Judgment — ECLI:EU:T:1999:326
Date: 1999-12-15
Language of the case: German
Court formation: Second Chamber, Extended Composition
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Statement of reasons;Applications by natural or legal persons;Formal investigation procedure;Commission decision following the formal investigation procedure;Regional aid;Aid for projects of European interest or to remedy a serious disturbance in the economy;General;Preliminary review;Aid relating to the division of Germany;Commission discretion
Procedure: Action for annulment - unfounded
Origin: Germany

summary of the grounds for the Commission's refusal to apply the derogation in Article 92(2)(c) of the Treaty to the facts of the case. 151. Nevertheless, the Decision was adopted in a context that was well known to the German Government and the applicants and forms part of a consistent line of decision-making practice, particularly in relation to those parties. Such a decision may be supported by a summary statement of reasons (Case 73/74 Papiers Peints v Commission [1975] ECR 1491, paragraph 31; Case T-34/92 Fiatagri and New Holland Ford v Commission [1994] ECR II-905, paragraph 35). 152. Since 1990, in its relations with the Commission, the German Government has referred many times to Article 92(2)(c) of the Treaty, insisting on the importance of that provision for the recovery of the former East Germany (see, in particular, the letter from Chancellor Kohl to President Delors of 9 December 1992, cited above). 153. The arguments put forward by the German Government in that regard were rejected in various letters or decisions of the Commission [see, in particular, the Commission notice pursuant to Article 93(2) of the EEC Treaty to other Member States and other parties concerned regarding the proposal by the GermanGovernment to award State aid to the Opel group in support of its investment plans in the new Länder (OJ 1993 C 43, p. 14); the Commission notice pursuant to Article 93(2) of the EEC Treaty to other Member States and interested parties concerning aid which Germany proposes to grant Rhône-Poulenc Rhotex GmbH (OJ 1993 C 210, p. 11); Commission Decision 94/266/EC of 21 December 1993 on the proposal to award aid to SST-Garngesellschaft mbH, Thüringen (OJ 1994 L 114, p. 21); the Mosel I decision; and Commission Decision 94/1074/EC of 5 December 1994 on the German authorities' proposal to award aid to Textilwerke Deggendorf GmbH, Thüringen (OJ 1994 L 386, p. 13)]. 154. In that respect, particular importance should be accorded to the Mosel I decision, in which the Commission declared some of the aid in question, amounting to DEM 125.2 million, incompatible with the common market after excluding, on grounds identical to those used in the Decision, the possibility that that aid might be covered by Article 92(2)(c) of the Treaty. It should be noted, moreover, thatneither the applicants nor the German authorities have brought any action against that earlier decision. 155. Even though, between the adoption of the Mosel I decision and the adoption of the Decision, the Commission, the German authorities and the applicants have had numerous contacts revealing their continuing differences of opinion concerning the applicability of Article 92(2)(c) of the Treaty to the aid in question (see Points V and VI of the Decision), it should also be noted that no specific or new argument has been put forward in that context, particularly as to the existence of a causal link between the position of the motor-vehicle industry in Saxony after German reunification and the division of Germany (see paragraph 141 above). 156. In those circumstances, the Court finds that the applicants and the Federal Republic of Germany were sufficiently informed of the grounds for the Decision and that, in the absence of more specific arguments, the Commission was not obliged to state the grounds for it more extensively. 157. It follows from the above considerations as a whole that the complaints alleging infringement of Article 92(2)(c) of the Treaty and an insufficient statement of reasons must be rejected. II - Infringement of Article 92(3) of the Treaty 158. The applicants claim that there have been a number of infringements of Article 92(3) of the Treaty, some arising from the general tenor of that article and others relating specifically, and respectively, to subparagraphs (a) and (b) of that provision. It is appropriate to begin by considering whether there has been infringement of Article 92(3)(b). Infringement of Article 92(3)(b) of the Treaty Arguments of the parties 159. The applicants maintain that the Commission has infringed Article 92(3)(b) of the Treaty by not examining the conditions for applying that provision. They refer to the second paragraph of Point X of the Decision, according to which: 'The derogation in Article 92(3)(b) can certainly not be applied to Germany. It is true that German unification has had negative effects on the German economy, but these alone are not sufficient to apply that provision to an aid scheme. Recently, the Commission took the view that an aid scheme remedied a serious disturbance in the economy of a Member State when, in 1991, aid was approved for a privatisation programme in Greece. In its decision the Commission noted that the privatisation programme was an integral part of the undertakings given pursuantto Council Decision 91/306/EEC of 4 March 1991 in connection with the consolidation of the national economy as a whole. The German situation is clearly different.‘ 160. The applicants submit, first, that such a statement of reasons is insufficient. The Commission merely repeated a standard formula appearing in previous decisions (see, in particular, the Mosel I decision). The Decision did not touch in any way on the decisive question, namely whether, in the particular circumstances of the case, the aid was designed to remedy a serious disturbance in the economy of the Federal Republic of Germany. Nor did the Decision explain what the differences were between the present case and the privatisation programme in Greece, which in the Commission's argument justified the non-application of Article 92(3)(b) of the Treaty. 161. Secondly, the Commission did not seriously examine the question of the applicability of Article 92(3)(b) of the Treaty, even though the German Government had relied on it a number of times during the administrative procedure, arguing that the problems of integrating the former planned economy of the new Länder and transforming it into a market economy caused a serious disturbance in its economy. 162. Thirdly, the applicants argue that the conditions for applying Article 92(3)(b) of the Treaty are fulfilled in this case. It was sufficient for that purpose to establish that the aid in question was intended to remedy a serious disturbance in the economy of a Land (Philip Morris, paragraphs 20 to 25). In that respect, the Free State of Saxony had been notable, particularly in 1991, for a remarkably low gross national product in comparison with the European average and a particularly high rate of unemployment. Moreover, application of Article 92(3)(b) of the Treaty was not excluded where the aid in question was intended for a single undertaking, and neither did it depend on the share held by that undertaking in the national economy. That argument, raised by the Commission in its defence in Case T-143/96, is, the applicants maintain, out of time and inadmissible in any event. 163. The Commission argues, first, that it has a wide discretion when making the economic and social assessments referred to in Article 92(3)(b) of the Treaty (Philip Morris, paragraph 24). 164. It maintains, secondly, that in referring to the aid granted to the privatisation programme in Greece, approved in implementation of a Council decision and concerning the whole of the economy of that Member State, it was merely recalling the conditions normally required for the purposes of applying Article 92(3)(b) of the Treaty. There was therefore no infringement of Article 190 of the Treaty. 165. Thirdly, the Commission maintains that the conditions for applying Article 92(3)(b) have not been fulfilled in this case. Findings of the Court 166. Under Article 92(3)(b) of the Treaty, aid may be considered to be compatible with the common market if it is '[...] to remedy a serious disturbance in the economy of a Member State‘. 167. It follows from the context and general scheme of that provision that the disturbance in question must affect the whole of the economy of the Member State concerned, and not merely that of one of its regions or parts of its territory. This, moreover, is in conformity with the need to interpret strictly a derogating provision such as Article 92(3)(b) of the Treaty. The judgment in Philip Morris, relied on by the applicants in support of their argument, makes no comment of any kind on the point at issue here. 168. The applicants' argument must therefore be rejected as inoperative since they merely refer to the state of the economy of the Free State of Saxony, without even alleging that this caused a serious disturbance of the economy in the Federal Republic of Germany as a whole. 169. Moreover, the question whether German reunification has caused a serious disturbance in the economy of the Federal Republic of Germany involves complex assessments of an economic and social nature, to be made within a Community context, which fall within the exercise of the wide discretion which the Commission enjoys under Article 92(3) of the Treaty (see, by analogy, Case C-355/95 P TWD v Commission [1997] ECR I-2549, paragraph 26). In that context, judicial review must be limited to verifying whether the rules on procedure and the statement of reasons have been complied with, that the facts are materially accurate, and that there has been no manifest error of assessment and no misuse of powers. In particular, it is not for the Community judicature to substitute its economic assessment for that of the Commission (Case T-380/94 AIUFFASS and AKT v Commission [1996] ECR II-2169, paragraph 56; Case T-149/95 Ducros v Commission [1997] ECR II-2031, paragraph 63). 170. In this case, the applicants have not put forward any concrete evidence capable of establishing that the Commission made a manifest error of assessment in taking the view that the unfavourable repercussions of the reunification of Germany on the German economy, however real, did not in themselves constitute a ground for applying Article 92(3)(b) of the Treaty to an aid scheme. 171. As for the statement of reasons for the Decision, although brief, it appears to be sufficient having regard to the context of the case, to its antecedents, especially the Mosel I decision, and to the absence of specific arguments raised during the administrative procedure. In that regard, the considerations set out in paragraphs 140 to 142 and 149 to 156 above apply, mutatis mutandis, as regards the statementof reasons for the Commission's refusal to apply in this case the derogation laid down in Article 92(3)(b) of the Treaty. 172. It follows from the above that the complaints alleging infringement of Article 92(3)(b) of the Treaty and an insufficient statement of reasons must be rejected. Infringement of Article 92(3)(a) of the Treaty Arguments of the parties 173. The applicants argue that the Commission infringed Article 92(3)(a) of the Treaty, which provides that 'aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment‘ may be considered to be compatible with the common market. 174. First, they maintain that Saxony is one of the regions envisaged by that provision, as the Commission impliedly acknowledged in the first paragraph of Point XII of the Decision. Yet the Decision did not contain any discussion concerning the possible application of Article 92(3)(a) of the Treaty. By refusing to express any view on that point, the Commission abused its discretion and infringed that rule. 175. Secondly, although the requirements of Article 92(3)(a) of the Treaty are stricter than those of Article 92(3)(c) in determining which regions are capable of benefiting from the derogations, Article 92(3)(a) does not require that trading conditions should not be adversely affected to an extent contrary to the common interest (Germany v Commission, paragraph 19). In the applicants' submission, it thus constitutes a special provision, the applicability of which should be examined in priority to that of Article 92(3)(c) of the Treaty. 176. Thirdly, the applicants state that Article 92(3)(a) of the Treaty allows the national authorities to offer an investor wishing to set up business in a particularly disadvantaged region a special encouragement ('top up‘ aid) going beyond mere compensation for regional disadvantages. Even if it is not possible totally to exclude considerations relating to the economic sector when carrying out an investigation under Article 92(3)(a) of the Treaty (Case C-169/95 Spain v Commission [1997] ECR I-135), in the case of aid to economically weak regions for the purposes of that provision, more weight must be given to regional development, whereas, in the case of regions envisaged by Article 92(3)(c) of the Treaty, sectoral considerations play a more important role. The applicants thus maintain that a higher intensity of aid is permissible in the former case. 177. In those circumstances, the applicants argue, the reference in the Decision to the existence of surplus production capacity in the motor-vehicle industry was not sufficient to exclude the application of Article 92(3)(a) of the Treaty. That wasonly a consideration to be potentially taken into account when exercising the discretion implied by that rule. Moreover, decisions involving a discretion required a particularly extensive and detailed statement of reasons (Joined Cases 36/59, 37/59, 38/59 and 40/59 Präsident Ruhrkohlen and Others v High Authority [1960] ECR 423, 439 et seq.; Opinion of Advocate General Roemer in Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1966] ECR 299, 352), especially in the case of decisions concerning State aids intended to benefit defined undertakings (Opinion of Advocate General Darmon in Germany v Commission, p. 4027). 178. The Commission maintains that it did examine the question whether aid might be authorised under Article 92(3)(a) of the Treaty, as is shown by the third paragraph of Point X and the first paragraph of Point XII of the Decision. 179. It points out first that, in the case of Germany, it has a policy of fixing the maximum intensity limit for regional aid (that is to say the amount of the aid as a percentage of the amount of the investment) at 35% for the regions envisaged in Article 92(3)(a) of the Treaty and 18% for those envisaged in Article 92(3)(c) of the Treaty. Since the Decision authorised aid of an intensity of 22.3% for Mosel II and 20.8% for Chemnitz II, it was obvious that the Commission applied Article 92(3)(a) of the Treaty to the facts of the case. 180. Whilst acknowledging that the new Länder are regions capable of receiving aidunder Article 92(3)(a) of the Treaty, the Commission cites, secondly, the wide discretion it enjoys in the matter (Case C-225/91 Matra v Commission [1993] ECR I-3203, paragraph 23 et seq.). It was entitled in particular to take account of the effects of the aid in question on the economic sector concerned throughout the Community, including the risk of creating surplus production capacity, and the proportionality between the amount of the aid and the regional disadvantages. 181. Thirdly, the Commission emphasises, the Decision sets out in its detail that the aid in question would exacerbate existing overcapacity in the motor-vehicle industry, and was thus contrary to the Community interest. It had therefore given sufficient reasons for its refusal to authorise that aid under Article 92(3)(a) of the Treaty, beyond the accepted limits. 182. Finally, the Commission argues that Article 92(3)(a) of the Treaty should not be applied in priority over Article 92(3)(c). It adds that regions falling under Article 92(3)(a) of the Treaty are characterised by the fact that an investor encounters cost disadvantages for his investment there that are greater than in regions falling under Article 92(3)(c) of the Treaty. Given that, in a case such as the present, those disadvantages are taken into consideration in analysing costs and benefits for the purposes of calculating the total amount of aid capable of being authorised by the Commission, account was therefore taken of the higher eligibility for aid of regions falling within Article 92(3)(a) of the Treaty. Therefore, the Commission argues, parallel application of subparagraphs (a) and (c) of Article 92(3) of the Treatycannot have the effect of depriving the provision in subparagraph (a) of its particular scope. Findings of the Court 183. In the first paragraph of Point X of the Decision, the Commission begins by recalling the argument of the German Government that the three derogations laid down respectively by Articles 92(2)(c), 92(3)(b) and 92(3)(a) of the Treaty are applicable in this case. In the two following paragraphs, the Commission states the reasons leading it to exclude the application of Articles 92(3)(b) and 92(2)(c) to the aids in question. In the second sentence of the third paragraph, the Commission states that 'not only the conditions for exemption provided for in Article 92(3)(a) and (c) but also ... the Community framework on State aid to the motor vehicle industry allow it to respond appropriately to the problems which the new Länder are facing‘. 184. The Commission therefore acknowledged the applicability to the aid in question not only of Article 92(3)(c) but also of Article 92(3)(a), as is confirmed by the use of wording from the latter in the first paragraph of Point XII of the Decision. The Commission there acknowledges that the new Länder constitute 'an underdeveloped region‘ where 'the standard of living is low‘ and 'the level of unemployment is exceptionally high and still rising‘. It then states that high levels of investment and other aid have been authorised 'in order to contribute to the development of the region‘. 185. In its pleadings, the Commission has further argued, without being contradicted by the applicants or the German Government, that in this case it allowed an aid intensity higher than it was its policy to accept when applying Article 92(3)(c) of the Treaty to regional aid in Germany. It that respect, it has explained that the specific disadvantages encountered by investors in the regions falling within Article 92(3)(a) of the Treaty are taken into consideration in its cost-benefit analysis for the purposes of fixing the total amount of the aid capable of being authorised, so that those calculations take account of the higher aid eligibility of those regions. 186. The argument that the Commission was unwilling to apply the more favourable provision of Article 92(3)(a) of the Treaty to the aid in question is therefore unfounded. 187. Moreover, in its judgment in Spain v Commission, the Court of Justice expressly rejected the argument of the applicants in their application by holding (at paragraph 17) that the difference in wording between subparagraphs (a) and (c) of Article 92(3) of the Treaty '[could not] lead to the conclusion that the Commission should take no account of the Community interest when applying Article 92(3)(a), and that it must confine itself to verifying the regional specificityof the measures involved, without assessing their impact on the relevant market or markets in the Community as a whole.‘ The Court of Justice also held (at paragraph 20) that 'the application of both Article 92(3)(a) and Article 92(3)(c) presupposes the need to take into consideration not only the regional implications of the aid covered by those provisions but also, in the light of Article 92(1), its impact on trade between Member States and thus the sectoral repercussions to which it might give rise at Community level‘. 188. In those circumstances, the arguments by which the applicants criticise the reference in the Decision to existing surplus capacity in the motor-vehicle industry are clearly ill founded, having regard to the wide discretion which the Commission enjoys under Article 92(3) of the Treaty (see also the judgment in Spain v Commission, paragraph 18). That applies particularly in respect of 'top-up‘ aid, as to which the Commission states in the fifth paragraph of Point XI of the Decision that, in assessing regional aid to the motor vehicle industry, such top-up aid 'is normally approved except in cases where the investment contributes to the creation of capacity problems in the relevant sector. In such cases, the aid will be strictly limited to the net regional disadvantages‘. 189. Finally, the Court finds that the Commission gave proper reasons, especially in Points X, XI and XII of the Decision, for its assessment with respect to Article 92(3)(a) of the Treaty. 190. It follows from the above that the complaints alleging infringement of Article 92(3)(a) of the Treaty and an insufficient statement of reasons must be rejected. Contravention of the general scheme of Article 92(3) of the Treaty 191. The applicants put forward essentially five complaints. (a) The need for an investigation ex ante and the applicability of the Community framework - Arguments of the parties 192. The applicants argue that, in order to express a view as to the compatibility of aid with the common market, the Commission must take into account the information which it held at the time the aid in question was granted (investigation ex ante) rather than at the time it adopted its decision (investigation ex post). They rely in that respect on Case C-301/87 France v Commission [1990] ECR I-307, paragraphs 43 and 45 (the 'Boussac‘ judgment) and Case T-266/94 Skibsværftsforeningen and Others v Commission [1996] ECR II-1399, paragraphs 96 and 98. In addition, they raise the following arguments: - where Article 93(3) of the Treaty provides that the Commission is to be informed in advance of any aid plans, that is precisely in order to enable it to examine ex ante their compatibility with the common market; - the deciding moment for assessing the compatibility of aid with the common market is that at which it produces its effects on competition (see, as regards the repayment of aid, Case C-348/93 Commission v Italy [1995] ECR I-673, paragraph 26); - the assessment of the existence of a State-aid element, and in particular the application of the 'private investor in a market economy‘ test, must be made ex ante (Boussac judgment, paragraphs 43 to 45; Tubemeuse II; Case C-305/89 Italy v Commission [1991] ECR I-1603, paragraph 19); - assessment of the situation ex post is contrary to the principle of a State governed by the rule of law. If the factual and legal situation that is decisive for assessing an aid were to be that prevailing at the time the Commission's decision were adopted, the Commission would be able to choose the most convenient moment according to the desired result. Moreover, the criteria must be foreseeable, which is not guaranteed if the situation is assessed ex post. 193. It follows, in the applicants' submission, that the compatibility of the aid in question with the common market must be assessed at the date on which it was granted, namely 22 March 1991, and not at the date of the adoption of the Decision in 1996. That approach also applied to the parts of the aid which were not yet paid when the Decision was adopted, since all instalments of aid granted in the context of a single decision and by virtue of a single project must be assessed in accordance with the same legal and factual framework. 194. The applicants go on to argue, first, that the aid in question falls within a programme of regional aid that was already approved, and that the Commission was therefore not entitled to subject it to an examination of its compatibility with the Community framework. In their submission, the Commission had only the limited power to examine whether the aid in question complied with the conditions of the regional aid programme already approved. 195. In this case, the investment grants were definitively allocated by the 1991 decrees (see paragraph 19 above). The amendments made to those decrees later did not concern the substance, but merely reduced the amount of the aid, thus attenuating its negative consequences for competition. As for the investment subsidies, a firm undertaking concerning them was given on 18 March 1991 (see paragraph 20 above). 196. All that aid was granted within the context of the Nineteenth Outline Plan adopted pursuant to the Law on the Joint Task. That programme had already been approved by the Commission, as is shown by the fourth paragraph of Point VIII of the Decision. It follows, in the applicants' submission, that the clause in the 1991 decrees, whereby the aid was granted subject to its authorisation by the Commission, was devoid of purpose. 197. Moreover, the applicants challenge the claim in the Commission's defence that, in its approval of the general aid programmes, it expressly reserved to itself the right to verify whether Articles 92 and 93 of the Treaty were complied with. They accuse the Commission of not having sent to them the documents said to contain that reservation and argue that their production at the rejoinder stage is out of time and inadmissible. 198. Even if the Commission's approval of the Nineteenth Outline Plan contained a reservation whereby the provisions of the Community framework had to be complied with, that framework, the applicants argue, was not applicable in March 1991, the date of the definitive grant of the aid in question. 199. Point 2.5 of the Community framework, as published in 1989, shows that the framework was to be applied for a two-year period from 1 January 1989. The Community framework therefore expired on 31 December 1990. The Federal Republic of Germany did not consent to its reintroduction until April 1991, after the definitive grant of the aid in question. 200. In that respect, the applicants put the following specific points by way of support for their argument: - Decision 90/381 of 21 February 1990, cited above, requiring the Federal Republic of Germany, 'pursuant to‘ the Community framework, to notify aid exceeding a certain amount to the Commission, was not applicable to the new Länder, which did not yet form part of that Member State, and it could not have extended that framework, which expired on 31 December 1990, beyond its original duration; - the decision to extend the duration of the Community framework, henceforth extended to the new Länder, was published in OJ C 81 of 26 March 1991, made available on 27 March 1991, after the definitive grant of the aid in question. The Community framework could not apply retrospectively, because its wording did not so provide and because it would be contrary to the principle of legal certainty to place the commencement of the validity of a Community measure at a time prior to its publication (Case C-368/89 Crispoltoni [1991] ECR I-3695, paragraph 17); - the date of adoption of the decision extending the Community framework has not been established. Moreover, it is doubtful whether that decisionwas validly adopted. The Commission's letter to the Member States is dated 31 December 1990, although the Commission does not hold meetings at the end of the year. Moreover, the text published in the Official Journal of the European Communities (OJ 1991 C 81, p. 4) does not correspond to that received by the German Government; - the Commission's letter proposing to the German Government that the Community framework be extended was not received by that government until 8 January 1991, as evidenced by the entry stamp by the permanent representation of Germany at the European Communities. At that date, the validity of the former Community framework had already expired, and the Commission's proposal should therefore be understood as proposing the reintroduction of that framework, without the possibility of retrospective application in the absence of consent from the Member States (Case C-135/93 Spain v Commission, paragraph 24; Case C-292/95 Spain v Commission, paragraph 28 et seq.); - the Community framework has in itself no binding force as against Member States for as long as they do not consent to it. In this case, the Federal Republic of Germany opposed the Community framework from the outset (see Decision 90/381 of 21 February 1990, cited above); on 7 February 1991, the Secretary of State at the Federal Ministry of the Economy explained to the Member of the Commission responsible for competition matters theposition of his government to the effect that the Community framework did not apply to the new Länder, and the consent of the Federal Republic was not finally given until April 1991. 201. The Commission argues essentially that it was entitled to apply the Community framework as in force in June 1996 and to take account of the factual circumstances existing at the date on which the Decision was adopted. In this case, the applicants had changed their plans fundamentally since March 1991, and the decrees granting the aid had also been amended several times up to February 1996. There could therefore be no question of the Commission, in 1996, having to examine the compatibility of the aid by reference to the situation prevailing in 1991, whilst in the meantime all the relevant criteria had been fundamentally changed. 202. The Commission further contends that the aid in question had to be notified to it with a view to its prior authorisation. - Findings of the Court 203. Contrary to what the applicants maintain, the aid measures in dispute cannot be regarded as falling within a regional aid programme already approved by the Commission and thus exempt from the duty of prior notification. 204. By referring, in the Nineteenth Outline Plan adopted pursuant to the Joint Task Law, to a number of specific sectors in which each of the projects to be supported remained subject to the need for prior authorisation from the Commission (see paragraph 7 above), Germany acknowledged that approval of the regional aid envisaged by that outline plan did not extend to the sectors in question and, in particular, the motor-vehicle industry, to the extent that the cost of a support operation exceeded 12 million ecus. 205. That is confirmed, in particular, by the Commission's letter of 2 October 1990 approving the regional aid scheme laid down for 1991 by the Nineteenth Outline Plan (see paragraph 7 above) and by its letter of 5 December 1990 approving the application of the Joint Task Law to the new Länder (see paragraph 11 above), in which the Commission expressly drew the attention of the German Government to the need to take account, when implementing the measures contemplated, of the Community framework existing in certain sectors of industry; by its letters of 14 December 1990 and 14 March 1991, insisting that the aid for Volkswagen's new investments could not be implemented without having first been notified to the Commission and having received its approval (see paragraph 18 above); and by the fact that each of the 1991 decrees states that it is 'subject to the authorisation of the Commission‘. The applicants are wrong in arguing that such a reference is devoid of purpose having regard to the authorisation already obtained by virtue of the approval of the Nineteenth Outline Plan; that approval does not extend to the motor-vehicle industry, as has just been pointed out in paragraph 204 above. The applicants are also incorrect in arguing that the production of the letters referred to above, in an annex to the rejoinder, was out of time and inadmissible. In the first place, those letters are cited both in Point II of the Decision and in the decision to initiate the investigation procedure. Moreover, they were produced in response to an assertion made for the first time in the reply. 206. In the light of the factors described above, the fact that application of the Community framework was suspended between January and April 1991, even if established, cannot have the legal consquence that the aid to the motor-vehicle industry is to be regarded as covered by the approval of the Nineteenth Outline Plan. On the contrary, if that fact were established, it would have to be held that Article 93(3) of the Treaty remained fully applicable to the aid in question. 207. It follows from the above that, in any event, the aid in dispute was subject to the duty of prior notification to the Commission, and that it could not be implemented before the procedure had led to a final decision. 208. By contrast, the question whether or not the Community framework had binding force vis-à-vis Germany in March 1991 is of no relevance for the purposes of these proceedings. 209. In that respect, it should be emphasised that, although the rules of the Community framework, as 'appropriate measures‘ proposed by the Commission to theMember States on the basis of Article 93(1) of the Treaty, are entirely devoid of binding force and bind Member States only if the latter have consented to them (Case C-292/95 Spain v Commission, paragraphs 30 to 33), there is nothing to prevent the Commission from examining the aid which must be notified to it in the light of those rules when exercising the wide discretion which it enjoys for the purposes of applying Articles 92 and 93 of the Treaty. 210. It should, nevertheless, be added that the applicants' argument that the investigation, in 1996, of the compatibility of the aid at issue with the common market could be based only on assessment criteria which existed in 1991 finds no support in the case-law of the Court of Justice and the Court of First Instance. Thus, in Case 234/84 Belgium v Commission [1986] ECR 2263, paragraph 16, and Case C-241/94 France v Commission [1996] ECR I-4551, paragraph 33, the Court of Justice stated that the legality of a decision concerning aid is to be assessed in the light of the information available to the Commission when the decision was adopted. The Court of First Instance did the same in Joined Cases T-371/94 and T-394/94 British Airways and Others and British Midland Airways v Commission [1998] ECR II-2405, paragraph 81). 211. Moreover, Article 92(1) of the Treaty prohibits, in so far as it affects trade between Member States, any aid 'which distorts or threatens to distort competition‘. It follows that, when it establishes the existence of an aid within the meaning of that provision, the Commission is not strictly bound by the conditions of competition existing at the date on which its decision is adopted. It must carry out an assessment in a dynamic perspective and take account of the foreseeable development of competition and the effects which the aid in question will have upon it. 212. The Commission cannot therefore be criticised for having taken account of factors arising after the adoption of a plan to grant or alter aid. The fact that the Member State concerned implemented the proposed measures before the investigation procedure resulted in a final decision, in breach of its obligations under Article 93(3) of the Treaty, is of no relevance to that question. 213. The applicants' argument that such a practice is incompatible with the principle of legal certainty cannot be accepted. Whilst the preliminary investigation procedure under Article 93(3) of the Treaty is intended to allow the Commission sufficient time, the Commission must, nevertheless, act diligently and take account of the interest of the Member States of being informed of the position quickly in spheres where the need to intervene may be urgent by reason of the effect that the Member States expect from the planned incentive measures. The Commission must therefore take a position within a reasonable period, which the Court of Justice has assessed at two months [Case 120/73 Lorenz v Commission [1973] ECR 1471, paragraph 4; see also Article 4 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of theEC Treaty (OJ 1999 L 83, p. 1]. Moreover, the Commission is bound by the same general duty of diligence where it decides to initiate the inter partes investigation procedure laid down by Article 93(2) of the Treaty, and its failure to act in the matter may in appropriate cases be condemned by the Community judicature in proceedings under Article 175 of the EC Treaty (now Article 232 EC). 214. Moreover, the question of a possible infringement of the principle of legal certainty does not arise in this case. The length of time which elapsed between the date on which the first decrees granting aid were adopted (March 1991) and the date of the Decision (26 June 1996) was due, first, to the absence of complete notification of the measures in question; secondly, to the successive amendments which the applicants made to their plans, which in turn entailed successive amendments to the decrees granting the aid; and, thirdly, to the considerable difficulties which the Commission encountered in obtaining from the German Government and the applicants the information which it needed in order to take a decision (see paragraphs 16 to 42 above). 215. In particular, the Mosel I decision shows that, at the beginning of 1993, the Commission was in a position to take a decision on the whole of Volkswagen's investment plans, as initially submitted to it. It was at the express request of Volkswagen, submitted on 31 January 1993, that the Commission limited its assessment to the aid concerning Mosel I and Chemnitz I. It was then necessary to wait until 1995, when the Commission threatened the German authorities that it would adopt a decision on the basis of the incomplete file in its possession, for the information which it needed to be finally communicated to it. In short, it was not until 1996 that the Commission was placed in a position to take a decision with full knowledge of the facts. 216. In the meantime, the applicants' initial plans had been changed three times and, in consequence, the 1991 decrees had been amended by the 1993, 1994 and 1996 decrees. Although the parties disagree as to the extent of those successive amendments, it is undisputed that, at the very least, they involved a significant reduction in the scale of the plans and, above all, the postponement by three to four years of the entry into service of the paint and final assembly workshops of Mosel II and Chemnitz II. 217. In those circumstances, the applicants are wrong when they maintain that the Commission was required to examine plans that were successively devised in 1993, 1994 or 1996 solely in the light of the information at its disposal in 1991. On the contrary, the Commission was right to take account in its assessment of the changes that were subsequently made. 218. Moreover, even if it had initially approved the aid granted by the 1991 decrees, the Commission would have been entitled to re-examine it at the time of its amendment, in accordance with Article 93(3) of the Treaty, under which the Commission is to be informed, in sufficient time to enable it to submit itscomments, of any plans to alter the aid. Thus, while acknowledging that there was no surplus capacity in the motor-vehicle industry in 1991, the Commission would in principle have been entitled to take account of surplus capacity which became apparent from 1993 onwards. 219. It follows from the above that the applicants' arguments concerning, first, the need for an investigation ex ante and, secondly, the inapplicability of the Community framework, must be rejected in their entirety. (b) The classification of the paint and final assembly workshops at Mosel II and Chemnitz II as 'extensions of existing capacity‘ - Arguments of the parties 220. The Free State of Saxony submits that, by making a distinction between extensions of existing capacity and new investments that does not appear in the Community framework, the Commission infringed the principle of institutional equilibrium (Case C-70/88 Parliament v Council, cited in paragraph 72 above, at paragraphs 21 and 22; Case C-316/91 Parliament v Council [1994] ECR I-625, paragraph 11 et seq.). They maintain that, under Article 94 of the EC Treaty (now Article 89 EC), it is for the Council to make any appropriate regulations for the application of Articles 92 and 93 of the Treaty. 221. The applicants also argue that it is incorrect to classify the paint and final assembly workshops of Mosel II and Chemnitz II as 'extensions of existing capacity‘. If they had been classified as 'greenfield investments‘, like the press and body shops of Mosel II, all the investment grants at issue would have been declared compatible with the common market. 222. First, the applicants maintain that the classification 'extension of existing capacity‘ applies only in cases of enlargement of an existing factory. In this case, Mosel II had been built on a field, its buildings and facilities were entirely new and materially separate from Mosel I, and they were built by a different company from the one that built the latter. Moreover, Mosel I was destined for closure on the entry into service of all parts of Mosel II. Throughout the administrative procedure and in the Decision itself, the Commission had always referred to the applicants' 'new factories‘ or 'new investment plans‘. Mosel II should therefore be regarded as a greenfield investment. The same applies to Chemnitz II. 223. Secondly, Mosel II and Chemnitz II also satisfy the definition of 'greenfield‘ investment given in the eighth paragraph of Point XII of the Decision. In that respect, the Commission wrongly established a distinction between the press and body shops of Mosel II on the one hand and the paint and final assembly workshops of Mosel II and Chemnitz II on the other, whereas the project as a whole constitutes a greenfield investment. 224. The applicants emphasise that Mosel II and Chemnitz II constitute a single project, even though executed in several stages. The basic conception of that project, namely the construction of a motor-vehicle factory comprising the four operations of manufacture (pressing, skeleton bodywork, painting and final assembly), with an engine-construction plant nearby, did not undergo any modification despite the spacing out in time, the reduction of the sum invested and the reduction ofproduction capacity and the amount of the aid in relation to the initial project of 1991. 225. The applicants insist that the production premises were constructed as planned. The skeleton bodywork and press shops of Mosel II were completed as planned, in 1992 and 1994 respectively. The entry into service of the final assembly workshop was simply postponed from 1994 to 1996, and that of the paint shop from 1994 to 1997. Only the logistics centre, which did not form part of the production units, was constructed not, as envisaged, by Volkswagen on the Mosel site, but by another undertaking some kilometres away from the factory. 226. The applicants add that the technology used at Mosel II is more modern than that initially envisaged, that production has been simplified and automated and that productivity has been increased, especially by the use of qualified suppliers nearby and the externalisation of certain services. They stress, however, that the investment project has not changed in content but has simply been adapted to technical progress. 227. It does not follow from the solution adopted on a transitional basis, consisting in the delivery by the already-finished part of Mosel II of skeleton bodywork to Mosel I, that Mosel II is not a greenfield investment. In that regard, the Commission erred in holding that that solution had permitted the establishment in Mosel in 1994 of a 'fully operational‘ factory, composed of the assembly and paint shops of Mosel I and the press and skeleton body shops of Mosel II. 228. Mosel I and II were never designed or constructed with a view to their forming an integrated motor-vehicle construction plant. There are considerable technical differences between them, making lasting integration of Mosel I in Mosel II's production process economically absurd. 229. The Commission was perfectly aware that Mosel I was only an interim solution and that it was intended to be closed. The applicants refer to the ninth paragraph of Point IX of the Mosel I decision, according to which 'the rationale behind the interim project was to maintain and train a workforce for automobile production at the location until the new plant Mosel II comes on stream‘. 230. In accordance with that interim solution, assembly was abandoned at Mosel I on 23 December 1996 and the paint shop was closed in March 1997. Assembly of the Passat B5 model started at Mosel II in October 1996. Only a small part of Mosel I's buildings were still used for touching-up work and to store detached componentsfrom other factories in the group. It was not intended to integrate Mosel I into Mosel II. 231. It is, moreover, both technically and economically out of the question to maintain Mosel I facilities in service, or to reopen them, after the completion of Mosel II. 232. Moreover, the Commission made a factual error in stating that Volkswagen's undertakings in Saxony had been profitable since 1994 (ninth paragraph of Point XII of the Decision). On the contrary, Volkswagen transferred DEM 367 million to VW Sachsen to compensate for its losses between 1994 and 1996. The Commission was aware of this. The applicants add that there is no connection between, on the one hand, a factory's productivity and rate of use and, on the other, its profitability. In any event, the alleged profitability of the Mosel facilities in 1994 played no part in the administrative procedure, and neither the applicants nor the Federal Republic of Germany had the opportunity to express their point of view on the question. 233. The applicants see no relevance in the fact that, in 1996, they had already eliminated certain typical disadvantages of a greenfield investment. Volkswagen made efforts, at its own expense and with a view to the completion of Mosel ll, to develop infrastructure, logistical organisation and supplier structure. Moreover, the initial disadvantages had not been taken into consideration in the Mosel I decision, so that the Commission was under a duty in the Decision to take account of all the disadvantages in connection with the investments in Mosel II. 234. As regards the training of Mosel I's workers for the needs of Mosel II, the applicants argue that the traditional (solvent-based) painting technique used in Mosel I differs considerably from the (water-based) technique used in Mosel II. The same applies to the final assembly chain. The highly advanced technologies of the Mosel II facilities and computerised control techniques require a particular mastery of machines which is in no way comparable with the know-how employed in Mosel I. 235. As regards suppliers, there were none meeting Volkswagen's needs established in the area in 1990. However, thanks to Volkswagen's efforts in anticipation of Mosel II, there were eight 'just-in-time‘ suppliers present in 1994 and, at the end of 1997, there were 11 suppliers of that type, supplying 13 modular construction groups. However, those subcontractors established themselves near Mosel and Chemnitz not on account of the transitional retention of Mosel I and Chemnitz I, but solely on account of the long-term perspective offered by Mosel II and Chemnitz II. 236. The Commission contends that the decisive factor in the categorisation of the paint and final assembly shops at Mosel II was Volkswagen's decision in 1993 to divide the Mosel II project into four separate units, the construction and entry into service of which were to happen at different times. The Commission maintains thatconsideration of the disadvantages linked to operating costs must commence for each of those units separately at the time of its entry into service. 237. In the Commission's view, Volkswagen has had an operational motor-vehicle construction plant in Mosel since July 1992, the date of the entry into service of the Mosel II body shop, an on-site pressing unit not being strictly necessary. In any event, as from 1994 at the latest, Volkswagen was able to prepare vehicles, with parts delivered by its suppliers, in its press shop (entered service March 1994) and skeleton body shop (entered service July 1992) at Mosel II, and to finish them in the paint and final assembly shops of Mosel I, situated close by on the same industrial estate. - Findings of the Court 238. It should be noted that investigation of the compatibility of the aid at issue with the common market, in accordance with the Community framework, consisted primarily in assessing the net additional costs entailed by setting up at the chosen site as compared with setting up in a central, non-disadvantaged area of the Community. 239. Concerning the calculation of operating costs, the Commission makes a distinction between what it calls 'greenfield‘ investments, the additional costs of which it takes into account for a period of five years, and what it refers to as 'extension‘ investments, the additional operating costs of which it takes into account for only three years. 240. According to the eighth paragraph of Point XII of the Decision: 'The term ”greenfield project” does not simply mean that the project is situated in a green field somewhere, but that, from the investing company's point of view, the site is a new, as yet undeveloped one. Consequently, the company faces the following typical special problems as compared with the extension of an existing plant: lack of adequate infrastructure, lack of organised logistics, no trained workforce adapted to the needs of the company, and no established supplier structure. If, however, these services can be provided by a nearby plant belonging to the same group, then the project is treated as an extension, even if it is located in a green field. The Community concept differs from the concept of new investments that may be defined in national law. Since, in the case of a greenfield project as defined in this way, more difficulties arise and the time-span for reaching full capacity and thus viability is somewhat longer, there is justification for calculating the operating cost disadvantages over a longer period.‘ 241. Contrary to what the Free State of Saxony maintains, the Commission does not undermine the principle of institutional equilibrium by making such a distinction. The power to make any appropriate regulations for the application of Articles 92 and 93 of the Treaty, conferred on the Council by Article 94 of the Treaty, is in noway called into question by the fact that the Commission uses pre-established operational criteria, such as those underlying the distinction between greenfield investments and extensions of existing capacity, when exercising the wide discretion which it enjoys in applying those provisions. 242. In this case, the Commission considered that the skeleton body shop and the press shop of Mosel II were greenfield investments. It therefore took their operating costs into account over a period of five years, namely from 1993 until 1997 (body shop) and from 1994 until 1998 (press shop), in its cost-benefit analysis. By contrast, the paint and final assembly shops of Mosel II and Chemnitz II were classified as extensions of existing capacity, with the result that their operating costs were taken into account over a period of three years, namely from 1997 until 1999. 243. In that respect, the Commission states in the ninth and tenth paragraphs of Point XII of the Decision: 'In the present case, the Commission had to take into account the fact that the different shops of the investment in Mosel come on stream at different times. Thus, the start-up problems associated with the different subprojects will also occur at different times. Furthermore, the Commission took account of the fact that, through the delay in project implementation, the character of the project has also changed. With the setting up of the press and body shops and their link with the modernised paint shop and final assembly halls of the old Mosel I plant, a fully operational car plant was established in Mosel by 1994. This is also demonstrated by the profitability of the VW companies in Saxony since 1994. The future investment for a new paint and final assembly hall in Mosel II thus no longer constitutes a greenfield investment but represents an extension of existing capacity. Since a supplier structure is already in place [...], [...] the infrastructure exists and ... most of the workers will be taken over from Mosel I, the typical handicaps associated with greenfield investments will arise to a much lesser degree. This also applies to the Chemnitz II engine plant. As in other cases of capacity extension, the build up of production in these plants is very rapid. Although the German authorities and VW originally suggested an analysis of the period from 1998 to 2002 for all projects in Mosel and Chemnitz, the Commission has analysed the operating handicaps over five years for the proposed greenfield projects, i.e. for 1993 to 1997 (body shop) and for 1994 to 1998 (press shop), and over three years for the extension projects, i.e. 1997 to 1999 (paint shop, final assembly, Chemnitz II). It was also taken into account that the press shop and the body shop will be expanded from a production capacity of 432 cars/day to 750 cars/day during the same period in order to be able to supply fully the new Mosel II paint shop and final assembly. Therefore, the additional operating handicaps for this period (1997 to 1999) that can be attributed to this extension of capacity were also included in the analysis.‘ 244. As stated above, the question whether the paint and final assembly shops of Mosel II and Chemnitz II were to be classified as extensions of existing capacity or as greenfield investments falls within the wide discretion which the Commission enjoys when applying Article 92(3) of the Treaty. Review by the Court of First Instance must therefore be restricted to checking that the facts relied on in making the disputed classification are materially accurate, and that there has been no obvious error in the assessment of those facts (see the Matra judgment, cited in paragraph 180 above, at paragraphs 23 to 28). 245. It should be noted, moreover, that the classification of an investment as an extension of existing capacity or, on the other hand, as a greenfield investment, is made in a Community context, irrespective of the classification under the accounting or tax law of the Member State to which the beneficiary undertaking is subject (see, by analogy, Case T-459/93 Siemens v Commission [1995] ECR II-1675, paragraph 76). 246. In that respect, it has not been established that the Commission's conception is manifestly erroneous. That conception is based on the idea that the taking into account of the disadvantages linked to the operating costs of a new plant must commence at the time of its entry into service or, when the coming-on-stream of its various production units is staggered, at the time of the entry into service of each of them. Each unit must thus form the subject-matter of a separate assessment, so as to permit the state of development of the site to be taken into account as at the time of its entry into service. That conception complies with the rule that derogations from the principle laid down in Article 92(1) of the Treaty that State aid is incompatible with the common market are to be interpreted strictly. 247. In this case, contrary to their initial plans, the applicants opened the four workshops of Mosel II at different times between 1992 and 1997. In those circumstances, the arguments they put forward are not sufficient to invalidate the Commission's conclusion that the paint and final assembly shops of Mosel II and Chemnitz II cannot be classified as greenfield investments, since, from 1994 at the latest, there was a fully operational motor-vehicle production unit in Mosel composed of the paint and final assembly shops of Mosel I (in the modernisation of which the applicants invested more than DEM 414 million, and which the Mosel I decision describes as an ultra-modern assembly and paint factory), the skeleton body and press shops of Mosel II (which entered service in July 1992 and March1994 respectively), and Chemnitz I. As the Commission has pointed out, without being contradicted, the production capacity of that unit has been 100 656 vehicles per year since 1992, and 34 000 vehicles of the new model Golf A3 were built there in 1992, 71 800 in 1993, 90 100 in 1994 and 100 100 in 1995. 248. The applicants have, it is true, argued that the investments in Mosel II and Chemnitz II form a whole and that the combination of Mosel I/Chemnitz I and the first part of Mosel II represents only an interim solution. It should nevertheless beremembered that the Volkswagen group has enjoyed considerable aid, amounting to DEM 487.3 million for Mosel I and DEM 84.8 million for Chemnitz I (see the Mosel I decision). That aid enabled it to have the benefit of a fully operational motor-vehicle construction plant in 1994 at the latest, and to commence production as from that year. If that aid had not been granted, its Mosel II and Chemnitz II projects would have been classified as greenfield investment in their entirety, but, as against this, the new plant would not have been able to enter service so quickly and the investments there would have been more costly since it would, in any event, have had to develop its infrastructure, logistics, workforce and supplier network. In short, the applicants' argument, if accepted, would thus amount to allowing the Volkswagen group to benefit from the greenfield investment regime twice in relation to the same project for the construction of a motor-vehicle factory. 249. Moreover, as the Commission has pointed out, investments are not primarily meant to secure State aid but to ensure future profits. Therefore, an investor who succeeds in eliminating certain handicaps connected with his investment, more quickly, by accelerating the entry into service of certain parts of his project, should not consider himself 'penalised‘ by a reduction in the aid which he may enjoy, since his operating costs in connection with the infrastructure diminish and his production conditions improve. 250. Accordingly, the Commission has not made any manifest error of assessment in classifying the paint and final assembly shops of Mosel II, and Chemnitz II, as 'extensions of an existing plant‘. It is incorrect in those circumstances to maintain that those workshops of Mosel II and Chemnitz II were erected 'on a greenfield site‘. On the contrary, as the Commission maintains, the Volkswagen group had already, in 1996, eliminated certain disadvantages typical of a greenfield investment, in the sense in which that expression is used in the Decision. 251. In particular, the documents before the Court show that, as from 1994, and by 1997 at the latest, it had in place an appropriate infrastructure, organised logistics, a workforce trained to meet its needs and a well-established supplier structure. 252. As the Commission has pointed out, the fact that the Mosel I workforce, comprising about 1 330 employees and which was transferred to Mosel II, had to undergo a certain amount of training before being able to work on the new models or according to the new production techniques does not mean that that workforce was untrained within the meaning of the definition of greenfield investments. 253. As for suppliers, the document joined as Annex B4 to the application in Case T-143/96 shows that, in Mosel at the end of 1995, there were 129 suppliers of parts (eight under the 'just in time‘ method) and 267 suppliers in the field of construction, equipment and services, together employing 22 000 workers. According to the same document, the number of local suppliers rose from 0 in 1990 to 87 in June 1993. The Commission has argued, without being contradicted, thatthat represents a proportion of local suppliers of 30%, which far exceeds the European average in the motor-vehicle industry. 254. The foregoing considerations cannot be invalidated by a factual error allegedly made by the Commission in its assessment of the profitability of the Volkswagen undertakings in Saxony since 1994. In the first place, the alleged error has not been established, since the accounts of those undertakings, produced as an annex to the rejoinder in Case T-143/96, show that they made an operating profit of DEM 49.4 million in 1994, DEM 170 million in 1995 and DEM 209 million in 1996. Moreover, the Commission has rightly observed that the profitability of a new motor-vehicle plant is only one of a number of indicators for determining whether that plant should be regarded as a greenfield investment or as an extension. It should be noted in that respect that the Decision treats the profitability of the Volkswagen undertakings in Saxony as no more than a confirmation that, as early as 1994, Mosel I and the pressing and skeleton body shops of Mosel II formed a complete and operational motor-vehicle construction plant. 255. Moreover, the question whether or not the facilities of Mosel I will be retained in service after the completion of Mosel II is irrelevant for the purposes of the present analysis. 256. As for Chemnitz II, the applicants have not put forward any concrete argument capable of casting doubt on the Commission's assessment that this was an investment extending Chemnitz I. The Commission has pointed out that the transfer of production of various engine parts from Chemnitz I to Chemnitz II took place progressively between 1996 and 1998, so that the two plants, in parallel, produced essential engine parts (see Annex B10 to the application in Case T-143/96). 257. It follows from the above that the arguments put forward by the applicants for the purposes of challenging the classification of the paint and final assembly shops of Mosel II and Chemnitz II as extensions of existing capacity must be rejected. (c) The calculation of the costs and benefits of the investment - Arguments of the parties 258. The applicants maintain that the analysis of the costs and benefits of the investment was made on the basis of incomplete documents and that the reasons for that analysis were insufficiently and/or erroneously stated. 259. They claim, first, that the Commission did not take account of certain essential documents. The Commission sent to Mr Sterk, the expert it designated to carry out that analysis, only the documentation which Volkswagen sent in January 1996. In fact, that documentation was only an addition to the documents submitted byVolkswagen in May 1993 and May 1994. The documentation of 1996 was therefore incomplete and likely to mislead the expert. 260. At a meeting held on 29 May 1996, Volkswagen became aware of the fact that the expert did not have the 1993 and 1994 documents and sent them to him directly. However, the applicants argue, it is evident from the very short period of time which elapsed between the sending of those documents and the adoption of the Decision on 26 June 1996, and from the Decision itself, that the expert was not in a position to study them. 261. In the light of the expert report produced in the defence, the applicants claim that the expert did not have the time to examine carefully the handicaps described in points 6.1.1, 6.1.3 and 6.5.2 to 6.5.7 of that report, and in particular the subsidy for connection to the road network. 262. Secondly, the applicants argue that the fifth, sixth, seventh, eleventh, twelfth and thirteenth paragraphs of Point XII of the Decision do not provide a comprehensible explanation of the calculation of costs and benefits, with the result that the Decision infringes Article 190 of the Treaty. 263. In their submission, even if the Commission is not required to set out in the Decision each of the factors entering into the calculation of the extra investment and operating costs, the most significant of them should be indicated and quantified, at least in outline. They maintain that this is so a fortiori where the aid declared incompatible with the common market is substantial. 264. Thirdly, the Decision does not indicate what additional costs put forward by Volkswagen were not accepted. In particular, Volkswagen estimated that if, within a short space of time, the employees of VW Sachsen were no longer to be remunerated in accordance with the collective agreement for the Saxon metallurgy industry but in accordance with Volkswagen's own tariff, this would entail an increase in the burden of wages and salaries of DEM 161.6 million. That risk was an essential element which the Commission completely ignored or wrongly dismissed, making no mention of it in the Decision. In that respect, the explanation contained in the defence comes too late. 265. The applicants add that the Commission made a factual error in stating, in the fourteenth paragraph of Point XII of the Decision, that, during the administrative procedure, its provisional cost-benefit analysis was accepted by Volkswagen. 266. In their reply, the applicants state that, thanks to the defence, they are in a position to understand the cost-benefit analysis carried out by the Commission. That, however, is irrelevant to the question whether sufficient reasons are stated in the Decision itself. The applicants repeat that that is not the case, since the cost-benefit analysis was not annexed to the Decision. The business secrets containedin that analysis were those of the applicants themselves, and it would therefore have sufficed for the Commission to have sent them the analysis as an integral part of the Decision. 267. The Commission states, inter alia, that it entrusted Plant Location International, a subsidiary of the company auditors Price Waterhouse, with the task of preparing a draft cost-benefit analysis. That draft was checked and corrected, where necessary, by the relevant departments of the Commission. Volkswagen had contacts with Mr Sterk, who was the last person to be concerned with the matter for Plant Locational International, several months before the Decision was adopted, and in particular at the meetings on 11 April and 29 May 1996. The 1996 documentation, supplied by the Commission to Mr Sterk, contained all the relevant information. Since Mr Sterk analysed the situation over a period of months and was therefore conversant with the project in all its details, it was possible for him to examine rapidly and completely the 1993 and 1994 documents which Volkswagen subsequently sent to him. - Findings of the Court 268. As regards, first of all, the allegation that the statement of reasons is defective, inasmuch as the Decision does not provide a comprehensible explanation of the cost-benefit analysis, it should be pointed out that, according to settled case-law, the reasons given for a measure must be assessed, in particular, by reference to the interest which the addressee or other persons concerned may have in receiving explanations, particularly where they played an active part in the procedure prior to the adoption of the contested measure and knew the reasons of fact and law which led the Commission to take its decision (see, for example, Case T-106/96 Wirtschaftsvereinigung Stahl v Commission [1999] ECR II-0000, paragraph 172). It should also be pointed out that the Commission is not required, in stating its reasons for a decision, to reply to all the issues of fact and law raised by the interested parties, provided it takes account of all the circumstances and all the relevant factors of the case (British Airways and British Midland Airways, paragraph 94). 269. In this case, the documents before the Court show that the applicants were closely associated with the administrative procedure which led to the drawing up of the Decision. In particular, they have not denied the fact that the successive draft cost-benefit analyses prepared by the Commission from 1992 were sent to them and were commented upon point by point with their representatives and those of the German Government, especially at the meetings of 11 April and 29 May 1996 (see the minutes of those meetings, Annexes B9 and B12 to the defence in Case T-143/96). It appears, moreover, that the definitive cost-benefit analysis on which the Decision is based essentially reproduces the analysis contained in the drafts examined at those meetings, the alterations that were made being favourable to the applicants. 270. In those circumstances, neither the fact that the Decision does not reproduce the detailed figures of the cost-benefit analysis, nor the fact that the analysis was not annexed to the Decision, constitutes a breach of the duty to state reasons laid down in Article 190 of the Treaty. 271. Moreover, the applicants have failed to demonstrate that the Commission's expert was not in a position to express a view on the documents which were sent to him at the end of May and the beginning of June 1996. On the contrary, it should be noted that the expert report (Annex 13 to the defence in Case T-143/96) is endorsed 'January 22, 1996, revised June, 1996‘. Moreover, the Commission observes, rightly, that the fact that some of the data sent was not treated as constituting additional investment or operating costs does not mean that it was not examined. That applies in particular to the request of the local authorities for repayment of the subsidy granted to the applicants in 1994 for the costs of connection to the road network, on the subject of which the applicants' point of view is discussed - and rejected - by the expert at point 6.1.1 of the report. 272. As for the applicants' complaint that the Decision does not state which additional costs were not accepted, that complaint merges with the allegation of defective reasoning and must be rejected on the grounds indicated above. As regards, more particularly, the cost of DEM 161.6 million which might result from the future application of Volkswagen's collective agreement on wages and salaries to the workers at Mosel, the Commission has rightly pointed out that this was ahypothetical risk, the occurrence of which it was not possible to assess at the time when the Decision was adopted, and which could not therefore be taken into account in the cost-benefit analysis. 273. It is also clear from the minutes of the meeting on 29 May 1996 (Annex 12 to the defence in Case T-143/96, p. 3) that Volkswagen had indeed acknowledged that the Commission's analysis concerning the calculation of operating costs was reasonable and could be accepted. 274. It follows that the applicants' arguments concerning the calculation of the costs and benefits of the investment must be rejected. (d) Top-up aid - Arguments of the parties 275. The applicants submit that the Commission erred in rejecting the possibility of top-up aid, in addition to simple compensation for regional disadvantages, on the ground of overcapacity problems in the motor-vehicle industry. 276. The Commission did not touch on the really decisive question in the context of Article 92(3)(c) of the Treaty, namely incentive to set up businesses in adisadvantaged region. In this case, only top-up aid could lead investors to set up in Mosel and Chemnitz. Nor did the Commission take account of the fact that, according to the Decision itself, 3 600 jobs were created or safeguarded, and that the establishment of suppliers on the spot, and other multiplier effects for the economy of the new Länder, will indirectly permit the creation of 20 000 others. 277. Moreover, the Commission itself acknowledged that the motor-vehicle industry has been suffering from overcapacity only since 1993. Since the aid is to be assessed by reference to the market situation at the time when it was granted, in March 1991, those overcapacity problems should not have been taken into consideration and the top-up aid should therefore have been authorised. 278. In addition, the Decision contained a limitation on the production capacity of Mosel II until 1997. Therefore, the applicants submit, the Commission could not refuse to allow the top-up aid, at least for the pressing and skeleton body shops. 279. According to the Commission, the Decision explains that top-up aid is not authorised where the investment contributes to the creation of overcapacity problems in the industry concerned. The Commission carefully examined overcapacity existing since 1993 in the motor-vehicle industry, on the basis of precise figures. In those circumstances, it was not necessary to assess separately whether there was any need to create particular incentives in Mosel and Chemnitz. - Findings of the Court 280. In the exercise of its power of assessment, whether pursuant to Article 92(2)(c) or 92(3)(a) of the Treaty, the Commission may take account of the consequences of aid on the industry concerned (Matra, paragraph 26). The Commission was therefore entitled to take into account all the factors existing at the time when the Decision was adopted in June 1996. 281. In this case, the first paragraph of Point XII of the Decision shows that the Commission duly took into account the need to create incentives to invest in disadvantaged regions, such as Mosel and Chemnitz. Indeed, it is stated in that paragraph that high levels of investment and other aid have been authorised there in order to contribute to the development of the region, and that the regions of Mosel and Chemnitz are eligible for investment aid of up to 33% (until April 1991) and of up to 35% gross aid intensity (after that date). 282. The Commission makes the qualifying statement, however, in the fifth paragraph of Point XI of the Decision, that 'top-up‘ aid intended to create particular incentives to invest in disadvantaged regions is not authorised where the investment contributes to the creation of capacity problems in the relevant sector. Similarly, in the nineteenth paragraph of Point XII of the Decision, the Commission states that, when applying the Community framework to cases where investments haveadverse effects on the sector as a whole, it has a policy of strictly limiting the aid to the net incremental costs facing the investor in the disadvantaged region. 283. Moreover, the Decision sets out, precisely and in detail, the considerable overcapacity problems existing since 1993 in the motor-vehicle construction industry (fifteenth paragraph of Point XII) and the extent to which that overcapacity will be exacerbated by the investments in question (eighteenth paragraph of Point XII). The Commission also takes account (in the sixteenth and seventeenth paragraphs of Point XII) of the limitation of Mosel II's production capacity. 284. Having regard to the above considerations, and bearing in mind the broad power of assessment which the Commission has in the matter, the applicants' arguments concerning top-up aid must be rejected. (e) The determination of the aid authorised 285. The Decision concludes, in the nineteenth paragraph of Point XII, that aid of an intensity, expressed in gross grant equivalent, of 22.3% for Mosel II and 20.8% for Chemnitz II are acceptable. It states that investment grants of DEM 418.7 million for Mosel II and Chemnitz II and investment allowances of DEM 120.4 million for Mosel II and Chemnitz II may be authorised. According to Article 1 of the Decision, the granting of aid up to those amounts is compatible with the common market. According to Article 2 of the Decision, the granting of special depreciation with a value of DEM 51.67 million for Mosel II and Chemnitz II and of investment grants of DEM 189.1 million for Mosel II and Chemnitz II is incompatible with the common market. 286. According to the applicants, the Commission has infringed Article 190 of the Treaty in that it is not possible to determine, from the gross grant equivalent which it has used, the amounts stated in Articles 1 and 2 of the Decision. The decision did not state the discount rate used by the Commission. Even knowing that factor, on the basis of information belatedly provided in the defence in Case T-143/96, it was impossible to ascertain with certainty what calculation gave rise to the amounts indicated in Articles 1 and 2 of the Decision. 287. That argument cannot be accepted. As the Court has held above, the applicants and the German Government were closely associated with the administrative procedure and were thus placed in a position to discuss point by point the successive draft cost-benefit analyses prepared by the Commission since 1992. Although they do not appear in the Decision, the method of calculating the discounting of the gross grant equivalent used to arrive at the authorised amount of aid and, in particular, the rate of discounting ('Nominal Discount Rate‘) of 7.5%, appear both in the cost-benefit analysis annexed to the Commission's expert report and in the minutes of the meeting of 29 May 1996. 288. It follows from the all the foregoing considerations that the complaints relating to infringement of Article 92(3) of the Treaty must be dismissed. III - Breach of the principle of the protection of legitimate expectations Arguments of the parties 289. The applicants submit that the Commission infringed the principle of the protection of legitimate expectations by classifying the paint and final assembly shops of Mosel II and Chemnitz II as extensions of existing capacity and, in consequence, adopting a reference period of three years for the cost-benefit analysis. The Commission had caused them to entertain a justified hope that it would examine the aid promised by means of a cost-benefit analysis based on a five-year period. 290. In their submission, the expectations of traders deserve protection where a Community institution has given rise to justified hopes on their part as to its future conduct (Case 265/85 Van Den Bergh en Jurgens v Commission [1987] ECR 1155, paragraph 44). Similarly, traders who have taken measures in reliance on the existing state of the law are protected against a subsequent alteration of the institutions' assessment of those measures (Case 161/88 Binder v Hauptzollamt Bad Reichenhall [1989] ECR 2415, paragraphs 21 to 23; Case C-189/89 Spagl v Hauptzollamt Rosenheim [1990] ECR I-4539, paragraph 9; Crispoltoni, paragraph 21). 291. In this case, the Commission classified Mosel II and Chemnitz II as new or greenfield investments throughout the administrative procedure, from September 1990 until April 1996. In that respect, the applicants points to the following factors: - in its letter to the German Government of 19 September 1990, the Commission requested notification of all aid 'for Volkswagen's new investment‘; - in its letter informing that Government of its decision to initiate the investigation procedure, the Commission distinguished between the 'retention of existing production units‘ (Mosel I) and the 'construction of a new adjacent plant‘ (Mosel II); - during the years 1992 to 1994, the Commission carried out a cost-benefit analysis for Mosel II and Chemnitz II which was based on a reference period of five years; - in the Mosel I decision, the Commission referred frequently to the 'new plants‘ of Mosel II and Chemnitz II, which showed that, despite the delaysin completing the project, it regarded those investments not as an extension of Mosel I and Chemnitz I but as new investments; - in its Decision 96/179 of 31 October 1995, referred to in paragraph 39 above, the Commission referred to those projects as 'new investments‘. 292. The applicants deny, moreover, that, on the occasion of the site visits on 21 and 22 December 1995, the officials and the expert of the Commission explained that the Mosel II and Chemnitz II projects could not be regarded in their entirety as greenfield investments. The only relevant question discussed on that occasion was whether the calculation of the disadvantages was to have a single starting-point, namely the completion of the project, or several starting-points corresponding to the completion of each of the workshops. 293. It is also incorrect to maintain that, at the meeting of 11 April 1996, the parties had discussed the application of a three-year period to the disadvantages in connection with the operation of the paint and final assembly shops of Mosel II. The cost-benefit analysis presented by the Commission on 16 April 1996 was still based on a five-year period. 294. Although the application of a three-year period for the disadvantages connected with the operation of the paint and final assembly shops of Mosel II was discussed at the meeting of 29 May 1996, the minutes of that meeting clearly show that the applicants did not in any way accept the principle of this. 295. The applicants emphasise that they have never altered the conception of their projects. In any event, the staggering of the investments over a period of time was known from the beginning of 1993. At the time of the adoption of the Mosel I decision in July 1994, therefore, the Commission knew of the amendments adopted by Volkswagen to the Mosel II and Chemnitz II projects. Since the Commission had adopted a separate decision concerning the aid to Mosel I, Volkswagen had understood that it considered Mosel I and Mosel II as two distinct projects which were to be treated separately from the point of view of the State-aid regime. The applicants also state that the situation existing at the time the Decision was adopted was identical to that existing at the time of the adoption of the Mosel I decision. The pressing and body shops of Mosel II were in service and the skeleton bodywork produced there were painted at Mosel I, where they underwent final assembly. 296. The applicants further argue that it was only with the prospect of Mosel II and Chemnitz II being classified by the Commission as new investments that they invested considerable sums. They maintain that, at the time of the adoption of the Mosel I decision, it was still possible to halt completely the investments in the paint and final assembly shops and transfer them to another site, and, they add, theywould indeed have taken that decision if they had known at the time that the Commission would classify those workshops as extensions of existing capacity. 297. The Commission denies that it ever gave the impression that it classified Mosel II and Chemnitz II as greenfield investments. 298. The applicants could not, in any event, rely on statements made prior to March 1996, since they were based on an incomplete knowledge of the facts. The applicants and/or the Federal Republic of Germany concealed relevant information until the last moment, with the result that the Commission lacked essential data for assessing the investment projects. 299. Nor, moreover, may the applicants plead a legitimate expectation, since they were aware of the fact that the Commission might refuse to authorise part of the aid granted, and that they would therefore be obliged to repay the aid already implemented unlawfully. What is more, VW Sachsen's annual balance sheet of 31 December 1995 shows that the applicants had envisaged that possibility and set aside considerable reserves for that reason. Findings of the Court 300. It is settled case-law that the right to protection of legitimate expectations may beclaimed by any individual who finds himself in a position in which it is shown that the Community administration gave rise to justified hopes on his part (see, for example, Case T-489/93 Unifruit Hellas v Commission [1994] ECR II-1201, paragraph 51). However, no one may plead infringement of the principle of the protection of legitimate expectations in the absence of specific assurances given to him by the administration (Case T-521/93 Atlanta and Others v European Community [1996] ECR II-1707, paragraph 57; Case T-113/96 Dubois et Fils v Council and Commission [1998] ECR II-125, paragraph 68). 301. In this case, it is sufficient to observe that the Commission never gave an assurance that the Volkswagen group's investments in Mosel II and Chemnitz II would be classified in their entirety as 'greenfield‘ investments. 302. The fact that the Commission referred to Volkswagen's 'new investments‘ or 'new implantations‘ throughout the administrative procedure, between 1990 and 1996, is irrelevant in that respect, since that expression was used in its everyday meaning and was intended merely to distinguish the investments in Mosel I from those in Mosel II, without taking any position on the question whether the latter investments should be regarded as extensions of existing capacity or as greenfield investments, within the meaning of the Decision. 303. It should also be pointed out that, in the decision to initiate the investigation procedure, the Commission informed the German Government of its seriousconcerns as to the compatibility of the aid in question with the common market, by reason, in particular, of its apparent high intensity (see paragraph 26 above). 304. In any event, the fundamental alteration made to the applicants' plans at the beginning of 1993, and the subsequent alterations to those plans in 1994 and 1996, rendered the Commission's earlier assessments obsolete, and thus also rendered obsolete any assurances it might have given concerning the classification of Mosel II and Chemnitz II as extensions of existing capacity or as greenfield investments. 305. Moreover, the applicants were not entitled to rely on any legitimate expectation for as long as they failed to supply the Commission with all the information which it needed in order to take its decision with full knowledge of the facts. Therefore, the statements and the conduct of the Commission prior to the beginning of 1996 cannot have given rise to legitimate expectations on the part of the applicants. 306. For the rest, it is clear from the minutes of the meeting of 11 April 1996 (Annex B9 to the defence in Case T-143/96, p. 4) that the discussions were particularly concerned with whether, in respect of the paint and final assembly shops of Mosel II, the cost-benefit analysis should take account of incremental operating costs over a period of three years or five years. Thus, as soon as it had all the information necessary for its assessment, the Commission made it known that the applicants' investments in Mosel II and Chemnitz II could not be classified in their entirety as 'greenfield‘ investments. 307. It follows that the plea alleging breach of the principle of the protection of legitimate expectations must be rejected as unfounded. 308. The applications must therefore be dismissed in their entirety. Costs 309. Under Article 87(2) of the Rules of Procedure, an unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Under Article 87(5) of the Rules of Procedure, a party who discontinues or withdraws from proceedings is to be ordered to pay the costs if they have been applied for in the other party's pleadings. Under Article 87(4) of the Rules of Procedure, Member States which have intervened in the proceedings are to bear their own costs. 310. It follows from the above that, on a proper view of those provisions, the applicants must bear their own costs and pay those of the Commission, save in so far as they have been incurred by the Commission as a result of the intervention of the Federal Republic of Germany. The Federal Republic of Germany shall bear itsown costs. It must also pay the costs incurred by the Commission as a result of its intervention. The United Kingdom shall bear its own costs. On those grounds, THE COURT OF FIRST INSTANCE (Second Chamber, Extended Composition) hereby: 1. Takes formal notice that the applicants discontinue their action in Case T-143/96 in so far as it seeks the annulment of the first indent of Article 2 of Commission Decision 96/666/EC of 26 June 1996 concerning aid granted by Germany to the Volkswagen Group for works in Mosel and Chemnitz; 2. Dismisses the applications as to the remainder; 3. Orders the applicants to bear their own costs and to pay the costs incurred by the defendant, save in so far as they have been incurred by the latter as a result of the intervention of the Federal Republic of Germany. The Federal Republic of Germany shall bear its own costs and pay the costs incurred by the Commission as a result of its intervention. The United Kingdom shall bear its own costs. Potocki Lenaerts Bellamy Azizi Meij Delivered in open court in Luxembourg on 15 December 1999. H. Jung A. Potocki Registrar President Table of contents Legal background II - 3 Factual background II - 7 Procedure II - 13 Forms of order sought by the parties II - 15 The admissibility of the application in Case T-132/96 II - 16 Arguments of the parties II - 16 Findings of the Court of First Instance II - 19 Substance II - 21 I - Infringement of Article 92(2)(c) of the Treaty II - 22 Arguments of the parties II - 22 Findings of the Court of First Instance II - 27 II - Infringement of Article 92(3) of the Treaty II - 32 Infringement of Article 92(3)(b) of the Treaty II - 32 Arguments of the parties II - 32 Findings of the Court II - 34 Infringement of Article 92(3)(a) of the Treaty II - 35 Arguments of the parties II - 35 Findings of the Court II - 37 Contravention of the general scheme of Article 92(3) of the Treaty II - 38 (a) The need for an investigation ex ante and the applicability of the Community framework II - 38 - Arguments of the parties II - 38 - Findings of the Court II - 41 (b) The classification of the paint and final assembly workshops at Mosel II and Chemnitz II as 'extensions of existing capacity‘ II - 45 - Arguments of the parties II - 45 - Findings of the Court II - 48 (c) The calculation of the costs and benefits of the investment II - 52 - Arguments of the parties II - 52 - Findings of the Court II - 54 (d) Top-up aid II - 55 - Arguments of the parties II - 55 - Findings of the Court II - 56 (e) The determination of the aid authorised II - 57 III - Breach of the principle of the protection of legitimate expectations II - 58 Arguments of the parties II - 58 Findings of the Court II - 60 1: Language of the case: German.