Judgment — ECLI:EU:C:2003:509
Date: 2003-09-30
Language of the case: German
Court formation: Full Court
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Statement of reasons;Formal investigation procedure;Aid for projects of European interest or to remedy a serious disturbance in the economy;Aid relating to the division of Germany
Procedure: Action for annulment - unfounded
Origin: Germany

summary of the reasons for which the Commission refused to apply the derogation in Article 92(2)(c) of the Treaty to the facts of the case. 89. However, it must be pointed out that the contested decision was adopted in a context with which the German Government was familiar and forms part of a consistent decision-making practice. 90. On this point, it should be noted that in its relations with the Commission the German Government from 1990 referred on several occasions to the provisions of Article 92(2)(c) of the Treaty, stressing their importance for the economic recovery of the new Länder. 91. The arguments put forward in this respect by the German Government were rejected by several decisions of the Commission, such as Commission Decision 94/266/EC of 21 December 1993 on the proposal to award aid to SST-Garngesellschaft mbH, Thüringen (OJ 1994 L 114, p. 21), the Mosel I decision, and Commission Decision 94/1074/EC of 5 December 1994 on the German authorities' proposal to award aid to Textilwerke Deggendorf GmbH, Thüringen (OJ 1994 L 386, p. 13). 92. In view of this context, the contested decision could be reasoned in a summary manner (Case 73/74 Papiers Peints and Others v Commission [1975] ECR 1491, paragraph 31, and Case C-156/98 Germany v Commission, paragraph 105). 93. In the present case, although the reasoning is summary, the contested decision was adequately reasoned. 94. Consequently, the first part of the second plea in law is unfounded. Alleged contradictory nature of the reasoning of the contested decision as regards the nature of the investment 95. By the second part of the second plea in law, the German Government claims that the reasoning of the contested decision is contradictory. According to that government, it is settled case-law that decisions must contain reasoning that is clear, unequivocal and free of contradictions, thus enabling the courts to exercise judicial review. 96. In its view, the contested decision is ambiguous and contradictory in that, while in Point XII of the grounds of the decision the Commission referred to the existence of an extension of existing capacity, it regarded, by contrast, in the fifth paragraph of Point III and in Point V of the grounds, the project as a single project which had not yet been completed and was thus postponed. It is not possible to treat the same investment process as completed and thus capable of being extended and, at the same time, as not completed but merely postponed. - Findings of the Court 97. It is common ground that in 1993 Volkswagen decided to postpone part of the investment project originally envisaged. 98. On the other hand, the concept of extension of investment does not refer to the timetable for carrying out the investment project proper. That concept must be seen together with that of investment on a greenfield site. 99. It is clear from the eighth paragraph of Point XII of the grounds of the contested decision that a greenfield investment or site does not simply mean that the project is situated in a green field somewhere, but that, from the investing company's point of view, the site is a new, as yet undeveloped one. As that paragraph states, [c]onsequently, the company faces the following typical special problems as compared with the extension of an existing plant: lack of adequate infrastructure, lack of organised logistics, no trained workforce adapted to the needs of the company, and no established supplier structure. 100. By contrast, in the present case, the Commission took account, in the ninth paragraph of Point XII of the grounds of the contested decision, of the fact that the different shops of the investment in Mosel come on stream at different times. Since the establishment in Mosel by 1994 of a motor vehicle construction plant was operational, the Commission could rightly deduce, in the tenth paragraph of that point, that from the point of view of Community law the future investment for a new plant and final assembly hall in Mosel II thus no longer constitutes a greenfield investment but represents an extension of existing capacity. 101. Accordingly, since the reasoning of the contested decision is not contradictory, the second part of the second plea in law is unfounded. 102. It therefore follows from paragraphs 94 and 101 above that this plea must be rejected. Third plea in law: breach of Article 92(3)(b) of the Treaty 103. The German Government criticises the Commission for failing to apply Article 92(3)(b) of the Treaty and failing to give reasons for declining to apply that provision, which the government claims to have relied on as a legal basis as a precaution. It refers to the second paragraph of Point X of the grounds of the contested decision, according to which: The derogation in Article 92(3)(b) can certainly not be applied to Germany. It is true that German unification has had negative effects on the German economy, but these alone are not sufficient to apply that provision to an aid scheme. Recently, the Commission took the view that an aid scheme remedied a serious disturbance in the economy of a Member State when, in 1991, aid was approved for a privatisation programme in Greece. In its decision the Commission noted that the privatisation programme was an integral part of the undertakings given pursuant to Council Decision 91/306/EEC of 4 March 1991 in connection with the consolidation of the national economy as a whole. The German situation is clearly different. 104. According to that government, Article 92(3)(b) of the Treaty should apply where certain regions of a Member State, such as the new Länder, are in a critical economic situation. Findings of the Court 105. Under Article 92(3)(b) of the Treaty, aid to remedy a serious disturbance in the economy of a Member State may be considered to be compatible with the common market. 106. Having regard to the context and structure of that provision and the need for a narrow interpretation of the derogations from the general principle that State aid is incompatible with the common market (see paragraph 66 above), it must be stated that the disturbance mentioned in that provision must affect the economy of a Member State, not merely that of one of its regions or areas. 107. It is in the framework of Article 92(3)(a) or (c) of the Treaty that disadvantaged regions of a Member State may benefit from aid considered by the Commission to be compatible with the common market. 108. In its third plea in law, the German Government merely referred to a serious disturbance of the economy of the Free State of Saxony and made no allegation that that situation had as a consequence a serious disturbance of the economy of the Federal Republic of Germany. 109. It follows that the German Government's argument concerning the refusal to apply Article 92(3)(b) of the Treaty must be rejected. 110. As to the complaint of inadequate reasoning for the refusal to apply that provision, it must be stated, having regard to the case-law referred to in paragraphs 87 and 92 above, that the contested decision, although summary in this respect, appears sufficiently reasoned in view of the context of the case, of the decisions previously adopted by the Commission in this context, especially the Mosel I decision, and of the absence of specific arguments put forward during the administrative procedure. 111. Accordingly, the third plea in law must be rejected. Fourth plea in law: breach of Article 92(3) of the Treaty 1. First part of the fourth plea 112. By the first part of the fourth plea, the German Government alleges that, assuming Article 92(2)(c) of the Treaty not to be applicable, the Commission should have taken into account, in order to decide on the compatibility of an aid with the common market, the factors available to it at the time of the grant of the aid in question, not at the time of adoption of the contested decision. At the date of granting the aid in question, it was not subject to an obligation of separate notification, since it formed part of the 19th Outline Plan which had been approved by the Commission by letter of 2 October 1990 addressed to the German Government. 113. According to that government, it follows from the Court's case-law that, to assess the compatibility of aid with the common market, the date to be taken is that on which the aid was granted, so that the date to be taken into consideration is 22 March 1991. It submits that, because of its expiry on 31 December 1990 and the opposition of the German Government, the Community framework did not at that time apply in Germany. 114. The Community framework may therefore be regarded as applicable only from April 1991, that is, after the date when the aid was granted, 22 March 1991. 115. In those circumstances, the aid at issue should have been regarded as forming part of an aid scheme which had received the general authorisation of the Commission. 116. The Commission submits that the German Government's argument is wrong. It submits essentially, first, that at the time of adoption of the contested decision, 26 June 1996, it was not required to base its decision on the factual and legal situation of March 1991. Second, even if it should have based itself on the factual and legal situation of March 1991, the aid at issue would still have had to be notified to it and it would have had to review it without restriction. Finally, on the supposition that it should have based its decision on a date at which the Federal Republic of Germany had not yet agreed to the application of the Community framework for the motor vehicle industry, that would not have prevented the Commission from applying that framework. - Findings of the Court 117. The German Government's argument is based on the premiss that, since the Community framework did not apply from January to March 1991, the aid at issue, which came within the regional aid scheme provided for by the 19th Outline Plan, was already approved. 118. That argument cannot be accepted. 119. As is clear from paragraphs 8 and 12 above, the German Government took note that the approval of the regional aid referred to in the 19th Outline Plan did not extend to the sectors mentioned there, in particular the motor vehicle sector, where the costs of a benefit operation exceeded ECU 12 million. 120. Moreover, that was the understanding of the German Government, as is apparent from the quotation from the 19th Outline Plan in paragraph 8 above. 121. Consequently, since the approval did not cover aid in the motor vehicle sector, the aid at issue should have been notified, either under the provisions of the Community framework or, if that did not apply, under Article 93(3) of the Treaty. 122. In those circumstances, having regard to the fact that the question of the applicability of the Community framework between January and April 1991 is not material, the first part of this plea must be rejected. 2. Second part of the fourth plea 123. By the second part of the fourth plea, the German Government criticises the Commission for having, in the context of the application of Article 92(3)(c) of the Treaty, carried out a cost-benefit analysis of the project in which the project relating to Mosel II and Chemnitz II was no longer regarded as new investment (greenfield investment) but as an extension investment, despite the fact that it had been classified differently for some years. 124. That analysis thus leads, as regards the period for assessing the disadvantages suffered by Volkswagen, to less favourable figures and a lesser degree of compatibility of the aids. According to the German Government, it cannot be disputed that Mosel II and Chemnitz II constitute new greenfield investment and that, had they been considered as such, all the investment grants at issue would have been declared compatible with the common market. - Findings of the Court 125. As regards the calculation of operating costs, the Commission drew a distinction between greenfield investments, for which additional costs are taken into account for a period of five years, and extension investments, for which it takes additional costs into account for a period of three years only. 126. According to the eighth paragraph of Point XII of the grounds of the contested decision: ... The term greenfield project does not simply mean that the project is situated in a green field somewhere, but that, from the investing company's point of view, the site is a new, as yet undeveloped one. Consequently, the company faces the following typical special problems as compared with the extension of an existing plant: lack of adequate infrastructure, lack of organised logistics, no trained workforce adapted to the needs of the company, and no established supplier structure. If, however, these services can be provided by a nearby plant belonging to the same group, then the project is treated as an extension, even if it is located in a green field. The Community concept differs from the concept of new investments that may be defined in national law. Since, in the case of a greenfield project as defined in this way, more difficulties arise and the time-span for reaching full capacity and thus viability is somewhat longer, there is justification for calculating the operating cost disadvantages over a longer period .... 127. In the present case, the Commission considered that the Mosel II body and press shops were greenfield investments. It therefore took into account their operating costs over a period of five years, from 1993 to 1997 (body shop) and 1994 to 1998 (press shop), in its cost-benefit analysis. By contrast, the Mosel II and Chemnitz II paint shop and final assembly hall were classified as extension investments, so that their operating costs were taken into account over a period of three years, from 1997 to 1999. 128. The ninth and tenth paragraphs of Point XII of the grounds of the contested decision state: In the present case, the Commission had to take into account the fact that the different shops of the investment in Mosel come on stream at different times. Thus, the start-up problems associated with the different subprojects will also occur at different times. Furthermore, the Commission took account of the fact that, through the delay in project implementation, the character of the project has also changed. With the installation of the press and body shops and their link with the modernised paint shop and final assembly halls of the old Mosel I plant, a fully operational car plant was established in Mosel by 1994. This is also demonstrated by the profitability of the VW companies in Saxony since 1994. The future investment for a new paint and final assembly hall in Mosel II thus no longer constitutes a greenfield investment but represents an extension of existing capacity. Since a supplier structure is already in place (see above), since the infrastructure exists and since most of the workers will be taken over from Mosel I, the typical handicaps associated with greenfield investments will arise to a much lesser degree. This also applies to the Chemnitz II engine plant. As in other cases of capacity extension, the build-up of production in these plants is very rapid. Although the German authorities and VW originally suggested an analysis of the period from 1998 to 2002 for all projects in Mosel and Chemnitz, the Commission has analysed the operating handicaps over five years for the proposed greenfield projects, i.e. for 1993 to 1997 (body shop) and for 1994 to 1998 (press shop), and over three years for the extension projects, i.e. 1997 to 1999 (paint shop, final assembly, Chemnitz II). It was also taken into account that the press shop and the body shop will be expanded from a production capacity from 432 cars/day to 750 cars/day during the same period in order to be able to supply fully the new Mosel II paint shop and final assembly. Therefore, the additional operating handicaps for this period (1997 to 1999) that can be attributed to this extension of capacity were also included in the analysis. 129. In this respect, the Commission enjoys a wide discretion in the context of the application of Article 92(3) of the Treaty (see, inter alia, Case C-225/91 Matra v Commission [1993] ECR I-3203, paragraphs 23 to 25), so that, as regards the question whether the paint shop and final assembly hall of Mosel II and Chemnitz II should be classified as greenfield investments or extension investments, review by the Court is limited to verifying the accuracy of the facts relied on to make the disputed classification and ascertaining that there was no manifest error of assessment. 130. It must be stated here that the concepts of greenfield investment or extension investment must come under a Community interpretation, otherwise the content and scope of those concepts could vary according to the national law applicable, thereby harming the uniform application of Community law. 131. The Commission's view that the scale of the disadvantages linked to operating costs which may be taken into account varies depending on whether a complete infrastructure has to be set up (the position which occurs, according to the Commission, where there is no adequate infrastructure, organised logistics, labour force trained for the undertaking's specific requirements, or network of suppliers) or already exists is not manifestly erroneous and meets the requirement of a narrow interpretation of derogations from the general principle that State aid is incompatible with the common market, stated in Article 92(1) of the EC Treaty (see paragraph 66 above). 132. The Commission was entitled to consider, and did not commit a manifest error of assessment in considering, that the Mosel II and Chemnitz II paint shop and final assembly hall could not be classified as greenfield investments, since from 1994 at the latest there was a fully operational motor vehicle production unit consisting of the Mosel I paint shop and final assembly hall, the Mosel II body and press shops, and Chemnitz II. It appears in particular from the case-file that by 1994 Volkswagen had available on the spot an adequate infrastructure, organised logistics, a labour force trained for its requirements and a stable network of suppliers, so that the investment carried out could be regarded as an extension investment within the meaning of the contested decision. 133. The second part of the fourth plea is therefore unfounded. 134. It follows from all the foregoing that this plea in law must be rejected. Fifth plea in law: incomprehensibility and inaccuracy of the cost-benefit analysis performed by the Commission 135. By the fifth plea, the German Government criticises the Commission for failing to take account of the actual original situation characterising the Mosel II and Chemnitz II investments and for making inadequate findings with respect to that new investment. 136. This comment applies in particular to the finding made by the Commission in the contested decision that an operational and viable plant had been set up in Mosel by mid-1994. That finding disregarded the restructuring measures taken at Mosel I and Chemnitz I after the agreement of principle with the THA reached in October 1990, which were in the nature of interim measures intended to employ the workforce until the construction of Mosel II and Chemnitz II. As to the alleged profitability of Mosel I and Chemnitz I, the Commission misunderstood the Volkswagen group's internal methods of calculation. Similarly, Volkswagen always emphasised to the Commission, with regard to its involvement in Saxony, the need to consider the entire investment project globally, and did not accept that it could be segmented. In this respect, the German Government refers to the observations of Volkswagen and VW Sachsen and of the Free State of Saxony in their pleadings submitted to the Court of First Instance in Cases T-132/96 and T-143/96. 137. According to the Commission, this plea of the German Government alleging that the analysis it performed in the contested decision is incomprehensible is not reasoned and is thus legally immaterial. 138. Nevertheless, the Commission submits, on the substance, that the German Government was closely associated with the administrative procedure. Furthermore, the successive drafts of cost-benefit analyses produced by the Commission from 1992 were transmitted to the government and were gone through point by point with its representatives. Findings of the Court 139. Without it being necessary to consider the question of the admissibility of this plea, it must be noted, with respect first to the complaint of alleged lack of reasoning concerning the calculation of the cost-benefit analysis, that the German Government was closely associated with the process of drafting the contested decision, and was therefore aware of the reason why the Commission considered that it could not accept the cost-benefit analysis done by Volkswagen (see, to that effect, Case 13/72 Netherlands v Commission [1973] ECR 27, paragraph 12). 140. It should also be observed that the Commission is not required to address, in the reasoning of a decision, all the issues of fact and law raised by the persons concerned, where it has taken account of all the circumstances and all the relevant factors of the case (see, to that effect, Case C-360/92 P Publishers Association v Commission [1995] ECR I-23, paragraph 39, and Joined Cases C-329/93, C-62/95 and C-63/95 Germany and Others v Commission [1996] ECR I-5151, paragraph 32). 141. In the present case, it is apparent from the case-file that the German Government, in particular, has not disputed that the successive draft cost-benefit analyses done by the Commission from 1992 were transmitted to it and were commented on point by point with its representatives, especially at the meetings of 11 April and 29 May 1996. Moreover, it is apparent that the definitive cost-benefit analysis on which the contested decision is based essentially repeats the analysis in the drafts examined on the occasion of those meetings, and that where the contested decision diverges from the drafts discussed at the meetings the differences are in favour of Volkswagen and VW Sachsen. 142. In those circumstances, the reasoning of the contested decision must be considered to be adequate, the fact that the decision does not take over all the data in the cost-benefit analysis and that that analysis is not annexed to the decision - for obvious reasons of confidentiality - being of no relevance on this point. 143. As regards, second, the complaint that a plant was operational from 1994, the documents in the case show that from 1994 at the latest there was an operational motor vehicle production unit consisting of the Mosel I paint shop and final assembly hall, the Mosel II body and press shops, and Chemnitz II. Consequently, from that date, contrary to the German Government's assertions, Volkswagen and VW Sachsen were undeniably able to start motor vehicle production. 144. As regards, third, the question of the alleged lack of profitability of Mosel I and Chemnitz I, it must be stated that the German Government has not submitted, even summarily, anything to support that allegation. 145. As regards, finally, the need to consider the investment project in a global and not, as the Commission did, in a segmented manner, it must be stated that the various plants were brought into operation over a period of time, so that each unit had to be the subject of a separate assessment in order for the state of development of the site at the time of coming on stream to be taken into consideration. That separate assessment was necessary in view of the distinction drawn by the Commission between greenfield investments and extension investments, a distinction which has as a necessary consequence a differentiation as regards the intensity of the aid authorised. 146. It follows from the above considerations that the fifth plea must be rejected. 147. In the light of all the foregoing, the application must be dismissed. Costs 148. Under Article 69(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 the Commission has applied for the Federal Republic of Germany to be ordered to pay the costs and the latter has been unsuccessful, it must be ordered to pay the costs. In accordance with Article 69(4) of the Rules of Procedure, the United Kingdom must bear its own costs. On those grounds, THE COURT hereby: 1. Dismisses the application; 2. Orders the Federal Republic of Germany to pay the costs; 3. Orders the United Kingdom of Great Britain and Northern Ireland to bear its own costs. Rodríguez Iglesias Puissochet Wathelet Schintgen Timmermans Edward Jann Skouris Macken von Bahr Cunha Rodrigues Delivered in open court in Luxembourg on 30 September 2003. R. Grass G.C. Rodríguez Iglesias Registrar President 1: Language of the case: German.