Information;Judgment — ECLI:EU:T:2022:403
Date: 2022-06-29
Language of the case: English
Court formation: Sixth Chamber
Subject matter: Freedom to provide services;Public procurement in the European Union
Procedure: Action for annulment - unfounded
Origin: Germany

Summary’ part of its reply, that it did not have an ultimate shareholder holding all or the majority of its shares. In particular, it noted that ‘KKR & Co. Inc., [an entity established in New York (United States)] [was] not [its] ultimate owner … but only the indirect general partner of KKR European Fund IV [an entity established in the] Cayman Islands in which it neither directly nor indirectly [held] all or a majority of the shares’, adding that ‘the majority of the shares in this fund [were] held by a high number of passive investors, each of whom [held] minority participations’. It stated, in essence, that all strategic decisions concerning it were taken in Germany and that it participated actively in the distribution of audiovisual works in Europe. 108 Next, in the administrative appeal of 12 June 2020 brought under Article 22 of Regulation No 58/2003 seeking review of the legality of the EACEA’s decision of 12 May 2020, the applicant, in essence, repeated its arguments previously put forward against the EACEA’s initial refusal, as reproduced, in essence, in the present action. 109 In support of the administrative appeal, reproduced in Annex A.18 to the application, the applicant provided a number of documents. Among these, it sent to the Commission, in particular, an overview of the various shareholdings in its capital, submitted in Annex A.8 to the application; an explanatory note, reproduced in Annex A.9 to the application; an extract from the commercial register attesting to its change of company name, set out in Annex A.14 to the application; and the copy of the control agreement with Leonine Holding, contained in Annex A.10 to the application. 110 Lastly, by email of 15 July 2020, reproduced in Annex A.19 to the application, the applicant informed the Commission of the ‘intended cooperation [by Leonine Holding] with the newly founded company Mediawan Alliance’ and explained that that project illustrated its desire to strengthen European cinematographic culture by entering into ‘new cooperation with European partners, as intended by the European legislature in Articles 3, 4 and 9 of [Regulation No 1295/2013]’. 111 It should be noted that none of the documents submitted by the applicant makes it possible to assess precisely the applicant’s current capital structure. 112 In particular, it is not apparent from any of the documents at issue that the applicant, contrary to the requirements of Section C.3 of the application form, referred to in paragraphs 45 and 98 above, provided the names of all of its shareholders and their nationality and the percentage of their shares in its capital. Such information was, however, sufficiently clear and precise that, contrary to what the applicant sought to argue before the EACEA, as is apparent from paragraph 104 above, it could easily be identified and communicated. 113 Although that information on the structure of its shareholding was requested from it explicitly on several occasions in the course of the proceedings, the applicant confined itself, in essence, to communicating a simple overview of its capital structure, from which it is apparent, solely, that KKR European Fund IV is its ultimate majority shareholder and that that entity, established in the Cayman Islands, is a company with its registered office in New York. Although it is apparent from Annex A.8 to the application that more than 85 investors hold shares in KKR European Fund IV, there is nothing in the documents before the Court to support the applicant’s assertion that that capital is held by a majority of European investors and to determine their respective percentage of shares in order to verify that the majority of the shares are actually held by natural persons holding the nationality of one of the Member States of the European Union or of one of the other European countries participating in the MEDIA sub-programme. 114 Since the only evidence provided by the applicant did not make it possible for the EACEA to conclude that KKR European Fund IV was held by natural persons having the nationality of one of the Member States of the European Union or of one of the other European countries participating in the MEDIA sub-programme, the Commission was therefore entitled to find, as is apparent from paragraphs 84 and 85 of the contested decision, that the EACEA had not been in a position to verify, in the absence of detailed information on the shareholders of that fund, concerning in particular their nationality and the percentage of shares held, whether the applicant was owned, by way of a majority participation, by natural persons having the nationality of one of those States or those countries. 115 In those circumstances, the arguments relied on by the applicant to establish that it had to be regarded as being owned by majority participation by KKR European Fund IV for the application of Section 6.1 of the Guidelines are, in any event, irrelevant. 116 First of all, for the purposes of assessing compliance with the conditions for submitting the applicant’s application, as defined in Section C.3 of the application form, no relevance attaches to the circumstance, assuming it to be correct, that, under ‘section 29 sentence 5 of the [State] Broadcasting Treaty [of reunified Germany of 31 August 1991]’ and the ‘Directive of the German Commission on concentration in the media sector concerning the exemption from the obligation to notify minor changes in shareholdings in listed companies of 14 July 1997 as amended on 10 January 2017’, minor changes in shareholdings in broadcasting companies, listed companies or private equity funds would not be subject to notification to the competent national authorities. 117 Next, the circumstance that ‘the financial involvement of KKR [European Fund IV] in [Leonine] Group (formerly Show Group) supports and reinforces the objectives of [Regulation No 1295/2013]’ cannot usefully be taken into account in assessing whether that fund, as the applicant’s ultimate majority shareholder, would enable the applicant, for the purposes of the application of Section 6.1 of the Guidelines, to be regarded as being owned by majority participation by natural persons holding the nationality of one of the countries participating in the MEDIA sub-programme. 118 Furthermore, it is also irrelevant that the Cayman Islands, where that fund is registered, is one of the overseas countries and territories associated with the European Union, pursuant to Article 198 TFEU and Annex II thereto in conjunction with Article 1 of and Annex IA to Council Decision 2001/822/EC of 27 November 2001 on the association of the overseas countries and territories with the European Community (‘Overseas Association Decision’) (OJ 2001 L 314, p. 1). 119 Furthermore, it is also irrelevant for the application of the eligibility criteria set out in Section 6.1 of the Guidelines, even if that circumstance were correct, that KKR European Fund IV might fulfil ‘the conditions set by the Commission for investment institutions’ holdings in European companies’, as defined in paragraph 44 in Section 5.2 of the Commission Notice on the Interpretative guidelines on Regulation (EC) No 1008/2008 of the European Parliament and of the Council – Rules on Ownership and Control of EU air carriers (OJ 2017 C 191, p. 1). That regulation governs the licensing of EU air carriers and the right of those carriers to operate air services within the European Union and cannot therefore have either the same object or the same scope as the Guidelines, as the applicant itself acknowledges. 120 In those circumstances, the applicant is not justified in claiming that the Commission erred in finding that it could not be regarded as ‘owned by majority participation’ by KKR European Fund IV, its ultimate shareholder, for the purposes of the application of Section 6.1 of the Guidelines. 121 The applicant submits, in the third and last place, that the Commission made an error of assessment in refusing to classify it as a European company on the ground that it did not take account, in essence, of the past and future use of the funds paid in respect of the financing of the MEDIA sub-programme. 122 The Commission, supported by the EACEA, contends that this part of the plea must be rejected. 123 In that regard, it is irrelevant that the funds paid would have been used for the distribution of European productions in Europe or that the profits generated would, in turn, have been invested in the circulation of European films across Europe. 124 Similarly, in order to assess whether the applicant could be regarded as a European company, no relevance attaches to the fact that it participated actively in the financing of European creations for decades, through, inter alia, the distribution of French films and films presented in the context of international festivals, or that it created jobs in Europe, whereas, moreover, even supposing that it had in the past met the eligibility criteria for being a candidate, such a past circumstance cannot prejudge the examination of its eligibility for the programme at issue. 125 The same applies in regard to the applicant’s claim that it was able to ‘safeguard cultural diversity and strengthen the competitiveness of Europe’s cultural and creative sectors’ and to ‘make a contribution … to creating plurality of media sources and combating media concentration in Europe’. 126 All of those circumstances and arguments, as set out in paragraphs 123 to 125 above, do not concern either the first or the second of the two conditions for classification as a European company, within the meaning of Section 6.1 of the Guidelines, as set out in paragraph 48 above. 127 Consequently, the Commission did not err in finding, in confirmation of the EACEA’s decision of 12 May 2020, that the applicant could not be regarded as a European company within the meaning of Section 6.1 of the Guidelines. 128 In the light of all of the foregoing, the Commission did not err in its application of Section 6.1 of the Guidelines to the applicant’s case in concluding, in paragraph 96 of the contested decision, that the EACEA had acted in accordance with the applicable rules in deciding to regard the applicant as ineligible and by refusing to sign the grant agreement. 129 The second plea in law must therefore be rejected. The third plea in law, alleging a failure to carry out an examination 130 The applicant claims, in essence, that the Commission vitiated the contested decision by failing to carry out an examination in that it did not take into account all the evidence which the applicant had submitted to the EACEA and in the context of the administrative appeal. 131 First of all, the applicant submits that the Commission failed to take account of the elements and arguments produced in order to establish that it was in a position to achieve the objectives of the Creative Europe Programme, in particular those of the MEDIA sub-programme aimed, in essence, at supporting the distribution of European cinematographic works. In particular, the applicant claims that the Commission did not take account, in the context of the examination, of its past conduct, namely the fact that the funds received were always used in accordance with the objectives of that programme. 132 In that regard, as has been stated in paragraphs 67 to 71 above, the fact that the applicant is in a position to achieve the objectives of the Creative Europe Programme, as shown by its past involvement in the financing of the European cultural sector, has no bearing on the Commission’s conclusion that it should not be classified as a ‘European company’ within the meaning of Section 6.1 of the Guidelines. Even if the Commission did not take sufficient account of such arguments, such a circumstance is therefore irrelevant in regard to the legality of the contested decision. 133 In any event, as the Commission correctly submits, it is apparent from the reasoning of the contested decision that the applicant’s arguments, which are the subject of paragraphs 23 to 44 of that decision, and as set out in particular in paragraphs 34 to 40 of that decision, were in fact taken into account in the Commission’s assessment, as set out in paragraphs 76 to 95 of that decision, in particular in paragraphs 76 to 79 and 89 to 91 thereof. 134 Next, the applicant submits that the Commission failed to take account of the fact that KKR European Fund IV was registered in the Cayman Islands. However, since that fact is irrelevant for the purpose of assessing the classification of the applicant as a ‘European company’, within the meaning of Section 6.1 of the Guidelines, as found in paragraph 118 above, it is also ineffective as regards the question whether the applicant could be regarded as being owned by majority participation by that fund for the application of those provisions. 135 Lastly, the applicant claims that the Commission did not take account, in the administrative appeal brought under Article 22(1) of Regulation No 58/2003, of the evidence which it had submitted to the Commission for the first time on 15 July 2020. 136 Suffice it to recall, in that regard, that the evidence submitted by the applicant on 15 July 2020 concerns, as stated in paragraph 110 above, the intended cooperation between Leonine Holding and the company Mediawan Alliance. That evidence is therefore irrelevant to the assessment of the eligibility criteria for the call for proposals at issue pursuant to Section 6.1 of the Guidelines, as is apparent from paragraphs 110 and 112 above. 137 Irrespective of the question of its admissibility in the context of the examination under Article 22(1) of Regulation No 58/2003, the complaint alleging failure by the Commission to examine the evidence submitted by the applicant on 15 July 2020 must therefore be rejected as ineffective. 138 In the light of all of the foregoing, the third plea in law must be rejected. The fourth plea in law, alleging infringement of the principle of proportionality 139 The applicant submits, in essence, that, in order to ensure that the funds of the MEDIA sub-programme had been used in accordance with the objectives of Regulation No 1295/2013, it would have been sufficient for the Commission to grant the funding sought subject to the condition that the applicant would have to justify its use a posteriori, failing which it would have had to repay the amount. 140 The applicant therefore maintains that, in those circumstances, the outright rejection of its application for funding ‘without examining the actual use of the funds or instead of making them subject to the resolving condition of use in accordance with the [legislation]’ infringes the principle of proportionality, expressly enshrined in Article 5(4) TEU. 141 The Commission, supported by the EACEA, disputes the applicant’s arguments. 142 It should be recalled that the principle of proportionality, as a general principle of EU law, requires that acts adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question; where there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued. That principle is recalled in Article 5(4) TEU and in Article 1 of the Protocol (No 2) on the application of the principles of subsidiarity and proportionality, annexed to the EU Treaty and the FEU Treaty (judgments of 4 June 2020, Hungary v Commission, C‑456/18 P, EU:C:2020:421, paragraph 41, and of 20 September 2011, Evropaïki Dynamiki v EIB, T‑461/08, EU:T:2011:494, paragraph 142). 143 Suffice it to note that none of the provisions of the legislation applicable to the present dispute, as set out in paragraphs 31 to 45 above, which the applicant does not claim to be contrary, in itself, to the general principle of EU law on which it relies, provides, in any event, contrary to what the applicant claims, for the possibility, and a fortiori the obligation, to grant provisional funding to any company replying to the call for proposals at issue, subject to subsequent verification of its actual use in accordance with Regulation No 1295/2013. The award of the grant is conditional on compliance with the eligibility conditions applicable to applicants and not, in any event, on the subsequent verification of the use of the grant awarded under the call for proposals at issue. 144 In that regard, the possibility of terminating the grant agreement signed with a beneficiary, in the event of a change in the beneficiary’s financial or legal situation likely to affect its implementation, clearly cannot, contrary to what the applicant claims, mean that the grant may, if not must, be awarded, in case of doubt, on a provisional basis, to any applicant, even if not eligible. 145 In the present case, the applicant was requested on several occasions to clarify the content of its application so that the EACEA could assess whether it met the eligibility criteria set out in Section 6.1 of the Guidelines. In the absence of sufficient evidence to assess the eligibility of its application on that point, the Commission was required to confirm the EACEA’s position to reject the applicant’s application for the call for proposals at issue, and the fact that it did not take account of the proposed use of the funds requested cannot, therefore, for that reason, show that the contested decision was disproportionate. 146 In the light of the foregoing, the fourth plea in law must be rejected and, consequently, the action must be dismissed in its entirety. Costs 147 Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 148 Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission. 149 The EACEA shall bear its own costs, in accordance with Article 138(1) of the Rules of Procedure. On those grounds, THE GENERAL COURT (Sixth Chamber) hereby: 1. Dismisses the action; 2. Orders Leonine Distribution GmbH to bear its own costs and to pay the costs incurred by the European Commission; 3. Orders the European Education and Culture Executive Agency (EACEA) to bear its own costs. Marcoulli Schwarcz Iliopoulos Delivered in open court in Luxembourg on 29 June 2022. E. Coulon M. van der Woude Registrar President * Language of the case: English.