Judgment — ECLI:EU:C:2005:223
Date: 2005-04-14
Language of the case: French
Court formation: Third Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Legal certainty;General;Principle of equality and non-discrimination;Principle of proportionality;Commission discretion;Implementing regulations;Aid to employment;Aid to small and medium-sized enterprises
Procedure: Action for annulment - unfounded
Origin: Belgium

Summary of the Judgment 1. Community law — Principles — Legal certainty — Community legislation — Requirements of clarity and precision — Limits 2. Acts of the institutions — Hierarchy of norms — Primacy of a regulation on guidelines or a framework having no basis either in the Treaty or in any act adopted under it (Art. 249 EC) 3. State aid — Prohibition — Derogations — Aid categories, set out in legislation, which can be regarded as compatible with the common market — Regulation No 70/2001 on aid to small and medium-sized enterprises — Regulation No 2204/2002 on aid for employment — Independent regulations pursuing different objectives (Commission Regulations No 70/2001, Art. 3(2), and No 2204/2002, Art. 3(1)) 4. State aid — Prohibition — Derogations — Aid categories, set out in legislation, which can be regarded as compatible with the common market — Regulation No 2204/2002 on aid for employment — Exemptions laid down under Articles 4, 5 and 6 of that regulation — Different and independent conditions for compatibility (Commission Regulation No 2204/2002, Arts 4, 5 and 6) 5. State aid — Prohibition — Derogations — Aid categories, set out in legislation, which can be regarded as compatible with the common market — Authority granted to the Commission by Regulation No 994/98 — Scope — Authority not confined to the simple codification of previous practice (Council Regulation No 994/98, Art. 1) 6. State aid — Prohibition — Derogations — Aid categories, set out in legislation, which can be regarded as compatible with the common market — Authority granted to the Commission by Regulation No 994/98 — Authority which does not extend to defining the concept of State aid (Council Regulation No 994/98) 7. State aid — Prohibition — Derogations — Aid categories, set out in legislation, which can be regarded as compatible with the common market — Regulation No 2204/2002 on aid for employment — Laying down of an exhaustive list of the categories of disadvantaged workers eligible for aid under that regulation — Infringement of the principle of proportionality — None (Commission Regulation No 2204/2002, Art. 2(f) and 5) 8. State aid — Prohibition — Derogations — Aid categories, set out in legislation, which can be regarded as compatible with the common market — Fixing of the conditions for compatibility — Commission’s power of assessment — Judicial review — Limits (Council Regulation No 994/98) 9. State aid — Prohibition — Derogations — Aid categories, set out in legislation, which can be regarded as compatible with the common market — Regulation No 2204/2002 on aid for employment — Fixing of conditions for compatibility which are stricter than those arising under the Commission’s earlier practice — Infringement of the principle of equal treatment — None (Commission Regulation No 2204/2002) 10. Acts of the institutions — Choice of legal basis — Criteria — Community measure pursuing a twofold purpose or having a twofold component — Reference to the main or predominant purpose or component — Adoption of Regulation No 2204/2002 on the basis of Regulation No 994/98 authorising the Commission to adopt regulations declaring certain categories of aid compatible with the common market — Legality even after the introduction of Article 137 EC by the Treaty of Amsterdam (EC Treaty, Art. 94 (now Art. 89 EC); Council Regulation No 994/98) 1. The principle of legal certainty is a fundamental principle of Community law which requires, in particular, that rules should be clear and precise, so that individuals may be able to ascertain unequivocally what their rights and obligations are and may take steps accordingly. However, where a degree of uncertainty regarding the meaning and scope of a rule of law is inherent in that rule, it is necessary, in the context of an action in which a Member State bases its complaints as regards the legality of a regulation essentially on hypothetical situations, for the examination of it to be confined to the question whether the legal measure at issue displays such ambiguity as to make it difficult for that Member State to resolve with sufficient certainty any doubts as to the scope or meaning of the contested measure. (see paras 30-31) 2. The guidelines and the multisectoral framework adopted by the Commission in the field of State aid have no legal basis either in the Treaty or in any legal act adopted under it, so that, in the event of any overlap with the provisions of a regulation adopted in the same field, it is the latter, which are binding and of general application pursuant to Article 249 EC, which take precedence. (see para. 33) 3. Regulation No 70/2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises and Regulation No 2204/2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment are independent of each other and pursue different objectives. Thus, neither the conditions which they lay down nor their respective fields of application coincide entirely. In those circumstances, it is clear from Article 3(1) of Regulation No 2204/2002 and from Article 3(2) of Regulation No 70/2001 that an aid scheme is compatible with the common market and exempt from the obligation of notification if it complies either with the scope and all the conditions of Regulation No 2204/2002 or with the scope and all the conditions of Regulation No 70/2001. (see para. 36) 4. It is clear from the general scheme and the purpose of Regulation No 2204/2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment that the exemptions provided for in Article 4 governing aid for employment creation, in Article 5 relating to aid for the recruitment of disadvantaged and disabled workers and in Article 6 concerning aid on a continuing basis for the employment of disabled workers, pursue different objectives and that the conditions for compatibility laid down therein are, in principle, independent of each other. Thus, provided that aid satisfies the conditions of one of those articles, it will be compatible with the common market regardless of the fact that it may also fulfil the conditions of another of those articles. (see para. 46) 5. The wording of Article 1 of Regulation No 994/98 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid provides no basis for stating that the Commission is required to lay down criteria for compatibility of aid with the common market that are in total conformity with its pre-existing practice, and cannot change them. Article 1 does no more than state in general terms that the exemption regulation relating to aid for employment must specify the thresholds for aid and the conditions for cumulation of aid, but does not in fact go into specific detail concerning those criteria. The authority given under the regulation by the Council cannot be interpreted as calling on the Commission to confine itself to simple codification of its previous practice and not to use its experience in the field of State aid to lay down new criteria, including even stricter criteria than the existing ones. (see paras 52-53) 6. The Council, by Regulation No 994/98 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid, conferred on the Commission the power to declare that certain categories of aid are compatible with the common market and are not subject to the obligation of notification. Having regard to Article 87 EC, the Council thus confined itself to empowering the Commission to give effect to paragraph 3 of that article by laying down exceptions to the principle of incompatibility of aid enunciated in paragraph 1 thereof. By contrast, it did not confer on the Commission any power to interpret Article 87(1) EC, which defines the concept of State aid. The Commission therefore had no power, on the adoption of Regulation No 2204/2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment to lay down a binding and general definition of the concept of State aid. It thus acted within the limits of its powers and, accordingly, did not contravene the general principles of legal certainty, subsidiarity and proportionality. (see para. 58) 7. A breach of the principle of proportionality by a Community measure presupposes that that measure imposes on those to whom it is addressed an obligation which goes further than is appropriate and necessary in order to attain the aim pursued. Regulation No 2204/2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment does not make measures for workers not covered by the definition which it gives of disadvantaged workers subject to any new obligation. By not mentioning such measures, it keeps them subject to the obligation of notification already imposed by Article 88(3) EC. Consequently, the Commission has not infringed the principle of proportionality by laying down, in Article 2(f) of Regulation No 2204/2002, an exhaustive list of the categories of disadvantaged workers eligible for aid granted on the basis of Article 5 thereof. (see paras 61-62) 8. In the sphere of State aid, the Commission enjoys a wide discretion, the exercise of which involves assessments of an economic and social nature which must be made within a Community context. That will in particular be the case when the Commission wishes to reconcile the objective of ensuring undistorted competition in the common market with other Community objectives such as the promotion of employment. When the Commission enjoys a wide discretion of that kind, the Court, in reviewing the legality of exercise of that power, cannot substitute its own assessment in that matter for that of the competent authority but must confine itself to examining whether the latter assessment contains a manifest error or constitutes a misuse of powers or whether the authority in question clearly exceeded the bounds of its discretion. (see paras 67-68) 9. The principle of equal treatment and non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified. Regulation No 2204/2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment gives rise to unequal treatment as between the grant of aid under schemes declared compatible by the Commission before its entry into force and the grant of aid on the basis of schemes established in accordance with the new conditions for compatibility laid down in that regulation, which are in some respects stricter than those existing in the Commission’s earlier practice. Nevertheless, such treatment is objectively justified. First, the Commission cannot be deprived of the opportunity to lay down stricter conditions for compatibility if developments in the common market and the objective of ensuring undistorted competition on that market so require. Second, it cannot bring existing aid schemes into line with the new conditions for compatibility under Regulation No 2204/2002 unilaterally, disregarding the procedure under Article 88(1) and (2) EC. Recourse to such an approach would be tantamount to conferring retroactive effect on the regulation. It would thus undermine the principles of legal certainty and protection of the legitimate expectations of the persons concerned. (see paras 71-73) 10. In the context of the organisation of the powers of the Community, the choice of the legal basis for a measure must rest on objective factors which are amenable to judicial review. Those factors include in particular the aim and content of the measure. If examination of a Community measure shows that it pursues a twofold purpose or that it has a twofold component, and if one of these is identifiable as the main or predominant purpose or component, whereas the other is merely incidental, the act must be based on a single legal basis, namely that required by the main or predominant purpose or component. Even if Regulation No 994/98 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid and Regulation No 2204/2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment have an impact on the promotion of employment, their main purpose is to determine which aid is compatible with the common market and to exempt it from the obligation of notification. Thus, they implement in particular Article 87(3) EC, which states that certain aid, conducive to objectives in the public interest, may be found to be compatible with the common market in so far as its objectives justify distortion of competition. It follows that the Council validly adopted Regulation No 994/98 on the basis of Article 94 of the Treaty (now Article 89 EC) and that that regulation could constitute a legal basis for Regulation No 2204/2002 even after the introduction by the Treaty of Amsterdam of Article 137(3) EC, which entrusts to the Council the adoption of measures concerning financial contributions for the promotion of employment. (see paras 78-81)