JUDGMENT OF THE COURT OF FIRST INSTANCE (First Chamber,
Extended Composition)
5 November 1997 (1)
(State aid Restructuring aid Commission decision Annulment
Admissibility)
In Case T-149/95,
Établissements J. Richard Ducros, a company incorporated under French law,
established in Paris, represented by Philippe Genin, of the Lyons Bar, with an
address for service in Luxembourg at the Chambers of Aloyse May, 31 Grand-Rue,
v
Commission of the European Communities, represented initially by Jean-Paul
Keppenne, then by Xavier Lewis, both of its Legal Service, acting as Agents, with
an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of
its Legal Service, Wagner Centre, Kirchberg,
supported by
CMF S.p.A., a company incorporated under Italian law, and CMF Sud S.p.A., a
company in liquidation incorporated under Italian law, established in Pignatero
Maggiore, Italy, represented by Mario Siragusa, of the Rome Bar, and Giuseppe
Scassellati-Sforzolini, of the Bologna Bar, with an address for service in
Luxembourg at the Chambers of Messrs Elvinger, Hoss & Prussen, 2 Place Winston
Churchill,
APPLICATION for annulment of the decision reproduced in Commission Notice
95/C 120/03 pursuant to Article 93(2) of the EC Treaty to other Member States
and other parties concerned regarding aid which Italy granted to CMF Sud S.p.A.
and CMF S.p.A. [State aid C 6/92 (ex NN 149/91)] (OJ 1995 C 120, p. 4),
THE COURT OF FIRST INSTANCE
OF THE EUROPEAN COMMUNITIES (First Chamber, Extended
Composition),
composed of: A. Saggio, President, C.P. Briët, A. Kalogeropoulos, V. Tiili and
R.M. Moura Ramos, Judges,
Registrar: B. Pastor, Principal Administrator,
having regard to the written procedure and further to the hearing on 22 April 1997,
gives the following
Judgment
Facts
- 1.
- CMF Sud S.p.A. ('CMF Sud), which resulted from the merger in 1986 of two
wholly-owned subsidiaries of two holding companies in the Italian public sector, was
principally engaged in metal construction work.
- 2.
- As part of the restructuring of those holding companies, a new company, CMF
S.p.A. ('CMF), was set up in October 1992. CMF bought up the principal
business of CMF Sud, which was then placed in liquidation.
- 3.
- The applicant is a company incorporated under French law which carries on
business in public works and metal construction.
- 4.
- In 1990 the applicant and CMF Sud put in tenders for a public-works contract
concerning the extension of the terminal at Marseilles Provence airport, France. By
decision of 4 September 1990 the contract for those works was awarded to CMF
Sud.
- 5.
- The applicant took the view that the terms and conditions of CMF Sud's bid for
the contract were made possible only as a result of the subsidies received by that
company; the applicant therefore lodged a complaint with the Commission.
- 6.
- By decision dated 11 March 1992, the Commission initiated the procedure provided
for in Article 93(2) of the EC Treaty against the Italian Republic in connection
with the public capital contribution in favour of CMF Sud to offset its operating
losses in 1989 and 1990 (Notice 92/C 122/04, OJ 1992 C 122, p. 6, hereinafter 'the
decision of 11 March 1992). By decision dated 16 September 1992 the Commission
decided to extend the procedure to cover fresh injections of public capital (Notice
92/C 279/11, OJ 1992 C 279, p. 13). On 22 September 1993 it decided to extend the
procedure once again in order to cover the grant by the Italian State of a guarantee
in respect of the total liabilities of CMF Sud during its voluntary liquidation, the aid
components which might be comprised in the sale to CMF of the main business of
CMF Sud and the supply of start-up capital to the new company (Notice
93/C 282/04, OJ 1992 C 282, p. 5).
- 7.
- In the abovementioned decisions the Commission took the view, essentially, that
the successive increases in the capital of CMF Sud, the guarantees granted to it,
and the provision of start-up capital to CMF, were State aid, since those
investments did not reflect the conduct of a private investor in a market economy.
In particular, the Commission found that, on carrying out the increases in capital,
the subscribers failed to decide at the same time on the measures necessary to
remedy the financial difficulties of the beneficiaries, which should have taken the
form of a thorough restructuring programme capable of being regarded as
acceptable from the point of view of the public interest. Under those circumstances,
it considered the financing to be operating aid in favour of CMF Sud and CMF.
- 8.
- On the initiation and subsequent extensions of the procedure, the Commission
stressed that the distortion of competition caused by the operating aid in the
building and engineering sectors was particularly serious in light of the
characteristics of those sectors. None the less, it stated that it was not opposed to
the grant of such aid for restructuring companies in difficulty, provided that certain
strict conditions were observed.
- 9.
- The applicant was the sole competing undertaking to intervene during the
procedure.
- 10.
- On 16 May 1995 the Commission published in the Official Journal of the European
Communities Notice 95/C 120/03 pursuant to Article 93(2) of the Treaty to the
other Member States and other parties concerned regarding aid which Italy granted
to CMF Sud S.p.A. and CMF S.p.A. [State aid C 6/92 (ex NN 149/91)] (OJ 1995
C 120, p. 4). In that notice the Commission stated that it had decided to close the
procedure initiated under Article 93(2) of the Treaty and to authorize the aid in
question under Article 92(3)(c) of the Treaty (hereinafter 'the contested decision).
- 11.
- The Commission explained that, following an evaluation of the information supplied
by the Italian authorities, by the recipients of the aid and by their shareholders, and
in the light of undertakings given by them to the Commission, it had formed the
view that the aid to CMF Sud and CMF covered by the procedure under Article
93(2) of the Treaty was in conformity with the principles of compatibility laid down
in the Community Guidelines for State aid for Rescuing and Restructuring Firms
in Difficulty set out in Commission Notice 94/C 368/05 (OJ 1994 C 368, p. 12,
hereinafter 'the guidelines).
- 12.
- It stressed in that connection that the aid formed part of a reasonably viable,
coherent and large-scale plan designed to restore the long-term viability of the
undertakings concerned. Moreover, the aid granted to CMF Sud was to be
accompanied by an acceptable industrial counterpart, namely the total withdrawal
of existing capacity from the relevant market. Furthermore, they would enable the
company's business to be wound up under optimal conditions without entailing
other harmful effects on competition in the sector.
- 13.
- The Commission stated that, in authorizing the aid, it took special account of the
following undertakings by the Italian authorities:
CMF would be privatized by 30 June 1995 at the latest;
two of CMF's production lines, with production capacities of 10 000 and
12 000 tonnes a year respectively, would be sold on markets not in
competition with the European Community or scrapped by 30 June 1995 at
the latest;
in the process of CMF Sud's liquidation its assets would be sold to
companies in sectors other than those in which it carried on its business, no
later than 31 December 1996.
Procedure and forms of order sought
- 14.
- By application lodged at the Registry of the Court of First Instance on 14 July
1995, the applicant brought these proceedings.
- 15.
- By document lodged at the Registry on 27 November 1995, CMF Sud and CMF
applied for leave to intervene in support of the form of order sought by the
Commission. By order of 31 January 1996 leave to intervene was granted.
- 16.
- The written procedure was concluded on 23 May 1996 when the Commission
lodged its observations on the statement in intervention.
- 17.
- At the hearing on 22 April 1997 the parties were asked to give their views on the
existence of competitive relations between the applicant and CMF and on the
latter's current situation.
- 18.
- The applicant claims that the Court should:
declare the action admissible and annul the contested decision;
order the Commission to pay the costs.
- 19.
- The Commission contends that the Court should:
dismiss the action as inadmissible or ill-founded:
order the applicant to pay the costs.
- 20.
- The interveners claim that the Court should:
declare the action inadmissible or dismiss it as unfounded;
order the applicant to pay the costs, including those incurred by the
interveners.
Admissibility
Arguments of the parties
- 21.
- The Commission, supported by the interveners, maintains that even if the applicant
was responsible for the initiation of the procedure provided for in Article 93(2) of
the Treaty, and participated in it, it does not satisfy the conditions laid down in the
case-law for it to be directly and individually concerned by the contested decision.
It has not shown that its position was significantly affected by the measure in
question (Case 169/84 Cofaz and Others v Commission [1986] ECR 391; Case
T-435/93 ASPEC and Others v Commission [1995] ECR II-1281, and Joined Cases
T-447/93, T-448/93 and T-449/93 AITEC and Others v Commission [1995] ECR
II-1971).
- 22.
- As far as the Commission is concerned, the applicant has not demonstrated the
existence of a causal link between the aid paid to CMF Sud and CMF, on the one
hand, and its exclusion from the public-works contract concerning Marseilles
airport, on the other. Analysis of the bids made in the course of that award
procedure reveals, moreover, that two other bidders also made proposals which
were deemed to be more attractive than that made by the applicant.
- 23.
- In the Commission's view, the applicant has not adduced proof that the aid in
question affected its market position. However, it is clear from the case-law that
the fact that a measure may influence existing competitive relationships cannot
suffice to allow a trader in competition with the addressee of the measure to be
regarded as directly and individually concerned by that measure (Joined Cases
10/68 and 18/68 Eridania and Others v Commission [1969] ECR 459).
- 24.
- The Commission, supported by the interveners, contends that the fact that CMF
was able to maintain its market position as a competitor of the applicant does not
suffice in order to enable its action to be deemed admissible, especially since the
contested decision entailed the closure of the CMF production lines which were in
direct competition with the applicant's business.
- 25.
- The interveners consider that, contrary to the requirement laid down in the Cofaz
judgment, cited above, the applicant did not play a decisive role in the conduct of
the administrative procedure, inasmuch as the contested decision states that the
only competitor to have participated in that procedure (that is to say, the applicant)
did no more than supply publicly available accounting documents.
- 26.
- The interveners go on to contend that, contrary to the requirements laid down in
the ASPEC judgment, the applicant has not shown that it belonged to a restricted
circle of competitors, or that the aid in question would bring about an increase in
capacity on a market already suffering from overcapacity. The conditions laid down
in the ASPEC judgment are therefore not satisfied in the present case and the
action is inadmissible. Furthermore, the financial intervention by the Italian State,
decided on in May 1991, served merely to cover the losses of the 1990 financial
year and not, as stated in the contested decision, also those arising in the 1989
financial year. Since the contract-award procedure took place in 1990, that aid
could not have had any effect, it is alleged, on CMF Sud's participation in that
procedure.
- 27.
- Finally, the interveners raise a supplementary plea of inadmissibility based on a
lack of jurisdiction of the Court of First Instance. Whilst accepting that this plea
was not put forward by the Commission, they contend that since it is a matter of
public policy it may be raised by the Court of First Instance of its own motion. The
pleas raised by the applicant are said, essentially, to go to the legality of the award
of a public-works contract in Marseilles. However, the French courts, with all the
facts before them and having all the necessary powers of investigation, have, it is
alleged, already rejected the plea raised in this action. Thus, the action does not
seek the annulment under Article 173 of the Treaty of an act of a Community
institution and the Court of First Instance therefore lacks jurisdiction to determine
the dispute.
- 28.
- For its part, the applicant maintains that it fulfils the criteria laid down in Cofaz.
It points out that it was responsible for the initiation of the administrative
procedure and asserts that the fact that the contested decision allows CMF to be
privatized without restitution of the aid received affects its market position. Regard
being had to the amount of the losses sustained by CMF Sud and CMF since 1989,
those undertakings could not have pursued their activities without their 'acquisition
by the State.
- 29.
- It also states that the prices offered by CMF Sud in the course of the contract-award procedure for Marseilles airport in reality constitute sales at a loss made
possible only by the State aid. The share of CMF Sud and CMF in the Community
market is large, as is borne out by the securing of several contracts in France,
Denmark and Portugal, and the aid in question, it claims, enabled those
undertakings to charge prices which amounted to dumping in relation to their
competitors' prices.
Findings of the Court
- 30.
- Contrary to the interveners' assertions, the jurisdiction of the Court of First
Instance cannot be called in question in this case. Suffice it to be noted in that
connection that the form of order sought in the action unequivocally seeks
annulment of a Commission decision reviewable by the Court. Accordingly, the fact
that the pleas relied on in support of the form of order sought may have already
been put forward and rejected in national proceedings cannot call in question the
jurisdiction of the Court of First Instance.
- 31.
- It follows from the fourth paragraph of Article 173 of the Treaty that persons other
than the addressees of a decision may contest that decision only if it concerns them
directly and individually. Since the contested decision was addressed to the Italian
Government, it is necessary to determine whether those conditions are met in the
applicant's case.
- 32.
- As regards the question whether the applicant was directly concerned, the Court
considers that, since the contested decision declares certain aid already granted to
be compatible with the common market, it is of direct concern to the applicant
(AITEC, paragraph 41).
- 33.
- As to the issue of the individual effect on the applicant, it has been consistently
held that a decision is of individual concern to the natural or legal persons to whom
it applies by reason of certain characteristics peculiar to them or a factual situation
which distinguishes them in relation to any other person (Case 25/62 Plaumann v
Commission [1963] ECR 95, at p. 124 and Case T-266/94 Skibsværftsforeningen and
Others v Commission [1996] ECR II-1395, paragraph 44).
- 34.
- With particular regard to review of State aid, it is clear from the case-law that a
decision closing a procedure initiated under Article 93(2) of the Treaty is of
individual concern to the undertakings which instigated the complaint giving rise to
the initiation of the procedure, which submitted observations and which determined
the course of that procedure, provided, however, that their market position was
significantly affected by the aid measure which formed the subject-matter of the
contested decision (Cofaz, paragraphs 24 and 25). However, it does not follow that
an undertaking may not demonstrate in another way, by pointing to specific
circumstances differentiating it in the same way as the addressee, that it is
individually concerned (ASPEC, paragraph 64).
- 35.
- In the present case the Court notes, first, that, as the Commission acknowledged,
the applicant was the instigator of the complaint and was the sole undertaking to
participate in the procedure other than the recipients of the aid; it submitted
observations on 15 July 1992 and, following the first extension of the procedure, on
8 December 1992. Those observations were, moreover, communicated to the Italian
authorities, which presented their comments on them (see also the contested
decision, pp. 5 and 6, and the decision of 11 March 1992, p. 6).
- 36.
- In that connection, the argument of the interveners based on the public nature of
the accounting documents supplied during the procedure by the applicant is without
foundation since it was on the basis of such information, which, in contrast to the
internal documents of the national administration granting aid and the documents
of the recipient undertaking, is to be found in the documents to which competing
undertakings may have access, that the applicant was able to argue its case during
the procedure before the Commission. The fact that the Commission was obliged
on two occasions to extend the scope of the procedure, moreover, highlights the
difficulty in elucidating the situation of the undertakings in receipt of the aid.
- 37.
- As regards, secondly, the effect on the applicant's market position, the Court of
First Instance considers that the file contains several indications that the applicant
is individually concerned by the contested decision. It should be noted, first, that
the Commission described the applicant in the contested decision as a competitor
of CMF Sud.
- 38.
- Next, it is clear from the file in general that a common feature of the construction
and engineering sector is the organization of tender procedures in which the price
offered is the main selection criterion at European level, which may result in the
securing by a company of a public-works contract such as that which gave rise to
the complaint, making it difficult to quantify the market shares of the undertakings
concerned.
- 39.
- The Court of First Instance notes further that, when asked at the hearing to give
particulars of a competitive relationship with CMF, the applicant stated that the
metal-construction sector in Europe comprises a restricted number of undertakings.
Though acknowledging that, since its tender for the public-works contract
concerning Marseilles airport, it has not participated in other tender procedures
with CMF, the applicant also stated that the public-works contract in question was
of considerable importance to it because it represented a considerable part of its
annual turnover. In those circumstances, the Court of First Instance considers that
this competitive relationship was not of the same degree as that referred to in the
Eridania judgment (paragraph 23, above).
- 40.
- On the other hand, neither the defendant nor the interveners were able to explain
further their assertions concerning the fact that, in view of the conditions to which
the contested decision is subject, CMF is no longer a competitor of the applicant.
Even if production lines have been closed, that undertaking remains active in
certain areas of metal construction and it is therefore still possible that, contrary
to the assertions of the Commission and the interveners, the applicant remains in
competition with CMF.
- 41.
- As regards the argument based on the fact that the applicant was classified only in
fourth position on the award of the public-works contract concerning Marseilles
airport, the Court of First Instance points out that the subject-matter of this action
is the Commission's decision to close a procedure under Article 93(2) of the Treaty.
Since the participation by the applicant and by one of the undertakings in receipt
of the aid in the same public-works contract is not in question, the classification
obtained by the applicant in this context cannot cast doubt on the significant effect
of the contested decision on its market position. Indeed, the action does not go to
the legality of that contract, and it is only in the framework of a review of that
aspect, which does not fall to be made here, that the applicant's classification could
possibly be of importance.
- 42.
- In the light of all those considerations, the Court of First Instance considers that
the applicant is in competition with the undertakings in receipt of the aid, so that
it is individually affected by the decision declaring the aid compatible with the
common market (see Skibsværftsforeningen and Others v Commission, cited above,
paragraph 47).
- 43.
- Accordingly, the action must be declared admissible.
Substance
- 44.
- In support of the form of order which it seeks, the applicant raises two pleas in law.
The first alleges infringement of the rules of procedure provided for in the Treaty,
inasmuch as the Italian State did not notify the Commission of the aid granted,
which justifies the annulment of the contested decision. The second plea alleges
infringement by that decision of the conditions laid down by the Commission in the
matter of aid to undertakings in difficulty.
- 45.
- The Commission, supported by the interveners, challenges the pleas raised by the
applicant.
The first plea: infringement of the rules of procedure provided for in the Treaty
Arguments of the parties
- 46.
- In its first plea the applicant maintains essentially that the fact that the aid granted
to CMF and CMF Sud was not notified renders the contested decision unlawful.
It is for the Commission to penalize such infringement of the duty to notify by
systematically ordering reimbursement of non-notified aid. Moreover, the applicant
recalls, in the notice of 24 November 1983 (OJ 1983 C 318, p. 3) the Commission
declared that such aid would be unlawful from the date of its coming into effect.
The judgment of the Court of Justice in Case 70/72 Commission v Germany [1973]
ECR 813, furthermore, affords the Commission the possibility of taking a decision
to order recovery of such aid. That is also the approach taken most recently by the
Commission, as is borne out by the decision which gave rise to the judgment of the
Court of Justice in Joined Cases 67/85, 68/85 and 70/85 Van der Kooy and Others
v Commission [1988] ECR 219, and by Commission Decision 88/468/EEC of 29
March 1988 on aids granted by the French Government to a farm machinery
manufacturer in St Dizier, Angers and Croix (OJ 1988 L 229, p. 37). By not
declaring aid granted in breach of the applicable rules of procedure to be unlawful,
on the pretext that it is in conformity with substantive rules, the Commission
renders those rules nugatory.
- 47.
- The Commission asserts that it strictly observed the relevant rules of procedure.
Moreover, it emphasizes that the applicant's assertion as to the consequences of
failure to observe the notification rules is in total contradiction with the case-law
(Case C-354/90 Fédération Nationale du Commerce Extérieur des Produits
Alimentaires et Syndicat National des Négociants et Transformateurs de Saumon v
French State [1991] ECR I-5505 and Case T-49/93 SIDE v Commission [1995] ECR
II-2501). It does not, it maintains, have the power to seek recovery of State aid,
without examining the compatibility thereof with the common market, solely on the
ground that the obligation to notify was not observed.
- 48.
- The interveners contend that the infringement of the obligation to notify aid does
not entail the incompatibility of the aid with the Treaty. Observance of that
obligation is ensured by the direct effect attributed by the Court to Article 93(3)
of the Treaty, which enables national courts to draw all the consequences of such
an infringement. Provided it could show an interest in bringing proceedings, the
applicant could therefore have secured from the Italian courts a declaration as to
the invalidity of the decisions implementing non-notified aid. Consequently, the plea
must be dismissed.
Findings of the Court
- 49.
- The Court has consistently held that the infringement by the Member States of the
obligation provided for in Article 93(3) of Treaty to notify the Commission of
projected aid and not to implement any such aid prior to the Commission's final
decision does not have the effect of rendering those measures automatically
incompatible with the common market (Case C-301/87 France v Commission [1990]
ECR I-307, paragraph 11 et seq., and Case C-39/94 SFEI and Others v La Poste
and Others [1996] ECR I-3547, paragraph 43; SIDE v Commission, cited above,
paragraph 84). The prohibition on the grant of aid provided for in Article 92(1) is
neither absolute nor unconditional, since paragraph 3 of that provision grants the
Commission a wide margin of discretion, in derogation from the general
prohibition, to declare certain aid compatible with the common market (France v
Commission, cited above, paragraph 15, and SFEI, cited above, paragraph 36).
- 50.
- The possible incompatibility of aid measures with the common market may be
established therefore only after completion of the examination procedure provided
for in Article 93, which it is for the Commission to implement, and cannot be an
automatic consequence of the omission by the Member State concerned to notify
the measure in question.
- 51.
- Furthermore, the Court of First Instance observes that the infringement of such an
obligation is penalized by the direct effect attributed to Article 93(3), in fine (Case
120/73 Lorenz [1973] ECR 1471 and Fédération Nationale du Commerce Extérieur
des Produits Alimentaires, cited above, paragraphs 12 and 14), which enabled the
applicant, if appropriate, to bring proceedings before the national courts. The
Commission may, none the less, for its part, direct the Member State responsible
to suspend payment of the aid until the procedure has been completed (France v
Commission, cited above, paragraphs 19 and 20). The Court of First Instance
emphasizes that in the present case both in the decision initiating the procedure
and in the two subsequent decisions extending it, the Commission directed the
Italian Government to suspend payment of the aid in question and reminded it of
the consequences of not doing so.
- 52.
- In those circumstances the failure by the Italian authorities to notify the aid grantedto CMF and CMF Sud could not render it incompatible with the common market.
The first plea must therefore be dismissed.
The second plea: failure to observe the requirements relating to aid to undertakings in
difficulty
Arguments of the parties
- 53.
- The applicant maintains that the contested decision infringes rules established by
the Commission in its guidelines on aid to undertakings in difficulty (see paragraph
11, above).
- 54.
- In fact, according to the applicant, CMF Sud and CMF received aid on six
occasions, between the establishment of CMF Sud in 1986 and the drawing up of
a restructuring plan approved by the Commission in 1994. In the notices
92/C 122/04 and 92/C 279/11 of 14 May and 28 October 1992 referred to above, the
Commission acknowledged that the aid in question was operating aid, since there
was no restructuring plan and the action proposed by the Italian authorities for
CMF Sud was very vague. It follows, the applicant states, that the aid is unlawful
in character, and the subsequent adoption of a restructuring plan under pressure
from the Commission could not have the effect of validating it. It is therefore
appropriate to apply the case-law laid down by the Court of Justice in Case
C-305/89 Italy v Commission [1991] ECR I-1603.
- 55.
- The total amount of the aid is about ECU 51 million, that is to say the equivalent
of the annual turnover of CMF, and it bears no relation to the benefits anticipated
at Community level. Under those conditions, the only adequate penalty, according
to the applicant, would be the liquidation of CMF, as the Commission required in
the case of CMF Sud. Mere privatization would not permit the Italian State to
recover the amounts granted. On the contrary, it would leave to the acquirer of the
undertaking the benefit of the situation already created and permit it immediately
to become a serious competitor. It is thus necessary to demand reimbursement of
the aid, the only way to bring an end to the distortion of competition which it has
occasioned.
- 56.
- The Commission first recalls the wide powers available to it for assessing the
compatibility of aid with the common market, in particular in cases of aid for
rescue or restructuring, powers confirmed in the case-law, particularly in the
judgments of the Court of Justice in Case 730/79 Philip Morris v Commission [1980]
ECR 2671 and in Case C-225/91 Matra v Commission [1993] ECR I-3203.
- 57.
- It contends that CMF and CMF Sud received three injections of capital and not six
as alleged by the applicant. The fact that the aid was paid in several instalments
does not prevent it from being compatible with the common market. It points out,
moreover, that in its second decision extending the procedure it declared that the
aid had to be considered as a whole. Since the applicant did not challenge this
approach in the observations which it sent to the Commission on this decision, for
it to do so at this stage is inadmissible (Case 102/87 France v Commission [1988]
ECR 4067, paragraph 27). In any event, it is clear from the judgment of the Court
of Justice in Case 323/82 Intermills v Commission [1984] ECR 3809, paragraph 35,
that for aid to rescue an undertaking, accompanied by a restructuring plan, to be
incompatible with the common market, it must be shown to be of such a nature as
to alter trading conditions. However, the applicant has not demonstrated that to be
the case.
- 58.
- In any event, the fact that a restructuring plan acceptable to the Commission was
finalized only in 1994 did not in the present case prevent restructuring measures
from being implemented as early as 1991, in the form of a capital injection, and
continued in 1992, with the voluntary liquidation of CMF Sud. The absence of a
restructuring plan at the time of the capital injection prompted the Commission to
deem that measure to constitute aid, thus justifying the initiation of a procedure
under Article 93(2) of the Treaty. On the other hand, once the restructuring plan
has been approved that time-lag cannot preclude a finding that the aid is
compatible with the common market.
- 59.
- Finally, the applicant's argument that the amount of the aid is not proportionate
to the restructuring effort undertaken is unsupported by evidence. On the contrary,
on this point the contested decision follows the guidelines on aid of this kind.
- 60.
- The interveners submit that, contrary to the applicant's assertions, the guidelines
on aid to undertakings in difficulty indicate that, in principle, only a restructuring
plan may be approved but that the aid may be paid in several instalments.
Moreover, even in the absence of a prior plan, aid may be declared compatible
with the common market if it satisfies certain conditions, including the drawing up
of a plan ensuring the viability of the undertaking within a reasonable period and
the adoption of measures to reduce the negative effects on competition. Finally, the
amount of the aid must be proportionate, in the sense that it must not exceed the
costs of restructuring. According to the Commission, the applicant has adduced no
evidence to cast doubt on the observance of those conditions in this case.
Findings of the Court
- 61.
- As a preliminary matter, the Court of First Instance recalls that the Commission
may lay down for itself guidelines for the exercise of its discretionary powers by way
of documents such as the guidelines in question, provided that they contain
directions on the approach to be followed by that institution and do not depart
from the Treaty rules (Case C-313/90 CIRFS and Others v Commission [1993] ECR
I-1125, paragraphs 34 and 36; and Case T-380/94 AIUFFASS and AKT v
Commission [1996] ECR II-2169, paragraph 57). It is in the light of those rules,
therefore, that the contested decision falls to be reviewed.
- 62.
- The guidelines require restructuring aid to be accompanied by a plan. Point 3.2.2.
makes approval of such a plan subject to three substantive conditions: the plan
must enable the viability of the undertaking to be restored, avoid undue distortion
of competition and ensure that aid is in proportion to the costs and benefits of
restructuring. It is for the Court of First Instance to verify whether those
requirements have been observed in the individual case.
- 63.
- It has been consistently held that Article 92(3) of the Treaty confers on the
Commission a wide discretion to allow aid by way of derogation from the general
prohibition laid down in paragraph (1) of that article, inasmuch as the
determination in such cases of whether State aid is compatible with the common
market raises problems which make it necessary to examine and appraise complex
economic facts and conditions (SFEI, cited above, paragraph 36). Judicial review
must therefore be limited to checking that the rules on procedure and the
statement of reasons have been complied with, that the facts are materially
accurate, and that there has been no manifest error of assessment and no misuse
of powers (Skibsværftsforeningen and Others v Commission, cited above, paragraph
170). It is not for the Court, therefore, to substitute its economic assessment for
that of the Commission (AIUFFASS and AKT v Commission, cited above,
paragraph 56).
- 64.
- With regard, first of all, to restoration of viability, the contested decision gives a
detailed account of several elements of a restructuring plan which seeks to attain
that objective. Moreover, as the Commission had already observed in the course
of the procedure which led to the adoption of the contested act (see in particular
the decision of 22 September 1993, p. 6), the Italian authorities had as early as
1992 taken steps to restructure the undertakings in question, including the voluntary
liquidation of CMF Sud in 1992 and the transfer of its business to CMF.
- 65.
- In fact, the decision clearly shows (see table at page 7) that, following the
restructuring of CMF and the liquidation of CMF Sud, the total installed capacity
of the two undertakings will fall by 50%. As regards the installed capacity of CMF's
main branch of business, taken in isolation, it will go down by 8.5%, the other
branches of business having been shut down. These factors, viewed in the context
of the measures which will be adopted in order to increase productivity, comprising
in particular a reduction in staffing levels, the replacement of obsolete equipment
and subcontracting of finishing, corroborate the Commission's conclusion, which,
moreover, is not contested by the applicant, as to the viability of CMF.
- 66.
- As regards the argument derived by the applicant from the fact that the aid was
paid in instalments, the Court finds, without its being necessary to rule on the
objection of inadmissibility raised by the Commission, that an infringement of the
guidelines cannot be inferred merely from the fact that payment was repeated.
Point 3.2.2.(i) of the guidelines merely states that aid should 'normally only need
to be granted once. It is thus non-mandatory. The contested act therefore satisfies
the first condition laid down in the guidelines.
- 67.
- With regard, next, to the need to avoid undue distortion of competition, the Court
considers that, as provided for in the contested decision, the reduction in installed
capacity constitutes an acceptable counterpart for the distortion of competition
created by the aid received, inasmuch as the reduction imposed will be total
because the installations shut down will be scrapped or sold to non-competing
undertakings (see p. 10 of the contested decision).
- 68.
- With regard, finally, to the requirement that the aid be proportionate to the
benefits anticipated, the Court finds, first of all, that the applicant has not referred
to any evidence in support of its allegation that that requirement has not been met.
The Court notes that among the advantages which, from the point of view of
competition, flow from the contested decision are the reduction in installed capacity
mentioned above, and the privatization of CMF. On that point, the contested
decision (see p. 10) takes note of the undertaking by the Italian State concerning
privatization by means of an unconditional call for tenders which will enable the
market to fix the price of CMF, thus removing any disproportionate aspect of the
aid.
- 69.
- It should also be recalled that the other undertaking in receipt of aid, CMF Sud,
has been placed in liquidation which, as affirmed in the contested decision (p. 9)
and found above by the Court, constitutes an acceptable return by the industry for
the aid received, inasmuch as it allows for the total withdrawal of existing capacity.
- 70.
- It follows from all of the foregoing that, since the conditions laid down in the
guidelines are satisfied, the second plea is unfounded, and that consequently the
action must be dismissed.
Costs
- 71.
- Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be
ordered to pay the costs if they have been applied for in the successful party's
pleadings. Since the applicant has been unsuccessful and the Commission and
interveners asked for an order as to costs against the applicant, it must be ordered
to pay the costs, including the costs of the interveners.
On those grounds,
THE COURT OF FIRST INSTANCE (First Chamber, Extended Composition)
hereby:
1. Dismisses the application;
2. Orders the applicant to pay the costs, including those of the interveners.
SaggioBriët
Kalogeropoulos
Tiili Moura Ramos
|
Delivered in open court in Luxembourg on 5 November 1997.
H. Jung
A. Saggio
Registrar
President
Language of the case: French.