# Arrêt du Tribunal

**Case T-36/99**

**Lenzing AG**

**v**

**Commission of the European Communities**

(State aid – Action for annulment – Admissibility – Act of individual concern to the applicant – Article 87(1) EC – Agreements on the rescheduling and repayment of debts – Private creditor test)

Judgment of the Court of First Instance (Fifth Chamber, Extended Composition), 21 October 2004

Summary of the Judgment

1.     *Procedure – Decision amending the contested decision in the course of the proceedings – New factor – Extension of the initial
pleadings*

2.     *Actions for annulment – Natural or legal persons – Measures of direct and individual concern to them – Commission decision
closing a procedure in relation to State aid – Undertaking competing with the undertaking in receipt of the aid – Right to
bring an action – Conditions*

*(Art. 88(2) EC)*

3.     *State aid – Definition – Selective nature of the measure – Measure of general scope to be applied by an administration with
a discretion in that regard – Included*

*(Art. 87(1) EC)*

4.     *State aid – Adverse effect on competition – Public body with responsibility for collecting social security contributions tolerating
late payment of such contributions – Significant commercial advantage – Interest and default surcharges demanded by way of
consideration – Not relevant*

*(Art. 87(1) EC)*

5.     *State aid – Definition – Public intervention intended to finance the wages and allowances payable to the staff of an undertaking
and conferring an advantage on that undertaking – Arrangements for payment – Not relevant*

6.     *State aid – Commission decision declaring a national measure compatible with Article 87(1) EC – Application by the Commission
of the private creditor test – Complex economic assessment – Judicial review – Limits*

*(Art. 87(1) EC)*

1.     An amendment, in the course of proceedings, of the contested decision constitutes a new factor which allows the applicant
to amend its pleas and the form of order sought.

(see para. 54)

2.     In order to claim to be individually concerned by a Commission decision closing the procedure initiated pursuant to Article
88(2) EC in respect of individual aid, an undertaking cannot rely solely on its status as a competitor of the undertaking
in receipt of the aid at issue but must additionally show that its circumstances distinguish it in a similar way to that in
which the addressee of a decision would be distinguished, account being taken of the extent of its possible participation
in the procedure and the magnitude of the prejudice to its position on the market. As regards the extent to which the applicant
undertaking’s position on the market was affected, it is not for the Community Court, when it is considering whether the application
is admissible, to make a definitive finding on the competitive relationship between the applicant undertaking and the undertakings
in receipt of the aid. In that context, it is for the applicant undertaking alone to adduce pertinent reasons to show that
the Commission’s decision may adversely affect its legitimate interests by seriously jeopardising its position on the market
in question.

(see paras 75, 80)

3.     Measures of purely general scope do not fall within Article 87(1) EC. However, even assistance which at first sight is applicable
to undertakings in general may present a certain selectivity and, accordingly, be regarded as a measure intended to favour
certain undertakings or certain products. That is the case, in particular, where the administration called upon to apply the
general rule has a discretion in that regard.

(see para. 129)

4.     The conduct of a public body with responsibility for collecting social security contributions which tolerates late payment
of such contributions gives an undertaking experiencing serious financial difficulties which benefits from that conduct a
significant commercial advantage by mitigating the burden associated with the normal application of the social security system
which cannot be wholly removed by the interest and default surcharges applied to it.

(see paras 137, 139)

5.     The wages and allowances payable to the staff of an undertaking are part of the undertaking’s normal operating costs which
it is required, in principle, to charge to its own resources. Any public intervention intended to finance those costs will
therefore be liable to constitute aid whenever it has the consequence of conferring an advantage on the undertaking, whether
the payments are made directly to the undertaking or to its staff via a public body.

(see para. 146)

6.     In so far as the Commission’s application of the private creditor test involves complex economic appraisals, such as the application
of the private investor test, when reviewing it the Court must confine itself to verifying whether the Commission complied
with the relevant rules governing procedure and the statement of reasons, whether the facts have been accurately stated and
whether there has been any manifest error of assessment or a misuse of powers.

(see para. 150)

:

: **Applicable national legislation**

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‘(20)
: The Commission must consider whether or not any of the elements deemed as incompatible with the common market set out in Article
1 of [the decision of 28 October 1998] constitute State aid within the meaning of Article 87(1) [EC]. If any such aid were
found to exist, the Commission would then need to consider whether it was compatible with the common market.

(21)
: The factual and legal context of the *Tubacex* judgment is similar to the one raised by Spain before the Court of Justice in Case C-479/98 and by Sniace before the Court
of First Instance in Case T-190/99 against [the decision of 28 October 1998]. The Commission considers that the arguments
developed by the Court in this judgment are relevant with equal force to the agreements between Sniace and Fogosa and between
Sniace and the Social Security [Fund] which were deemed to contain State aid in [the decision of 28 October 1998].

(22)
: It should firstly be noted that Sniace was already subject to the pre-existing statutory obligation to repay the wages advanced
by Fogasa and to pay its debts in respect of social security contributions. The agreements in question did not therefore create
any new debt owed by Sniace to the public authorities. Thus, in the repayment agreements of Fogasa and in the rescheduling
agreements of the Social Security [Fund], the State did not act as a public investor whose conduct must be compared with that
of a private investor providing capital with a view to realising a profit but as a public creditor which, like a private creditor,
may seek to recover sums owing to it. Consequently, in assessing the contested State aid, the Commission has to compare the
default rate of interest applied to the debts of the public creditor with the rate charged for the debts owed to private creditors
acting in similar circumstances.

(23)
: However it should be noted that particular circumstances of debtors and creditors are likely to prove problematic for the
determination of a common applicable behaviour of private creditors seeking to recover sums owing to them. Consequently, the
Commission has to base its assessment on an analysis of the behaviour of private creditors on a case by case approach.

(24)
: In the particular case of Sniace, following an application made by the company in 1992, the Spanish Courts ordered suspension
of payments in March 1993. By using their abstention rights, public creditors did not subscribe to the creditors agreement
of October 1996 within the framework of the suspension of payments procedure agreement. As the Commission noted in the opening
decision, by using their abstention rights, the public creditors were protecting their claims.

(25)
: The separate agreements between Fogasa and Sniace and between the Social Security [Fund] and Sniace did not accord Sniace
any more generous treatment than that reached in the private creditors’ agreement.

(26)
: However, the circumstances of the private creditors were not the same as those of public creditors because of their status,
the securities provided and abstention rights that the public institutions enjoyed. Consequently, the Commission considers
that such a comparative approach does not constitute in this particular case a correct application of the “private creditor”
test as defined by the Court, which as it subsequently underlined in its judgment of 29 June 1999 in the DMT case (C-256/97),
supposes that the public creditors’ behaviour under examination should be compared with that of a hypothetical private creditor
finding himself, as far as possible, in the same situation.

(27)
: The Commission notes that Article 1108 of the Spanish Civil Code establishes that the legal interest rate is that which applies
for compensation of damage and harm when the debtor delays the payment and no determined interest rate has been agreed. In
addition, Article 312 of the Spanish Commercial Law rules that in case of a money loan and in the absence of any specific
agreement between the parties, the debtor is obliged to repay the legal value (“valor legal”) of the debt at the time the
repayment is made. Therefore, legal interest rate would be the highest rate a private creditor could expect to obtain if he
pursued the recovery of the debt by legal means.

(28)
: As a consequence, a private creditor could not have obtained from the debtor a rate of interest on arrears that would be higher
than the legal interest rate as a compensation for not pursuing the recovery of the debt by legal means.

(29)
: Finally, the particular circumstances of Sniace at the time the rescheduling agreements with Fogasa and the Social Security
Fund were made should be underlined. The company had been in serious financial difficulties, resulting in the suspension of
all debt repayments and there were serious doubts about its future existence. As the Commission noted in [the decision of
28 October 1998], by not proceeding to execution and thereby possibly provoking the liquidation of the company, the Social
Security [Fund] acted in such a way as to maximise its prospects of recovering the debt.

(30)
: In the light of the above, the Commission can accept that in this particular case, by rescheduling and applying the legal
interest rate to debts owed by Sniace, Spain was seeking to maximise the recovery of the sums due to it without suffering
any financial loss. Consequently, Spain acted as a hypothetical private creditor would have done, vis-à-vis Sniace.’

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1.
: The first subparagraph of Article 1 is replaced by the following:

: “The following measures which Spain has implemented in favour of [Sniace] do not constitute State aid:

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: annul Article 1 of the decision of 28 October 1998 in so far as the Commission states that:

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: order the Commission to pay the costs.

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: dismiss the action as inadmissible;

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: in any event, dismiss the action as unfounded;

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: order the applicant to pay the costs.

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: dismiss the action as inadmissible;

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: in the alternative, dismiss the action as unfounded;

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: order the applicant to pay the costs.

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: the group to which the applicant belongs produces approximately 275 000 tonnes of cellulose fibres each year and is one of
the three world leaders on the viscose fibres market;

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: the applicant, Säteri and Courtaulds plc together account for approximately 90% of Community production of viscose fibres;

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: between 1991 and 1997, the applicant’s market share on the world market for artificial and synthetic viscose spinning fibres
has consistently increased, from 9.2% to 16.4%;

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: between 1991 and 1997, the applicant’s production regularly increased, from 152 700 tonnes per year to 270 800 tonnes per
year;

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: for the applicant, ‘1995 was ... characterised by very strong demand, 1996 by full use of its production capacity, 1997 by record
production and, last, 1998 by record results’;

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: the applicant announced good results for the first quarter of 1999;

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: for the third quarter of 1997, it announced an increase in its selling prices, ‘its increasing independence vis-à-vis pressure
from prices on the world market’ and the need to import to satisfy demand;

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: the applicant’s consolidated turnover increased by 7.2% between the first half of 2000 and the corresponding period for 2001.

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: Sniace’s turnover had fallen significantly in 1995 and 1996;

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: no restructuring measure capable of ensuring the undertaking’s profitability and viability had been envisaged and the viability
plan prepared in August 1996 had not been regarded by the Spanish Government as constituting an official restructuring plan;

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: in 1996, the viscose fibres market was suffering from considerable surplus capacity;

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: a fresh fall in demand for viscose fibres in the Community during the following years was envisaged.

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1.
: Annuls Article 1(1) of Commission Decision 1999/395/EC of 28 October 1998 on State aid implemented by Spain in favour of Sniace
SA, located in Torrelavega, Cantabria, as amended by Commission Decision 2001/43/EC of 20 September 2000;

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2.
: Orders the Commission to bear its own costs and to pay those incurred by the applicant;

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3.
: Orders the Kingdom of Spain to bear its own costs.

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1 –
: Language of the case: German.