Opinion of the Advocate General — ECLI:EU:C:2014:4
Date: 2014-01-15
Language of the case: French
Subject matter: State aids;Competition
Procedure: Action for annulment;Appeal - unfounded
Origin: France

summary references to the brand image of a Member State, as a global player, are not enough to support a finding that there is no aid, for the purposes of EU law. 42 The first ground of appeal of SNCM cannot be upheld either in that it criticises the General Court for having imposed on the Commission, in paragraphs 101 to 108 of the judgment under appeal, an excessive standard so far as concerns proof of the fact that the conduct of the French State was motivated by a reasonable probability of obtaining a material benefit, even in the long term. It is clear from the judgment under appeal that the Commission merely stated that the brand image of the French State would be affected due to social problems. Given what has been stated, in particular in paragraph 41 above, such arguments cannot be upheld. 43 Thus the General Court was entitled to find, in paragraph 108 of the judgment under appeal, that the French State’s long-term economic rationale has not been demonstrated to the required legal standard. 44 So far as concerns the allegation of distortion, SNCM has not demonstrated that the General Court distorted the Commission’s decision, that is to say, that its interpretation was clearly erroneous. 45 So far as concerns SNCM’s criticism that the General Court failed to fulfil its obligation to state reasons, in that it did not define the terms ‘sufficiently well-established practice’ or ‘settled practice’, it must be stated, as the Advocate General did in point 62 of his Opinion, that those terms are clear and refer to a factual assessment, and that it is easy to see that only one or a few examples do not constitute a ‘sufficiently well-established practice’ or a ‘settled practice’. 46 Accordingly, the first ground of appeal must be rejected in its entirety. Second ground of appeal: errors of law relating to the capital contribution of EUR 8.75 million Arguments of the parties 47 SNCM claims that the General Court distorted the decision at issue in failing to take account of all the relevant factors, in particular the issues of the fixed yield and the effect of the cancellation clause, in its assessment of the comparable nature of the investment conditions of the simultaneous capital contributions. 48 According to SNCM, the issue of the fixed yield was examined by the Commission in paragraphs 361 to 363 of the decision at issue. The Commission thus found that a fixed yield of 10% of the French State’s capital investment in SNCM constituted, for a private investor, an adequate long-term profitability of the capital invested. 49 Furthermore, according to SNCM, the Commission did in fact state why it considered that the cancellation clause could not call into question the equal treatment of the concurrent investors. Contrary to what the General Court found in paragraph 127 of the judgment under appeal, the Commission in fact stated that that clause concerned the complete disposal of SNCM to the private purchasers, and not the investments made simultaneously by the private purchasers and the State in the privatised SNCM. The cancellation clause thus concerns the disposal of SNCM and must be analysed in that context, and in those circumstances it cannot be taken into account in the analysis of the simultaneous investment of the State and of the private purchasers made following that disposal. 50 SNCM submits that when SNCM was disposed of a value was placed on the cancellation clause in the negative price of EUR 158 million. Since that disposal of SNCM took place at the market price, the cancellation clause had a value in that disposal price and could not be regarded as having conferred an advantage on the purchasers. Therefore, that clause should no longer be taken it into account when assessing whether the French State’s simultaneous investment is in keeping with the principle of equal treatment of investors; otherwise the value attributed to that clause would be counted twice. 51 As regards taking account of the context of the undertaking’s privatisation in which the capital contribution of EUR 8.75 million to SNCM is set, SNCM submits that the commitments relating to the measures adopted by the French State in the course of the privatisation of SNCM, that is to say, the negative price of EUR 158 million and the current account advance of EUR 38.5 million, must not be taken into account a second time when assessing that capital contribution. Taking account of the negative price and the capital contribution again when assessing the current account advance is tantamount to double counting that price and that contribution. 52 The French Republic claims that the General Court erred in law in that it infringed Article 87(1) EC when it found that the Commission had not considered all the relevant factors in its analysis of the comparability of the capital contribution of CGMF, a public shareholder in SNCM, for an amount of EUR 8.75 million, and that of the private purchasers for an amount of EUR 26.25 million, and that the Commission should have taken into account the sale cancellation clause granted to those private buyers in the course of the privatisation of SNCM. 53 Corsica Ferries claims that the placing of a value on the cancellation clause in the negative price of EUR 158 million at the time of the disposal has no bearing on the General Court’s reasoning or on the fact that the Commission refrained from conducting a thorough analysis of the economic impact of that clause in the decision at issue, so that, if a value had been placed on it in that negative price, quod non, the Commission should have explained this clearly and succinctly. Findings of the Court 54 It must be observed that the General Court, in paragraph 117 of the judgment under appeal, was right to find that the mere fact that a capital contribution was made jointly and concurrently with private investors does not automatically exclude it from being classified as State aid. Other factors, in particular the equal treatment of public and private shareholders, must also be taken into account. 55 In paragraph 130 of the judgment under appeal, the General Court found that the sale cancellation clause is, at the least, capable of removing any uncertainty for the private purchasers in the event of the occurrence of one of the triggering events and that that clause, consequently, has an actual financial value. The General Court considered that that clause is therefore liable to alter the risk profiles of the capital contributions of the private purchasers and of CGMF and therefore to call into question the comparable nature of the investment conditions. 56 It must be stated that the appellants have failed to prove that the General Court erred in law in that regard. 57 The argument that the value of the cancellation clause was included in SNCM’s sale price and that that clause could no longer be taken into account when assessing the comparability of the capital contributions of the public and private shareholders must be rejected. 58 As the General Court states in paragraph 111 of the judgment under appeal, the joint and concurrent subscription in question had already been provided for in the memorandum of understanding concerning the sale in question. Consequently, it is clear that the capital contribution in question was provided for in the context of the partial privatisation of SNCM. 59 As the French Republic acknowledges, if the sale cancellation clause is exercised, the original shareholder which has transferred its shares to the purchaser must reimburse him his capital contribution, and thus, unlike the original shareholder, the purchaser has the opportunity to recover his capital contribution in the event that the cancellation clause is exercised and to end his involvement with the public undertaking concerned. 60 In those circumstances, it is clear that the cancellation clause may produce effects on the conditions of that recapitalisation and affect the comparability conditions. 61 Since the General Court found evidence of those effects, it was right to conclude that, in the decision at issue, the Commission could not therefore refrain from conducting a thorough analysis of the economic impact of the sale cancellation clause. As the Advocate General observed in point 115 of his Opinion, the General Court was right to find that the Commission did not, or did not sufficiently, support its decision on the equal treatment of the public and private investments in SNCM. 62 Consequently, the second ground of appeal must be rejected and there is no need to examine the issue of the assessment of the yield from CGMF’s capital contribution. Third ground of appeal: error in law relating to the aid to individuals in the amount of EUR 38.5 million Arguments of the parties 63 According to SNCM, the General Court distorted the decision at issue in finding that the Commission had claimed that the fact that the measure in question does not result from strict statutory obligations was, by its nature, liable to exclude its being in the nature of State aid within the meaning of Article 87(1) EC. 64 The General Court erred in law by encroaching on the Commission’s margin of assessment in assessing complex economic situations. In finding, in paragraph 144 of the judgment under appeal, that ‘the existence of the escrow account is such as to create an inducement for SNCM employees to leave the company or, at least, to leave it without negotiating their departure, particularly in view of the possible grant of additional redundancy payments … all of which created an indirect economic advantage for SNCM’, the General Court went beyond the review of a manifest error of assessment that is required in the case of an examination of complex economic situations. 65 The General Court did not give sufficient reasons for its decision regarding the advantage to SNCM. Its analysis of the escrow account in paragraph 144 of the judgment under appeal does not make it possible to understand the reasons why the Commission committed a manifest error of assessment by not classifying the measures involving aid to individuals as ‘State aid’. 66 In addition, SNCM and the French Republic claim that the judgment under appeal is vitiated by a failure to state reasons. The General Court did not examine the Commission’s finding that ‘even when the amount of EUR 38.5 million is added to the State’s capital contribution of EUR 142.5 million, the adjusted negative selling price of EUR 196 million is still well below the cost of compulsory liquidation of SNCM’. The Commission established that the liquidation costs for the French State would have been higher than the negative price, even if the amount of the aid to individuals were added. 67 In that regard, by classifying the measures involving aid to individuals in the amount of EUR 38.5 million as ‘State aid’, for the purposes of Article 87(1) EC, without ascertaining, in the alternative, whether those measures met the reasonable private investor test, the General Court did not state the reasons for its decision to the requisite legal standard. 68 Corsica Ferries claims that it is precisely because the Commission was not able to determine the normal application of the additional social compensation for termination of the contract of employment through the escrow account mechanism that it was criticised by the General Court. Findings of the Court of Justice 69 On the basis of the considerations set out in paragraphs 14 to 16 above, the Court of Justice considers that the examination carried out by the General Court in paragraph 144 of the judgment under appeal is in keeping with the requisite level of review. 70 As regards the argument of SNCM and the French Republic that the General Court should have ascertained, in the alternative, whether the amount of EUR 38.5 million was justified by the private investor test, it must be stated that the Court of Justice has not upheld the first ground of appeal concerning the classification of the additional redundancy payments in the amount of EUR 158 million. 71 As the Advocate General stated in point 132 of his Opinion, the amount of EUR 38.5 million in the escrow account is also intended to be paid, where appropriate, as additional redundancy payments. 72 However, the applicants do not raise any arguments that demonstrate that the nature of that sum of EUR 38.5 million is different from the sum of EUR 158 million assessed in the examination of the first ground of appeal concerning the application of the private investor test. 73 As regards, the reasons advanced by the Advocate General in points 122 to 137 of his Opinion, the Court of Justice considers that the General Court, in its analysis of the findings and arguments resulting from that plea, did not distort the decision at issue, and it provided reasons to the requisite legal standard for the judgment under appeal. 74 Consequently the third ground of appeal must be rejected. The fourth ground of appeal: error in law relating to the balance for restructuring of EUR 15.81 million Arguments of the parties 75 SNCM and the French Republic claim that the General Court’s reasoning concerning the balance for restructuring of EUR 15.81 million is erroneous. 76 The applicants claim that the General Court’s reasoning in paragraphs 148 to 153 of the judgment under appeal is based on the premiss that the Commission considered that the 2006 Plan was free of the elements that constitute State aid. Thus, by their appeals, the applicants seek to demonstrate that the General Court erred in law in its analysis of the measures of the 2006 Plan and failed to fulfil its obligation to state reasons. Findings of the Court 77 It is clear from the applicants’ pleadings that the fourth ground of appeal depends on the Court upholding the previous grounds advanced in support of their appeals. 78 In paragraphs 39, 55 and 66 above, the Court has rejected the first, second and third grounds of appeal and upheld the judgment under appeal. 79 In those circumstances, the fourth ground of appeal must be rejected as ineffective, and it is not necessary to examine the arguments put forward by the appellants. 80 Since none of the grounds of appeal raised by the appellants have been upheld, the appeals in Cases C‑533/12 P and C‑536/12 P must be dismissed. Costs 81 In accordance with the first paragraph of Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court shall make a decision as to costs. Under Article 138(1) of those Rules, applicable to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 82 Since Corsica Ferries has applied for costs against SNCM and the French Republic and the latter have been unsuccessful in their pleas, they must be ordered to pay the costs. On those grounds, the Court (Fifth Chamber) hereby 1. Dismisses the appeals; 2. Orders Société nationale maritime Corse-Méditérrannée (SNCM) SA and the French Republic to bear their own costs and to pay those incurred by Corsica Ferries France SAS in equal shares. [Signatures] * Language of the case: French.