive. It maintains, first, that the term ‘aid’ is used in Article 107(3) TFEU in its general sense, and not in the technical sense to designate State aid.
35 It should, however, be observed that, although the term ‘aid’ is, in fact, used in Article 107(1) TFEU, in conjunction with the other indications set out in that provision, according to the usual meaning in everyday language, it is, by contrast, used in Article 107(3) TFEU to designate only State aid It follows from Article 107(1) TFEU, read as a whole, that only measures which fulfil the conditions arising from paragraph 1 and which, consequently, constitute State aid are, save as otherwise provided in the Treaty, incompatible with the internal market. Therefore, Article 107(3) TFEU, which, by way of exception to that provision, lists the measures which may be considered to be compatible with the internal market, can concern only State aid.
36 The Commission is therefore wrong to claim that the General Court’s literal interpretation of Article 107(3) TFEU is incorrect.
37 Furthermore, while it is true that, as the Commission submits, Article 107 TFEU neither lays down procedural rules nor directly concerns the Commission’s powers, the fact remains that, as has been noted in paragraph 35 of the present judgment, it is apparent from that provision that the classification of a measure as State aid within the meaning of paragraph 1 of that provision is a precondition for the possible application of the exception laid down in paragraph 3. The European Union thus has the power to decide on the compatibility with the internal market of measures constituting State aid, and has no power to decide on the compatibility with the internal market of measures which have not been established as being State aid. Articles 108 and 109 TFEU confer on the Commission and the Council of the European Union, subject to review by the Court, the exercise of that power. The EU institutions may only act within the limits of the powers conferred on them, (judgment of 14 June 2016, Commission v McBride and Others, C‑361/14 P, EU:C:2016:434, paragraph 36).
38 As regards the Commission’s reference to the judgment of 11 December 1973, Lorenz (120/73, EU:C:1973:152, paragraph 3), the Court of Justice did not, contrary to what the Commission suggests, say that the opinion formed in the context of the preliminary examination of a measure may, as the case may be, leave aside the question of the classification of the measure under examination as State aid. In the case which gave rise to that judgment, in which the nature of the notified measures as State aid was not in doubt, the question raised was whether the Commission was under an obligation to conclude the preliminary examination by means of a decision. The Court of Justice held that although it is in the interests of good administration for the Commission, when, at the end of the preliminary examination, it considers that ‘the aid’ conforms with the EC Treaty, to inform the Member State accordingly, it is not, however, bound to take a decision within the meaning of Article 189 EC (now, after amendment, Article 288 TFEU), since Article 93 EC (now, after amendment, Article 108 TFEU) requires such a step only at the end of the contentious procedure (judgment of 11 December 1973, Lorenz, 120/73, EU:C:1973:152, paragraphs 5 and 6). It should be observed, as an ancillary point, that that possibility of not adopting a decision ended with Regulation No 659/1999, Article 4(1) of which, read in the light of recital 7 of that regulation, determined that the preliminary examination should now, for reasons of legal certainty, be closed by a decision.
39 As regards the Commission’s criticisms of the statements in paragraphs 56 to 60 of the judgment under appeal, relating to Article 4(3) of Regulation 2015/1589, it should be noted that those statements are made by the General Court only for the sake of completeness, in support of its finding expressed, on the basis of the provisions of the FEU Treaty, in paragraph 55 of that judgment. Therefore, those criticisms are ineffective (see, to that effect, judgment of 14 June 2016, Marchiani v Parliament (C‑566/14 P, EU:C:2016:437, paragraphs 59 and 60).
40 In any event, the expression ‘in so far as it falls within the scope of Article 107(1) TFEU’ in Article 4(3) of Regulation 2015/1589 must be interpreted in accordance with the meaning, correctly accepted by the General Court, in paragraphs 53 to 55 of the judgment under appeal, of Article 107(1) and (3) TFEU. In that regard, it should be borne in mind that, according to settled case-law, where it is necessary to interpret a provision of secondary EU law, preference should as far as possible be given to the interpretation which renders the provision consistent with the Treaties and the general principles of EU law (judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 174 and the case-law cited).
41 As regards the Commission’s criticisms of the General Court’s references to the judgments of 22 December 2008, British Aggregates v Commission (C‑487/06 P, EU:C:2008:757, paragraph 113), and of 24 May 2011, Commission v Kronoply and Kronotex (C‑83/09 P, EU:C:2011:341, paragraphs 43 and 44), it should be noted that, while it is true that those judgments did not relate specifically to the question of the Commission’s power to adopt a decision not to raise objections to a measure that it has not determined to be State aid, the fact remains that, in those judgments, the Court of Justice, consistently with the wording of Article 107 TFEU, considered that the determination of whether a measure constitutes State aid must be carried out in advance in relation to the examination of whether that measure is compatible with the internal market.
42 It should be added, first, that the Court of Justice has, in other judgments, stated that ‘the Commission is required to initiate the formal investigation procedure if, following the preliminary examination referred to in Article 4 of Regulation 2015/1589, it … entertains doubts as to the actual classification as “aid” within the meaning of Article 107(1) TFEU of [the] measure’ (judgment of 16 March 2021, Commission v Poland, C‑562/19 P, EU:C:2021:201, paragraph 50 and the case-law cited; see also, to that effect, judgment of 6 October 2021, Scandlines Danmark and Scandlines Deutschland v Commission, C‑174/19 P and C‑175/19 P, EU:C:2021:801, paragraphs 65 to 67 and the case-law cited).
43 Furthermore, it held that the question whether a measure must be categorised as State aid arises upstream of the question which involves examining, where necessary, if incompatible aid, within the meaning of in Article 107 TFEU, is nevertheless necessary to the performance of the tasks assigned to the beneficiary of the measure at issue, under Article 106(2) TFEU (judgment of 24 November 2020, Viasat Broadcasting UK, C‑445/19, EU:C:2020:952, paragraph 35).
44 As regards the Commission’s argument that the General Court’s position leads the Commission to an impasse, preventing it, in circumstances such as those of the present case, from adopting any decision at the end of the preliminary examination, suffice it to note, as the Kingdom of the Netherlands did, that that impasse derives solely from the incorrect view that the Commission has the power to conclude that there is no doubt as to the compatibility of a measure which it has not classified as State aid and therefore, by extension, that it does not have the power to initiate the formal investigation procedure in such a situation. When that view is rejected, the impasse disappears and the formal investigation procedure can be initiated, in accordance with Article 4(4) of Regulation 2015/1589 and the case-law referred to in paragraph 42 of the present judgment.
45 As regards the Commission’s reference to Article 4(6) of Regulation 2015/1589, it should be noted that that provision aims to remedy failure on the part of the Commission to exercise its decision-making power under Article 4. That provision, read in the light, in particular, of recital 7 of that regulation, cannot form the basis for the Commission’s power to decide that a measure which it has not classified as State aid is compatible with the internal market.
46 As regards the fact that Article 6(1) of Regulation 2015/1589 refers to a ‘preliminary assessment’ of the measure, it should be noted that that reference does not mean, contrary to what the Commission maintains, that the Commission may terminate the preliminary examination by a decision not to raise objections to a measure which it has not classified as State aid.
47 As regards the Commission’s assertion that there are situations in which it is, both in the light of the principle of good administration and the interests of the parties concerned, more appropriate to determine whether the measure is compatible with the internal market than to determine whether it constitutes aid, it should be noted that that principle and the considerations of appropriateness thus invoked cannot call into question the scheme and consistency of Article 107 TFEU, the scope of which has been recalled in paragraphs 35 and 37 above.
48 In that regard, the Commission’s reliance, in connection with the principle of good administration, on the judgment of 26 February 2002, Council v Boehringer (C‑23/00 P, EU:C:2002:118), in order to justify its being able to examine the compatibility of a measure with the internal market without having determined whether it constitutes State aid, is irrelevant. Although it is indeed apparent from paragraph 52 of that judgment that it is for the EU Courts to assess whether the proper administration of justice justifies, in the circumstances of the case, the dismissal of the action on the merits without ruling on the pleas of inadmissibility raised by the defendant, the issue raised by the present case, for its part, relates to the very power of the Commission to adopt certain decisions. That power of the Commission must be exercised in compliance with the conditions laid down by the Treaties, which, in the present case, and as is apparent in particular from paragraphs 35 and 37 of the present judgment, requires that institution to decide whether to classify a measure as State aid before it can, if required, examine whether such aid may, notwithstanding that classification, be regarded as compatible with the internal market.
49 Thus, the Commission cannot abandon such an obligation on the basis of considerations relating to how readily such a classification or examination of compatibility may be carried out in a particular case.
50 It follows from the foregoing considerations that the first part of the single ground of appeal must be rejected.
The second part of the single ground of appeal
51 In the light of the fact that the first part of the ground of appeal has been upheld, it is not necessary to examine the second part of that ground of appeal. It is apparent from the examination of that first part of the ground of appeal and from its rejection that, by the judgment under appeal, the General Court was fully entitled to annul the decision at issue, upholding the plea alleging that the Commission lacked competence. It follows that the question whether the General Court could, as the case may be, have erred in law when examining the plea alleging a possible infringement of the principle of legal certainty cannot, in any event, affect the annulment of the decision at issue thus ordered by the General Court or, therefore, the outcome of the present appeal.
52 In those circumstances it is necessary to reject the present appeal.
Costs
53 In accordance with Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to the costs. Under Article 138(1) of those Rules of Procedure, which applies to the procedure on appeal by virtue of Article 184(1) of those rules, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
54 Since the Commission has been unsuccessful, it must be ordered, in accordance with the form of order sought by the Kingdom of the Netherlands, to bear its own costs and to pay those incurred by that Member State.
On those grounds, the Court (Second Chamber) hereby:
1. Dismisses the appeal;
2. Orders the Commission to pay, in addition its own costs, those incurred by the Kingdom of the Netherlands.
[Signatures]