Judgment — ECLI:EU:C:2000:248
Date: 2000-05-16
Language of the case: English
Court formation: Full Court
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Use of State resources;General
Procedure: Action for annulment;Appeal - unfounded
Origin: France;United Kingdom

summary that, even where the refund of State aid is at issue, the Court follows, in principle, the reasoning adopted in Deutsche Milchkontor, namely: (i) the principle of the protection of legitimate expectations constitutes a general principle of Community law which is derived from the legal traditions common to the Member States; (ii) the scope of legitimate expectations and the conditions under which they apply are determined by the domestic law of the Member States; and (iii) the body applying the principle at national level must observe the principles of equal treatment and of effectiveness of Community law and respect the Community interest. However, precisely because of the particular nature of State aid and the need to safeguard the imperative Community interest in rectifying the conditions governing competition, the Court has the tendency to restrict the legal autonomy of the national legal orders, by laying down itself the substantive requirements for recognising that legitimate expectations are entertained or even by directly prohibiting the application of national provisions. 59. More specifically, the Court has preferred to define the concept of a diligent businessman itself, restricting the opportunities for recipients of aid to invoke legitimate expectations. (30) In addition, it has completely taken away the ability of the Member States to resort to the principle of the protection of legitimateexpectations in order to avoid recovering unlawful aid. (31) It has indeed gone as far as to reshape, if not overturn, national law on legitimate expectations with regard to the specific instances where it is applied in the context of the recovery of unlawful State aid. It is, I believe, essential to dwell on that last issue. 60. A characteristic example of the tendency to reduce the autonomy of the Member States is provided by the judgment in Land Rheinland-Pfalz v Alcan Deutschland (cited in footnote 28 above; hereinafter 'Alcan II‘), where the Court overrode Paragraph 48 of the German Verwaltungsverfahrensgesetz (Law on Administrative Procedure). More specifically, it ruled: 'Community law requires the competent authority to revoke a decision granting unlawful aid, in accordance with a final decision of the Commission declaring the aid incompatible with the common market and ordering recovery, [(i)] even if the authority has allowed the time-limit laid down for that purpose under national law in the interest of legal certainty to elapse ..., [(ii)] even if the competent authority is responsible for the illegality of the aid decision to such a degree that revocation appears to be a breach of good faith towards the recipient, where the latter could not have had a legitimate expectation that the aid was lawful because the procedure laid down in Article 93 of the Treaty had not been followed ... [and (iii)] even where such recovery is excluded by national law because the gain no longer exists, in the absence of bad faith on the part of the recipient of the aid.‘ (32) 61. It is to be noted that in that case the Court followed the Opinion of the Advocate General and found that the national authorities 'do not ... have any discretion as regards revocation of a decision granting aid‘, (33) overturning in that way the fundamental rule of German administrative law that it is in principle for the administration, acting in its discretion, to decide on the revocation of an advantageous administrative measure which is contrary to the law. 62. There is a further interesting aspect of the Community case-law on the repayment of unlawful State aid, from which it appears that the Court of Justice prefers to entrust the national courts with the issue of assessing the legitimateexpectations of recipients of aid, the latter being expected to take action before those courts if they are to avoid returning the benefit which they have reaped. (34) 63. It is not by accident that the possibility of relying on legitimate expectations is tied to the jurisdiction of the national courts. The latter are the national authorities before which legal disputes concerned with the enforcement of Commission decisions requiring unlawfully paid aid to be refunded are considered likely to end up. Furthermore, they provide greater guarantees of independence and neutrality than the national administrative departments which might also have played a part in the grant of the unlawful aid; it is therefore to be anticipated that national courts will weigh up the Community interest better than some other State authority. They are also the most suited to taking account of the parameter of the effectiveness of Community law. Finally, if a problem of interpretation arises with regard to the above issues and the way in which they affect the application of national rules concerning legitimate expectations, the national courts are in the privileged position of being able to refer a question to the Court of Justice for a preliminary ruling. 64. The national administrative authorities are of course allowed to reject submissions as to legitimate expectations, whereupon the recipient of the aid will in all probability bring proceedings in the national courts. By contrast, it is not open to those authorities not to seek recovery of the unlawful aid by accepting (whether acting of their own accord or following the submission of a request) that legitimate expectations are entertained. In that case they would be acting contrary to the direction of the Court of Justice as set out in Case C-5/89, cited in footnote 27 above. Moreover, that decision by the authorities would probably never be brought before the national courts for review, resulting in a risk that the Community interest would remain unprotected. (35) 65. Consequently, always assuming that the above indications in the case-law are borne out by future judgments, it appears that the Court has laid down a furtherprocedural and formal rule concerning the application of the principle of the protection of legitimate expectations where the recovery of unlawful State aid is at issue. Under the above rule, that general principle is not protected by the national administrative bodies, acting of their own accord or following a request, but by the courts. In other words, the national courts are converted into special authorities for assessing an issue which in principle falls within the competence of the administrative authorities, while the latter are relegated to bodies which merely implement Commission decisions. 66. In short, certain fundamental rules of national administrative law relating to the application of the principle of legality and to the division of powers between judicial and administrative authorities are undermined, if not entirely set aside, by the above case-law. Not only is the autonomy of national law shrunk to almost nothing when it is applied to cases with Community interest; more significantly, rather, through the safeguarding of the Community interest the constituent elements of the national legal order are prejudiced, possibly resulting in inexpert or even arbitrary legal structures. 67. The chief reason for the creation of the above - in my view regrettable - situation must be sought in the starting point from which the logic of the present case-law proceeds, that is to say in the acceptance of the duality of legitimate expectations. It is not clear that the endeavour to combine Community and national elements in order to fashion a dual-based concept of legitimate expectations results in conclusions which are acceptable for the legal system or in a satisfactory reconciliation of the need to protect the trader acting in good faith and the need to safeguard the conditions of competition. 68. Nor is it obvious that, by entrusting this issue to the national courts for decision by them, their role is enhanced, preserving the balance between the national and Community legal orders at the present stage of European integration. The national courts are in a difficult position. First, they do not feel secure when they rely on the specific provisions of national law, in particular following the stringent position adopted by the Court in Alcan II. (36) Second, the Court of Justice, by its abovementioned case-law, is giving them strong encouragement to refer questions to it for a preliminary ruling on a systematic basis, especially when they are called on to weigh up the Community interest in that particular category of disputes. From the moment, however, that definition of the Community interest determines entirely whether, and in what manner, the national provisions will be applied, the whole legal problem passes in reality to the 'high inspectorate‘ of the Court. Finally, it is not clear that legal certainty is served by the fact that the national rules regarding legitimate expectations remain in force but may be overturned at any moment if they are considered to be incompatible with the objectives of Community law. 69. Following the above general observations, I will now consider the ground of appeal before the Court in the light of its case-law referred to above. On the basis of that case-law, I consider that the Court of First Instance was correct in finding that it was not open to the French Government to submit that the racecourse undertakings entertained legitimate expectations as a result of the abovementioned judgment of the Conseil d'État as regards the lawfulness of the national measure at issue and, consequently, that the Commission should not have relied on that submission to restrict the temporal scope of the obligation to recover the unlawfully granted aid. 70. The principal argument in favour of the position adopted by the Court of First Instance must, prima facie, be sought in the settled case-law of the Court, according to which 'a Member State whose authorities have granted aid contrary to the procedural rules laid down in Article 93 may not rely on the legitimate expectations of recipients in order to justify a failure to comply with the obligation to take the steps necessary to implement a Commission decision instructing it to recover the aid. If it could do so, Articles 92 and 93 of the Treaty would be set at naught, since national authorities would thus be able to rely on their own unlawful conduct in order to deprive decisions taken by the Commission under provisions of the Treaty of their effectiveness‘. (37) Moreover, the Court of First Instance expressly refers to that case-law in paragraph 181 of the contested judgment. 71. That prohibition laid down by the Court of Justice appears to be founded, first of all, on the general principle under which nobody may obtain benefit from his own violation of the law (nemo potens propriam turpitudinem allegans). In other words, it has been adjudged unacceptable for the effectiveness of the Community rule - which is safeguarded by the imposition of a strict obligation to notify proposed aid and by the systematic repayment of aid which has been given unlawfully - to be undermined by the very transgressor, namely the Member State, relying on conduct contrary to the Community interest. To allow such reliance could give rise to the absurd result that a Member State is vindicated where, apart from infringing the express obligation to inform the Commission laid down by Article 93(3) of the EC Treaty, it has succeeded in shaping the legal and factual context within which a sum of aid is granted in such a way as to mislead even the diligent businessman, thereby rendering practically inapplicable the decision declaring the aid contrary to Community competition law. 72. In addition, a second argument can be advanced in favour of preventing the Member States from resorting to the principle of the protection of legitimate expectations in order to avoid the recovery of unlawful aid; the concept oflegitimate expectations is subjective in nature (38) and must therefore be assessed in concreto, taking account not only of the conduct of the public (Community and national) authorities which is the underlying reason for the expectations but also of the features particular to the person who entertains them. (39) Thus, when the question is raised as to whether the recipient of the aid entertained legitimate expectations that the aid was lawful (in which case it might not have to be recovered) it is preferable for the authority which will decide that question to have a direct connection with the trader allegedly persuaded that the conduct at national level was lawful; it is then possible to carry out the fullest assessment of those aspects of the concept of legitimate expectations which relate to the subjective situation and to the conduct of the person holding the expectations, for example the diligence which he displayed and/or his good faith. This point also appears to be implicit in the Court's preference in favour of entrusting the issue to the national courts and in principle not examining it within the framework of disputes between Member States and the Community, when the recipient of the aid is not present. (40) 73. As Advocate General Tesauro observes in his Opinion in Spain v Commission, (41) when the Member State which is the applicant in the case refers to the expectations of the undertaking in receipt of the aid, in actual fact 'it is contesting the obligation imposed on it by the decision to recover the aids at issue, by invoking a legal situation which is not its own, but that of another, the beneficiary undertaking, which is not a party to [those] proceedings, even as an intervener; it is doing that at best in the absence of any specific provision of law conferring on it any such rights of subrogation‘. (42) 74. The weight of the above arguments is undermined, however, by the solution reached by the Court in the same case. (43) In its judgment, the Court did not adoptthe absolute position proposed by the Advocate General but examined the merits of the submission which had been advanced by Spain relating to the expectations of the recipient undertaking. The Court did not rule fully on the question as to whether or not the undertaking which had benefited from the aid entertained legitimate expectations when it received it, but restricted itself to one aspect of the issue, stating that 'the fact that the Commission initially decided not to raise any objections to the aid in issue cannot be regarded as capable (44) of having caused the recipient undertaking to entertain any legitimate expectation since that decision was challenged in due time before the Court ...‘. (45) 75. Even after that explanation, however, it is clear that this development in the case-law calls into question, if not conclusions, at least the reasoning of the case-law cited above. From the moment that the Court considered the merits of the submission put forward by Spain, that is to say by a State which had not notified proposed aid, it set aside the argument that national authorities are unable to invoke legitimate expectations in order that they do not benefit from their own unlawful conduct. Similarly, the argument that, when the person entertaining the legitimate expectations is absent from the Community proceedings, the legal issue relating thereto cannot be fully dealt with loses much of its value; in Spain v Commission the undertakings which had received the aid did not appear before the Court. 76. In my view, the judgment in Spain v Commission reveals the basic criterion for deciding whether or not the issue of legitimate expectations must be considered by the Court when it is put forward by a Member State. The criterion is none other than the duality of legitimate expectations which is acknowledged by the case-law in the context of the repayment of unlawful State aid. When the underlying reason for the creation of expectations that the national measure is lawful 'is attributed‘ to the conduct of national authorities, the Court refuses to intervene; only as an exception does it agree to rule on whether legitimate expectations formed at national level should be protected or are contrary to the Community interest. (46) By contrast, in cases where it is contended that the mistaken belief as to the legality of the State measure was created by conduct of the Community authorities, usually the Commission, the Court appears to cast its qualms aside and examines that particular dimension of the issue of legitimate expectations. 77. Spain v Commission was such an instance. In its judgment in that case, the Court exceptionally agreed to examine whether particular conduct on the part ofthe Commission - its adoption of a decision stating that it wished 'to raise no objections‘ to the grant of the aid at issue - could be regarded as the underlying reason for a legitimate belief on the part of the recipient of the aid that the latter was consistent with Community law. (47) The choice made by the Court to go into the substance of the issue was directly connected with the 'Community‘ nature of the conduct at issue, that is to say with the fact that the conduct was attributable to a Community institution. (48) 78. Transposing the above reasoning to the present case, I note that there is no mention in Decision 93/625 of the extent to which the Commission itself or another Community institution had, by its conduct, caused the PMU to believe that there were no problems as regards the compatibility of the State aid with Community law; (49) nevertheless, the Commission agrees to examine whether a national judicial decision created, on the basis of national legal rules, expectations on the part of the recipients of the aid which deserved protection. In that way, the Commission involves itself with the assessment of conduct to be attributed to a national authority, an assessment which is carried out in accordance with the national provisions governing the protection of legitimate expectations and the revocation of unlawful administrative measures. In accordance with the case-law as analysed above, the option taken by the Commission of examining the issue in question is therefore not justified. It constitutes an intervention into the purely national dimension of a legal problem which not only exceeds its institutional competence but also offends against the duality of prior expectations in the particular context of the repayment of State aid contrary to Article 92 et seq. of the EC Treaty. (50) 79. In view of the above reasoning, no error of law is apparent in the position of the Court of First Instance that the Commission was wrong to restrict in time the recovery of the unlawful State aid in question on the basis of the French Government's submissions as to legitimate expectations entertained by the PMU. (ii) Legitimate expectations as a purely Community concept 80. The starting point for the following analysis is a different definition of legitimate expectations, for instances where that concept arises in the particular context of the recovery of unlawful State aid. This definition deviates from the Deutsche Milchkontor case-law inasmuch as it gives the concept of legitimate expectations a purely Community content, that is to say its application is not, under this definition, a matter for the rules of national law. The definition is founded on the idea that, in the legal context at issue, the protection of legitimate expectations is a concern of the Community legal order, being a parameter connected with the exercise of an exclusively Community competence; that competence consists in remedying the severe damage caused to the conditions of competition in inter-State trade by the payment of unlawful State aid. The administrative measure which gives rise to an issue of protection of legitimate expectations is the Commission decision requiring the aid granted contrary to the Community interests to be recovered. The national measures giving effect to that decision are in reality implementing measures which the national administration is under a mandatory duty to take. (51) 81. The transfer of such a matter to the exclusive regulatory power of Community law is, of course, a further blow to the autonomy of national law, inasmuch as it takes away a particular area of jurisdiction. However, that need not appear strange from a legal point of view or be considered to constitute an impermissible intervention by the Community legal order in the national legal orders which is contrary to the current status quo and not justified at the present stage of European integration. 82. The need to safeguard the effectiveness of Community law when it is implemented at national level has led not only, from the negative point of view, to the shrinking of national legal autonomy - a characteristic example being Alcan II - but also, positively, to the restriction of the scope of national law by express formulation of the rules to be applied. Examples are Directives 89/665/EEC and92/13/EC which contain the procedural rules for ensuring that Community law on public works is duly observed. 83. It is also important to refer to a less well-known passage from the judgment in Deutsche Milchkontor, where it is held that the need of Community law to intervene in relation to the rules governing the repayment of unlawful aid, that is to say an area of law still open to the Member States, cannot be ruled out. More specifically, while the Court stated that 'in the absence of provisions of Community law disputes concerning the recovery of amounts unduly paid under Community law must be decided by national courts pursuant to their own national law subject to the limits imposed by Community law‘, (52) it then observed that 'if disparities in the legislation of Member States proved to be such as to compromise ... equal treatment ... or distort or impair the functioning of the common market, it would be for the competent Community institutions to adopt the provisions needed to remedy such disparities‘. (53) It is therefore expressly foreseen that Community measures might be adopted on issues relating to the repayment of unlawful aid and the safeguarding of the conditions of competition even though they currently fall within national competence. Such measures would consist in the harmonisation of national provisions or assimilation of the way in which a particular legal issue is dealt with by the national authorities. 84. That pronouncement by the Court is entirely correct and reinforces the comments made above regarding the Community character of the issue of repayment of aid. In particular, the fact that national rules governing the recovery of unlawful aid, which include the parameter of the protection of legitimate expectations, are applied does not mean that that issue is brought within the scope of the national legal order; their application is justified, however, by the fact that, as Community law currently stands, detailed Community provisions have not yet been enacted. The Community institutions therefore retain the power of regulatory intervention if they judge that the Community interest is not met by application of the national rules. 85. The very same reasoning provides the context for the proposition under consideration, whereby legitimate expectations become a Community concept; however, the need for Community law to intervene with regard to the meaning and practical application of the principle of the protection of legitimate expectations as entertained by recipients of State aid is not justified solely in order to protect the Community interest more fully but also in order to avoid the adverse effects on national administrative law which result from the prevailing case-law, as set out above. 86. The intervention by Community law could be achieved by drafting Community legislation which would include the basic procedural and substantive rules governing the recovery of unlawful aid and, of course, also broach the issue of safeguards for traders who have in good faith received such State assistance. Furthermore, I am of the view that the absence, until now at least, of Community legislation governing the repayment of aid may be made good, in particular so far as concerns the protection of legitimate expectations, by the work of the Court in shaping the law. It is feasible for the Community judicature to engage in a venture of that kind for two reasons. First, in accordance with the theoretical traditions common to national administrative law, the protection of legitimate expectations constitutes a general principle of law and there is thus scope for filling the gaps in the legislation by means of case-law. Second, the concept at issue already exists as a general principle with a purely Community content, applying principally to the revocation of unlawful administrative measures which create rights. (54) 87. I can therefore see no practical obstacle to accepting that the question of the protection of a trader acting in good faith who has benefited from a national measure contrary to Articles 92 and 93 of the EC Treaty be judged on the basis of the Community principle of legitimate expectations, as applied in the particular context of the recovery of unlawful State aid. In other words, the body applying Community law - and ultimately the Court - will seek to ascertain whether certainty was created in the trader's mind that the aid was compatible with Community law, before balancing the private interest in not repaying the aid against the Community interest. (55) 88. Two observations are called for at this point. First, the national provisions which operate to protect legitimate expectations under domestic law are not immaterial when assessing whether recipients of aid have expectations which are protected at Community level. It is logical for the particular circumstances under which that issue is judged in national law to influence a trader acting in good faith, and they may be sufficient to persuade him that the State aid from which he has benefited is not only lawful but also irreversible. In that case, it is necessary to determine - of course from the standpoint of Community law - the extent to whichthe national provisions contribute to the creation of legitimate expectations under Community law. Both the conduct of the national authorities which is presented as the underlying reason for the belief that the aid is lawful and the particular provisions concerning legitimate expectations are substantive issues for Community law and as such are taken into account by the body implementing it. 89. Second, when the private interest of a trader acting in good faith is balanced against the general Community interest in rectifying the conditions of competition and ensuring that the Community rules are observed, it is expected that the outcome will be unfavourable to the trader. (56) Moreover, we are not faced with a classic relationship between a benefits authority and an individual, as is usually the case in national law. (57) In the category of disputes under consideration, the unlawful act of the national authorities does not prove detrimental solely to their own interests, when it could be maintained that they themselves are to blame for the financial loss which they will suffer if aid is not repaid; that unlawful act adversely affects both a superior legal order, that of the Community, and a category of persons, namely competitors and all those who suffer the adverse consequences of the distortion of competition and the prejudice to inter-State trade. I therefore believe that, in practice, the cases where the protection of the legitimate expectations of a recipient of aid prevails over the abovementioned interests will prove to be entirely exceptional. In order for there to be such an exception, the particular position in which the trader acting in good faith has been placed must be deserving of special protection, a situation which in principle arises only when he is 'misled‘ into believing that the aid is lawful not only by the conduct or measures of the national authorities but also by inappropriate or misleading acts on the part of the Community institutions. Only then is the need to safeguard the Community interest weakened and the need to protect the trader acting in good faith correspondingly strengthened. 90. Having regard to the foregoing, I will now examine the question which occupied the Court of First Instance in the present case. If the above analysis is accepted, the Commission was correct to consider the issue of the legitimate expectations entertained by the PMU, and the Court of First Instance was wrong to find that it was not open to the Commission to assess the ground put forward by the French Government. That view is imposed precisely by the Community character of the protection of legitimate expectations entertained by recipients of aid acting in good faith. Since the investigation as to whether those expectations exist flows from the general principles of Community law, the Commission, whenadopting the relevant measures regarding repayment of the unlawful aid, is not merely entitled, but obliged, to consider that parameter. 91. A number of objections contesting the above view may be put forward. First of all, acceptance that the Commission is able, or even required, to consider the issue in question in the course of the Community procedure at issue means that the Member States are indirectly given the opportunity to derive benefit from their own unlawful acts and that the legitimate expectations end up being assessed in the absence of the person alleged to hold them, without his even having made a request in that regard. I have already explained that the value of those arguments is only relative and that the Court puts them to one side when faced with a case where it is contended that a measure or conduct of a Community institution has given rise to the trader's belief that the aid is lawful. I consider that the same arguments lose force if it is accepted that the issue of legitimate expectations of a recipient of aid falls in the domain of Community law. In accordance with a commonly held view in administrative law, the protection of legitimate expectations, as a fundamental principle which governs the action of administrative bodies under every legal system, must be taken into account by those bodies of their own accord. Since the Commission must therefore examine that parameter in any event, it is entirely within the Commission's power to rely on it in its decisions even if they are adopted in the absence of the person immediately concerned - that is to say the person entertaining the expectations - or even without a request by him in that regard. (58) It is immaterial that the Member States may benefit if the aid is not repaid. The decision that it need not be repaid will have been adopted irrespective of the appraisal of their interests, and that decision does not remove their liability arising from the unlawful acts which have been committed, a liability which may have various unfavourable legal consequences for them. (59) 92. Nor would there be any foundation to the argument that acknowledgment of that competence to the Commission prejudices the national courts, which are the 'natural adjudicators‘ of the legitimate expectations of recipients of State aid. Irrespective of the Commission's assessment, the national courts, as the 'ordinary courts of Community law‘, may examine the issue in question if an application is made to them. Indeed, if they consider that the Commission has misinterpreted and misapplied the Community principle of the protection of legitimate expectations, they can refer a question to the Court for a preliminary ruling. 93. I consider that greater attention should be paid to another criticism which may be made of the view which I am now putting forward, a criticism which relates to the limits of the Community legal order. Does the suggested transfer to Community law alone of jurisdiction to apply legitimate expectations constitute an excessive and impermissible challenge to the Community legal order? As I have explained above, the solution of making the protection of legitimate expectations a Community matter, even solely in relation to the particular issue of the repayment of unlawful State aid, is at first sight a significant blow to the autonomy of national law, in that it takes away a portion of national jurisdiction. Nevertheless, I take the view that that blow is preferable to the blow inflicted by the case-law of the Court of Justice to date, on the grounds that the Community interest is better protected, legal clarity and certainty are enhanced and the specific elements which make up the national legal order are safeguarded. As I have stated at a previous point in my analysis, it proves more prejudicial to national law, and is uncertain from a systemic and theoretical viewpoint, for national law to be legally autonomous in circumstances where fundamental rules of the national legal order might be overturned or even distorted when they are applied in cases of interest to the Community. 94. The answer to this ground of appeal remains to be given. Having regard to the above analysis, must the solution adopted by the Court of First Instance be set aside? I think not. Despite the mistaken reasoning adopted by it when assessing the relevant part of the Commission decision, the conclusion which it reached is correct, irrespective of its grounds. As is clear from the contested judgment, the Commission decided to restrict recovery of the unlawful aid, finding that a judgment of the French Conseil d'État gave rise to legitimate expectations on the part of the racecourse undertakings. However, it failed to explain the specific reasons why the protection of those expectations - assuming that they were in fact legitimate - prevailed over the mandatory Community interest in restoring free competition and inter-State trade following the very heavy damage caused by unlawful State aid, especially when, as stated above, the need to protect the interests of the person who has received the aid in good faith may prevail only in wholly exceptional cases over the need to safeguard the Community interest at issue. Accordingly, Commission Decision 93/625 manifestly suffered from a defective statement of grounds and was correctly annulled by the Court of First Instance. (iii) Failure to notify State aid as a ground which precludes legitimate expectations 95. A final point requires explanation. The appellant criticises in particular paragraph 182 of the contested judgment, where it is, in its view, held that an undertaking in receipt of aid may rely on exceptional circumstances establishing that the aid is lawful only where the procedure under Article 93 of the Treaty has been observed. It is not in fact clear that such an absolute position, under whichthe formal requirements of Article 93 of the EC Treaty must always be satisfied in order for prior expectations to be recognised, is in line with the conclusions of the case-law to date. 96. It follows from a review of the case-law that the reasoning of the Court may be condensed into the following two propositions. On the one hand, the Court observes that, 'in view of the mandatory nature of the supervision of State aid by the Commission under Article 93 of the Treaty, undertakings to which an aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in that article. A diligent businessman should normally be able to determine whether that procedure has been followed‘. (60) On the other hand, the Court nevertheless finds that 'it is true that a recipient of illegally granted aid is not precluded from relying on exceptional circumstances on the basis of which it had legitimately assumed the aid to be lawful and thus declining to refund that aid. If such a case is brought before a national court, it is for that court to assess the material circumstances, if necessary after obtaining a preliminary ruling on interpretation from the Court of Justice‘. (61) Thus, while in principle a failure to comply with the obligation of notification laid down by Article 93 of the Treaty prevents legitimate expectations from being created, a recipient of aid nevertheless has a narrow leeway for proving that there may be exceptional circumstances which enable the presumption against him that there are no legitimate expectations to be rebutted. (62) 97. There is, of course, also the precedent of Alcan II, where the Court refers to the general position set out above, (63) but appears in the end to consider that legitimate expectations were not entertained in the case before it solely because theState aid at issue had not been notified. (64) However, I do not consider that that judgment is sufficient to overturn the previous case-law and to establish an irrebuttable presumption that failure to notify national measures is sufficient to preclude the creation of legitimation expectations on the part of the recipient of the aid. 98. In any event, however, the error detected in paragraph 182 of the contested judgment is not sufficient to undermine its correctness, since the position of the Court of Instance with regard to the relevant point of the disputed Commission decision is entirely correct for the reasons previously set out. IV - Conclusion 99. In view of the foregoing, I propose that the Court should: - dismiss the appeal in its entirety; - order the appellant to pay the costs. 1: Original language: Greek. 2: - Case T-67/94 Ladbroke Racing v Commission [1998] ECR II-1. 3: - OJ 1993 L 300, p. 15. 4: - I consider that a typical example is the development of judicial review of Commission decisions relating to whether or not mergers of undertakings are compatible with Community competition rules. It is settled case-law that, 'although as a general rule the Community judicature undertakes a comprehensive review ... its review of complex economic appraisals made by the Commission is necessarily limited to verifying whether the relevant rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or a misuse of powers‘. The above self-imposed restriction on the Community judicature - which perhaps has an inherent contradiction (a 'comprehensive‘ investigation of the case whereas only the 'manifest‘ errors of the administrative authority are looked for) - is concerned in particular with decisions adopted by the Commission when monitoring whether the rules of fair competition are observed (see, in particular, Case C-7/95 P Deere v Commission [1998] ECR I-3111, paragraph 34, Case 42/84 Remia and Others v Commission [1985] ECR 2545, paragraph 34, and Case T-243/94 British Steel v Commission [1997] ECR II-1887, paragraphs 107 to 113). In reality, however, the intention of the above judicial statement is not to restrict absolutely the scope for the Community judicature to intervene in the substance of the case, but to recognise that the Community judicature has the power to remain master of its tasks, defining itself the depth to which its investigation will go on each occasion. As is indeed apparent from the judgment in Joined Cases C-68/94 and C-30/95 France and Others v Commission [1998] ECR I-3175, there is clearly a will on the part of the Community judicature to use that power with a view to carrying out a more comprehensive review than formerly. While the Court may, in the major premiss of its reasoning, consider the 'discretion‘ of the Commission 'especially with respect to assessments of an economic nature‘ (paragraphs 223 and 224), it nevertheless then proceeds to make findings of substance on issues which are very much economic in nature. It finds, for example, that the undertakings involved in the concentration 'did not have a privileged relationship for the distribution of potash-based products‘ and that 'the cluster of structural links ... is not in the end as tight or as conclusive as the Commission sought to make out‘ (paragraphs 230 to 237). Finally, it concludes by rebutting purely factual and specialist technical analyses of the Commission (see, in particular, paragraphs 237 and 244). That development is entirely legitimate if the familiarity which the Court of First Instance and the Court of Justice have with that category of legal disputes is taken into account. It would certainly be absurd to exclude the possibility of the Community judicature using the experience which it has acquired to fill the gaps in judicial review. 5: - Case C-353/95 P Tiercé Ladbroke v Commission [1997] ECR I-7007, paragraphs 34 and 35. 6: - Case 173/73 Commission v Italy [1974] ECR 709, paragraph 15 et seq. 7: - Joined Cases C-72/91 and C-73/91 Sloman Neptun v Bodo Ziesemer [1993] ECR I-887. 8: - Case C-353/95, cited in footnote 4 above. 9: - Paragraph 35. 10: - The Court has consistently held that appeals may be based only on grounds relating to the infringement of rules of law, to the exclusion of any appraisal of the facts. The Court of First Instance, as the court adjudicating on the substance, has exclusive jurisdiction to find the facts. The Court of Justice may merely review the legal classification of those facts and the legal consequences which the Court of First Instance has drawn from them, except where the substantive inaccuracy of the latter's findings is apparent from the documents submitted to the Court of Justice (distortion of the sense of evidence). See, for example, Case C-136/92 P Commission v Brazzelli Lualdi and Others [1994] ECR I-1981, paragraphs 48 and 49, and Case C-8/95 New Holland Ford v Commission [1998] ECR I-3175. 11: - Case C-142/87 Belgium v Commission [1990] ECR I-959. 12: - Point 29 of the Opinion. 13: - Paragraph 35. 14: - Emphasis added. 15: - Paragraph 38. 16: - The appellant refers to paragraphs 65, 66 and 67 of the judgment in Case T-358/94 Air France v Commission [1996] ECR II-2109. 17: - Paragraph 109 of the contested judgment. 18: - Case C-295/97 Piaggio v Ifitalia [1999] ECR I-0000. 19: - Piaggio, cited in footnote 17 above, paragraph 35. See also Joined Cases C-52/97, C-53/97 and C-54/97 Viscido and Others v Ente Poste Italiane [1998] ECR I-2629, paragraph 13. 20: - Piaggio, cited in footnote 17 above, paragraph 42. 21: - Air France, cited in footnote 15 above, paragraph 67. 22: - Paragraph 184 of the contested judgment. 23: - Paragraph 183 of the contested judgment. 24: - Case C-169/95 Spain v Commission [1997] ECR I-135. 25: - Joined Cases 205/82 to 215/82 Deutsche Milchkontor v Germany [1983] ECR 2633. 26: - Deutsche Milchkontor, paragraph 30. 27: - Deutsche Milchkontor, paragraphs 22 and 32. 28: - See Case 94/87 Commission v Germany [1989] ECR 175 (known as Alcan I), paragraph 12, and Case C-5/89 Commission v Germany [1990] ECR I-3437 (known as BUG-Alutechnik), paragraphs 13 to 16. 29: - With regard to the difference in the treatment of legitimate expectations according to whether State or Community aid is at issue, see the judgments in, respectively, Case C-24/95 Land Rheinland-Pfalz v Alcan Deutschland [1997] ECR I-1591 (known as Alcan II) and Case C-298/96 Oelmühle and Schmidt Söhne v Bundesanstalt für Landwirtschaft und Ernährung [1998] ECR I-4767. As Advocate General Jacobs stated in paragraph 40 of his Opinion in Alcan II, '... [in Deutsche Milchkontor] the Court properly left the matter to be decided in accordance with national law since there was no overriding Community interest justifying encroachment upon the procedural autonomy of the Member State concerned. By contrast, if a similar situation arose in relation to State aid, it would jeopardise attainment of the aims of the Treaty provisions to allow the recipient of aid to resist recovery because he had passed onthe benefit of the aid to his customers by lowering his prices. In such circumstances he would with impunity receive a significant competitive advantage.‘ In this connection, Advocate General Léger observed in his Opinion in Oelmühle (points 47, 48 and 49): 'The Court has consistently held that a State's obligation to repeal an aid which the Commission finds incompatible with the common market is designed to bring about the restoration of the previous situation. Just as for the recovery of Community aid, the recovery of a State aid must in principle be effected in accordance with the relevant provisions of national law, provided that they are applied in a way which does not make it impossible in practice to effect the recovery required by Community law. In particular, the interests of the Community must be taken fully into consideration when applying a provision which makes the revocation of an unlawful administrative act subject to an assessment of the different interests arising. On the other hand, the Court's case-law relating to these two areas differs considerably. The specific nature of State aid justifies the Court's very rigorous approach to pleas based on principles of national law such as that of the protection of legitimate expectations or that of legal certainty in order to resist the repayment of aid.‘ 30: - 'In view of the mandatory nature of the supervision of State aid by the Commission under Article 93 of the Treaty, undertakings to which an aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in that article. A diligent businessman should normally be able to determine whether that procedure has been followed‘ (Case C-5/89, cited in footnote 27 above, paragraph 14). 31: - 'A Member State whose authorities have granted aid contrary to the procedural rules laid down in Article 93 may not rely on the legitimate expectations of recipients in order to justify a failure to comply with the obligation to take the steps necessary to implement a Commission decision instructing it to recover the aid‘ (Case C-5/89, cited in footnote 27 above, paragraph 17). 32: - Alcan II, operative part of the judgment. 33: - Alcan II, paragraph 34. See also paragraph 27 of the Opinion of Advocate General Jacobs in the same case. 34: - The Court's preference in favour of the national court as the 'natural adjudicator of the legitimate expectations of recipients of unlawful State aid‘ is apparent in paragraph 16 of the judgment in Case C-5/89, cited in footnote 27 above, which followed the Opinion of Advocate General Darmon (points 17 to 26). The judgment states: 'It is true that a recipient of illegally granted aid is not precluded from relying on exceptional circumstances on the basis of which it had legitimately assumed the aid to be lawful and thus declining to refund that aid. If such a case is brought before a national court, it is for that court to assess the material circumstances, if necessary after obtaining a preliminary ruling on interpretation from the Court of Justice‘. See also Case C-39/94 SFEI and Others v La Poste and Others [1996] ECR I-3547. 35: - The above explanation is necessary in order to understand the final words of paragraph 183 of the contested judgment, according to which the recipient of the aid may plead legitimate expectations '... in the context of proceedings before the public authorities or before the national courts‘. 36: - Cited in footnote 28 above. 37: - Case C-5/89, cited in footnote 27 above, paragraph 17. See also Spain v Commission, cited in footnote 23 above, paragraph 48. 38: - See J.-P. Puissochet, '”Vous avez dit confiance légitime?” (le principe de confiance légitime en droit communautaire‘, Mélanges en l'honneur de Guy Brabant, Dalloz 1996, p. 584. 39: - This is also understood by Advocate General Darmon in his Opinion in Case C-5/89 (cited in footnote 27 above), when he observes that 'the national court must be able to assess the conduct of the recipient undertaking in concreto ... The doubts with which some undertakings may be assailed, when faced with ”atypical” forms of aid, as to whether notification is necessary should not be made light of. But the concrete nature of the assessment to be carried out by the national court must be contrasted with the abstract concept of legitimate expectations on which Germany relies in support of its refusal to implement the Community decision ordering the recovery of aid in question. The existence of legitimate expectations is not presumed, it must be proved‘ (point 26 of the Opinion). 40: - See above, point 62 et seq. 41: - Cited in footnote 23 above. 42: - Point 17 of the Opinion. 43: - Spain v Commission, cited in footnote 23 above. 44: - Emphasis added. 45: - Paragraph 53 of the judgment. 46: - See Alcan II (cited in footnote 28 above). In those instances, the Court answers questions referred to it for a preliminary ruling by national courts, having substantive jurisdiction in respect of the assessment of the legitimate expectations which have arisen at national level. 47: - Nor is it an accident that, on the only occasion when Court has accepted that aid should not be repaid because of legitimate expectations entertained by the recipient, those expectations had been created by acts and omissions of the Commission whose effect was that the decision by it had to be annulled (Case 223/85 RSV v Commission [1987] ECR 4617). See also SFEI and Others, cited in footnote 33 above, in particular paragraphs 75 and 76 of the Opinion of Advocate General Jacobs. 48: - At this point, however, two questions arise. First, may the national courts examine submissions as to legitimate expectations which have been created by conduct at Community level? At first sight, this venture presents difficulties inasmuch as the ultimate judge of whether acts of the Community institutions are lawful is the Court of Justice. If the Court of Justice has not looked into the issue, the national court seised with the case regarding repayment of aid is in all probability required to refer a question to the Court of Justice for a preliminary ruling on the legal interpretation of the Commission's acts or omissions, in order to be able to rule on whether or not prior expectations have been aroused. See, however, the Opinion of Advocate General Jacobs in SFEI and Others, cited in footnote 33 above, from which it appears to follow indirectly that national courts may take conduct on the part of the Commission into account when establishing whether a recipient of aid entertains legitimate expectations, without it being necessary to refer a question to the Court of Justice for a preliminary ruling. I consider that view to be correct where the assessment does not call into question the compatibility of a decision of a Community institution with Community law. The relevant passages of the Opinion of Advocate General Jacobs (paragraphs 75 and 76) are as follows: '... It is for national courts to assess whether a diligent businessman ought to have realised that the measures in question constituted aid which could be granted only in accordance with the procedure laid down by Article 93(3). In the present case it seems doubtful whether that is so. First, the measures in question are not ones which self-evidently constitute aid; whether they do depends on whether the Post Office received adequate remuneration for its services, a matter which SFMI may have found it difficult, if not impossible, to verify. Secondly, the Commission, after conducting its preliminary inquiry, decided not to proceed with the matter; moreover, since re-opening its inquiry, it has failed for a period of more than three years to reach a decision. In such circumstances the national court, if it were to find that the measures constitute aid, may in my view be justified in considering it inappropriate to order repayment of the aid.‘ The second question concerns the applicable law in instances where the Court examines the issue of legitimate expectations created by conduct at Community level. What legal criteria are used to establish whether legitimate expectations are entertained in those specific instances? In all probability criteria of Community law. It follows, therefore, thatthe Community principle of the protection of legitimate expectations also has a special regulatory content, that is to say its application is not always dependent on the special provisions of national law. 49: - If the Commission's finding had related to conduct to be 'attributed‘ to a Community institution, I do not consider that problems would have arisen regarding the legality of its decision to look into the question of legitimate expectations. The principle of the protection of legitimate expectations, as a component of the Community legal order, requires the Community institutions to examine whether their conduct has caused persons subject to their administration to entertain beliefs of such a kind as to deserve protection. The ultimate decision on that issue rests, of course, with the Community judicature. 50: - This is a particularly delicate issue. I am not, of course, implying that the question of the legitimate expectations of recipients of aid is one for the national authorities. That submission was, for that matter, made by the German Government in Case C-5/89 and, correctly, not accepted by Advocate General Darmon (points 14, 15 and 16 of the Opinion). In reality, this issue has many aspects, some of which are for the Member States and others for the Community. For example, the question as to whether national requirements for establishing legitimate expectations arising from conduct at national level are satisfied has a purely Member State character and is a matter for decision by the competent national authorities. By contrast, the Community interest or the effectiveness of a Community provision, as parameters to be assessed when determining whether and how the expectation which has been created might be protected, are issues for Community law. The error of the Commission in the present case lies in the fact that it accepted the legal weight of a decision of a French court from the standpoint of French law regarding the revocation of administrative measures, when the issue had not already been dealt with by the national courts and the undertaking alleged to have been misled by that decision was not present before it. Thus, either the Commission determined a Member State issue purely by itself, or it contented itself with submissions of the national authorities regarding how the question of the legitimate expectations of the recipient of the aid was to be considered. On either interpretation, its decision is defective. 51: - See the observations of Advocate General Jacobs in Alcan II, cited in footnote 28 above. It is to be noted that it is more correct from a methodological point of view to agree to the issue of legitimate expectations being examined during the Community stage of the procedure, that is to say when the decision-making body (the Commission) has a discretion as to the decisions which it will adopt, than during the national stage of the procedure, when the national bodies will be obliged to give effect to the order issued by the Commission. 52: - Deutsche Milchkontor, cited in footnote 24 above, paragraph 19. 53: - Deutsche Milchkontor, paragraph 24. 54: - See, for example, Case 14/61 Hoogovens v High Authority [1962] ECR 253 and Joined Cases 42/59 and 49/59 Snupat v High Authority [1961] ECR 53. It is settled case-law that 'while it must be acknowledged that any Community institution which establishes that a measure which it has just adopted is tainted with illegality has the right to withdraw it within a reasonable period, with retroactive effect, that right may be restricted by the need to fulfil the legitimate expectations of a beneficiary of the measure, who has been led to rely on the lawfulness thereof‘. See, for example, Case C-248/89 Cargill v Commission [1991] ECR I-2987, paragraph 20. 55: - The Court traditionally follows the above judicial reasoning when it examines the issue of prior expectations. See Case 15/85 Consorzo Cooperativo d'Abruzzo v Commission [1987] ECR 1005, Case C-50/95 P De Compte v Parliament [1997] ECR I-1999 and Case 84/78 Tomadini v Amministrazione delle Finanze dello Stato [1979] ECR 1801. 56: - See above, point 57 et seq. 57: - For example, it is common to recognise legitimate expectations entertained by persons who in good faith receive a social security or pension benefit on the basis of an unlawful administrative measure. In that case, the legal situation of other persons is unaffected by the unduly paid sums not being refunded because of the legitimate expectation. 58: - I nevertheless cannot fail to spot the fundamental weakness of the Community procedure for monitoring State aid, which makes no provision for the participation of the undertaking granted the aid. 59: - For example, the consequences laid down by the Treaty for failure to comply with the requirements of Community law or those provided for by national law where the persons affected by the aid have a claim for compensation. 60: - Case C-5/89, cited in footnote 27 above, paragraph 14. 61: - Case C-5/89, paragraph 16. 62: - 'Traders in receipt of State aids are professionals who have a duty to take care ... The obligation under which they are placed to verify that prior notification of the aid granted to them has been given to the Commission does not appear to me to be either excessive or particularly difficult to fulfil. However, both the principle of the protection of legitimate expectations itself and the jurisdiction of the national courts to determine such matters must be preserved, and allowance must therefore be made for cases in which the fundamental rights of an undertaking, although it has not verified whether the aid had been notified, are such that it should none the less be accorded the benefit of the protection of legitimate expectations ...‘ (Opinion of Advocate General Darmon in Case C-5/89, points 25 and 26). 63: - Alcan II, cited in footnote 28 above, paragraph 25. 64: - 'It appears from the file on the case that the aid was paid without prior notification to the Commission, so that it was unlawful under Article 93(3) of the Treaty. The first tranche was paid on 9 June 1983, without prior advice to the Commission, and the second on 30 November 1983, after the Commission's letter of 25 November 1983 informing the Federal Government that the grant of the first tranche had been unlawful and that the second tranche should not be paid. In accordance with the principle set out in paragraph 25 of this judgment, the recipient of aid could not, therefore, have had at that time a legitimate expectation that its grant was lawful‘ (Alcan II, paragraphs 30 and 31).