Joined Cases T‑479/11 RENV and T‑157/12 RENV
French Republic and IFP Énergies nouvelles
v
European Commission
Judgment of the Court (Eighth Chamber), 5 October 2020
(State aid – Oil exploration – State aid scheme implemented by France – Implied and unlimited State guarantee conferred on IFPEN by the grant of the status of EPIC – Advantage – Presumption of an advantage – Proportionality)
1. State aid – Meaning – Grant of an advantage to beneficiaries – State guarantee in favour of an undertaking which is not subject to the ordinary compulsory administration and winding-up procedures – Burden of proof falling on the Commission to show that an advantage exists – Assessment in the light of all relevant information – Presumption of an advantage in dealings between the undertaking benefiting from the guarantee and its suppliers and customers – Conditions – Prior verification of the existence of market conditions justifying the hypothesis of an advantage similar to that which exists in dealings between the beneficiary undertaking and banks and financial institutions – Not present
(see paragraphs 74, 75, 82, 83, 87-92, 94-104)
2. State aid – Meaning – Grant of an advantage to beneficiaries – State guarantee in favour of an undertaking which is not subject to the ordinary compulsory administration and winding-up procedures –Existence of the advantage proven by means of a presumption of an improvement in the financial position of that undertaking – Rebuttal of that presumption – Conditions – Proof of the absence of a real economic advantage in the past and in the future
(Art. 107(1), TFEU)
(see paragraphs 77, 124-132, 140-151)
3. State aid – Commission Decision – Assessment of legality by reference to the information available at the time of adoption of the decision
(Art. 107(1), TFEU)
(see paragraphs 132, 133)
4. State aid – Administrative procedure – Obligations of the Commission – Diligent and impartial examination – Account taken of the most complete and reliable information possible – Scope of the obligation
(Arts 107 and 108(2), TFEU)
(see paragraphs 134-143)
5. State aid – Prohibition – Exemptions – Decision declaring the aid compatible with the internal market on certain conditions – Infringement of the principle of proportionality
(Art. 107(1), TFEU)
(see paragraphs 202-207)
Résumé
The Institut Français du Pétrole (French Petroleum Institute), now called IFP Énergies nouvelles (‘IFPEN’), is a French publicly owned establishment entrusted with tasks in research and development, training, information and documentation. Until 2006, IFPEN was a legal person governed by private law operating under the economic and financial supervision of the French Government. In 2006, IFPEN was converted into a legal person governed by public law, more specifically, a publicly owned industrial and commercial establishment (établissement public à caractère industriel et commercial, ‘EPIC’).
In 2011, (1) the European Commission found that the grant of that status had the effect of conferring on IFPEN an unlimited public guarantee in respect of all of its activities. The Commission inferred therefrom that the cover provided by that guarantee for IFPEN’s economic activities (such as technology transfer and contract research) constituted State aid. The Commission took the view that IFPEN derived an economic advantage from the implied and unlimited State guarantee, not only in its dealings with banks and financial institutions, but also in its dealings with suppliers and customers. According to the Commission, that advantage was selective, in so far as IFPEN’s competitors, who were subject to insolvency procedures provided for under ordinary law, did not benefit from a comparable State guarantee. Nevertheless, the Commission concluded that the State aid granted could be regarded as compatible with the internal market if certain conditions were complied with.
The French Republic and IFPEN brought proceedings before the General Court of the European Union seeking the annulment of the contested decision. By the initial judgment of 26 May 2016, (2) the Court upheld the actions in part and annulled the contested decision inasmuch as it classified the guarantee arising from IFPEN’s EPIC status as State aid. In its initial judgment, the General Court held that, in order to prove the existence of an economic advantage in IFPEN’s favour in its dealings with suppliers and customers, the Commission could not rely on the presumption of an advantage conferred on an EPIC by the implied and unlimited State guarantee inherent in its status, as established by the Court of Justice. (3) In addition, the General Court also held that, in IFPEN’s dealings with banks and financial institutions, that presumption of an advantage had been rebutted on the ground that, during the period examined by the contested decision, IFPEN did not derive any real economic advantage in the form of more favourable credit terms. In that regard, the General Court also found that, since the presumption had been rebutted for the period considered in the decision, it could not be relied on again in the future without a substantial change in the circumstances in which it had been rebutted.
In response to an appeal brought by the Commission seeking the annulment of the initial judgment, the Court of Justice held, in the judgment on appeal, (4) that the General Court had misconstrued the scope of the presumption of an economic advantage. First of all, the mere fact that the beneficiary of an implied and unlimited State guarantee had not, in the past, obtained any real economic advantage from its EPIC status was not in itself sufficient to rebut the presumption of an advantage. According to the Court of Justice, that simple presumption could be rebutted only in so far as it was shown that the EPIC had not obtained in the past and, in all plausibility, would not obtain in the future any real economic advantage from that guarantee. Next, the Court of Justice held that the General Court had committed an error of law in finding that the presumption of an advantage was restricted to dealings involving a financing transaction, in particular, dealings between the EPIC and banks and financial institutions. That being so, the Court of Justice stated that the presumption could not be automatically applied to an EPIC’s dealings with its suppliers and customers without it first being determined whether, in the light of the conduct of those players on the market, the advantage that the establishment could derive was similar to that which it derived from its dealings with banks and financial institutions, which the Commission was required to verify.
By its judgment of 5 October 2020, delivered following a referral back from the Court of Justice, the General Court partially annuls the contested decision in so far as it failed to demonstrate any advantage that IFPEN was able to derive from the State guarantee in its dealings with suppliers and customers, meaning that the obligations imposed to ensure their compatibility were deemed disproportionate.
The General Court recalls that, when seeking to apply the presumption of an advantage in the dealings between an EPIC and its suppliers and customers, in accordance with the judgment on appeal, the Commission is required to verify whether the conduct of the suppliers and customers on the market concerned justifies the hypothesis that there is an advantage similar to that found in the EPIC’s dealings with banks and financial institutions. The General Court finds that the Commission had not carried out that prior verification. First, with regard to IFPEN’s dealings with its suppliers, the Commission acknowledged that the contested decision did not contain any evidence in support of the hypothesis that there was an advantage similar to that found in IFPEN’s dealings with banks and financial institutions. Secondly, with regard to IFPEN’s dealings with its customers, the General Court notes that the Commission had used hypothetical reasoning and had not carried out a prior examination of the economic and legal context which would allow the hypothesis of an advantage in IFPEN’s dealings with its customers, similar to that encountered in dealings between that EPIC and the banks and financial institutions, to be regarded as plausible. Accordingly, the General Court finds that the Commission had not discharged the obligation to provide proof of the existence of State aid in relation to IFPEN’s dealings with its suppliers and customers. In the light of that finding, the obligation imposed on IFPEN to provide the Commission every year with information about the value of goods obtained from its suppliers and economic activities carried out with its customers, in order to ensure the compatibility of aid the existence of which had not been demonstrated, is regarded as neither appropriate nor necessary for the aims pursued by State aid legislation. The General Court therefore partially upholds the plea alleging an infringement of the principle of proportionality.
By contrast, the General Court finds that the Commission was entitled to consider that the guarantee enjoyed by IFPEN by virtue of its status as an EPIC gave it an economic advantage in its dealings with banks and financial institutions. In that regard the General Court finds that, although the presumption of an advantage had been rebutted for the past, France and IFPEN had not succeeded in rebutting that presumption for the future as required by the judgment on appeal, due to the inadmissibility of the arguments raised. That was because those arguments related to information which should have been brought to the attention of the Commission during the formal investigation procedure and information which post-dated the adoption of the contested decision.