**Case C-5/01**


**Kingdom of Belgium
v
Commission of the European Communities**

«(ECSC Treaty – Aid granted by the Member States – Annulment of Commission Decision 2001/198/ECSC of 15 November 2000 concerning State aid granted by Belgium to Cockerill Sambre
SA)»

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| | | | | --- | | Opinion of Advocate General Stix-Hackl delivered on 12 September 2002 | | | |
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| | | | | --- | | Judgment of the Court (Fifth Chamber), 12 December 2002 | | | |
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Summary of the Judgment

*1..
: ECSC – Aid to the steel industry – Meaning – Financing by public funds of supplementary pay to compensate for a reduction in wages ensuing from a reduction in working
  time – Included

(Art. 4(c) CS)*

*2..
: ECSC – Aid to the steel industry – Time-limit fixed by Article 6(5) of the Sixth Steel Aid Code for the Commission to take a decision on the compatibility of
  aid – Time-limit not a prescription period linked to loss of competence

(General Decision No 2496/96, Art. 6(5))*

*3..
: Acts of the institutions – Statement of reasons – Obligation – Scope – ECSC decision

(Arts 4(c) and 15 CS)*

*4..
: ECSC – Aid to the steel industry – Commission authorisation – Authorisation by way of individual decision – Condition – Prior application by the Member State concerned

(Art. 95 CS)*

1.
The expression
aid, for the purposes of Article 4(c) CS, necessarily implies advantages granted directly or indirectly through State funds or
constituting an additional charge for the State or for bodies designated or established by the State for that purpose. That
is the case where public funds finance supplementary pay to compensate the employees of an undertaking for a reduction in
their working week in consideration of their being employees of that undertaking and as compensation for their work for the
firm. Such supplementary pay, irrespective of whether or not it stems from legal obligations or collective agreements, in
fact constitutes an incidental element of the salary received and consequently comes under the labour costs which that undertaking
must normally meet. The fact that public authorities meet the cost out of social concerns is therefore not sufficient to exclude
it from being categorised as aid. Measures of State intervention are not characterised by reference to their causes or aims
but defined in relation to their effects. see paras 33, 36-37, 39, 45-46

2.
In the context of the implementation of Article 6(5) of the Sixth Steel Aid Code, a Member State may legally put into effect
an aid measure only pursuant to a formal decision by the Commission in that regard. In the absence of such a decision, the
expiry of the three-month time-limit set for the Commission's decision cannot therefore have the effect of implicitly authorising
the Member State to implement the planned aid measure. If that three-month time-limit were to be interpreted as a prescription
period linked to loss of competence, the effect of there being no decision by the Commission within that period would be that
the Member State concerned would, on the one hand, be prevented from implementing that aid measure and, on the other, find
it impossible to obtain an authorisation decision to that effect from the Commission under the procedure initiated by the
latter; that would be contrary to the orderly functioning of the rules on State aid. A decision taken after the expiry of
that time-limit is therefore not vitiated by lack of competence. Although in its relations with the Member States, the Commission
is bound to observe a condition which it has imposed on itself, failure to comply with such a condition is likely to constitute
a breach only if it would render nugatory a procedural safeguard granted to the Member States. Since the above period of three
months was established in the interest of protecting legal certainty, in order to ensure a rapid decision by the Commission,
failure to comply with that time-limit cannot lead to loss of competence, which would merely serve to delay a decision, which
could be obtained only as a result of a new procedure, without offering any additional safeguard to the Member State. That
is without prejudice to the possibility of bringing an action for damages where the delay in the Commission's decision has
caused real damage to one of the parties concerned. see paras 57-64

3.
The statement of reasons required by Article 15 CS must be appropriate to the act at issue and must disclose in a clear and
unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable
the persons concerned to ascertain the reasons for the measure and to enable the Court having jurisdiction to exercise its
power of review. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question
whether the statement of reasons meets the requirements of Article 15 CS must be assessed with regard not only to its wording
but also to its context and to all the legal rules governing the matter in question. The Commission is, in particular, not
required to form a view on a matter which is manifestly immaterial. Nor is it required, in connection with the application
of Article 4(c) CS to the measures in question, to give any explanation concerning the consequences and economic impact of
those measures on the common market, since an aid measure does not necessarily need to have an effect on trade between Member
States or on competition in order to be caught by the provisions of that article. see paras 68, 71, 75

4.
The logic inherent in that system of authorisation, by way of exception, of aid necessary for the orderly functioning of the
common market in coal and steel entails, in regard to the adoption of an individual decision by the Commission, that the Member
State concerned applies to the Commission for the procedure laid down in Article 95 CS to be initiated before the Commission
considers whether aid is needed in order to attain the Treaty's objectives. see paras 82, 85


JUDGMENT OF THE COURT (Fifth Chamber)

12 décembre 2002 ([\*](#Footnote*))

(ECSC Treaty - Aid granted by the Member States - Annulment of Commission Decision 2001/198/ECSC of 15 November 2000 concerning
State aid granted by Belgium to Cockerill Sambre SA)

Dans l'affaire C-5/01,

In Case C-5/01,

**Kingdom of Belgium,** represented by A. Snoecx, acting as Agent , and by L. Levi, G. Vandersanden and J.-M. de Backer, avocats, with an address
for service in Luxembourg,

applicant,

v

**Commission of the European Communities,** represented by G. Rozet, acting as Agent, with an address for service in Luxembourg,

defendant,

APPLICATION for the annulment of Commission Decision 2001/198/ECSC of 15 November 2000 concerning State aid granted by Belgium
to Cockerill Sambre SA (OJ 2001 L 71, p. 23),

THE COURT (Fifth Chamber),

composed of: M. Wathelet, President of the Chamber, C.W.A. Timmermans, D.A.O. Edward (Rapporteur), P. Jann and S. von Bahr,
Judges,

Advocate General: C. Stix-Hackl,

Registrar: H.A. Rühl, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 2 May 2002,

after hearing the Opinion of the Advocate General at the sitting on 12 September 2002,

gives the following

**Judgment**

1       By application lodged at the Court Registry on 8 January 2001, the Kingdom of Belgium brought an action under the first paragraph
of Article 33 of the ECSC Treaty for the annulment of Commission Decision 2001/198/ECSC of 15 November 2000 concerning State
aid granted by Belgium to Cockerill Sambre SA (OJ 2001 L 71, p. 23, hereinafter the contested decision).

**Legal framework**

*The ECSC Treaty*

2       Under Article 4 CS,

The following are recognised as incompatible with the common market for coal and steel and shall accordingly be abolished
and prohibited within the Community, as provided in this Treaty:

...

(c)       subsidies or aids granted by States, or special charges imposed by States, in any form whatsoever;

...

3       The first paragraph of Article 15 CS provides:

Decisions, recommendations and opinions of the Commission shall state the reasons on which they are based and shall refer
to any opinions which were required to be obtained.

4       The first paragraph of Article 95 CS states:

In all cases not provided for in this Treaty where it becomes apparent that a decision or recommendation of the Commission
is necessary to attain, within the common market in coal and steel and in accordance with Article 5, one of the objectives
of the Community set out in Articles 2, 3 and 4, the decision may be taken or the recommendation made with the unanimous assent
of the Council and after the Consultative Committee has been consulted.

*Decision No 2496/96/ECSC*

5       Commission Decision No 2496/96/ECSC of 18 December 1996 establishing Community rules for State aid to the steel industry (OJ
1996 L 338, p. 42, hereinafter the sixth steel aid code), adopted on the basis of Article 95 CS and applicable from 1 January
1997 until 22 July 2002, defines the conditions in which aid to the steel industry financed by Member States or their regional
or local authorities or through State resources may be deemed compatible with the orderly functioning of the common market.

6       In accordance with Article 1 of the sixth steel aid code, entitled Principles:

1.       Aid to the steel industry, whether specific or non-specific, financed by Member States or their regional or local authorities
or through State resources in any form whatsoever may be deemed Community aid and therefore compatible with the orderly functioning
of the common market only if it satisfies the provisions of Articles 2 to 5.

2.       The term aid also covers the aid elements contained in transfers of State resources by Member States, regional or local authorities
or other bodies to steel undertakings in the form of acquisitions of shareholdings or provisions of capital or similar financing
(such as bonds convertible into shares, or loans on non-commercial conditions or the interest on or repayment of which is
at least partly dependent on the undertaking's financial performance, including loan guarantees and real-estate transfers)
which cannot be regarded as a genuine provision of risk capital according to usual investment practice in a market economy.

3.       Aid falling within the terms of this decision may be granted only after the procedures laid down in Article 6 have been followed
and shall not be payable after 22 July 2002.

7       Under Article 6 of the sixth steel aid code, entitled Procedure, any aid plan and any plan for the transfer of State resources
to steel undertakings must be notified to the Commission, which is to examine whether they are compatible with the common
market. Under Article 6(4), the planned measures falling within paragraphs 1 or 2 may be put into effect only with the approval
of and subject to any conditions laid down by the Commission.

8       According to Article 6(5) of the sixth steel aid code:

If the Commission considers that a certain financial measure may represent State aid within the meaning of Article 1 or doubts
whether a certain aid is compatible with the provisions of this Decision, it shall inform the Member State concerned and give
notice to the interested parties and other Member States to submit their comments. If, after having received the comments
and after having given the Member State concerned the opportunity to respond, the Commission finds that the measure in question
is an aid incompatible with the provisions of this decision, it shall take a decision not later than three months after receiving
the information needed to assess the proposed measure. Article 88 of the Treaty shall apply in the event of a Member State's
failing to comply with that decision.

9       Article 6(6) of the sixth steel aid code provides:

If the Commission fails to initiate the procedure provided for in paragraph 5 or otherwise to make its position known within
two months of receiving full notification of a proposal, the planned measures may be put into effect provided that the Member
State first informs the Commission of its intention to do so. Where the Commission seeks the views of Member States under
paragraph 3, the abovementioned period shall be three months.

**The factual context of the dispute**

*Social conditions in the undertaking Cockerill Sambre*

10     Cockerill Sambre SA and the companies Carlam SA, Cockerill Sambre Finances Services SA and Recherche et Développement du Groupe
Cockerill Sambre SC (hereinafter, as a whole, Cockerill Sambre) constitute an integrated steel company established in the
Walloon Region of Belgium. Until early 1999, Cockerill Sambre was a publicly owned company, in which the Walloon Region held
a majority stake. In that year, it was privatised and sold to the French steel group Usinor.

11     In response to the difficulties facing the Walloon steel industry, in particular during 1996, Cockerill Sambre drew up a restructuring
plan which made provision, *inter alia*, for a reduction in the workforce of some 2000 persons.

12     In that context, the employees of Cockerill Sambre whose salaries were determined on the basis of salary scales (hereinafter
salaried employees) demanded, during the negotiations which took place in 1997/1998, a reduction from 37 to 34 hours in the
working week as a means of increasing, or at the very least maintaining, the number of jobs in that undertaking. That demand
was rejected by Cockerill Sambre because of its high cost.

13     None the less, after a warning strike by the salaried employees, negotiations led to the conclusion, on 17 April 1998, of
a collective agreement between Cockerill Sambre and the union representing the workers concerned which ratifies that reduction
in working hours (hereinafter the collective agreement).

14     The collective agreement provides, *inter alia*:

−      reduction in the working week from 37 to 34 hours from 1 January 1999;

−      maintenance, despite that reduction in the working week, of the total working hours for the salaried employees as a whole,
resulting in the creation of 150 new jobs;

−      maintenance, at the level set in the collective agreement, of the total wages paid by Cockerill Sambre to the salaried employees
as a whole;

−      establishment of a mechanism intended to offset the loss of earnings by salaried employees as the result of a reduction in
their pay proportional to the reduction in their working hours.

15     In that regard, the collective agreement provides, first, that the parties are to apply jointly for any aid made available
to Cockerill Sambre in order to finance the reduction in working hours laid down in that agreement and, secondly, that the
agreement is structurally dependent on the securing of public funds, failing which the parties to the agreement will re-examine
the situation and the possibility of implementing the agreement.

*The contested measures*

16     The measures adopted by the Kingdom of Belgium complained of by the Commission (hereinafter the contested measures) are intended
to offset the reduction in the pay of salaried employees resulting from the reduction in their working hours.

17     Thus, in order to offset the effects of that reduction in pay, it was decided to pay salaried employees a transitional supplement
intended to maintain their pay at the level reached in 1998 for 37 hours of work a week, until the end of 2005.

18     The transitional supplement is essentially funded by the Belgian public authorities and, for the remainder, by the salaried
employees themselves, as a result of their forgoing the salary increases to which they were entitled in 1997 and 1998.

19     That public aid totals EUR 13.71 million and consists of two parts:

−       a reduction in employers' social security contributions during the period from 1999 to 2005, granted by the Belgian Federal
Government, amounting to EUR 10.36 million;

−       a subsidy of EUR 3.35 million from the Walloon Government, paid to the association Cockerill Sambre employees' fund, during
the same seven-year period.

20     The amounts saved by Cockerill Sambre as the result of the reduction in social security contributions, as well as the amounts
paid to the association referred to in the preceding paragraph, are transferred to the salaried employees of that undertaking.
Those payments constitute the transitional supplement.

**Procedure prior to the adoption of the contested decision**

21     By letter of 23 November 1998, the Commission requested information from the Belgian authorities regarding information which
appeared in the Belgian press on 20 November 1998, according to which the Kingdom of Belgium had decided to grant aid to Cockerill
Sambre, over a period of seven years, as part of a scheme to reduce total working time.

22     By letter of 11 December 1998, the Belgian authorities confirmed that they had taken the contested measures but stated that
they did not consider these to constitute State aid and therefore had not notified them to the Commission in accordance with
Article 6 of the sixth steel aid code.

23     Following several exchanges of letters and a meeting with the Belgian authorities during 1999, the Commission decided to initiate
the procedure laid down in Article 6(5) of the sixth steel aid code and informed the Kingdom of Belgium of that decision by
letter of 25 January 2000. That decision was published in the *Official Journal of the European Communities* of 25 March 2000 (OJ 2000 C 88, p. 8) and interested parties were invited to submit their comments to the Commission within
one month of its publication.

24     In response to that decision, the Belgian authorities sent the Commission a note, dated 5 April 2000, reiterating the position
already expressed before the procedure was initiated, namely, that the contested measures do not constitute State aid.

25     Under that procedure, the Commission received comments in April 2000 from an interested party and from a Member State, and
it communicated those to the Belgian Government, giving it the opportunity to comment on them, which the Government did by
letter of 9 June 2000.

26     As a result of that procedure, the Commission adopted the contested decision.

**The contested decision**

27     The contested decision was notified to the Kingdom of Belgium on 5 December 2000 under number C (2000) 3563.

28     Under Article 1 of that decision:

The State aid totalling BEF 553.3 million (EUR 13.7 million) granted by Belgium to the steel company Cockerill Sambre constitutes
State aid under Article 1 of the steel aid code and is incompatible with the common market.

29     Article 2 of the contested decision requires the Kingdom of Belgium immediately to take all the necessary steps to recover
from Cockerill Sambre the aid already unlawfully paid, together with interest accrued thereon, and to suspend payment of amounts
not yet paid.

**Pleas in law in the action for annulment, and the findings of the Court**

30     In support of its action for annulment, the Kingdom of Belgium relies on five pleas. First, the contested decision infringes
Article 4(c) CS and the sixth steel aid code by incorrectly considering that Cockerill Sambre derives an economic advantage
from the contested measures. Second, the contested decision misconstrues those same provisions by considering that those measures
benefit Cockerill Sambre, although the employees of that undertaking are the only true beneficiaries of those measures. Third,
the decision is vitiated by lack of competence. Fourth, the statement of reasons is insufficient. Fifth, in the alternative,
the contested decision infringes the first paragraph of Article 95 CS.

*The first and second pleas*

31     The first and second pleas, both of which seek to challenge the characterisation in the contested decision of the contested
measures as State aid, should be considered together.

32     First of all, it should be recalled that, as the Court has already held, the concept of aid is wider than that of a subsidy
because it embraces not only positive benefits, such as the subsidies themselves, but also measures which, in various forms,
mitigate the normal burdens on the budget of an undertaking and which therefore, without being subsidies in the strict meaning
of the word, are similar in character and have the same effect (see, *inter alia*, Case 30/59 *De Gezamenlijke Steenkolenmijnen in Limburg* v *High Authority* [1961] ECR 1, 39; Case C-387/92 *Banco Exterior de España* v *Ayuntamiento de Valencia* [1994] ECR I-877, paragraph 13; Case C-200/97 *Ecotrade* [1998] ECR I-7907, paragraph 34; and Case C-143/99 *Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke* [2001] ECR I-8365, paragraph 38).

33     Furthermore, the expression aid, for the purposes of Article 4(c) CS, necessarily implies advantages granted directly or indirectly
through State funds or constituting an additional charge for the State or for bodies designated or established by the State
for that purpose (see, *inter alia*, Case 82/77 *Openbaar Ministerie of the Netherlands* v *Van Tiggele* [1978] ECR 25, paragraphs 23 to 25; Joined Cases C-72/91 and C-73/91 *Sloman Neptun* v *Bodo Ziesemer* [1993] ECR I-887, paragraphs 19 and 21; Joined Cases C-52/97 to C-54/97 *Viscido and Others* v *Ente Poste Italiane* [1998] ECR I-2629, paragraph 13; and *Ecotrade*, cited above, paragraph 35).

34     In the present case it is common ground that the financing of the transitional supplement paid to Cockerill Sambre's salaried
employees is essentially provided by means of public funding granted by the Belgian Federal Government and the Walloon Government.

35     None the less, the Belgian Government maintains that the involvement of those public authorities has not mitigated Cockerill
Sambre's normal budgetary burdens.

36     In that regard, it should be pointed out that the transitional supplement financed by the abovementioned public funds was
paid exclusively to the employees of Cockerill Sambre, either by the undertaking itself or by the association Cockerill Sambre
employees' fund, for being employees of that undertaking and as compensation for their work for the firm.

37     That supplementary pay thus constitutes an incidental element of the salary received by Cockerill Sambre's employees and consequently
comes under the labour costs which that undertaking must normally meet.

38     It is true that Cockerill Sambre was under no legal obligation to provide financial compensation for the reduction in pay
of its salaried employees as a result of the reduction in their working week, and that no such obligation was provided for
in the collective agreement.

39     None the less, the costs linked to employee pay naturally place a burden on the budgets of undertakings, irrespective of whether
or not those costs stem from legal obligations or collective agreements.

40     The fact that the collective agreement linked the envisaged reduction in working time to the securing of public funds, by
excluding from the outset any salary increase to be borne by Cockerill Sambre, does not prevent the transitional supplement
from being a salary cost which would normally be incurred by that undertaking.

41     In addition, the Court has already held that public financing of a bonus paid to certain workers in the coal industry led
to an increase in their pay which artifically reduced the production costs of the undertakings concerned and that that bonus
had accordingly to be considered a prohibited aid under Article 4(c) CS (see *De Gezamenlijke Steenkolenmijnen in Limburg* v *High Authority*, cited above, paragraphs 51 and 52).

42     It must therefore be held that the effect of the contested measures is to mitigate Cockerill Sambre's normal budgetary burdens.

43     It follows that the first plea put forward by the Kingdom of Belgium, that public funding of the reduction in working hours
of salaried employees of that undertaking has not brought it any financial advantage, with the result that the contested measures
cannot be characterised as State aid, must be rejected.

44     The second plea on which the action relies, that those measures do not constitute State aid because Cockerill Sambre's employees
are their true beneficiaries, must also be rejected.

45     In fact, the Court has consistently held that measures of State intervention are not characterised by reference to their causes
or aims but defined in relation to their effects (see, to that effect, *inter alia*, Case 173/73 *Italy* v *Commission* [1974] ECR 709, paragraph 27; Case C-241/94 *France* v *Commission* (*Kimberley-Clark*) [1996] ECR I-4551, paragraph 20; and Case C-480/98 *Spain* v *Commission* [2000] ECR I-8717, paragraph 16).

46     The social character of State assistance is therefore not sufficient to exclude it from the outset from being categorised
as aid (see, *inter alia*, *Kimberly-Clark*, cited above, paragraph 21, Case C-75/97 *Belgium* v *Commission* [1999] ECR I-3671, paragraph 25, and Case C-251/97 *France* v *Commission* [1999] ECR I-6639, paragraph 37).

47     It follows that the Belgian Government's argument that the contested measures are intended to create jobs and to attenuate,
in the interest of the employees, the financial consequences of the reduction in working hours that they requested is irrelevant
for the purposes of determining whether those measures constitute State aid prohibited under Article 4(c) CS.

48     As regards the effects of the contested measures, while the public funds granted by the Belgian Federal Government and the
Walloon Government were paid to salaried employees of Cockerill Sambre, it is the latter which benefits from them since, as
indicated in paragraph 42 of the present judgment, the effect of those measures is to mitigate the normal budgetary burdens
imposed on that undertaking.

*The third plea*

49     By its third plea, the Kingdom of Belgium claims that the contested decision is vitiated by lack of competence.

50     It maintains that since the Belgian authorities communicated their observations on the comments by interested third parties
on 9 June 2000 and no request for additional information was addressed to those authorities, the contested decision, dated
15 November 2000, was adopted after expiry of the three-month time-limit laid down in Article 6(5) of the sixth steel aid
code.

51     It is common ground that that period had expired when the contested decision was adopted. In order to decide whether that
fact deprived the Commission of the competence to adopt that decision, it is therefore necessary to determine whether its
failure to do so within the period prescribed entails a consequent loss of competence.

52     However, the nature of a time-limit must be determined with reference to the general context in which it occurs and with regard
to its objective (see, to that effect, *inter alia*, Case C-357/88 *Hopermann* [1990] ECR I-1669, paragraph 12 and Case C-289/97 *Eridania* [2000] ECR I-5409, paragraph 26).

53     As regards the context of the period prescribed in Article 6(5) of the sixth steel aid code, it should be recalled that under
Article 4(c) CS, subsidies or aid granted by Member States in any form whatsoever are recognised as incompatible, without
exception, with the common market for coal and steel and are accordingly to be abolished and prohibited within the Community.

54     The sixth steel aid code, adopted under Article 95 CS, nevertheless authorises the grant of aid to the steel industry in cases
exhaustively enumerated, and in accordance with prescribed procedures. Article 6(4) of that code provides, in particular,
that planned measures may be put into effect only with the approval of the Commission. Article 6(6) expressly derogates from
that rule by providing that those measures may be put into effect if the Commission has failed to initiate the procedure provided
for in Article 6(5) or otherwise to make its position known within two months of receiving notification of a proposal, provided
that the Member State has first informed the Commission of that intention.

55     Cases in which aid to the steel industry may be granted therefore constitute an exception to the rule according to which such
aid is prohibited and can in principle be granted only pursuant to a formal Commission decision.

56     Any derogation from or exception to a general rule must be interpreted strictly (see, *inter alia*, Case C-399/93 *Oude Luttikhuis and Others* [1995] ECR I-4515, paragraph 23 and Case C-83/99 *Commission* v *Spain* [2001] ECR I-445, paragraph 19).

57     It follows that, in the context of the implementation of Article 6(5) of the sixth steel aid code, a Member State may legally
put into effect an aid measure only pursuant to a formal decision by the Commission in that regard. In the absence of such
a decision, the expiry of the three-month time-limit set for the Commission's decision cannot therefore have the effect of
implicitly authorising the Member State to implement the planned aid measure.

58     If that three-month time-limit were to be interpreted as a prescription period linked to loss of competence whose expiry prohibits
the Commission from expressing a view on the compatibility with the ECSC Treaty of a planned aid measure where a decision
in that regard has not been adopted by the Commission within that period, the Member State concerned would, on the one hand,
be prevented from implementing that aid measure and, on the other, find it impossible to obtain an authorisation decision
to that effect from the Commission under the procedure initiated by the latter. As the Advocate General pointed out in paragraph
101 of her Opinion, such a situation would be contrary to the orderly functioning of the rules on State aid.

59     In a situation such as the one described in the preceding paragraph, the Commission's authorisation may be obtained only as
a result of a new procedure initiated in accordance with the sixth steel aid code, which would delay the Commission's decision
without offering any additional safeguard to the Member State concerned, and be contrary to the objective of Article 6(5)
of that code.

60     Therefore, given its general context and objective, the three-month period set out in Article 6(5) of the sixth steel aid
code cannot be regarded as a prescription period linked to loss of competence.

61     It is true that, in its relations with the Member States, the Commission is bound to observe a condition which it has imposed
on itself (see, to that effect, Case C-170/00 *Finland* v *Commission* [2002] ECR I-1007, paragraph 34 and Case C-158/00 *Luxembourg* v *Commission* [2002] ECR I-5373, paragraph 24).

62     Nevertheless, the failure to comply with such a condition is likely to constitute a breach only if it would render nugatory
a procedural safeguard granted to the Member States (see, to that effect, *Finland* v *Commission*, cited above, paragraph 34 and *Luxembourg* v *Commission*, cited above, paragraph 24).

63     The period of three months laid down in Article 6(5) of the sixth steel aid code was established in the interest of protecting
legal certainty, in order to ensure a rapid decision by the Commission.

64     Failure by the Commission to comply with its obligation to take a decision within that period therefore cannot lead to loss
of competence, which, as is clear from paragraph 59 hereof, would merely serve to delay a decision by the Commission without
offering any additional safeguard to the Member State concerned. That finding is without prejudice to the possibility of bringing
an action for damages where the delay in the Commission's decision has caused real damage to one of the parties concerned.

65     Moreover, it cannot but be noted that, in contrast to Article 6(5) of the sixth steel aid code, Article 6(6), which concerns
the situation where a Member State has notified the Commission of an aid project or a projected transfer of public resources,
expressly provides that failure by the Commission to observe the time-limit set for making its position known is sanctioned
by the opportunity afforded to the Member State, provided that it first informs the Commission of its intention, to implement
the projected measures.

66     It follows from the foregoing considerations that the third plea must be rejected.

*The fourth plea*

67     The Kingdom of Belgium claims that the contested decision was adopted in breach of the obligation to state reasons set out
in the first paragraph of Article 15 CS.

68     It is settled case-law relating to Article 235 EC and transposable to Article 15 CS that the statement of reasons required
by that provision must be appropriate to the act at issue and must disclose in a clear and unequivocal fashion the reasoning
followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain
the reasons for the measure and to enable the Court to exercise its power of review. It is not necessary for the reasoning
to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements
of Article 235 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules
governing the matter in question (see, in particular, Case C-56/93 *Belgium* v *Commission* [1996] ECR I-723, paragraph 86; Case C-367/95 P *Commission* v *Sytraval and Brink's France* [1998] ECR I-1719, paragraph 63; and Case C-310/99 *Italy* v *Commission* [2002] ECR I-2289, paragraph 48).

69     In this instance, the contested decision sets out the reasons why the Commission considers that the contested measures constitute
State aid incompatible with the common market within the meaning of the ECSC Treaty and the sixth steel aid code. In particular,
in paragraph 20 of the contested decision, the Commission develops in detail its argument that, in contrast to the claim by
the Kingdom of Belgium, Cockerill Sambre derived financial and economic advantages from those measures.

70     The Kingdom of Belgium claims, first of all, that the contested decision does not contain any reply to its arguments concerning
the risk of creating inconsistencies in European employment policy.

71     In that regard, it is sufficient to state by way of reply that the Commission was not required to form a view on that matter,
which is manifestly immaterial to the classification of the contested measures as State aid (see, to that effect, *Commission* v *Sytraval and Brink's France*, paragraph 64).

72     The Kingdom of Belgium also claims that the contested decision does not respond to its arguments concerning the concept of
the beneficiary of those measures.

73     In that regard, paragraph 23 of the contested decision sets out the reasons why the Commission considers that the contested
measures do not constitute aid to persons but aid to a firm, inasmuch as they finance costs related to the work performed
by Cockerill Sambre's employees.

74     Finally, the Kingdom of Belgium claims that the contested decision contains no explanation conerning the consequences and
the economic impact of the contested measures on the common market and unfettered competition.

75     In that regard, it must be held that, in order to be caught by the provisions of Article 4(c) CS, an aid measure does not
necessarily need to have an effect on trade between Member States or on competition (see Joined Cases C-74/00 P and C-75/00
P *Falck and Acciaierie di Bolzano* v *Commission* [2002] ECR I-7869, paragraph 102), with the result that the Commission is not required to state reasons for the contested
decision on that point.

76     It follows from the foregoing considerations that the fourth plea must be rejected.

*The fifth plea*

77     In the alternative, the Kingdom of Belgium claims that, were the Court to accept the classification of the contested measures
as State aid, the contested decision was adopted in breach of the first paragraph of Article 95 CS.

78     In that regard, it states that the Commission committed a manifest error of assessment by failing to apply to the Council
in order to obtain its opinion on the approval of those measures, by way of derogation under the first paragraph of Article
95 CS.

79     The Commission replies that the fact that the Belgian Government formally asked it to consider the possibility of applying
the first paragraph of Article 95 CS after adoption of the contested decision renders inadmissible the plea put forward in
the alternative.

80     However, that fact does not allow the consideration that the plea is not directed against the contested decision itself and
in fact constitutes an action for failure to act, directed against the Commission's failure to consult the Council, brought
outside the conditions laid down in Article 35 CS.

81     It follows that that plea is admissible.

82     As regards the substance of that plea, the first paragraph of Article 95 CS enables the Commission to adopt, in accordance
with the procedure laid down in that provision, decisions to authorise, by way of exception, the grant of aid necessary for
the orderly functioning of the common market in coal and steel.

83     Some of those decisions authorise the grant of specific aid to designated steel companies, others authorise the Commission
to declare compatible with the common market certain types of aid with respect to any undertaking which satisfies the relevant
conditions (order of the President of the Court in Case C-399/95 R *Germany* v *Commission* [1996] ECR I-2441, paragraph 20).

84     The Commission exercises that power when it considers that the aid in question is necessary for the purpose of attaining the
objectives of the Treaty.

85     As noted in paragraph 138 of the Advocate General's Opinion, the logic inherent in that system of authorisation entails, in
regard to an individual decision by the Commission, that the Member State concerned applies to the Commission for the procedure
laid down in Article 95 CS to be initiated before the Commission considers whether aid is needed in order to attain the Treaty's
objectives.

86     It follows that, in contrast to the claim by the Kingdom of Belgium, the Commission was in no way required in the present
case, before adopting the contested decision, automatically to initiate the procedure laid down in the first paragraph of
Article 95 CS, in order to authorise the contested measures on the basis of that provision.

87     Accordingly, the fifth plea must be rejected.

88     In light of all the foregoing considerations, the action must be dismissed.

**Costs**

89     Under Article 69(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 Commission has applied for costs and the Kingdom of Belgium has
been unsuccessful, the latter must be ordered to pay the costs.

On those grounds,

THE COURT (Fifth Chamber)

hereby:

1)      **1. Dismisses the application;**

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

| | | |
| --- | --- | --- |
| Wathelet | Timmermans | Edward |

| | | |
| --- | --- | --- |
| Jann | | von Bahr |

Delivered in open court in Luxembourg on 12 December 2002.

| | | |
| --- | --- | --- |
| R. Grass | | M. Wathelet |

| | | |
| --- | --- | --- |
| Registrar | | President of the Fifth Chamber |

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[\*](#Footref*) Original language: English.