Judgment — ECLI:EU:T:2009:2
Date: 2009-01-14
Language of the case: German
Court formation: Fifth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Statement of reasons;Notification and obligation to suspend payment of the aid;General
Procedure: Action for annulment - unfounded;Action for annulment - inadmissible
Origin: Germany

summary of the pleas in law on which it is based. That summary must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the action, if necessary without any other supporting information. The application must accordingly specify the nature of the grounds on which the action is based, so that a mere abstract statement of the grounds does not satisfy the requirements of the Rules of Procedure (Case T-102/92 Viho v Commission [1995] ECR II-17, paragraph 68, and Case T-352/94 Mo och Domsjö v Commission [1998] ECR II-1989, paragraph 333). 55 Such an infringement of Article 44(1) of the Rules of Procedure constitutes an absolute bar to proceeding with a case, which, under Article 113 of the Rules of Procedure, the Court may consider at any time of its own motion, after hearing the parties (Case T-64/89 Automec v Commission [1990] ECR II-367, paragraphs 73 and 74, and Joined Cases T-481/93 and T-484/93 Exporteurs in Levende Varkens and Others v Commission [1995] ECR II-2941, paragraph 75). 56 In the present case, it must be stated that Kronoply simply alleges infringement of Article 88 EC without putting forward any argument in support of that claim. When questioned about this by the Court at the hearing, Kronoply did not provide any explanation. 57 The present plea must therefore be declared inadmissible in so far as it alleges infringement of Article 88 EC. – Substance of the present plea 58 It is common ground that the Commission held that none of the derogations provided for in Article 87(2) and (3) EC were applicable to the State aid of EUR 3 936 947 that the Federal Republic of Germany planned to grant to Kronoply and that the aid had therefore to be declared incompatible with the common market. 59 It follows, both from the structure of the Decision and from the content of its recitals, that the Commission’s conclusion is based on two separate pillars: the lack of any incentive provided by the aid at issue and the lack of necessity for that aid. Thus, the Commission states in recital 20 of the Decision that ‘the two fundamental elements of incentive and necessity are missing in the present case’. 60 Even though, in certain circumstances, they may be mutually supportive, those two conditions governing the compatibility of aid each have their own specific meaning, so that the two pillars of the Decision relating to the lack of incentive and the lack of necessity must each be regarded as autonomous. In the context of the present plea, Kronoply specifically challenges each of the pillars on which the Decision rests. 61 When questioned at the hearing, both parties confirmed that interpretation of the Decision, as well as the need to apply cumulatively the two conditions relating to incentive effect and necessity of the aid if the compatibility of that aid with the common market is to be recognised. Formal note of this was recorded in the minutes of the hearing. 62 It should be borne in mind at this stage that, where some grounds of a decision on their own provide a sufficient legal basis for the decision, any errors in other grounds of the decision have, in any event, no effect on its enacting terms (see, by way of analogy, Joined Cases C-302/99 P and C-308/99 P Commission and France v TF1 [2001] ECR I-5603, paragraphs 26 to 29, and Case T-201/01 General Electric v Commission [2005] ECR II-5575, paragraph 42). Moreover, where the enacting terms of a Commission decision are based on several pillars of reasoning, each of which would in itself be sufficient to justify those terms, that decision should, in principle, be annulled only if each of those pillars is vitiated by an illegality. In such a case, an error or other illegality which affects only one of the pillars of reasoning cannot be sufficient to justify annulment of the decision at issue because that error could not have had a decisive effect on the enacting terms adopted by the Commission (see, by analogy, Graphischer Maschinenbau v Commission, cited in paragraph 45 above, paragraphs 49 to 51, and General Electric v Commission, paragraph 43). 63 Accordingly, it is appropriate first of all to examine Kronoply’s criticisms, as set out in the plea alleging infringement of Article 87(3)(a) and (c) EC, in relation to the second pillar of the Decision, concerning the lack of necessity of the aid at issue. 64 Article 87(3) EC states that the following may be considered to be compatible with the common market: ‘(a) aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment; … (c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest; …’ 65 As stated in recital 36 of the Decision, the Commission can declare aid compatible with Article 87(3) EC only if it can establish that the aid contributes to the attainment of one of the objectives specified, something which, under normal market conditions, the recipient firms would not achieve by their own actions. In other words, the Member States must not be permitted to make payments which, although they would improve the financial situation of the recipient undertaking, are not necessary for the attainment of the objectives specified in Article 87(3) EC (see, to that effect, Case 730/79 Philip Morris Holland v Commission [1980] ECR 2671, paragraph 17). 66 It is not acceptable for aid to include arrangements, in particular as regards its amount, whose restrictive effects exceed what is necessary to enable the aid to attain the objectives permitted by the Treaty (see, to that effect, Case 74/76 Iannelli & Volpi [1977] ECR 557, paragraph 15). 67 It follows from the Decision that the Commission reached the conclusion that the aid at issue is not necessary essentially on the basis of two objective findings. 68 The Commission first pointed out that the aid, in the amount of EUR 3 936 947, notified by the Federal Republic of Germany on 22 December 2003, did not concern either a new investment project on Kronoply’s part or the creation of employment, but related solely to the construction of an OSB production plant, the subject of the notification of 22 December 2000. 69 In its written pleadings, the Commission therefore cites – without being contradicted on that point by Kronoply – a sentence from point 3.2.2 of the notification of 22 December 2003, according to which ‘all eligible investments are limited to investments originally applied for’. It is also clear from the figures cited in point 3.3.1 of that notification that the amount of the contested aid corresponds to 3.5% of the cost of the initial investment, thereby raising the intensity of the aid from 31.5% to 35% of the cost. 70 Secondly, the Commission took account of the fact that the investment project for the construction of an OSB production plant had been fully completed by Kronoply by means of the authorised grant of EUR 35.43 million, representing an aid intensity of 31.5% of the investment cost, and that it was completed well before the second notification of 22 December 2003. 71 Thus the parties are agreed that Kronoply pursued its activities after receiving an aid intensity of no more than 31.5% and that the works for the construction of the plant, which had started in February 2000, were finally completed at the end of January 2003, in other words, almost one year before the second notification. 72 The Commission inferred from the second circumstance that Kronopoly ran a viable economic operation or that it did not in any event need more aid and that, at that stage, any further aid would provide a windfall profit for Kronoply (recital 39 of the Decision). 73 It must be stated in that connection that Kronoply does not claim that the full implementation of the investment project at issue ultimately gave rise to additional costs that it had to finance by means of own resources or a loan and which therefore compromised its financial position. Kronoply therefore fails to establish that the additional aid of EUR 3 936 947 notified to the Commission on 22 December 2003 was financially necessary for the full implementation of the investment project at issue. 74 Thus it appears that, in the circumstances, the Commission was right to hold that the aid at issue did not require the beneficiary either to pay consideration or to contribute to an objective in the common interest and that, in consequence, it was operating aid intended to cover the normal running costs that Kronopoly had to bear and, as such, could not be authorised. 75 It should be borne in mind in that regard that, as a rule, operating aid – that is to say, aid which is intended to release an undertaking from costs which it would normally have to bear in its day-to-day management or normal activities – distorts the conditions of competition (see Case C-156/98 Germany v Commission [2000] ECR I-6857, paragraph 30 and the case-law cited). 76 None of the arguments put forward by Kronoply are capable of invalidating the conclusion set out in paragraph 74 above. 77 Kronoply claims, first, that it is clear from the Commission’s decision-making practice as set out in the Guidelines that, just as for incentive effect, it is sufficient, in order to demonstrate the necessity of aid, that the national application for aid have been lodged before work was started on the investment project. 78 It must be held, however, that Kronoply does not provide any reference to Commission decisions which demonstrate the alleged practice, and that an examination of the Decision reveals, to the contrary, that the third subparagraph of point 4.2 of the Guidelines concerns only the condition relating to the incentive effect of aid. 79 Under that provision, ‘aid schemes must lay down that an application for aid must be submitted before work is started on the projects’. 80 It should be observed that that provision refers to a circumstance of a chronological nature and therefore points to an examination ratione temporis, which is perfectly suitable for determining whether an incentive effect exists. That examination must be made by reference to the decision to invest taken by the undertaking concerned, which marks the beginning of the dynamic process that an operating investment such as that undertaken by Kronoply necessarily constitutes. 81 As stated in recital 30 of the Decision, the aim of applying the criterion set out in point 4.2 of the Guidelines is to ascertain the existence of incentive effect without unduly delaying the investment by carrying out a full analysis of the economic circumstances of the recipient’s investment decision, which might prove very difficult or time-consuming. The latter concern explains why the finding that the aid application was made before the start of the investment project is enough in itself, according to the Commission, to raise the presumption that an incentive effect exists. 82 However, the issue raised in the present dispute as regards the condition relating to the necessity of the aid is that of the assessment of the actual terms of the implementation of the investment project concerned and the existence of a consideration, to be provided by Kronoply, justifying the grant of the additional aid notified on 22 December 2003. 83 Kronoply’s argument amounts, in reality, to maintaining that the assessment of the objective and substantive condition of the necessity of the aid must be made in the light of a purely formal criterion. That cannot be accepted. 84 Kronoply submits, secondly, that the Commission’s interpretation of the concept of the necessity of the aid fails to take account of the fact that Kronoply was obliged, under the applicable national legislation, to complete the project within 36 months – that is to say, by 1 January 2005 – failing which it would lose all the aid, and amounts to a repudiation of the case-law of the Court, which provides for the possibility that an increase in aid already granted may be authorised. 85 It is common ground that, after a notification by a Member State of an aid project and its authorisation by the Commission, that State may notify a plan to introduce new aid in favour of an undertaking or to alter aid already granted to it (Case T‑212/00 Nuove Industrie Molisane v Commission [2002] ECR II-347, paragraph 47, and the order in Kronopoly v Commission, cited in paragraph 9 above, paragraph 50). The new notification is subject to review by the Commission, which, after checking that the conditions laid down in Article 87(2) and (3) EC are satisfied, may declare the aid compatible with the common market (see, to that effect, Nuove Industrie Molisane v Commission, paragraph 46). 86 Far from denying that that possibility is open to the Member States, the Commission expressly mentions it in recital 24 of the Decision. The Commission clearly accepts that several forms of aid may be accumulated with respect to a single investment project, but on condition that each of them may be considered to be compatible with the common market and that the condition that the aid is necessary is therefore satisfied. 87 Furthermore, as the Commission rightly states in its written pleadings, the fact that national legislation provides that a project must be completed within a certain period does not automatically lead to the loss of the possibility of applying for and obtaining authorisation, after the expiry of that period, for an increase in the aid already granted for that project. 88 It is thus conceivable that a Member State may notify the Commission, after the expiry of a period laid down by national law, of additional aid for a particular project whose implementation has, on account of unforeseeable external factors, generated additional costs. 89 It is for the Commission, in such a situation, to determine whether the additional aid notified may be regarded as necessary, by taking into account – particularly in the case of regional aid covered by the 1998 multisectoral aid framework – the maximum allowable intensity of aid applicable. 90 In the present case, the Commission rightly confined itself to finding that the investment project concerned had been fully implemented by Kronoply by means of the aid initially authorised and before the notification of the aid at issue. 91 It should be borne in mind that Kronoply has never claimed that the completion of the investment project concerned, hence the attainment of one of the objectives laid down in Article 87(3) EC, had given rise to additional expenditure and that the proposed increase in the initial aid to EUR 3 936 947, notified to the Commission on 22 December 2003, was to compensate, wholly or in part, for that additional expenditure and, to that extent, had to be regarded as necessary. 92 Kronoply merely alleges that additional aid for the investment project must be authorised where, as in the present case: – the Commission has made, in its decision declaring the initial aid compatible, an erroneous assessment of the market for the goods concerned; – a uniform approval practice for aid for that market is sought; – the national administrative procedure relating to the initial aid application is still open. 93 It should be noted, first, that the allegation of an erroneous assessment by the Commission of the market for the relevant goods is at odds with the assertion that the information supplied by the German authorities – in the light of which the decision of 3 July 2001 was adopted – was correct. Secondly, Kronoply’s submissions, as set out in the preceding paragraph, have no bearing on the condition that the aid must be necessary, as defined in paragraphs 65 and 66 above. 94 It is clear from the documents before the Court that the true position is that the notification of the contested aid was intended quite simply to reach an aid intensity of 35%, corresponding to the initial aid application, as Kronoply had clearly not accepted the setting of a 0.75 coefficient for the ‘state of competition’ factor, when the Commission had approved a coefficient of 1 for the aid project notified in favour of the competing undertaking Glunz AG, in its decision on aid for that undertaking which was adopted several weeks after the decision of 3 July 2001. 95 Thirdly, Kronoply criticises the classification of the aid at issue as operating aid, relying essentially on the terms of the notification of 22 December 2003. 96 It must be observed, however, that the mere fact that the notification by a Member State ‘relates to’ regional investment aid does not mean that the measure concerned cannot be operating aid. 97 It should be borne in mind that, as is clear from Article 88 EC and the relevant case-law, the implementation of the system for the control of State aid is a matter essentially for the Commission, which, for the application of Article 87(3) EC, enjoys a broad discretion, the exercise of which involves assessments of an economic and social nature which must be made within a Community context (Case C-303/88 Italy v Commission [1991] ECR I-1433, paragraph 34, and Germany v Commission, cited in paragraph 75 above, paragraph 67). 98 In the present case, the Commission rightly held that the condition regarding the necessity of the aid was not satisfied and that the contested aid had to be classified as operating aid because it was granted without the recipient being required to provide consideration and it was intended to improve the finances of the recipient undertaking. 99 It is clear from the above considerations that Kronoply has failed to demonstrate that the Commission was wrong in concluding that the aid was not necessary. 100 Accordingly, and even supposing the Commission to have been wrong in holding that the aid at issue did not satisfy the condition concerning incentive effect in the particular circumstances of the case, those circumstances being that a notification was made of additional aid for an investment project which had already been authorised and which formed an economically indissociable whole, it must be held that, in accordance with the considerations set out in paragraphs 59 to 62 above, the Decision would remain well founded, solely on the basis of the finding that the aid was not necessary. 101 It follows that the plea alleging infringement of Article 87(3)(a) and (c) EC and the Guidelines must be rejected. Plea alleging manifest errors on the part of the Commission in the finding of the facts Arguments of the parties 102 Kronoply claims first that, in recital 22 of the Decision, the Commission is incorrect in stating that, in the N 813/2000 proceedings, it recognised the relevance of the information provided by the Federal Republic of Germany and accepted the conclusions drawn by the latter as to the market for the goods concerned. It is clear from the Commission decision of 3 July 2001 that the Commission and the Federal Republic of Germany were not in agreement as regards the question whether or not the investment was made in a declining market. 103 Kronoply submits, secondly, that another comment made in recital 22 of the Decision, namely that the Commission decision of 3 July 2001 was accepted both by the Federal Republic of Germany and by Kronoply, is incorrect. The fact that no action was brought against the decision declaring the aid to be entirely compatible with the internal market cannot be construed as acceptance, because such an action would have been inadmissible for lack of locus standi. Furthermore, Kronoply had an obligation under national law to complete the project as notified within 36 months of its approval by the Commission. 104 Kronoply states, thirdly, that the Commission was wrong to find in the Decision that Kronoply had already been refused an aid intensity of 35%. According to Kronoply, the difference between the aid intensity of 31.5% authorised in the decision of 3 July 2001 and the aid intensity of 35% resulting from the correct application of the 1998 multisectoral aid framework had not yet been the subject of a State aid procedure before the notification of 22 December 2003, and it was only in the Decision that the Commission refused an (accumulated) aid intensity of 35%. 105 Kronoply observes, fourthly, that in assessing whether the aid had an incentive effect, hence in determining whether the aid application had been submitted before the start of the project, the Commission does not mention even once in the Decision the date of Kronoply’s aid application, namely 28 January 2000. Clearly, therefore, the Commission is relying on incomplete facts. 106 Kronoply concludes that if the Commission had established the facts correctly, it would have reached a different conclusion, and that the manifest errors made by the Commission in finding the facts are in themselves sufficient justification for the annulment of the Decision. 107 The Commission contends that the present plea should be rejected. Findings of the Court 108 It is clear from the case-law that, in order to annul the contested act, it is not sufficient to establish that the latter is vitiated by an error of fact. That error must also have had an impact on the content of the act itself; or, in other words, it must be established that, in the absence of that error, the act might have been different (see, to that effect, Joined Cases T-163/94 and T-165/94 NTN Corporation and Koyo Seiko v Council [1995] ECR II-1381, paragraph 115; Case T-35/01 Shanghai Teraoka Electronic v Council [2004] ECR II-3663, paragraph 167; and Case T-107/04 Aluminium Silicon Mill Products v Council [2007] ECR II-669, paragraph 66). 109 In the present case, it is sufficient to note that, even if the Commission had committed the four errors of fact alleged by Kronoply, the conclusion relating to the lack of necessity of the aid would remain well founded in the light of the considerations set out in paragraphs 68 to 74 above. 110 The four alleged errors of fact committed by the Commission in the Decision – relating to the acknowledgement of the relevance of the information provided by the Federal Republic of Germany, to the acceptance of the decision of 3 July 2001, to the refusal of an aid intensity of 35% and to the failure to mention the exact date on which the initial aid application was submitted – do not in fact have any bearing on the above conclusion, or on the declaration of the incompatibility of the aid at issue, which derives from that conclusion. 111 The present plea must therefore be rejected as being, in any event, irrelevant. Plea alleging manifest errors on the part of the Commission in the assessment of the facts, and a misuse of powers Arguments of the parties 112 Kronoply claims that the Commission manifestly made an erroneous assessment in relation to the criterion of incentive effect, since it failed to carry out the examination of the criterion provided for in point 4.2 of the Guidelines or to take account of the fact that Kronoply was obliged, under rules of national law authorised by the Commission, to complete its project within a given time. In the Decision, the Commission’s approach is at variance with the case-law of the Court, according to which it is possible to grant further aid or to alter aid already granted. 113 The Commission also failed to make use of its discretion, as confirmed by the Court in the abovementioned case-law and conferred by Article 9 of Regulation No 659/1999. 114 By basing the entire Decision solely on the fact that the project was completed with an aid intensity of 31.5% before the notification from Germany reached the Commission, the latter reveals its intention of arriving at a particular finding by basing the Decision only on the material circumstances, without classifying them in legal terms or assessing them from a legal point of view. Clearly, the reason why the criterion of incentive effect was not fully examined was to enable it to be concluded that there was no such effect. That falls to be construed as a misuse of powers by the Commission. 115 The Commission contends that the present plea should be rejected. Findings of the Court 116 As regards the plea alleging manifest errors of assessment, it is clear from the examination of the application that, in that respect, Kronoply is putting forward arguments which it has already adduced in support of the pleas alleging infringement of Article 9 of Regulation No 659/1999, and of Article 87 EC and the Guidelines. 117 As stated above, those last-mentioned two pleas provide no sound basis for the annulment of the Decision. 118 As regards the plea alleging misuse of powers, Kronoply’s argument is based on the assertion that ‘clearly, the reason why the criterion of incentive effect was not fully examined was to enable it to be concluded that there was no such effect’ and that ‘that falls to be construed as a misuse of powers by the Commission’. 119 It is clear on the face of the Decision that the plea concerned is based on a false premiss, in that the Commission did in fact examine the condition concerning the incentive effect of the aid, by explaining why the particular circumstances of the present case enabled the presumption under point 4.2 of the Guidelines to be rebutted and the conclusion to be drawn that there was no incentive effect. 120 It must therefore be held that Kronoply has failed to show that the Commission misused its powers in the present case. 121 It follows from all the foregoing considerations that the present plea cannot succeed and that, in consequence, the action must be dismissed in its entirety. Costs 122 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since Kronoply has been unsuccessful, it must be ordered to pay the costs, in accordance with form of order sought by the Commission. On those grounds, THE COURT OF FIRST INSTANCE (Fifth Chamber) hereby: 1. Dismisses the action. 2. Orders Kronoply GmbH & Co. KG to pay the costs. Vilaras Prek Ciucă Delivered in open court in Luxembourg on 14 January 2009. [Signatures] Table of contents Facts Procedure and forms of order sought Law Plea alleging infringement of Article 253 EC Arguments of the parties Findings of the Court Plea alleging infringement of the provisions of Regulation No 659/1999 Arguments of the parties Findings of the Court Plea alleging infringement of Article 87(3)(a) and (c) EC, Article 88 EC and the Guidelines Arguments of the parties – Lack of incentive effect – Lack of necessity – Classification of the aid as operating aid Findings of the Court – Admissibility of the plea – Substance of the present plea Plea alleging manifest errors on the part of the Commission in the finding of the facts Arguments of the parties Findings of the Court Plea alleging manifest errors on the part of the Commission in the assessment of the facts, and a misuse of powers Arguments of the parties Findings of the Court Costs * Language of the case: German.