Judgment — ECLI:EU:C:1999:311
Date: 1999-06-17
Language of the case: Dutch
Court formation: Sixth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition;Social Policy
Concepts: Statement of reasons;Notification and obligation to suspend payment of the aid;Formal investigation procedure;Commission decision following the formal investigation procedure;Damage to competition and effect on trade;General;Obligations of the Member States;Selective nature of the measure
Procedure: Action for annulment - unfounded
Origin: Belgium

Summary of the Judgment 
1. State aid — Concept — Grant to certain undertakings of increased reductions in social 
security contributions — Covered — Measures of a social character — Irrelevant 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC)) 
2. State aid — Concept — Specificity of the State measure — Partial reduction of 
financial charges — Covered 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC)) 
3. State aid — Affecting trade between Member States — Prejudicial to competition — 
Criteria of assessment 
(EC Treaty, Art. 92 (now, after amendment, Art. 87 EC)) 
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SUMMARY — CASE C-75/97 
4. State aid — Commission decision finding that a particular grant of aid is incompatible 
with the common market and ordering its abolition — Resulting obligation to 
recover — To restore the previous legal situation 
(EC Treaty, Art. 92 (now, after amendment, Art. 87 EC)) 
5. State aid — Planned aid — Not notified — Implemented before the Commission's 
final decision — Whether the Commission is under an obligation to use its power to 
require payment of the aid to be suspended — No such obligation 
(EC Treaty, Art. 93(3) (now Art. 88(3) EC)) 
6. State aid — Planned aid — Implemented before the Commission's final decision — 
Commission decision ordering recovery of the aid — Obligation to state reasons — 
Scope 
(EC Treaty, Art. 93(3) (now Art. 88(3) EC)) 
7. State aid — Commission decision finding that a particular grant of aid is incompatible 
with the common market — Lawfulness — Conditions — Absolute impossibility of 
implementation — Impossibility evident at the implementation stage — No effect — 
Impossibility evident at the adoption stage — Unlawful 
(EC Treaty, Art. 173 (now, after amendment, Art. 230 EC)) 
1. State aid, within the meaning of Arti­
cle 92(1) of the Treaty (now, after 
amendment, Article 87(1) EC), covers 
measures which, in various forms, 
mitigate the charges which are nor­
mally included in the budget of an 
undertaking and which, without there­
fore being subsidies in the strict sense, 
are similar in character and have the 
same effect. A system under which 
certain undertakings are accorded the 
advantage of increased reductions in 
social security contributions relieves 
them of some of their costs and confers 
on them financial advantages which 
improve their competitive position. 
The social character of such State 
measures is not sufficient to exclude 
them outright from classification as aid 
for the purposes of Article 92 of the 
Treaty. Article 92(1) of the Treaty does 
not distinguish between measures of 
State intervention by reference to their 
causes or their aims but defines them in 
relation to their effects. 
2. The specificity of a measure adopted by 
the State — that is to say, its selective 
character — constitutes one of the 
characteristics of the concept of State 
aid. A measure designed to give under­
takings in a particular industrial sector 
a partial reduction of the financial 
charges arising from the normal appli­
cation of the general social security 
system, without there being any justi­
fication for this exemption on the basis 
of the nature or general scheme of this 
system, must be regarded as aid. 
Even when a Member State states that 
it intends ultimately to extend to its 
entire economy, and thereby generalise, 
measures initially restricted to certain 
sectors of activity, that intention can­
not be taken into account for avoiding 
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BELGIUM V COMMISSION 
application of Article 92(1) of the 
Treaty (now, after amendment, Arti­
cle 87(1) EC) since such measures must 
be assessed solely in relation to their 
effects. 
The opposite approach would enable 
the Member State concerned to escape 
application of the Community rules in 
this area simply by declaring its inten­
tion to generalise the contested mea­
sure in the future. The same applies 
where the Member State concerned can 
produce evidence of a first stage 
towards generalisation of the measure 
under consideration. 
3. When State aid strengthens the position 
of an undertaking compared with other 
undertakings competing in intra-Com-
munity trade, the latter must be regar­
ded as affected by the aid, even if the 
beneficiary undertaking is itself not 
involved in exporting. Where a Mem­
ber State grants aid to an undertaking, 
domestic production may for that rea­
son be maintained or increased, with 
the result that undertakings established 
in other Member States have less 
chance of exporting their products to 
the market in that Member State. 
4. The removal of unlawful State aid by 
means of recovery is the logical con­
sequence of a finding that it is unlaw­
ful. The sole purpose of obliging the 
State concerned to recover the aid is to 
restore the previous legal situation. 
Accordingly, recovery cannot in princi­
ple be regarded as a penalty. 
Furthermore, the recovery of State aid 
unlawfully granted cannot in principle 
be regarded as disproportionate to the 
objectives of the provisions of the 
Treaty on State aid. 
5. When the Commission finds that aid 
has been introduced without being 
notified, it has the power, after giving 
the Member State in question the 
opportunity to submit its comments 
on the matter, to issue an interim 
decision requiring it to suspend imme­
diately the payment of the aid pending 
the outcome of the examination of the 
aid. That does not mean, however, that 
the Commission is obliged to require 
automatically the Member State con­
cerned to suspend payment of the aid in 
question. The opposite outcome would 
render nugatory the legal obligation 
imposed on the Member State by 
Article 93(3) of the Treaty (now Arti­
cle 88(3) EC) not to implement plan­
ned aid before the Commission's final 
decision and would have the conse­
quence of reversing the roles of the 
Member States and the Commission. 
6. In the matter of State aid, where, 
contrary to the provisions of Arti­
cle 93(3) of the Treaty (now Arti­
cle 88(3) EC), the proposed aid has 
already been granted, the Commission, 
which has the power to require the 
national authorities to order its repay-
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SUMMARY — CASE C-75/97 
ment, is not obliged to provide specific 
reasons in order to justify the exercise 
of that power. 
7. The absolute impossibility of imple­
menting a Commission decision order­
ing the abolition of unlawful State aid 
does not invalidate that decision where 
it becomes apparent only at the stage of 
implementation. Any procedural or 
other difficulties in regard to the 
implementation of the contested mea­
sure cannot have any influence on its 
lawfulness. However, the Commission 
may not impose — by a decision which 
. would then be invalid — an obligation 
whose implementation would, from the 
beginning, be impossible in objective 
and absolute terms. 
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