Judgment — ECLI:EU:T:2003:217
Date: 2003-08-05
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Statement of reasons;Provisional data;Notification and obligation to suspend payment of the aid;Formal investigation procedure;Private investor/private creditor test;Principle of the protection of legitimate expectations;Commission decision following the formal investigation procedure;Damage to competition and effect on trade;Right to a judicial remedy;General;Beneficiaries of the aid to be recovered;Res judicata;Aid having a social character
Procedure: Action for annulment - unfounded
Origin: Spain

Summary of the Judgment 
1. State aid — Unnotified aid — Acceptance by the Commission of the notification of a 
new agreement between recipient and grantor — No effect on the unlawfulness of the 
aid 
(Art. 88(3) EC) 
II - 2957 
SUMMARY — JOINED CASES T-116/01 AND T-118/01 
2. Procedure — Force of res judicata attaching to a judgment — Scope — Inadmis­
sibility of a second action — Conditions — Same parties, subject-matter and grounds 
in both actions 
. 3. State aid — Definition — Purchases from an undertaking —• Assessment on the basis 
of the private investor test •—· State aid excluded only in the case of a normal 
commercial transaction 
(Art. 87 EC) 
4. Acts of the institutions — Statement of reasons •— Obligation — Scope 
(Art. 253 EC) 
5. State aid — Commission decision finding aid which has not been notified incom­
patible with the common market — Obligation to state reasons — Scope 
(Art. 88(3) EC) 
6. EC Treaty — Systems of property ownership — Principle of neutrality — Limits — 
Bound by the fundamental rules of the Treaty — No effect on the scope of the concept 
of State aid 
(Arts 87(1) EC and 295 EC) 
7. State aid — Prohibited — Derogations —• Aid which may be considered compatible 
with the common market — Aid having a social character — Conditions 
(Art. 87(2)(a) EC) 
8. State aid —· Recovery of unlawful aid — Aid granted in breach of the procedural 
rules in Article 88 EC — Possibility of legitimate expectation on the part of recipients 
only — Protection — Conditions and limits 
(Arts 87 EC and 88 EC) 
9. Community law — Principles — Need for judicial review — Recovery of unlawful 
aid notwithstanding the requirements of legal certainty 
(Arts 88 EC, 220 EC, 230, first para., EC and 233 EC; Charter of fundamental rights 
of the European Onion, Art. 47; European Convention on Human Rights, Arts 6 and 
13) 
II - 2958 
P & O EUROPEAN FURRIKS (VIZCAYA) AND DIPUTACIÓN FORAI. DE. VIZCAYA v COMMISSION 
10.State aid — Review by the Commission — Initiation of formal review procedure — 
Maximum period of two months — Inapplicable in the case of unnotified aid 
(Art. 88(2) and (3) EC; Council Regulation No 659//999, Art. 4(6)) 
11.State aid — Proposed aid — Implementation before the final decision of the 
Commission — Commission decision ordering repayment of the aid — Obligation 
to state reasons — Scope 
(Art. 88(3) EC) 
1. The fact that the Commission has, 
without raising any objection concern­
ing its validity, accepted the notifi­
cation of a new agreement concerning 
unnotified aid between the territorial 
authority granting the aid and the 
recipient undertaking cannot under 
any circumstances alter the fact that 
the aid at issue is unlawful. The Com­
mission cannot on any account permit 
a derogation from the notification 
procedure laid down in Article 88(3) 
EC and, by its conduct, alter the fact 
that aid is unlawful. 
(see para. 70) 
2. The force of res judicata attaching to a 
judgment can constitute a bar to the 
admissibility of an action if the action 
which gave rise to the judgment in 
question was between the same parties, 
had the same subject-matter and was 
founded on the same grounds, those 
conditions necessarily being cumu­
lative. 
Since the measure whose annulment is 
sought is an essential element of the 
subject-matter of an action, res judi­
cata cannot be pleaded where the 
actions in question do not relate to 
the same measure. 
(sec paras 77-78) 
3. A State measure in favour of an under­
taking cannot be excluded as a matter 
of principle from the concept of State 
aid in the sense contemplated in 
Article 87 EC merely because the 
parties undertake reciprocal commit­
ments. 
In addition, the mere fact that a 
Member State purchases goods and 
services on market conditions is not 
II - 2959 
SUMMARY — JOINED CASES T-116/01 AND T-l 18/01 
sufficient for that transaction to con­
stitute a commercial transaction con­
cluded under conditions which a pri­
vate investor would have accepted, or 
in other words a normal commercial 
transaction, if it turns out that the State 
did not have an actual need for those 
goods and services. It is all the more 
necessary for a Member State to dem­
onstrate that such a purchase consti­
tutes a normal commercial transaction 
where selection of the other contract­
ing party has not been preceded by a 
sufficiently advertised open tender pro­
cedure. The fact that such a procedure 
is conducted is normally considered 
sufficient to rule out the possibility that 
the Member State is seeking to grant an 
advantage to the undertaking with 
which it is contracting. 
(see paras 114, 117-118) 
4. The statement of reasons required by 
Article 253 EC must disclose in a clear 
and unequivocal fashion the reasoning 
followed by the institution which 
adopted the measure in question in 
such a way as to enable the persons 
concerned to ascertain the reasons for 
the measure and to enable the Court to 
exercise its power of review. The 
requirements to be satisfied by the 
statement of reasons depend on the 
circumstances of each case, in particu­
lar the content of the measure in 
question, the nature of the reasons 
given and the interest which addressees 
of the measure, or other parties to 
whom it is of direct and individual 
concern, may have in obtaining expla­
nations. It is not necessary for the 
reasoning to go into all the relevant 
facts and points of law, since the 
question whether the statement of 
reasons meets the requirements of 
Article 253 EC must be assessed with 
regard not only to its wording but also 
to its context and to all the legal rules 
governing the matter in question. 
(see paras 139, 170) 
5. In order to make a declaration of 
incompatibility in the case of State aid 
granted unlawfully, the Commission is 
not required to demonstrate the actual 
effect which that aid has had on 
competition and on trade between 
Member States. Such an obligation 
would ultimately favour Member 
States which pay aid without comply­
ing with the duty to notify the aid laid 
down in Article 88(3) EC, to the 
detriment of those which notify the 
aid at the proposal stage. 
(see para. 142) 
6. Although the system of property 
ownership continues to be a matter 
for each Member State under 
Article 295 EC, that provision does 
II - 2960 
P & O EUROPEAN FERRIES (VIZCAYA) AND DIPUTACIÓN FORAL Dl; VIZCAYA v COMMISSION 
not have the effect of exempting the 
Member States' systems of property 
ownership from the fundamental rules 
of the Treaty. Article 295 EC cannot 
therefore be considered to restrict the 
scope of the concept of State aid for the 
purposes of Article 87(1) EC. 
(see paras 151-152) 
7. In order to determine whether aid 
having a social character granted to 
individual consumers is granted with­
out discrimination related to the origin 
of the products concerned so that it 
may, pursuant to Article 87(2)(a) EC, 
be considered compatible with the 
common market, it must be ascertained 
whether those consumers benefit from 
the aid irrespective of the economic 
operator supplying the product or ser­
vice capable of fulfilling the social 
objective relied on by the Member 
State concerned. 
(see paras 162-163) 
8. While it is true that a recipient of 
unlawfully granted aid is not precluded 
from relying on exceptional circum­
stances on the basis of which it had 
legitimately assumed the aid to be 
lawful in order to decline to refund that 
aid, on the other hand a Member State 
whose authorities have granted aid in 
breach of the procedural rules laid 
down in Article 88 EC may not plead 
the legitimate expectations of recipi­
ents in order to justify a failure to 
comply with the obligation to take the 
steps necessary to implement a Com­
mission decision instructing it to 
recover the aid. If it could do so, 
Articles 87 EC and 88 EC would be 
deprived of all practical force, since 
national authorities would thus be able 
to rely on their own unlawful conduct 
in order to render decisions taken by 
the Commission under those provisions 
ineffectual. Thus, it is not for the 
Member State concerned, but for the 
recipient undertaking, to invoke the 
existence of exceptional circumstances 
on the basis of which it had entertained 
legitimate expectations, leading it to 
decline to repay such aid. 
The fact that the Commission initially 
adopted a positive decision approving 
the aid in question cannot have caused 
the recipient undertaking to entertain a 
legitimate expectation if that decision 
was challenged in due time before the 
Community judicature, which annulled 
it. 
(sec paras 201-202, 205) 
II - 2961 
SUMMARY — JOINED CASES T-116/01 AND T-118/01 
9. Whilst it is important to ensure com­
pliance with requirements of legal 
certainty that protect private interests, 
those requirements must be balanced 
against requirements that protect pub­
lic interests, which, in the field of State 
aid, are designed to prevent the oper­
ation of the market from being dis­
torted by aid injurious to competition. 
The latter mean that unlawful aid must 
be repaid and competitors of the recipi­
ent of the aid must be able to challenge 
Commission measures which adversely 
affect them as otherwise the review, 
conducted by the Community judica­
ture in accordance with Article 220 
EC, the first paragraph of Article 230 
EC and Article 233 EC, of the legality 
of measures adopted by the Commu­
nity institutions would be rendered 
ineffective. The requirement of judicial 
review reflects a general principle of 
Community law stemming from the 
constitutional traditions common to 
the Member States and enshrined in 
Articles 6 and 13 of the European 
Convention on Human Rights. The 
right to an effective remedy has, more­
over, been reaffirmed by Article 47 of 
the Charter of fundamental rights of 
the European Union. 
(see paras 207-209) 
10. The principle set down in Article 4(6) 
of Regulation N o 659/1999 that the 
period available to the Commission for 
initiating the formal review procedure 
provided for in Article 88(2) EC may 
not exceed two months can be invoked 
only where aid has been notified in 
accordance with the procedure laid 
down in Article 88(3) EC and therefore 
does not apply where the Commission 
initiates a procedure in relation to 
unnotified aid. 
(see para. 217) 
11. In the matter of State aid, where, 
c o n t r a r y to t h e p r o v i s i o n s of 
Article 88(3) EC, the proposed aid 
has already been granted, the Commis­
sion, which has the power to require 
the national authorities to order its 
repayment, is not obliged to provide 
specific reasons in order to justify the 
exercise of that power. 
(see para. 224) 
II - 2962