Judgment — ECLI:EU:T:2002:188
Date: 2002-07-11
Language of the case: Spanish
Court formation: Fifth Chamber, Extended Composition
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Statement of reasons;Private investor/private creditor test;Commission decision following the formal investigation procedure;Damage to competition and effect on trade;General;Aid to undertakings in difficulty;Selective nature of the measure;Commission discretion
Procedure: Action for annulment - unfounded;Action for annulment - successful
Origin: Spain

Summary of the Judgment 
1. State aid — Prohibition — Derogations — Aid which can be regarded as compatible 
with the common market — Commission's discretion — Judicial review — Limits 
(EC Treaty, Art. 93(3) (now, after amendment, Art. 87(3) EC» 
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SUMMARY — CASE T-152/99 
2. State aid — Prohibition — Derogations — Aid which can be regarded as compatible 
with the common market — Aid for rescuing an undertaking in difficulty — 
Conditions — Exceptional measure needed to keep an undertaking in business and 
applied for a limited time — Manifest error of assessment by the Commission — 
None 
(EC Treaty, Art. 92(3) (now, after amendment, Art. 87(3) EC)) 
3. State aid — Definition — Taking into account of the situation existing at the time the 
measure was adopted 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC)) 
4. State aid — Prohibition — Derogations — Aid which can be regarded as compatible 
with the common market — Restructuring aid for an undertaking in difficulty — 
Conditions — Implementation, under the supervision of the Commission, of a 
restructuring plan approved by it 
(EC Treaty, Art. 92(3) (now, after amendment, Art. 87(3) EC)) 
5. State aid — Prohibition — Derogations — Restructuring aid for an undertaking in 
difficulty in an assisted region — Special conditions — Assessment 
(EC Treaty, Art. 92(3)(a) and (c) (now, after amendment, Art. 87(3)(a) and (c) EC)) 
6. State aid — Definition — Conversion into capital of part of an undertaking's debts to 
a public body — Criterion of assessment — Private investor criterion •—· Commis­
sion's discretion — judicial review — Limits 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC)) 
7. State aid — Definition — Selective nature of the measure •—· Financiai advantages 
granted in a discretionary manner by a public body to an undertaking — Included 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC)) 
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HAMSA v COMMISSION 
8. State aid — Definition — Remission of debts granted by public bodies to an 
undertaking in difficulty in the context of judicial proceedings and in conformity with 
applicable national law — Included 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC» 
9. State aid — Definition — Legal nature — Interpretation on the basis of objective 
elements — Judicial review — Scope 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC)) 
10.State aid — Definition — Remission of debts granted by public bodies to an 
undertaking in difficulty — Proportion of the remissions granted to the total debts 
of the undertaking — Irrelevant — Assessment criterion — Private investor criterion 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC)) 
11.State aid — Effect on trade between Member States — Prejudice to competition — 
Assessment criteria 
(EC Treaty, Art. 92(1) (now, after amendment, Art. 87(1) EC» 
12.State aid — Commission decision finding aid which has not been notified incom­
patible with the common market — Obligation to state reasons — Scope 
(EC Treaty, Arts 92 (now, after amendment, Art. 87 EC), 93(3) and 190 (now, after 
amendment, Arts 88(3) and 253 EC» 
1. The Commission has wide discretion in 
its assessments under Article 92(3) of 
the EC Treaty (now, after amendment, 
Article 87(3) EC). Judicial review by 
the Community Court must, therefore, 
be limited to checking that the rules on 
procedure and the statement of reasons 
have been complied with, that the facts 
are materially accurate, and that there 
has been no manifest error of assess­
ment and no misuse of powers. It is not 
for the Community judicature to sub­
stitute its economic assessment for that 
of the Commission. 
(see para. 48) 
2. The Commission did not commit a 
manifest error of assessment in finding 
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SUMMARY — CASE T-152/99 
that the loan and guarantees granted by 
a public body to the undertaking in 
question between May and December 
1995 could not be termed rescue aid 
within the meaning of the Community 
guidelines on State aid for rescuing and 
restructuring firms in difficulty, 
because it has been established that 
that public body had already granted 
loans and guarantees to the applicant 
in 1993 and 1994, which were of the 
same type and for the same reason as 
the alleged rescue aid, and that those 
measures were already intended to 
enable the undertaking to overcome 
its financial difficulties and stay in 
business. Accordingly, the Commission 
was right in finding that the require­
ment that rescue aid should be an 
exceptional measure needed to keep 
the undertaking in business and applied 
for a limited time was not met in the 
case at hand. 
(see paras 50-51) 
3. The question of whether a measure 
constitutes aid within the meaning of 
Article 92(1) of the EC Treaty (now, 
after amendment, Article 87(1) EC) 
must be resolved having regard to the 
situation existing at the time the meas­
ure was implemented. If the Commis­
sion took subsequent factors into 
account, it would confer an advantage 
on Member States which fail in their 
obligation to give notice at the plan­
ning stage of aid they intend to grant. 
Consequently, the fact that the rate of 
interest applied to loans granted by a 
public body to an undertaking in dif­
ficulty was subsequently fixed at the 
market rate — whether or not one 
qualifies this as a mere 'accounting 
adjustment' — is of no relevance. 
(see para. 53) 
4. The Community guidelines on State aid 
for rescuing and restructuring firms in 
difficulty require restructuring aid to 
an undertaking in difficulty to be part 
of a plan, the Commission's approval 
of which is subject to three substantive 
conditions: it must enable long-term 
restoration of viability of the under­
taking, avoid undue distortions of 
competition and ensure the propor­
tionality of the aid in relation to the 
restructuring costs and benefits. More­
over, it is incumbent on the firm to 
implement the restructuring plan, as 
accepted by the Commission, and the 
implementation and satisfactory prog­
ress of the plan must be monitored by 
the Commission, to which detailed 
annual reports must be submitted. 
(see para. 78) 
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HAMSA v COMMISSION 
5. As is apparent from the Community 
guidelines on State aid for rescuing and 
restructuring firms in difficulty, the 
fact that an ailing undertaking is 
located in an assisted area does not 
justify a wholly permissive approach to 
aid, and the guidelines state that 'dis­
tortions of competition must be mini­
mised even in the case of aid to firms in 
assisted areas'. Likewise, the possibil­
ity, which amounts to an exception, of 
relaxing the requirement for reducing 
capacity where the market concerned 
shows structural excess capacity does 
not call into question the primary 
requirement that there be a coherent 
and realistic restructuring plan 
enabling the undertaking to be restored 
to viability. Accordingly, the Commis­
sion cannot be criticised for having 
refused to allow a firm an exemption 
based on regional development needs 
when that firm, even supposing it has 
carried out reductions in capacity 
which — on a relaxed reading of the 
rules — could be found to be suffi­
cient, does not meet one or more of the 
conditions imposed by the guidelines. 
(see para. 114) 
6. Investment by public authorities in the 
capital of undertakings, in whatever 
form, may constitute State aid. 
In order to determine whether the 
conversion into capital of part of an 
undertaking's debts to a public body 
constitutes State aid, it is appropriate 
to apply the private investor criterion. 
Thus, it is necessary to consider 
whether in similar circumstances a 
private investor of a size comparable 
to that of the public investor might 
have provided capital of such an 
amount. Although the conduct of a 
private investor with which the inter­
vention of a public investor pursuing 
economic policy aims must be com­
pared need not be the conduct of an 
ordinary investor laying out capital 
with a view to realising a profit in the 
relatively short term, it must at least be 
the conduct of a private holding com­
pany or a private group of undertak­
ings pursuing a structural policy •—· 
whether general or sectoral — and 
guided by prospects of profitability in 
the longer term. 
The assessment by the Commission of 
the question whether an investment 
satisfies the private investor criterion 
involves a complex economic apprai­
sal. When the Commission adopts a 
measure involving a complex economic 
appraisal, it enjoys a wide discretion 
and judicial review of that measure on 
this point is limited to verifying 
whether the Commission complied 
with the relevant rules governing pro­
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SUMMARY — CASE T-152/99 
cedure and the statement of reasons, 
whether the facts on which the con­
tested finding was based have been 
accurately stated and whether there has 
been any manifest error of assessment 
or a misuse of powers. In particular, 
the Court is not entitled to substitute its 
own economic assessment for that of 
the Commission. 
(see paras 125-127) 
7. The specific nature of a State measure, 
namely its selective application, con­
stitutes one of the characteristics of 
State aid within the meaning of 
Article 92(1) of the EC Treaty (now, 
after amendment, Article 87(1) EC). In 
that regard, it is necessary to determine 
whether or not the measure in question 
entails advantages accruing exclusively 
to certain undertakings or certain sec­
tors of activity. 
Where the public body granting finan­
cial assistance enjoys a degree of lati­
tude which enables it to choose the 
beneficiaries or the conditions under 
which the financial assistance is pro­
vided, that assistance cannot be con­
sidered to be general in nature. This is 
the case where debt remissions do not 
flow automatically from the appli­
cation of national legislation governing 
suspension of payments and instituting 
a general procedure applicable to all 
undertakings in difficulty, but from the 
discretionary decisions made by the 
public bodies in question. 
(see paras 156-157) 
8. Article 92(1) of the EC Treaty (now, 
after amendment, Article 87(1) EC) 
does not distinguish between measures 
of State intervention by reference to 
their causes or aims but defines them in 
relation to their effects. Accordingly, 
the fact that the debt remissions at 
issue here were granted by public 
bodies to undertakings in difficulty in 
the course of judicial proceedings and 
in accordance with the applicable 
national law does not by itself make 
them a general measure falling outside 
the scope of Article 92(1) of the EC 
Treaty. 
(see para. 158) 
9. State aid, as defined in the Treaty, is a 
legal concept which must be inter­
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HAMSA v COMMISSION 
preted on the basis of objective factors. 
For that reason, the Community courts 
must, in principle, having regard both 
to the specific features of the case 
before them and to the technical or 
complex nature of the Commission's 
assessments, carry out a comprehensive 
review as to whether a measure falls 
within the scope of Article 92(1) of the 
EC Treaty (now, after amendment, 
Article 87(1) EC). 
(see para. 159) 
10. The share of the overall debt of an 
undertaking in difficulty represented by 
the claims of public bodies does not in 
itself constitute a decisive factor for 
d e t e r m i n i n g w h e t h e r the d e b t 
remissions granted by those bodies to 
the undertaking bear some of the hall­
marks of State aid. Taking this factor 
into account amounts to an unjustified 
restriction on the possibilities of debt 
arrangement for an undertaking in 
difficulty when the total amount of 
public claims is higher than the private 
claims. Conversely, when the total 
amount of private claims is higher than 
the public claims, it is difficult to 
conceive of a measure for debt arrange­
ment taken by a public body as con­
stituting State aid. 
By granting the debt remissions, the 
public bodies in question did not have 
to act like public investors whose 
behaviour should be compared to the 
conduct of a private investor pursuing 
a structural policy — whether general 
or sectoral — guided by the longer 
term prospects of profitability of the 
capital invested. Those bodies should 
actually be compared to a private 
creditor who is seeking to obtain 
payment of sums owed to it by a 
debtor in financial difficulties. 
Consequently, it is for the Commission 
to determine, for each of the public 
bodies in question, whether the debt 
remissions granted by them were mani­
festly more generous than those which 
would have been granted by a hypo­
thetical private creditor in a situation 
comparable vis-à-vis the undertaking 
to that of the public body in question 
and seeking to recover the sums owed 
to it. 
Although an apparent lack of propor­
tion between the respective debt 
remissions by public and private credi­
tors may be indicative of the existence 
of State aid, this factor in itself does not 
free the Commission from its obli­
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SUMMARY — CASE T-152/99 
gation to examine, having regard to the 
circumstances of the case, whether the 
remissions granted by the public credi­
tors go beyond what is justified by 
commercial constraints and thus can 
only be explained by an intention to 
confer an advantage on the undertak­
ing in question. 
(see paras 166-167, 170-171) 
11. When State aid strengthens the position 
of an undertaking compared with other 
undertakings competing in intra-Com-
munity trade, the latter must be 
regarded as affected by that aid. Fur­
thermore, an aid may be of such a kind 
as to affect trade between Member 
States and distort competition even if 
the recipient undertaking, which is in 
competition with undertakings from 
other Member States, does not itself 
participate in crossborder activities. 
Where a Member State grants aid to 
an undertaking, internal supply may be 
maintained or increased, with the con­
sequence that the opportunities for 
undertakings established in other 
Member States to offer their services 
to the market of that Member State are 
reduced. 
Likewise, the relatively small size of the 
undertaking which receives aid does 
not as such exclude the possibility that 
intra Community trade might be 
affected. 
(see paras 220-221) 
12. In its reasons in a decision concerning 
State aid, and more specifically with 
respect to the condition that trade 
between Member States be affected, 
the Commission is not required to 
carry out an economic analysis of the 
actual situation on the relevant market, 
of the market share of the undertaking 
in question, of the position of compet­
ing undertakings and of trade flows of 
the products and services in question 
between Member States, once it has 
explained how the aid in question 
distorts competition and affects trade 
between Member States. 
Furthermore, in the case of aid granted 
illegally, the Commission is not 
required to demonstrate the actual 
effect which that aid has had on 
competition and on trade between 
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HAMSA v COMMISSION 
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 93(3) of the EC Treaty 
(now, after amendment, Article 88(3) 
EC), to the detriment of those which 
notify the aid at the proposal stage. 
(see paras 223, 225-226) 
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