Judgment — ECLI:EU:T:2003:57
Date: 2003-03-06
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;Provisions governing the Institutions;Acts of the institutions
Concepts: Statement of reasons;Formal investigation procedure;Pleas in law;Intervention;Public undertakings;Rights of the defence and procedural guarantees;Private investor/private creditor test;Commission;Commission decision following the formal investigation procedure;Damage to competition and effect on trade;Principle of equality and non-discrimination;General
Procedure: Action for annulment - successful
Origin: Germany

Summary of the Judgment 
1. Commission — Management of current business — Scope — Supervisory function 
in matters of State aid — Included 
(Arts 87(1) EC and 211 EC) 
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SUMMARY — JOINED CASES T-228/99 AND T-233/99 
2. State aid — Administrative procedure — Commission's obligation to give notice to 
the parties concerned to submit their comments — Exclusion of those parties from 
rights of defence 
(Arts 88(2) EC and 253 EC) 
3. Actions for annulment — Pleas in law — Infringement of essential procedural 
requirements — Action against a Commission decision declaring State aid incom­
patible with the common market — Right of the beneficiary of the aid and the grantor 
thereof to plead infringement of the Member State's right to be heard 
(Arts 88(2) EC and 230, second para., EC) 
4. Procedure — Intervention — Application in support of the form of order sought by 
one of the parties but relying on a different argument — Whether admissible 
(Statute of the Court of justice, Art. 40, fourth para.) 
5. Acts of the institutions — Statement of reasons — Error of fact in an otherwise 
adequate statement of reasons — No bearing on the lawfulness of the decision 
(Art. 253 EC) 
6. Community law — General principles of law — Right to proper administration — 
Diligent and impartial examination of the case 
7. State aid — Definition — Grant of an advantage by a State through State resources 
(Art. 87(1) EC) 
8. Competition — Application of the competition rules — Equal treatment of public 
and private undertakings — Rules governing public ownership — No effect — 
Possibility of derogations for undertakings entrusted with the operation of services 
of general economic interest or having the character of a revenue-producing monopoly 
(Arts 86(1) and (2) EC, 87(1) EC and 295 EC) 
9. State aid — Definition — Assessment on the basis of the private investor criterion — 
Criterion applicable to measures favouring profitable undertakings 
(Art. 87(1) EC) 
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WESTDEUTSCHE LANDESBANK GIROZENTRALE AND LAND NORDRHEIN-WESTFALEN v COMMISSION 
10. State aid — Definition — Financial aid granted to an undertaking by public 
authorities — Assessment criterion — Attractiveness to a private investor of a 
similar investment made on the same conditions 
(Art. 87(1) EC) 
11. State aid — Definition — Private investor test — Assessment in the light of the 
average return on capital invested in the sector concerned — Whether permissible — 
Limits 
(Art. 87(1) EC) 
12. State aid — Definition — Application to public investors of the informed private 
investor test — Breach of the principle of equal treatment — None 
(Art. 87(1) EC) 
13. State aid — Definition — Application of the private investor test — Commission's 
power of assessment — judicial review — Limits 
(Art. 87(1) EC) 
14. Acts of the institutions — Statement of reasons — Obligation — Scope — Com­
mission decision on State aid — Description of the effect on competition and on trade 
between Member States 
(Arts 87(1) EC and 253 EC) 
15. State aid — Effect on trade between Member States — Prejudicial to competition — 
Assessment criteria 
(Art. 87(1) EC) 
16. Acts of the institutions — Statement of reasons — Obligation — Scope — Choice 
of basic rate of return when applying the private investor principle 
(Art. 253 EC) 
1. A Commission decision making a find­
ing as to the compatibility with the 
common market of State aid, applying 
the market economy investor principle, 
falls within the scope of the Commis­
sion's supervisory function pursuant to 
Article 211 EC and in particular of its 
duty to apply Article 87(1) EC in such 
a way as to ensure that aid granted by a 
Member State or through State 
resources in any form whatsoever does 
not distort or threaten to distort com­
petition by favouring certain undertak­
ings. Accordingly, even though it 
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SUMMARY — JOINED CASES T-228/99 AND T-233/99 
applies that principle to a profitable 
undertaking, it is not a new political 
initiative which goes beyond dealing 
with current business. 
(see paras 96, 98, 100) 
2. The administrative procedure regard­
ing aid is opened only against the 
Member State concerned. Undertak­
ings that receive aid and the local 
authorities within that State which 
grant the aid are considered, in the 
same way as competitors of the recipi­
ents of the aid, only to be 'interested 
parties' in this procedure. 
In the context of an examination under 
Article 88(2) EC, the Commission is 
required to give notice to the parties 
concerned to submit their comments. 
In that regard, the publication of a 
notice in the Official Journal is an 
appropriate means of informing all the 
parties concerned that a procedure has 
been initiated. The sole aim of this 
communication is to obtain from per­
sons concerned all information 
required for the guidance of the Com­
mission with regard to its future action. 
The parties concerned essentially play 
the role of information sources for the 
Commission in that administrative 
procedure. It follows that, far from 
enjoying the same rights of defence as 
those which individuals against whom 
a procedure has been instituted are 
recognised as having, the parties con­
cerned have only the right to be 
involved in the administrative pro­
cedure to the extent appropriate in 
the light of the circumstances of the 
case. 
(see paras 122-125) 
3. The administrative procedure for the 
examination of State aid is initiated 
only against the Member State con­
cerned. Decisions adopted by the Com­
mission at the end of that procedure are 
addressed only to that Member State.-
Furthermore, in accordance with 
Article 88(2) EC, the Member State is 
responsible for complying with any 
decision by the Commission requiring 
the State aid in question to be abol­
ished or altered. 
In those circumstances, having regard 
to the Member State's central role in 
that procedure, the Member State's 
right to be heard in the same procedure 
constitutes an essential procedural 
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WESTDEUTSCHE LANDESBANK GIROZENTRALE AND LAND NORDRHEIN-WESTFALEN v COMMISSION 
requirement and failure to comply with 
that requirement entails the nullity of a 
Commission decision ordering that aid 
be abolished or altered. 
Consequently, the beneficiary of the 
aid, and the local government body 
which has granted it, have a legitimate 
interest in pleading such a defect in the 
Commission's decision where a failure 
to comply with the Member State's 
right to be heard may have a bearing 
on the legality of the contested meas­
ure. 
(see paras 140-142) 
4. The fourth paragraph of Article 40 of 
the Statute of the Court of Justice does 
not preclude an intervener from sub­
mitting arguments which differ from 
those of the party which he supports, 
provided that his aim is to support the 
form of order sought by that party. 
(see para. 145) 
5. Even if one recital of a contested 
measure contains a factually incorrect 
statement, that procedural defect can­
not lead to the annulment of that 
measure if the other recitals in them­
selves supply a sufficient statement of 
reasons. 
(see para. 162) 
6. The Commission is under a duty to 
examine a case diligently and impar­
tially, in particular in the context of 
Article 88 EC. That obligation is 
associated with the right to sound 
administration, which is one of the 
general principles that are observed in 
a State governed by the rule of law and 
are common to the constitutional tradi­
tions of the Member States. 
(see para. 167) 
7. For advantages to be capable of being 
categorised as State aid within the 
meaning of Article 87(1) EC, they must 
be granted directly or indirectly 
through State resources and be imput­
able to the State. 
However, Article 87(1) does not dis­
tinguish between State interventions by 
reference to their causes or their objec­
tives but defines them by reference to 
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SUMMARY — JOINED CASES T-228/99 AND T-233/99 
their effects. It follows that the concept 
of aid is an objective one, the sole test 
being whether a State measure confers 
an advantage on one or more particular 
undertakings. 
State resources do not cease to be so 
simply because the use of those 
resources is similar to that by a private 
investor. The question whether the 
State has conducted itself like an entre­
preneur is a question relating to the 
existence of State aid and not to the 
examination of whether the resources 
in question are public in nature. 
(see paras 179-181) 
8. Although systems of property owner­
ship continue to be a matter for 
Member States by virtue of Article 295 
EC, that article does not have the effect 
of exempting the Member States' sys­
tems of property ownership from the 
fundamental rules of the Treaty. Thus, 
and in accordance with Article 86(1) 
EC, the competition rules, which are 
fundamental rules, apply without dis­
tinction to public and private under­
takings. Article 295 EC cannot there­
fore be held to restrict the scope of the 
concept of State aid within the meaning 
of Article 87(1) EC. 
This application of the competition 
rules to undertakings irrespective of 
the property systems to which they are 
subject does not have the effect of 
restricting the protection under 
Article 295 EC and of leaving the 
Member States hardly any latitude in 
the management of public undertak­
ings, in the retention of shareholdings 
which they have in those undertakings, 
or in recourse to considerations other 
than purely profit-making criteria. 
Where such interests might conflict 
with the application of the competition 
rules, they are taken into account by 
Article 86(2) EC since it provides that 
undertakings entrusted with the oper­
ation of services of general economic 
interest or having the character of a 
revenue-producing monopoly may 
escape the application of the compe­
tition rules if those rules obstruct the 
performance, in law or in fact, of the 
particular tasks assigned to those 
undertakings. 
(see paras 192-196) 
9. The use, in order to assess whether a 
State measure is aid, of the private 
market-economy investor is not 
restricted solely to undertakings that 
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WESTDEUTSCHE LANDESBANK GIROZENTRALE AND LAND NORDRHEIN-WESTFALEN v COMMISSION 
are loss-making or being restructured; 
it also applies to profitable companies. 
(see paras 209-210) 
10. In order to determine whether action 
taken by public authorities in respect of 
the capital of an undertaking, in what­
ever form, is in the nature of State aid, 
it is necessary to assess whether, in 
similar circumstances, a private inves­
tor operating in normal conditions of a 
market economy, of a comparable size 
to that of the bodies operating in the 
public sector, could have been 
prompted to make a capital contribu­
tion of that size. In particular, the 
relevant question is whether a private 
investor would have entered into the 
transaction in question on the same 
terms and, if not, on which terms he 
might have done so. Moreover, the 
comparison between the conduct of 
public and private investors must be 
made by reference to the attitude which 
a private investor would have had at 
the time of the transaction in question, 
having regard to the available infor­
mation and foreseeable developments 
at that time. 
(see paras 244-246) 
11. In the course of applying the private 
investor principle the average return on 
capital invested in the sector concerned 
is an analytical tool, but only one tool 
amongst others, to determine whether 
and, if so, to what extent the under­
taking benefiting from a State measure 
is receiving an economic advantage 
which it would not have obtained 
under normal market conditions. 
The conduct of a private investor in a 
market economy being guided by pros­
pects of profitability, the use of an 
average return is consistent with the 
notion that an informed private inves­
tor, that is, an investor who wishes to 
maximise his profits but without run­
ning excessive risks in comparison with 
other participants in the market, 
would, when calculating the appropri­
ate return to be expected for his invest­
ment, in principle require a minimum 
return equivalent to the average return 
for the sector concerned. 
Moreover, since the Commission must 
always examine all the relevant fea­
tures of the transaction at issue and its 
context, it must take into account the 
question whether an informed private 
investor, in the place of the public body 
which has introduced funds that it 
claims to be an investment, would have 
accepted a lower return than the aver­
age return in the sector concerned as an 
appropriate return because of econ-
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SUMMARY — JOINED CASES T-228/99 AND T-233/99 
omie considerations other than the 
optimisation of his return. 
(see paras 254-255, 270) 
12. The principle of equal treatment pro­
hibits like cases from being treated 
differently, thereby subjecting some to 
disadvantages as opposed to others, 
without such differentiation being jus­
tified by the existence of substantial 
objective differences. However, a pub­
lic investor is not in the same situation 
as a private investor. The private 
investor can count only on his own 
resources in order to finance his invest­
ments and is liable, up to the limits of 
those resources, for the consequences 
of his decisions, whereas the public 
investor has access to resources flowing 
from the exercise of public power, in 
particular from taxation. Con­
sequently, as the situations of those 
two types of investors are not the same, 
if the conduct of an informed private 
investor is taken into account in order 
to assess the conduct of the public 
investor, when the behaviour of a 
private investor is not subject to such 
a constraint, this cannot be regarded as 
discriminating against the public inves­
tor. 
(see paras 271-272) 
13. The assessment by the Commission of 
the question whether an investment 
satisfies the private investor test 
involves a complex economic apprai­
sal. When the Commission adopts a 
measure involving such a complex 
economic appraisal it enjoys a wide 
discretion, and judicial review of that 
measure, even though it is in principle a 
'comprehensive' review of whether a 
measure falls within the scope of 
Article 87(1) EC, is limited to verifying 
whether the Commission complied 
with the relevant rules governing pro­
cedure and the statement of reasons, 
whether the facts on which the con­
tested finding was based have been 
accurately stated and whether there has 
been any manifest error of assessment 
of those facts or a misuse of powers. In 
particular, the Court is not entitled to 
substitute its own economic assessment 
for that of the author of the decision. 
(see para. 282) 
14. Even in cases where it is clear from the 
circumstances in which State aid has 
been granted that it is liable to affect 
trade between Member States and to 
distort or threaten to distort compe­
tition, the Commission must at least set 
out those circumstances in the state­
ment of reasons for its decision. 
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WESTDEUTSCHE LANDESBANK GIROZENTRALE AND LAND NORDRHEIN-WESTFALEN v COMMISSION 
The Commission is not, however, 
required to demonstrate the real effect 
of that aid on competition and trade 
between Member States. If it were 
required to do so, that would ulti­
mately favour those Member States 
which grant aid in breach of the duty 
to notify laid down in Article 88(3) EC, 
to the detriment of those which do 
notify aid at the planning stage. 
(see paras 292, 296) 
15. Even State aid of a relatively small 
amount is liable to affect trade between 
Member States where there is strong 
competition in the sector in which the 
recipient operates. 
When financial aid granted by a State 
or from State resources strengthens the 
position of an undertaking compared 
with other undertakings competing in 
intra-Community trade, the latter must 
be regarded as affected by that aid. 
Aid intended to relieve undertakings of 
all or part of the expenses which they 
would normally have had to bear in 
their day-to-day management or usual 
activities in principle distorts compe­
tition. 
(see paras 298-300) 
16. When, in order to decide whether 
financial assistance provided to an 
undertaking constitutes State aid 
within the meaning of Article 87(1) 
EC, the Commission uses the private 
investor test, the determination of the 
basic rate of return that might be 
obtained by such an investor is a 
central element of its calculation of 
the appropriate return for the trans­
action at issue. The duty to state 
reasons in that regard is therefore of 
fundamental importance. 
That duty is not satisfied where the 
Commission merely lists the sources of 
information on which its choice was 
based but does not set out their content 
in such a way as to explain its use of 
them, makes a general reference to 
contradictory documents, of which the 
document most relevant to the ultimate 
finding made was not brought to the 
attention of the parties concerned, and 
refers to its previous experience and 
decisions on State aid, of which the 
relevance of the only one to which the 
decision expressly refers is not 
explained. 
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SUMMARY — JOINED CASES T-228/99 AND T-233/99 
This failure to explain the essential 
considerations which led it to choose 
the normal figure for the rate of return 
in question cannot be remedied by the 
fact that the parties concerned were 
able to participate in the administrative 
procedure preceding the adoption of 
the decision and the beneficiary of the 
aid is an economic operator in the 
sector concerned. 
There is a similar inadequate reasoning 
in regard to the Commission's deter­
mination of the rate of return for risks 
which must affect the normal rate of 
return where the decision merely refers, 
in footnotes, to an expert's report 
ordered by the Commission and to a 
letter concerning its practice, to which 
the parties concerned did not have 
access. 
(see paras 395-405, 414-419) 
II - 444