JUDGMENT OF THE COURT (Sixth Chamber)

17 June 1999 (1)

(State aid — Definition — Increased reductions in social security contributions incertain industrial sectors — 'Maribel bis/ter‘ scheme)

In Case C-75/97,

Kingdom of Belgium represented by Gerwin van Gerven and Koen Coppenholle,of the Brussels Bar, with an address for service in Luxembourg at the Chambersof Freddy Brausch, 11 Rue Goethe,

applicant,

v

Commission of the European Communities represented by Gérard Rozet, LegalAdviser, and Wouter Wils, of its Legal Service, acting as Agents, with an addressfor service in Luxembourg at the Chambers of Carlos Gómez de la Cruz, of thesame service, Wagner Centre, Kirchberg,

defendant,

APPLICATION for annulment of Commission Decision 97/239/EC of 4 December1996 concerning aid granted by Belgium under the Maribel bis/ter scheme (OJ 1997L 95, p. 25),

THE COURT (Sixth Chamber),

composed of: P.J.G. Kapteyn, President of the Chamber, G. Hirsch (Rapporteur),G.F. Mancini, H. Ragnemalm and R. Schintgen, Judges,

Advocate General: A. La Pergola,

Registrar: D. Louterman-Hubeau, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 17 September 1998,

after hearing the Opinion of the Advocate General at the sitting on 12 November1998,

gives the following

Judgment

1.

    By application lodged at the Court Registry on 19 February 1997, the Kingdom ofBelgium sought a declaration under the first paragraph of Article 173 of the ECTreaty (now, after amendment, the first paragraph of Article 230 EC) thatCommission Decision 97/239/EC of 4 December 1996 concerning aid granted byBelgium under the Maribel bis/ter scheme (OJ 1997 L 95, p. 25, hereinafter 'thecontested decision‘) is void.

The measures taken under the Maribel bis/ter scheme

2.

    In Belgium, a Law of 29 June 1981, laying down the general principles of socialsecurity for wage earners (Staatsblad of 2 July 1981, p. 8575), introduced the so-called 'Maribel‘ scheme. Under Article 35 of that Law, employers employingmanual workers are granted, for each one of them, a reduction in social securitycontributions.

3.

    Under the Royal Decree of 12 February 1993 (Staatsblad of 9 March 1993,p. 4995), employers were granted, as from 1 January 1993, in respect of manualworkers, upon certain conditions, a reduction in contributions, per quarter and perworker, of BEF 2 825 for a maximum of five manual workers and BEF 1 875 forother manual workers if the employer employs less than 20 workers, and BEF1 875 per manual worker if the employer employs 20 workers or more.

4.

    The Royal Decree of 14 June 1993 (Staatsblad of 7 July 1993, p. 16069), whichintroduced the 'Maribel bis‘ scheme, introduced a new amendment as from 1 July1993. The reduction per quarter and per worker was increased to BEF 3 000 fora maximum number of five manual workers in undertakings employing less than 20workers. In the other cases, the reduction of BEF 1 875 per quarter and perworker was maintained.

5.

    If an employer carries on his activities primarily in one of the sectors most exposedto internal competition, the Royal Decree of 14 June 1993 increased the reductionin contributions, per quarter and per worker, from, respectively, BEF 3 000 toBEF 7 200 and from BEF 1 875 to BEF 6 250 (hereinafter 'the increasedreductions‘).

6.

    The Belgian legislature defined the economic sectors concerned by reference todivisions 13 to 22 and 24 to 36 of the statistical classification pursuant to CouncilRegulation (EEC) No 3037/90 of 9 October 1990 on the statistical classification ofeconomic activities in the European Community (OJ 1990 L 293, p. 1).Consequently, the undertakings receiving increased reductions are undertakingsoperating in sectors such as the extraction of non-energy materials, the chemicalindustry, the metal-processing industry, the precision instrument industry, theoptical instrument industry and other processing industries.

7.

    The Royal Decree of 22 February 1994 (Staatsblad of 18 March 1994, p. 6724),which introduced the 'Maribel ter‘ scheme, increased, with effect from 1 January1994, for undertakings carrying on their activity in one of the sectors most exposedto international competition, the amount of increased reductions per quarter andper worker to, respectively, BEF 9 300 for a maximum of five manual workers andto BEF 8 437 for other manual workers, in undertakings with less than 20employees, and to BEF 8 437 for manual workers in undertakings employing 20workers or more.

8.

    With effect from 1 January 1994, this latter Royal Decree also extended theMaribel ter scheme to the international transport sector covered by subdivision60.242 of the national classification, which derives from the statistical classificationof Regulation No 3037/90 and, as from 1 April 1994, to certain other sectorscovering air and sea transport and to the transport-related activities coming undersubdivisions 61.100, 61.200, 62.100, 62.200, 63.111 and 63.220 of the sameclassification.

9.

    The scope of the Maribel ter scheme was extended still further, with effect from 1July 1994, by the Royal Decree of 21 June 1994 (Staatsblad of 28 June 1994,p. 17355), to horticulture, forestry and the exploitation of forests.

10.

    However, the increased reductions granted under the Maribel bis/ter scheme applyonly to manual workers who work at least 51% of the maximum number of working

hours or working days stipulated in the collective labour agreement by which theyare covered.

The contested decision

11.

    By letter of 17 August 1993, the Commission requested from the BelgianGovernment information on the Maribel bis scheme. That request was followedby an exchange of correspondence at the end of which the Commission, on 9 July1996, informed the Kingdom of Belgium of its decision to commence the procedureprovided for by Article 88(2) EC (ex Article 93(2)) (OJ 1996 C 227, p. 8,hereinafter 'the Decision of 9 July 1996‘). At the end of that procedure, theCommission adopted the contested decision.

12.

    Article 1 of that decision provides: 'The increased reduction in social securitycontributions in respect of manual workers granted under the Maribel bis/terscheme to employers who carry on their principal activity in one of the sectors mostexposed to international competition constitutes illegal State aid because it was notnotified to the Commission in advance in accordance with Article [88(3) EC]. It isfurthermore incompatible with the common market within the meaning of Article92(1) of the EC Treaty [now, after amendment, Article 87(1) EC] and cannotqualify for any of the derogations laid down in Article 92(2) and (3).‘

13.

    Article 2 requires the Kingdom of Belgium to 'take appropriate measures toterminate forthwith the granting of the increased reductions in social securitycontributions referred to in Article 1 and [to] recover the illegal aid from therecipient undertakings. The aid shall be repaid in accordance with the proceduresand provisions of Belgian law, with interest charged, from the date the aid wasgranted until the date it is actually repaid, at a rate equal to the percentage valueon that date of the reference rate used for the calculation of the net grantequivalent of regional aid in Belgium.‘

14.

    As regards the quarterly reduction in the amount of contributions per worker, theCommission states, in section I of the grounds of its decision, that the aid grantedto undertakings carrying on their principal activity in one of the sectors mostexposed to international competition, constituted by the difference between thebasic reduction and the increased reduction, is BEF 26 248 per worker per year. As regards undertakings employing less than 20 workers, the quarterly advantagerelating to each of the first five workers is regarded by the Commission as fallingin the category of de minimis aid, which is not therefore caught by Article 92 of theTreaty.

The pleas in law advanced by the Kingdom of Belgium

15.

    The Belgian Government puts forward five pleas in support of its application forannulment. By the first three, it challenges the validity of the contested decisionon the ground that, first, the Maribel bis/ter scheme is a general measure ofeconomic policy, and not an aid measure, second, it has no effect on intra-Community trade and, third, in the event that it is considered to be State aid withinthe meaning of Article 92(1) of the Treaty, it must qualify for the derogationprovided for in Article 92(3)(c) of the Treaty and must be declared compatible withthe common market. By its last two pleas, the Belgian Government denies that itis under any obligation to recover the amounts of social security contributions savedby way of aid under the Maribel bis/ter scheme on the ground that recovery wouldbe disproportionate and, moreover, would be impossible to carry out.

The nature of the Maribel bis/ter scheme

16.

    By its first plea, the Belgian Government contests the validity of the contesteddecision on the ground that the increased reductions granted under the Maribelbis/ter scheme constitute general measures of economic policy excluded from thescope of Article 92(1) of the Treaty and are not aid within the meaning of thatprovision. In advancing this plea, the Belgian Government examines in particularthe general criteria for distinguishing State aid measures from general measures ofeconomic policy, the possible justification for the scheme in question and, finally,the budgetary constraints which at present prevent its scope from being widened.

17.

    Essentially basing its arguments on public positions taken by the Commission, inparticular in its XXIVth Report on Competition Policy of 1994 and Communication97/C 1/05 on the monitoring of State aid and reduction of labour costs (OJ 1997C 1, p. 10, hereinafter 'the 1997 Communication‘), the Belgian Governmentcontends that, although there are no clear indications for distinguishing between thetwo concepts in the case-law of the Court of Justice, Article 92 of the Treaty doesnot apply to general measures applicable to all undertakings of a Member Statewhere those measures meet objective, non-discriminatory and non-discretionaryrequirements. According to the Belgian Government, by 'all undertakings‘ mustbe understood those which are in an objectively similar position. According to the1997 Communication, measures in favour of certain categories of workers do notconstitute, as such, State aid when they apply automatically and withoutdiscrimination.

18.

    According to the Commission, the question to be examined, starting with the bodyof ordinary law applicable to all undertakings, is whether the exceptions to thatbody of law which favour a relatively large group of undertakings fall into theinternal logic of the general system. In the present case, justification for themeasures to reduce the burden of social security costs adopted under the Maribelbis/ter scheme should be sought in the internal logic of the general social welfaresystem existing in Belgium and not in the specific purpose of the scheme.

19.

    The Belgian Government contends that the Maribel bis/ter scheme is a generalmeasure which reflects a choice of economic policy, consisting in a decision topromote the creation of jobs in industrial sectors employing mostly manual workersearning low wages owing to their low qualifications. By reason of this aim, theincreased reductions are restricted to undertakings in the processing industry andto certain international transport sectors, which are the economic areas mostaffected by redundancies and restructuring. The Belgian Government points outthat, even in these areas, only manual workers working for at least 51% of themaximum number of working hours or days allowed are entitled to the increasedreductions.

20.

    The Belgian Government recognises that the reference to the undertakings mostexposed to international competition, used to define the scope of the Maribel bis/terscheme, is unfortunate but points out that this is not one of the relevant factorstaken into account in restricting the scheme to certain sectors.

21.

    As regards the sectors excluded from the Maribel bis/ter scheme, the BelgianGovernment points out that these are the tertiary sector and the building sectorand that their exclusion is based on objective considerations, namely thatemployment of manual labour is growing strongly in the tertiary sector and thatmanual workers in the building industry are subject to special social security andtax systems.

22.

    Finally, the Belgian Government states that the Maribel scheme forms part of apolicy of generalised reductions of social security costs. It explains that thebudgetary constraints under which it is operating have obliged it to actprogressively, so that it has still not been possible to extend the Maribel bis/terscheme, which is in its first stages, to all sectors of economic activity. Such atemporary restriction, based on budgetary considerations, does not deprive it of itscharacter of a general measure of economic policy when it is already sufficientlygeneralised. As it is, the increased reductions granted under the Maribel bis/terscheme cover such a large number of undertakings that they must be regarded asbeing sufficiently general to escape characterisation as State aid and Article 92(1)of the EC Treaty cannot therefore be applied to them.

The selective nature of the increased reductions

23.

    First of all, it must be borne in mind that Article 92(1) of the Treaty provides thatany aid granted by a Member State, or through State resources in any formwhatsoever, which distorts or threatens to distort competition by favouring certainundertakings or the production of certain goods is incompatible with the commonmarket. In particular, measures which, in various forms, mitigate the chargeswhich are normally included in the budget of an undertaking and which, withouttherefore being subsidies in the strict meaning of the word, are similar in character

and have the same effect are considered to constitute aid (Case C-200/97 Ecotrade[1998] ECR I-0000, paragraph 34).

24.

    It is not contested by the Belgian Government that, as the Commission points outin section IV of the grounds of the contested decision, by according to certainundertakings the advantage of increased reductions in social security contributions,the system set up by the Maribel bis/ter scheme relieves them of some of their costsand confers on them financial advantages which improve their competitive position.

25.

    The social character of such State measures is not sufficient to exclude themoutright from classification as aid for the purposes of Article 92 of the Treaty (CaseC-241/94 France v Commission [1996] ECR I-4551, paragraph 21, and CaseC-342/96 Spain v Commission [1999] ECR I-0000, paragraph 23). Article 92(1) ofthe Treaty does not distinguish between measures of State intervention byreference to their causes or their aims but defines them in relation to their effects(Case C-56/93 Belgium v Commission [1996] ECR I-723, paragraph 79, and CaseC-241/94 France v Commission, cited above, paragraph 20).

26.

    According to established case-law, it is necessary to determine whether theincreased reductions under the Maribel bis/ter scheme entail advantages accruingexclusively to certain undertakings or certain sectors and do not therefore fulfil thecondition of specificity which constitutes one of the characteristics of the conceptof State aid namely the selective character of the measures in question (see, to thiseffect, the judgment in France v Commission, cited above, paragraph 24, andEcotrade, cited above, paragraph 40).

27.

    As the Belgian Government rightly pointed out at the hearing, it cannot becontended that the measures in question constitute State aid on the ground that thecompetent national authorities have a discretionary power in the application of theincreased reduction of social charges (see France v Commission, cited above,paragraph 23). In this instance, the conditions for the grant of the increasedreductions in question are laid down by the Belgian legislature, in theaforementioned royal decrees, and leave the competent authorities no latitude, inparticular in the choice of recipient undertakings or sectors.

28.

    Nor can it be contested, as both the Belgian Government and the Commissionaccept, that the restriction of the measures in question to manual workers and onlyto those manual workers whose working time exceeds a certain number of hoursis not sufficient to support the conclusion that aid within the meaning of Article 92of the Treaty exists.

29.

    However, as the Belgian Government acknowledges, the increased reductions aregranted only to undertakings belonging to certain sectors of the processing industrydefined in Article 1 of the Royal Decree of 14 June 1993 by reference to thestatistical classification laid down in Regulation No 3037/90 and to the sectors

defined in Articles 2 and 3 of the Royal Decree of 22 February 1994 and Article1 of the Royal Decree of 21 June 1994.

30.

    The Belgian Government accepts that undertakings belonging to other sectorsmarked by the employment of manual labour are thus excluded from the benefitof the increased reductions. These include undertakings belonging to the sectorsof the processing industry not referred to in the royal decrees and undertakings inthe tertiary sector and the building sector.

31.

    Having regard to the exclusion of those sectors, which, like those covered by theMaribel bis/ter scheme, employ manual workers, the Commission rightly found, insection V of the grounds of the contested decision, that the limitation of theincreased reductions to certain sectors rendered those reduction measures selective,so that they fulfilled the condition of specificity.

The derogating character of the increased reductions

32.

    Neither the high number of benefiting undertakings nor the diversity andimportance of the industrial sectors to which those undertakings belong warrant theconclusion that the Maribel bis/ter scheme constitutes a general measure ofeconomic policy, as the Belgian Government claims.

33.

    According to the case-law of the Court, aid in the form of an aid programme mayconcern a whole economic sector and still be covered by Article 92(1) of the Treaty(Case 248/84 Germany v Commission [1987] ECR 4013, paragraph 18) and ameasure designed to give the undertakings of a particular industrial sector a partialreduction of the financial charges arising from the normal application of thegeneral social security system, without there being any justification for thisexemption on the basis of the nature or general scheme of this system, must beregarded as aid (Case 173/73 Italy v Commission [1974] ECR 709, paragraph 33).

34.

    Consequently, a measure aimed at promoting the creation of jobs by reducing, forcertain undertakings, the amount of social security contributions which they mustpay must be regarded as State aid when it is not justified by the nature or generalscheme of the social welfare system.

35.

    In the present case, the general scheme of social protection laid down by the Lawof 29 June 1981 has as its aim, according to Article 3, 'to replace or supplementthe occupational income of the worker in order to protect him from theconsequences of certain employment risks, certain family situations and lifeconditions and social risks‘. According to Article 22 of that Law, social securitycontributions, expressing solidarity between workers and employers, are amongstthe means of funding social security and are therefore intended to contribute to theattainment of the objectives pursued.

36.

    It is true that an increased reduction of social security contributions, concerningonly a limited category of employers owing to their belonging to certain industrialsectors, thus relieving them of certain social security charges, does not at first sightappear to derogate from the nature and scheme of the general system of socialprotection.

37.

    Moreover, as Community law stands at present, the Member States retain theirpowers to organise their social security systems (Case C-238/94 García and Others[1996] ECR I-1673, paragraph 15). They may therefore pursue objectives ofemployment policy, such as those relied on by the Kingdom of Belgium, amongstwhich are, in particular, the maintenance of a high level of employment amongstmanual workers and the maintenance of an industrial sector in order to balance theBelgian economy. As regards social welfare costs, the Member States have evenbeen urged by the Commission to reduce labour costs, as appears in particularfrom point 1 of its 1997 Communication, and from the 'Guidelines on aid toemployment‘ published in 1995 by the Commission (OJ 1995 C 334, p. 4,hereinafter 'the Guidelines‘).

38.

    However, it must be emphasised that the increased reductions introduced by theBelgian authorities in order to attain that objective have the sole direct effect ofaccording an economic advantage to the recipient undertakings alone, relievingthem from part of the social costs which they would normally have to bear. Thisis even more true for the horticulture and forestry sectors in relation to which theMaribel bis/ter scheme can under no circumstances be justified by the objectives ofemployment policy, as the Belgian Government has itself admitted.

39.

    So, the Maribel bis/ter scheme, which pursues an employment policy by meansaffording a direct advantage only in relation to the competitive situation of theundertakings concerned, belonging to certain sectors of economic activity, is notjustified by the nature or scheme of the social security system in force in Belgium.

Budgetary restrictions

40.

    The explanations provided by the Belgian Government, according to which theMaribel bis/ter scheme is a general measure of economic policy whose plannedextension to all sectors of economic activity can only be done progressively forreasons related to budgetary restrictions, cannot be accepted.

41.

    Even when a Member State states that it intends ultimately to extend to its entireeconomy measures initially restricted to certain sectors of activity and therebygeneralise them, such a declared intention cannot be taken into account foravoiding application of Article 92(1) of the Treaty since, according to the case-law

of the Court of Justice referred to in paragraph 25 above, such measures must beassessed solely in relation to their effects.

42.

    The opposite approach — assessing the character of a measure liable to constituteunlawful State aid according to the intention of the Member State to generalise themeasure — would deprive Community law of its effectiveness in the area of Stateaid. The Member State concerned would then be able, in such a case, to escapeapplication of the Community rules simply by declaring its intention to generalisethe contested measure in the future.

43.

    The same applies where the Member State concerned can produce evidence of afirst stage towards generalisation of the measure under consideration. Consequently, the extension of the Maribel bis/ter scheme to undertakings in thehorticulture and forestry sectors cannot alter the assessment in relation to thisargument concerning the intention of the Belgian Government.

44.

    It follows from all those considerations that the Belgian Government's contentionthat the Commission was wrong to find that the Maribel bis/ter scheme constitutesaid within the meaning of Article 92 of the Treaty cannot be upheld. The first pleaof the Belgian Government must therefore be dismissed.

The effect of the Maribel bis/ter scheme on trade between Member States

45.

    By its second plea, the Belgian Government contends that, in the event that theMaribel bis/ter scheme is held to be aid within the meaning of Article 92 of theTreaty, it does not affect intra-Community trade.

46.

    It also contends that the contested decision is not sufficiently reasoned, in particularin that it does not explain the impact of the measures in question on trade betweenthe Member States and that it therefore infringes the obligation to state reasons,laid down in Article 253 EC (ex Article 190).

47.

    As regards the effects of the Maribel bis/ter scheme on intra-Community trade, itmust be recalled that, according to the case-law of the Court, when State aidstrengthens the position of an undertaking compared with other undertakingscompeting in intra-Community trade, the latter must be regarded as affected by theaid, even if the beneficiary undertaking is itself not involved in exporting. Wherea Member State grants aid to an undertaking, domestic production may for thatreason be maintained or increased, with the result that undertakings established inother Member States have less chance of exporting their products to the marketin that Member State (Joined Cases C-278/92 to C-280/92 Spain v Commission[1994] ECR I-4103, paragraph 40).

48.

    In the case of an aid programme, the Commission may confine its examination tothe characteristics of the programme in question in order to determine whether it

gives an appreciable advantage to the recipients in relation to their competitors andis likely to benefit essentially undertakings engaged in trade between MemberStates (Germany v Commission, cited above, paragraph 18). Moreover, in the caseof unnotified aid, it is not necessary for the reasoning on which the Commissiondecision is based to contain an up-to-date assessment of the effect of the aid oncompetition and on trade between Member States (Case 301/87 France vCommission [1990] ECR I-307, paragraph 33).

49.

    According to that case-law, and contrary to what the Belgian Government contends,it is not necessary in this particular instance for the undertakings benefiting fromthe Maribel bis/ter scheme to be engaged in exporting. They may even operateonly at local level.

50.

    According to the actual wording of Article 1 of the Royal Decree of 14 June 1993referred to in section V of the grounds of the contested decision, an employerqualifies for the increased reduction if it 'carries on its principal activity in one ofthe sectors most exposed to international competition‘. In the previous section, thecontested decision explains that the 'primary purpose [of the increased reductions]is to reduce the costs of undertakings which are either exporters or facecompetition from imports into Belgium of goods produced and services providedby foreign undertakings, including undertakings from other Member States‘. Thisis borne out by a 'statement on the overall plan for employment‘ of the BelgianGovernment which, according to the explanations given in the same section, wascommunicated to the Commission on 27 December 1993 and in which the BelgianGovernment pointed out, in particular, the contraction in exports as a justificationfor granting greater reductions in social security contributions. The BelgianGovernment has not contested the truth of that statement.

51.

    Thus, intra-Community trade is liable to be affected by the scheme in question,since, as sectoral aid, it improves the competitive position of the undertakingsconcerned, both on the Belgian market and on the export market, in relation toundertakings established in other Member States by relieving them of part of theirsocial costs. Consequently, it must be held that the Maribel bis/ter scheme is liableto affect trade between Member States and to distort or to threaten to distortcompetition.

52.

    Moreover, according to the case-law of the Court referred to in paragraphs 47 and48 above, the Commission cannot be criticised, in these circumstances, for notproviding sufficient reasoning to satisfy the requirements of Article 253 EC.

53.

    Having regard to the foregoing considerations, the Belgian Government's secondplea, to the effect that the Maribel bis/ter scheme has no effect on trade betweenMember States and that the obligation to state reasons was infringed, cannot beupheld.

    

Compatibility of the Maribel bis/ter scheme with the common market

54.

    By its third plea, the Belgian Government contends that, if the Maribel bis/terscheme were to be considered to be aid affecting trade between Member States,it must be declared compatible with the common market pursuant to Article92(3)(c) of the Treaty. It argues in particular that the Commission did not accept,either in the contested decision or in the procedure before the Court, that thescheme was in the nature of aid for the creation of jobs.

55.

    According to established case-law, in the application of Article 92(3) of the Treatythe Commission enjoys a wide discretion, the exercise of which involves assessmentsof an economic and social nature which must be made within a Community context(Case C-303/88 Italy v Commission [1991] ECR I-1433, paragraph 34).

56.

    As regards the exercise of its discretion, the Commission states, in particular inpoint 13 of the Guidelines and in point 1 of its 1997 Communication, that it hastraditionally adopted a favourable attitude towards aid which is intended topromote the creation of jobs.

57.

    However, as appears from section IV of the grounds of the contested decision, inthe present case the Commission refused to apply the derogation provided for inArticle 92(3)(c) of the Treaty essentially on the ground that the increasedreductions are granted without any direct social or economic compensatorycontribution on the part of the recipient undertakings and are not therefore linkedto either the creation of jobs in small and medium-sized enterprises or to the hiringof certain groups of workers experiencing particular difficulties entering or re-entering the labour market. Consequently, the aid system introduced by theMaribel bis/ter scheme does not in any way guarantee attainment of the objectiveof creating jobs.

58.

    In those circumstances, the Belgian Government has adduced no arguments orevidence to support the conclusion that the Commission exceeded the bounds ofits discretion in holding that the Maribel bis/ter scheme did not meet the conditionsfor the derogation provided for in Article 92(3)(c) of the Treaty to be applied.

59.

    Since the refusal to apply Article 92(3)(c) of the Treaty was not vitiated by anymanifest error of assessment, the Belgian Government's third plea must also bedismissed.

The obligation to recover the aid is disproportionate

60.

    By its fourth plea, the Belgian Government contests the requirement to recover aidgranted in the form of an increased reduction in social security contributions on the

ground that such recovery is disproportionate. In support of its plea, it advancesthree arguments.

61.

    First, the Belgian Government, which accepts that the Commission has a discretionwhether or not to require recovery of unlawful aid, considers this measure to be asanction which is excessively heavy in relation to the gravity of the infringement,having regard to the uncertainty which, in its view, surrounds the concept of generalmeasures and their definition in relation to aid.

62.

    Second, it considers that, having regard to the obligation of cooperation laid downin Article 10 EC (ex Article 5), the Commission was under an obligation to limitthe damage flowing from the finding that the Maribel bis/ter scheme was unlawfuland for this reason should have resorted to less coercive means. In its view, itshould, in particular, have directed the Belgian Government to suspend the aid,which had not been notified, while it examined its compatibility with the rules ofthe Treaty on State aid.

63.

    Finally, the Belgian Government criticises the Commission for not providing preciseinformation as to its intention whether or not to require recovery of amountsgranted under the Maribel bis/ter scheme. By not being clear on this matter duringthe examination stage, the Commission acted in breach of the rights of the defenceand the principle of legal certainty.

The Commission's power to require recovery

64.

    It must be borne in mind first of all that the removal of unlawful State aid bymeans of recovery is the logical consequence of a finding that it is unlawful (CaseC-142/87 Belgium v Commission [1990] ECR I-959, paragraph 66) and that the aimof obliging the State concerned to abolish aid found by the Commission to beincompatible with the common market is to restore the previous situation (CaseC-350/93 Commission v Italy [1995] ECR I-699, paragraph 21). Furthermore, theBelgian Government has recognised that this is the function of repayment ofamounts granted by way of unlawful aid.

65.

    By repaying the aid, the recipient forfeits the advantage which it had enjoyed overits competitors on the market, and the situation prior to payment of the aid isrestored (Case C-350/93 Commission v Italy, cited above, paragraph 22). Sincerepayment of the aid is meant only to restore the prior legal situation, it cannot in principle be regarded as a sanction.

66.

    It also follows from that function of repayment of aid that, as a general rule, savein exceptional circumstances, the Commission will not exceed the bounds of itsdiscretion, recognised by the case-law of the Court (Case 310/85 Deufil vCommission [1987] ECR 901, paragraph 24), if it asks the Member State to recover

the sums granted by way of unlawful aid since it is only restoring the previoussituation.

67.

    Although the Belgian Government refers to two particular cases in which theCommission found that it was unable to require repayment, there is nothing in thepresent case to indicate the existence of exceptional circumstances justifying thesame course. Moreover, the Belgian Government itself makes no submissions insupport of this course, but confines itself to criticising the recovery demand asdisproportionate.

The disproportion between the breach of obligations and the requirement to recover theaid

68.

    As regards the contention that the requirement to recover the aid isdisproportionate in relation to the breach of obligations of which the Kingdom ofBelgium is accused, it must be borne in mind that, according to the case-law of theCourt, the recovery of State aid unlawfully granted, for the purpose of restoring thesituation existing previously, cannot in principle be regarded as disproportionate tothe objectives of the provisions of the Treaty on State aid (Case C-142/87 Belgiumv Commission, cited above, paragraph 66, and Joined Cases C-278/92 to C-280/92Spain v Commission, cited above, paragraph 75).

69.

    The uncertainty, which, according to the Belgian Government, surrounds theconcept of general measures and consequently the scope of application of theCommunity rules on State aid cannot alter this assessment and render the recoverydemand inappropriate.

70.

    The Belgian Government has itself disclosed that the Commission, by letter of 17August 1993, had asked for information concerning the Maribel bis scheme shortlyafter its entry into force. It is therefore clear that it could be under nomisapprehension as to the Commission's intention to investigate whether or not thescheme constituted unlawful aid. Moreover, the letter which the Belgian Ministerfor Social Affairs sent to Belgium's permanent representative to the Communitieson 15 September 1993 following the Commission's request refers to 'aid forexporting undertakings‘.

71.

    Consequently, any uncertainty as to the concept of general measures could notprevent the Belgian Government from being aware, right from the beginning of theinvestigation, that the Maribel bis scheme might constitute State aid within themeaning of Article 92 of the Treaty. Consequently, given the case-law of the Courtwhich, in Deufil v Commission, cited above, had already recognised that theCommission had the power to direct national authorities to order repayment ofsums paid, and having regard to the practice developed by the Commissionfollowing that judgment, the Belgian Government could not have been unaware of

the possibility that the Commission might order it to recover the sums grantedunder the Maribel bis/ter scheme.

72.

    As regards the Commission's practice, it must have been known, and it cannot bedenied, that, before the Maribel bis/ter scheme was introduced, the Commission wasaccustomed to order recovery when it found that aid was incompatible with therules of the Treaty on State aid (see, in this regard, Case 102/87 France vCommission [1988] ECR 4067, paragraph 9; Case C-301/87 France v Commission,cited above, paragraph 6; Case C-142/87 Belgium v Commission, cited above,paragraph 8; Case C-303/88 Italy v Commission, cited above, paragraph 2; and CaseC-183/91 Commission v Greece [1993] ECR I-3131, paragraph 3).

Suspension of the increased reductions during the examination stage

73.

    As regards the Belgian Government's second argument concerning the breach bythe Commission of an alleged duty to employ a less coercive measure, it must berecalled first of all that, according to the case-law of the Court, when theCommission finds that aid has been introduced without being notified, it has thepower, after giving the Member State in question the opportunity to submit itscomments on the matter, to issue an interim decision requiring it to suspendimmediately the payment of the aid pending the outcome of the examination of theaid (Case C-301/87 France v Commission, cited above, paragraph 19, and CaseC-303/88 Italy v Commission, cited above, paragraph 46).

74.

    However, that case-law does not mean that the Commission is obliged to requireautomatically the Member State concerned to suspend payment of aid which hasnot been notified in accordance with Article 88(3) EC (Case T-49/93 SIDE vCommission [1995] ECR II-2501, paragraph 83). The opposite outcome wouldrender nugatory the legal obligation imposed on the Member State by Article 88(3)EC not to implement planned aid before the Commission's final decision and wouldhave the consequence of reversing the roles of the Member States and theCommission.

75.

    In any event, in the present case a direction to suspend the aid would not have hadthe same effect as an obligation to recover it since part of the increased reductionshad already been implemented at the time when the Commission first requestedinformation, whether this was on 17 August 1993 as contended by the BelgianGovernment or on 4 February 1994, the date stated by the Commission in thedecision of 9 July 1996 and in the contested decision.

76.

    Moreover, before directing the Belgian Government to suspend the Maribel bis/terscheme, the Commission would have been obliged, under the case-law of the Court,to give the Kingdom of Belgium an opportunity to submit its comments on such ameasure (Case C-303/88 Italy v Commission, cited above, paragraph 46, and Case

C-39/94 SFEI and Others [1996] ECR I-3547, paragraph 43), which would havenecessarily delayed suspension of the aid.

Lack of information as to the Commission's intentions

77.

    As regards the alleged lack of information as to the Commission's intention torequire the unlawful aid to be recovered if necessary, it must be observed that theCommission has stated, without being contradicted, that its first request forinformation, which, according to the Belgian Government, was made on 17 August1993, contained the following warning: 'The Commission would draw the BelgianGovernment's attention to the letter which it has sent to all the Member States on3 November 1983 regarding their obligations under Article [88(3) EC] and to theCommunication published in the Official Journal of the European Communities NoC 318, p. 3, of 24 November 1983, which pointed out that any aid grantedunlawfully was liable to be the subject of a demand for repayment.‘

78.

    It must also be pointed out that the penultimate paragraph of the decision of 9 July1996 again referred to the letter of 3 November 1983 and to the Communicationpublished on 24 November 1983 and also reiterated the terms of the letters of 4March 1991, 22 February and 30 May 1995, addressed by the Commission to all theMember States on the matter of unlawfully granted aid and the CommissionCommunication to the Member States (OJ 1995 C 156, p. 5) on the same subject.

79.

    Thus, the Communication did not lead the Belgian Government to believe that itmight decide against demanding repayment of the amounts granted under theMaribel bis/ter scheme. Consequently, the Belgian Government must have beenaware of the possibility that the unlawful aid would be required to be recoveredand its claims of breach of the principle of legal certainty and of the rights of thedefence must be dismissed.

Failure to state reasons

80.

    The Belgian Government argues, alternatively, that the Commission failed to statereasons for its decision to order recovery of the aid and thus acted in breach ofArticle 253 EC.

81.

    According to the case-law of the Court, in principle the requirements to be satisfiedby the statement of reasons depend on the circumstances of each case, in particularthe content of the measure in question, the nature of the reasons given and theneed which the addressee may have in receiving explanations (Joined Cases 296/82and 318/82 Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985]ECR 809, paragraph 19, and Joined Cases C-329/93, C-62/95 and C-63/95 Germanyand Others v Commission [1996] ECR I-5151, paragraph 31).

82.

    However, in the matter of State aid, where, contrary to the provisions of Article88(3) EC, the proposed aid has already been granted, the Commission, which hasthe power to require the national authorities to order its repayment, is not obligedto provide specific reasons in order to justify the exercise of that power (JoinedCases C-278/92 to C-280/92 Spain v Commission, cited above, paragraph 78).

83.

    In the present case, the contested decision contains no reasons explaining thedemand for the aid to be recovered. Although that total lack of reasoning takenin isolation or in another context may appear unacceptable in view, in particular,of the administrative difficulties which implementation of this decision will entail,owing to the scope of the Maribel bis/ter scheme and its complexity, it must beobserved that its adoption came as no surprise in a context with which the BelgianGovernment was quite familiar and pursuant to a decision which explains in detailhow the aid in question was incompatible with the common market. Consequently,this complaint of the Belgian Government must also be dismissed.

84.

    It follows from the considerations explained above that the plea alleging that therequirement to recover the amounts granted by way of aid is disproportionatecannot be upheld.

Impossibility of carrying out the obligation to recover the aid

85.

    By this last plea, the Belgian Government maintains that it is absolutely impossiblefor it to recover the amounts granted in the form of increased reductions in socialsecurity contributions owing, in particular, to the wide scope and complexity of theMaribel bis/ter scheme. It explains that it will be necessary to determine, in morethan 2 000 enterprises and for each quarter, the number of manual workersemployed at precise periods. Moreover, recovery is excluded from the outset in thecase of undertakings which have in the meantime filed their balance sheets ininsolvency proceedings.

86.

    The Commission, which claims that this plea is inadmissible, rightly points out thatthe alleged absolute impossibility cannot invalidate the contested decision where itemerges only at the stage of implementation. According to the case-law of theCourt, any procedural or other difficulties in regard to the implementation of thecontested measure cannot have any influence on the lawfulness of the measure(Joined Cases C-278/92 to C-280/92 Spain v Commission, cited above, paragraph80). However, the Commission may not impose, by a decision such as thecontested decision, which would then be invalid, an obligation whoseimplementation would, from the beginning, be impossible in objective and absoluteterms. Consequently, the Belgian Government's plea could be accepted only ifrecovery could never objectively have been carried out.

87.

    After the period for bringing an action for annulment against a Commissiondecision ordering a Member State to recover unlawful aid has expired, theargument that it is absolutely impossible to carry out such an order is the onlydefence which the Member State concerned may still advance in proceedingsbrought by the Commission on the basis of the second paragraph of Article 88(2)EC (Case 52/84 Commission v Belgium [1986] ECR 89, paragraphs 13 and 14; Case94/87 Commission v Germany [1989] ECR 175, paragraph 8; Commission v Greece,cited above, paragraph 10, and Case C-280/95 Commission v Italy [1998] ECR I-259, paragraph 13).

88.

    In addition, a Member State which, in giving effect to a Commission decision onState aid, encounters unforeseen and unforeseeable difficulties or becomes awareof consequences overlooked by the Commission, must submit those problems to theCommission for consideration, together with proposals for suitable amendments tothe decision in question. In such cases, the Commission and the Member Statemust, by virtue of the rule imposing on the Member States and the Communityinstitutions a duty of genuine cooperation which underlies, in particular, Article 10EC, work together in good faith with a view to overcoming the difficulties whilstfully observing the Treaty provisions and, in particular, the provisions on aid (CaseC-348/93 Commission v Italy [1995] ECR I-673, paragraph 17). In view of thoseconsiderations, the arguments put forward by the Belgian Government in supportof this plea must be examined having due regard for the limits set on this actionfor annulment.

89.

    The fact that a certain number of undertakings have lodged their balance sheetsin insolvency proceedings after the adoption of the contested decision cannotprevent recovery of the aid from the majority of the undertakings which continueto trade. That argument is not therefore relevant (see, to this effect, Joined CasesC-278/92 to C-280/92 Spain v Commission, cited above, paragraph 80).

90.

    As regards the administrative and practical difficulties which will incontestably ariseowing to the large number of undertakings involved, as was made clear in CaseC-280/95 Commission v Italy, cited above, these also do not warrant regardingrecovery as technically impossible. Despite the incontestable existence of thedifficulties referred to by the Belgian Government at the time when theCommission ordered the aid to be recovered, there is nothing to prove that it isabsolutely impossible for recovery to be carried out and that such absoluteimpossibility already existed when the Commission took its contested decision. Tohold, in those circumstances, that recovery is impossible would undermine theeffectiveness of Community law in the matter of State aid, which cannot beallowed.

91.

    Consequently, the Belgian Government's last plea, to the effect that recovery isimpossible, must also be dismissed.

92.

    Since none of the Belgian Government's arguments have succeeded, the actionmust therefore be dismissed.

Costs

93.

    Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to beordered to pay the costs if they have been applied for in the successful party'spleadings. Since the Commission has applied for costs and the Kingdom ofBelgium has failed in its submissions, the latter must be ordered to pay the costs.

On those grounds,

THE COURT (Sixth Chamber),

hereby:

1.    Dismisses the application;

2.    Orders the Kingdom of Belgium to pay the costs.

KapteynHirsch Mancini Ragnemalm Schintgen

Delivered in open court in Luxembourg on 17 June 1999.

R. Grass

P.J.G. Kapteyn

Registrar

President of the Sixth Chamber

1: Language of the case: Dutch.