Judgment — ECLI:EU:C:2014:2309
Date: 2014-10-22
Language of the case: English
Court formation: Second Chamber
Subject matter: State aids;Competition
Procedure: Action for annulment;Appeal - unfounded
Origin: United Kingdom

summary. 13 In order to respond to those arguments, the General Court observed in paragraph 46 of the judgment under appeal that it was appropriate to examine in the first place: (i) whether the Commission had erred in not finding an indivisible link between the additional pension liabilities and the guarantee and (ii) the merits of the grounds set out in recital 80 to the contested decision. In that same paragraph, the General Court announced its intention of then determining whether, in the light of the case-law, the Commission had been wrong to disregard such a link in its assessment as to whether there was a selective economic advantage for BT in the form of the exemption from the PPF levy. 14 It can be seen from the above that, in paragraph 46 of the judgment under appeal, the General Court divided its analysis of the plea raised at first instance by BT and by BTPS Trustees into two parts, the first of which comprised two separate branches. Neither BT nor BTPS Trustees challenges the way in which the examination of that plea is structured. 15 As regards the first branch of the first part of the argument put forward by BT and by BTPS Trustees, that is to say, as regards the question of an indivisible link between the additional pension liabilities and the guarantee, the General Court noted first of all, in paragraph 47 of the judgment under appeal, that BT and BTPS Trustees had not relied on any such link between the additional pension liabilities and the exemption from the PPF levy, which is the measure at issue. It went on to observe that those parties’ arguments regarding the existence of such a link between the additional liabilities and the guarantee could not be upheld. 16 The rejection of the arguments regarding the supposed link between those liabilities and the guarantee was explained in paragraphs 49 to 51 of the judgment under appeal, with the General Court concluding in paragraph 52 of that judgment that BT and BTPS Trustees had not established that there was an indivisible link between the additional pension liabilities and the guarantee; nor, in particular, had they shown how the two mechanisms constituted a whole with respect to BT; and that, consequently, the Commission had not erred in not finding a link of that kind. 17 Continuing to pursue the sequence of arguments suggested by BT and BT Trustees (see paragraph 46 of the judgment under appeal), the General Court began in paragraph 53 of the judgment under appeal to address the second section of the first part of the argument submitted by BT and by BTPS Trustees, that is to say, the question of the merits of the grounds set out in recital 80 to the contested decision concerning the assertion that the potential advantage arising from the exemption from the PPF levy is more than offset by the additional pension liabilities. 18 To that end, the General Court summarised — in paragraphs 54, 55, 57, 60 and 61 of the judgment under appeal — the arguments raised by BT and by BTPS Trustees in that regard. In paragraphs 58 to 61 of that judgment, it rejected those arguments, concluding in paragraph 62 that it was necessary to reject the first part of the plea, as set out in the first part of paragraph 46 of that judgment, in its entirety. 19 It must be held that — contrary to the assertions made by BT and BTPS Trustees — the General Court, by its reasoning in paragraphs 46 to 52 of the judgment under appeal, responded to the specific arguments put forward before it alleging that there was an indivisible link between the additional pension liabilities and the guarantee and, by its reasoning in paragraphs 53 to 62 of that judgment, responded also to the arguments contesting the merits of recital 80 to the contested decision. 20 Thus the General Court responded to the first part of the plea raised by BT and by BTPS Trustees and, in doing so, adhered to the framework that it had set for its analysis, as described in paragraph 46 of the judgment under appeal. 21 Furthermore, contrary to the assertions made by BT and BTPS Trustees in support of their first ground of appeal, the General Court’s findings regarding recital 80 to the contested decision were not intended as a series of secondary points but as a response to the second branch of the first part of the plea raised before it. 22 It follows from the foregoing that, in its response to that plea, the General Court did not substitute grounds at any point but carried out a review of the legality of the contested decision by responding, to the requisite legal standard, to all the arguments invoked at first instance in that regard by BT and by BTPS Trustees. 23 Consequently, the first ground of appeal must be declared to be unfounded. Second ground of appeal: error of law in the assessment of the selective nature of the advantage Arguments of the parties 24 By its second ground of appeal, which is structured around four arguments, BT submits that the grounds identified by the General Court in paragraphs 47 to 52 of the judgment under appeal as a basis for dismissing the additional pension liabilities as irrelevant are legally flawed. 25 BTPS Trustees concurs with that ground of appeal, adding that the General Court erred in law to the extent that, in paragraph 62 of the judgment under appeal, it confirmed on the basis of paragraphs 53 to 61 of that judgment the reasoning set out in recital 80 to the contested decision. BTPS Trustees argues that the General Court incorrectly assessed the reasoning set out in each of the three indents of that recital. 26 The Commission contends that none of the arguments put forward in support of the second ground of appeal relied on by BT can be upheld. Findings of the Court 27 By its first argument, BT makes reference to paragraph 47 of the judgment under appeal, in which the General Court observed, regarding the scope of the arguments advanced at first instance by BT and by BTPS Trustees, that those parties did not rely on ‘any indivisible link’ between the additional pension liabilities and the exemption from the PPF levy. According to BT, the General Court drew ‘no immediate conclusions’ from that finding but relied on it in paragraph 62 of the judgment under appeal to support its conclusion that that exemption was selective. In reality, given the link between the additional liabilities and the guarantee, the relevant question for the General Court should have been whether those liabilities and that guarantee were so closely linked that neither could be examined in isolation from the other for the purposes of determining whether the legal framework of reference confers an advantage on BT. 28 With regard to those arguments, it should first be noted that the finding of the General Court, set out in paragraph 47 of the judgment under appeal, regarding the scope of the arguments in question is not contested by BT. 29 Second, it must be emphasised that the General Court has the freedom to structure and to expound its reasoning in whatever way it deems necessary for the purposes of responding to the pleas raised before it. Accordingly, the way in which the General Court chooses to structure and reason its response are not open to challenge, in the context of an appeal, through claims seeking to establish that the General Court should have undertaken its analysis in the manner expected by the applicant. 30 However, the first argument put forward by BT constitutes just such a challenge. Accordingly, BT has failed to establish why, in its reasoning, the General Court should have drawn any such ‘immediate conclusions’ when that Court was simply clarifying, in paragraph 47 of the judgment under appeal, the implications of the arguments submitted to it and pointing out, in paragraph 62 of that judgment, that BT and BTPS Trustees had not proved a fact which, indeed, they had made no attempt to prove. 31 As regards the complaint that the General Court should have examined the link between the additional pension liabilities and the guarantee, it is sufficient to note that the Court addressed that question, beginning its analysis in that regard in paragraph 48 of the judgment under appeal. Moreover, the Court’s reasoning on that point is called in question by the second argument put forward by BT, which is examined below. 32 Accordingly, the first argument cannot succeed. 33 By its second argument, BT submits that the General Court erred in law in making a distinction between, on the one hand, the objective of protecting the rights of certain employees in the context of the change in status of their employer and, on the other, the objective of protecting the rights of those employees in the event of the company becoming insolvent. According to BT, it ‘should have been clear’ to the General Court that the first objective applies equally to the pension liabilities and to the guarantee. 34 In that regard, it should be borne in mind that, in paragraph 49 of the judgment under appeal, the General Court examined the relationship between the additional pension liabilities and the guarantee from a number of angles. 35 Thus, the General Court found that the funding by BT of the additional pension liabilities and the guarantee do indeed have a link for the BTPS members concerned, since both mechanisms were put in place for their benefit. However, those mechanisms cannot be regarded as indivisible, as one can exist without the other. Indeed, according to the General Court, in the case of additional pension liabilities, the objective is to protect the rights of certain employees in the context of the change in status of their employer, whereas, in the case of the guarantee, the purpose is to protect the rights of those employees in the event of their employer’s insolvency. 36 Consequently, the first mechanism applies from the moment the change in the company’s status enters into force, whereas the second mechanism applies only to a possibility, namely, the company’s insolvency. 37 It is clear that the distinction that the General Court makes between those two mechanisms is not vitiated by any error. On the contrary, that distinction is a relevant element of the General Court’s assessment of whether a selective advantage exists. 38 The second argument is accordingly unfounded. 39 As regards the third argument, which alleges an error of law in connection with the finding that there is no link between the guarantee and the additional pension liabilities even though those mechanisms were adopted at the same time and in the same regulations, it is sufficient to point out that, in the first two sentences of paragraph 50 of the judgment under appeal, the General Court simply rejected the submission made by BT and by BTPS Trustees to the effect that the two mechanisms in question are indivisible elements so far as BT is concerned, emphasising that the presence of a ‘temporal link’, owing to the fact that those two mechanisms were adopted in the same regulations, is not significant. 40 In addition — and contrary to the position argued for by BT — the General Court was in no way prevented, by the mere fact of having recognised that there was such a ‘temporal link’, from addressing later in that paragraph the question whether the two mechanisms were linked in terms of their respective substantive content or from concluding, on the basis of its analysis of that question, that there was no link between those mechanisms which could be regarded as indivisible. 41 Accordingly, the third argument cannot be upheld. 42 As regards the fourth argument, whereby the General Court is criticised for finding that the guarantee is not linked to the additional pension liabilities because the guarantee would not be implemented unless the company were to become insolvent, whereas in reality both mechanisms provide additional protection for BT’s employees, it should be noted that that argument relates to the findings of the General Court in the fourth, fifth and sixth sentences of paragraph 50 of the judgment under appeal. In those sentences, the General Court observed that there was no link, whether in terms of law or logic, between the additional pension liabilities and the guarantee, since in reality those two mechanisms were not, as purported, indivisible. 43 By that reasoning, the General Court has shown to the requisite legal standard that that guarantee is underpinned, from its inception, by considerations which are broader than those concerning the protection of additional pension liabilities. Furthermore, those liabilities are imposed on BT while it remains in operation, whereas the guarantee does not apply unless that company becomes insolvent. 44 It follows that the General Court did not err in law in discounting the supposed link between the two mechanisms. 45 Accordingly, the fourth argument must also be rejected. 46 As regards the line of argument relied on by BTPS Trustees, it should be noted that it relates to paragraphs 53 to 61 of the judgment under appeal, which state the General Court’s findings regarding the arguments submitted by BT and by BTPS Trustees concerning the merits of the reasoning set out by the Commission in the three indents of recital 80 to the contested decision. That part of the judgment under appeal is the subject of the third ground of appeal, which is examined below. 47 The second ground of appeal must therefore be rejected in its entirety. Third ground of appeal: error of law in the examination of the grounds of the contested decision Arguments of the parties 48 BT submits that, in paragraph 56 of the judgment under appeal, the General Court reproduces the reasoning set out by the Commission in the first indent of recital 80 to the contested decision. The Court does not explain, however, how that reasoning is relevant to the question of whether the advantage is selective. 49 BT also submits that, in paragraphs 57 and 58 of the judgment under appeal, the General Court focuses, not on the separation in time between the PPF and the additional pension liabilities, but rather on the proximity in time between those liabilities and the guarantee. Thus, the General Court did not make it clear whether it accepted or rejected the reasoning put forward by the Commission in the second indent of recital 80 to the contested decision, which is based on precisely the separation in time mentioned above. 50 As regards the reasoning relied on by the Commission in the third indent of recital 80 to the contested decision, BT argues that, in paragraph 59 of the judgment under appeal, the General Court construed that reasoning as meaning that the Commission was maintaining that there was no exclusive link between the additional pension liabilities and the guarantee, since the latter was to be applied — where appropriate — to other kinds of liabilities. However, the General Court did not explain why the fact that, as conceived, the guarantee also applied to situations besides pensions was legally relevant for the purposes of justifying the contested decision. The supposedly exclusive nature of that link is legally irrelevant and as a consequence the General Court, by endorsing that aspect of the grounds of the contested decision, itself erred in law. 51 In addition, BT submits that, in paragraph 60 of the judgment under appeal, the General Court sought to rely on its own grounds for disregarding the additional pension liabilities when assessing whether there was a selective advantage, thereby substituting its own grounds for those set out by the Commission in the contested decision. 52 Lastly, BT alleges that, in paragraph 61 of the judgment under appeal, the General Court carried out an ‘inadequate’ examination of the grounds of the contested decision. It is ‘unclear ... whether the General Court accepted any of the reasons given by the Commission as valid, and if so, on what basis it did so’. 53 The Commission contends that the third ground of appeal is unfounded. Findings of the Court 54 By its third ground of appeal, BT makes reference to the findings of the General Court regarding the merits of the reasoning set out by the Commission in the three indents of recital 80 to the contested decision. In essence, BT and BTPS Trustees (see paragraphs 25 and 46 above) complain that the General Court made errors of reasoning in its assessment of the merits of that recital and that it substituted grounds in paragraph 60 of the judgment under appeal. 55 In that regard, it should be borne in mind that, in the context of an appeal, the purpose of review by the Court of Justice is, primarily, to examine to what extent the General Court took into consideration, in a legally correct manner, all the arguments relied upon at first instance by the appellant (judgment in France Télécom v Commission, C‑202/07 P, EU:C:2009:214, paragraph 41 and the case‑law cited). 56 Nevertheless, according to settled case-law of the Court of Justice, the duty incumbent upon the General Court under Article 36 and the first paragraph of Article 53 of the Statute of the Court of Justice of the European Union to state reasons for its judgments does not require the General Court to provide an account that follows exhaustively and one by one all the arguments put forward by the parties to the case. The reasoning may therefore be implicit, on condition that it enables the persons concerned to understand the grounds of the General Court’s judgment and provides the Court of Justice with sufficient evidence to exercise its powers of review on appeal (judgment in France v Commission, C‑559/12 P, EU:C:2014:217, paragraph 86 and the case-law cited). 57 It is in the light of that case-law that the various arguments submitted by BT in support of its third ground of appeal must be examined. 58 First, as regards the argument alleging that the General Court failed to explain the relevance of the reasoning set out in the first indent of recital 80 to the contested decision, which stated that the benefit secured to employees in the event of the company’s bankruptcy was of ‘little interest, if any, to … shareholders’, it should be borne in mind that, in paragraph 56 of the judgment under appeal, the General Court stated that the Commission’s assertion had to be seen in the context of that institution’s findings regarding the impact on BT (and, accordingly, on its shareholders) of the various parts of the ‘package of measures’. It can be seen from those findings that the shareholders were affected only by mechanisms which added value to — or subtracted value from — the undertaking in question. Thus, the guarantee, which took effect only in the event of BT’s bankruptcy and only for the benefit of its employees, was of no interest to BT’s shareholders and, accordingly, could not be regarded as giving them an advantage. 59 Secondly, as regards the argument that the General Court did not take a position on the reasoning set out in the second indent of recital 80 to the contested decision, it is important to point out that, in paragraph 58 of the judgment under appeal, the General Court held that no temporal link existed between the additional pension liabilities and the advantage arising from a reduced contribution to the PPF, as those two mechanisms were adopted 20 years apart. 60 Thus, in that paragraph of the judgment under appeal, the General Court explained why it was necessary to endorse the Commission’s conclusion that there was no link between the duration of the PPF levy and the additional pension liabilities. The General Court also observed that, in any event, the fact that those liabilities and the guarantee were adopted or exist in the same time frame does not mean that they constitute indivisible elements, the temporal aspect being of little importance in the circumstances. 61 Thirdly, as regards BT’s complaint about paragraph 59 of the judgment under appeal, which also concerns the reasoning set out by the Commission in the second indent of recital 80 to the contested decision — more specifically, the possibility of a ‘substantive link’ between the alleged burdens placed on BT and the liabilities to which the guarantee applies — it is sufficient to note that, in that paragraph, the General Court observed that there was no ‘exclusive’ link between the additional pension liabilities and the guarantee — which had, moreover, been acknowledged by BT — with the result that, if there was a link, it had to be categorised as not substantively discernible. 62 In those circumstances, and contrary to BT’s assertions, the General Court provided reasons to the requisite legal standard for concluding that the reasoning set out by the Commission in support of the contested decision in the second indent of recital 80 thereto was well founded. 63 As regards the complaint brought on the basis of a supposed substitution of grounds in paragraph 60 of the judgment under appeal, it should be noted that the General Court was entitled to remind the parties, at the end of that paragraph, that it had already responded, in paragraphs 47 to 52 of that judgment, to the arguments put forward by BT and by BTPS Trustees regarding the supposed link between the guarantee and the additional pension liabilities. 64 It follows that the General Court correctly assessed the reasoning set out by the Commission in the third indent of recital 80 to its decision. 65 It cannot therefore be said that the General Court substituted any grounds. 66 Lastly, as regards paragraph 61 of the judgment under appeal, it should be borne in mind that, in that paragraph, the General Court categorised the Commission’s statement in the third indent of recital 80 to the contested decision ‘not as a legal argument, but as an observation which … assumes secondary importance in the statement of reasons set out in [that] decision concerning the existence of a selective economic advantage’. 67 It can be seen from paragraphs 47 to 62 of the judgment under appeal as a whole that the General Court rejected the arguments relating to the third indent of recital 80 to the contested decision because, in view of the secondary importance of the considerations set out therein, relating to the fact that the liabilities in question could have given rise to advantages for BT, those arguments were not capable of establishing that there had been an error on the part of the Commission regarding the existence of a selective economic advantage. 68 BT’s final argument is therefore also unfounded. 69 Accordingly, the third ground of appeal must also be rejected in its entirety. 70 It follows from all of the foregoing that the appeal must be dismissed in its entirety. Costs 71 Under Article 184(2) of its Rules of Procedure, where the appeal is unfounded, the Court is to make a decision as to the costs. Under Article 138(1) of those rules, which apply to the procedure in an appeal by virtue of Article 184(1) thereof, the unsuccessful party must be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since BT and BTPS Trustees have been unsuccessful and the Commission has applied for costs, they must be ordered to pay the costs. On those grounds, the Court (Second Chamber) hereby: 1. Dismisses the appeal; 2. Orders British Telecommunications plc and BT Pension Scheme Trustees Ltd to pay the costs. [Signatures] * Language of the case: English.