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Action brought on 4 May 2009 - Budapesti Erőmű v Commission

(Case T-182/09)

Language of the case: English

Parties

Applicant: Budapesti Erőmű Rt. (Budapest, Republic of Hungary) (represented by: M. Powell, Solicitor, C. Arhold, K. Struckmann and A. Hegyi, lawyers)

Defendant: Commission of the European Communities

Form of order sought

to annul the decision of the European Commission of 4 June 2008 in State Aid Case C 41/05, as far as the PPAs concluded by the applicant are concerned;

to award the applicant the costs of the present action;

to take such other or further action as justice may require.

Pleas in law and main arguments

The applicant seeks the annulment of Commission Decision C (2008) 2223 final, of 4 June 2008, declaring incompatible with the common market the aid granted by the Hungarian authorities to certain electricity generating producers in the form of long-term power purchase agreements ("PPAs") of electricity concluded between the transmission operator Magyar Villamos Müvek Rt. ("MVM"), owned by the Hungarian State, and these producers at a date prior to accession of the Republic of Hungary to the European Union [State aid C 41/2005 (ex NN 49/2005) - Hungarian "Stranded Costs"]. The applicant is identified in the contested decision as a beneficiary of the alleged State aid and the decision orders Hungary to recover the aid, including interest, from the applicant.

On the basis of its first plea, the applicant submits that the Commission has erroneously taken the view that the relevant period of assessment was the time of Hungary's accession to the EU. Instead, the Commission should have assessed whether the applicant's PPAs contain any State aid in light of the factual and legal circumstances at the time when they were concluded. The applicant further claims that the Commission infringed Article 87(1) EC and made a manifest error of assessment by concluding that the PPAs grant an economic advantage. In addition, the applicant contends that the Commission misapplied the Treaty of accession of Hungary and Article 1(b)(v) of Council Regulation No 659/1999¹("The Procedural Regulation").

Moreover, the applicant claims that, contrary to the Commission's view, there was no distortion of competition and that Annex IV to the accession Treaty does not list conclusively the aid measures that can be deemed existing aid, but stipulates only an exception to the principle that all pre-accession aid measures are per se existing aid. In addition, the applicant contends that Articles 87(3) EC with respect to possible exemption as State aid for cogeneration, 86(2) EC, 88(1) and (3), as well as Article 14 of the Procedural Regulation, with respect to the recovery of existing individual aid, have been infringed.

On the basis of its second plea, the applicant claims that the Commission lacked competence to assess the PPAs in question as they were concluded before Hungary's accession to the EU.

On the basis of its third plea, the applicant claims that the Commission infringed essential procedural requirements such as the right to be heard and the obligation to undertake a diligent and impartial investigation. Moreover, the applicant contends that the Commission has infringed essential procedural requirements by carrying out a common assessment of the PPAs without assessing the essential terms of each PPA individually. According to the applicant, in order to be able to assess whether the PPAs contain State Aid, the Commission must assess whether they confer an economic advantage on generators and in order to do so, an individual assessment of each PPA is absolutely essential. Further, it is submitted that the approach carried out by the Commission was inadequate for a proper assessment of whether a significant number of individual measures constitute State aid. If the PPAs could be considered as existing aid schemes, the Commission would have had to follow the appropriate measures procedure as laid down in Article 88(1) EC and Article 18 of the Procedural Regulation.

On the basis of its fourth plea, the applicant submits that the contested decision infringes the obligation to state reasons, enshrined in Article 253 EC.

Finally, on the basis of its fifth plea, the applicant claims that the Commission misused its powers under State aid rules by adopting a negative decision under the procedure laid down in Article 88(2) EC, calling for the termination of the PPAs without even establishing their economic advantage.

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¹ - Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty, OJ 1999 L 83, p. 1