Opinion of the Advocate General — ECLI:EU:C:2001:537
Date: 2001-10-11
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Procedure: Action for annulment - unfounded
Origin: Spain

summary, the Spanish Government submits that the Commission position is inherently contradictory. Either the ESP 58 billion in aid is justified as compensation or it is part of a package of aid measures conditional on a substantial and irreversible capacity reduction, on various aspects of which the parties had had the opportunity to negotiate. The first view, as defended by the Commission, implies the option of paying out sums greater than that authorised specifically if it transpires that the sum to be compensated is much higher than anticipated. The Commission clearly finds the latter option unacceptable. 57. The Commission rejects the Spanish Government's reasoning. It clearly assumes that the only conditions the authorising decision imposes on tax credits are compliance with the ESP 58 billion ceiling on aid and the capacity reductions established. The Commission's view, by contrast, is that authorisation was only justified because the Spanish yards could no longer benefit from general tax credits. This justification inherent in the authorisation has ceased to exist, and thus the authorisation itself becomes invalid. The Commission points out that for aid to be authorised, necessity must be demonstrated, both in terms of the amount and of the specific objective of the aid. If other means such as the applicability of general tax legislation seem adequate for attaining the same objective, then the aid cannot be authorised. 58. The Commission submits that no decision authorising aid in general terms is subject to the sole restriction of compliance with a ceiling. In its decisions it always indicates the maximum sum authorised and the underlying objective. A complete aid package has never been approved without further detailed conditions, particularly not in a sensitive sector such as this where aids are generally categorically prohibited. In this context, the Commission refers to the detail of the authorising decision which describes each category of aid separately, and expressly lists the conditions under which each may be approved. This would have been pointless if only the total sum of aid approved and the corresponding capacity reduction were relevant. 59. The Commission does not therefore share the Spanish Government's point of view as regards the outcome of the general negotiations. The Commission's position is that Regulation No 1013/97 and the authorising decision are clear. These specify that the Kingdom of Spain must not only adhere to the total sum authorised but must also comply with the objectives and the ceilings set for each authorised category of aid. The basis for the Spanish Government's submissions of breach of the protection of legitimate expectations and of Regulation No 1013/97 is unclear to the Commission. 60. The Commission explains that the maximum of ESP 58 billion is based on information received from the Spanish Government. This is derived from forecasts of the yards' losses before tax and not from forecasts relating to their future taxable losses, which would theoretically have been preferable. Since these were forecasts rather than definitive figures, the Commission did not demand further detail from the Spanish authorities. It would have been impossible to obtain more accurate calculations in advance since they would have been substantially influenced by the future results of the undertaking, which were by definition uncertain. 61. A second reason for having recourse to a calculation based on anticipated losses before tax is that a calculation based on the expected taxable base would have been even less accurate: tax legislation changes from year to year, which makes any advance forecasts very uncertain. An estimate based on the anticipated net results of the shipyards concerned offers greater certainty in this respect. 62. However, the actual application of special credits is calculated under the special Law No 13/96 using the taxable base rather than losses before tax. It was unnecessary to state this expressly in the authorising decision since it followed from special Law 13/96. 63. Finally, the figure of ESP 58 billion in tax credits could be accepted because it was a ceiling. This means that if the shipyards' losses were less than anticipated, compensation under Law 13/96 would be proportionately reduced, since this law is predicated on the taxable base. If, on the contrary, losses and therefore also the compensation under Law 13/96 were greater than anticipated, then the sum actually paid out in tax credits could not in any event exceed ESP 58 billion, since this was expressly stated to be a maximum. This mechanism therefore guarantees that competition is not affected beyond the authorised limit, irrespective of the development of the undertaking 64. The Spanish authorities' observation that the Commission would never in any event have authorised more than ESP 58 billion, even if the actual losses had been higher, is therefore correct. The Commission considers this limit to be a maximum, which was still acceptable without damaging competitive relations excessively. An alternative view would be tantamount to giving the Spanish State carte blanche, enabling them to continue to grant an undertaking aid in the form of tax credits even if the extent of that undertaking's losses indicated that it was no longer viable. Consequently, the authorised limit was not to be exceeded under any circumstances. 65. The Commission disputes the link alleged by the Spanish Government between capacity reduction and the maximum authorised amount in the decision. The capacity reduction is an integral part of the authorising decision, by implication a quid pro quo to offset to an extent the adverse effects of aid on competition. This does not mean that there is an automatic relationship or link between capacity reduction and the level of aid authorised. 66. Under the second part of this plea in law, the Spanish Government submits that the Commission's interpretation of the maximum amount applying to authorised tax credits is incompatible with Article 87(3) EC, the principle of legal certainty and the principle of the protection of legitimate expectations. This amounts to a denial of the definitive nature of the authorising decision. The Commission's position in point 42 of the contested decision would mean that the authorisation granted degenerated into a declaration of intent, which would oblige the Spanish authorities when implementing the restructuring plan continually to demonstrate the necessity of granting the aid which had already been authorised. 67. The fact that the sums authorised constitute a ceiling does not mean that they are provisional, in the sense that when plans are implemented substantially lower sums may be acceptable. The Commission's contrary interpretation is, in the opinion of the Spanish Government, contrary to Article 1 of Regulation No 1013/97 under which the Commission may also declare new aid compatible with the common market provided that the objectives and the ceiling on aid specified in the regulation are respected. 68. In its response to the second part of the third plea in law, the Commission points out that fiscal compensation is to a great extent dependent on developments within the undertakings concerned and therefore it is logical that the precise amount is not specified. Since it was impossible to fix the amount in advance, the Commission has set a ceiling in order to prevent an undertaking with extremely bad results from automatically receiving aid and thereby adversely affecting competition. It is equally logical that where results are better than expected, less compensation should be received under Spanish Law 13/96 (calculated on the basis of 28% of the taxable base). It cannot therefore be submitted that the authorisation is temporary in nature. The actual sum to be paid out may be unspecified, but the same is not true of the mechanism for calculating it with the ceiling of ESP 58 billion linked to it. 69. Under the third part of this plea in law, the Spanish Government contends that the Commission's line of reasoning in the contested decision means that tax credits under the general legislation are added to those paid under special legislation. According to the Spanish Government, this is conceptually incorrect, since the tax credits under general provisions are not aid measures. The addition of the two therefore infringes Article 87(1) EC. 70. The Commission responds that in the contested decision it merely observed that the justification for aid in the form of tax credits lapsed on 1 January 1997 and that the existence of the authorisation itself cannot be justified. Consequently, the aid must be considered unauthorised from that point on. The Commission has not therefore aggregated any amounts, nor investigated the cumulative effect of these two types of tax aid, but has merely observed that the special tax credits previously authorised are no longer justified. B - The fourth plea in law: infringement of the principle of the protection of legitimate expectations and error of assessment 1. Submissions of the parties 71. Under the fourth plea in law the Spanish Government contends in the alternative that even if it is admitted that aid authorised in the form of tax credits cannot exist concurrently with general tax credits, the ESP 58 billion granted to the yards is still justified. The Commission has therefore infringed the principle of the protection of legitimate expectations and committed a manifest error of assessment. 72. In this context the Spanish Government asserts that the tax credits received by the yards under the general tax consolidation scheme amounted to 28% of the taxable base. When the special tax credits were authorised, 28% of net results before tax was the base figure used. The Commission should have taken this criterion into account. 73. The Commission however considers that the aid paid in 1998 is devoid of justification. It observes in this context that the aid approved does not correspond to 28% of forecast losses during the period under consideration as asserted by the Spanish Government, but rather to the sum, albeit a maximum, which the shipyards could otherwise have received under the general tax rules. The basis for this was in Law 13/96. This law preceded the adoption of Regulation No 1013/97 and the authorising decision. The latter therefore, in authorising the tax credits, refers to the Spanish law. The aid paid out under this law does not correspond to 28% of losses before tax but rather to the sum which could have been claimed if the shipyards had remained in a tax consolidation scheme. The Commission therefore believes that it used the only correct criterion. 2. Assessment of the third and fourth pleas in law 74. The Spanish Government fails to appreciate that this case concerns not whether the aid paid was above or below the ceiling, but rather the fact that the aid was no longer justified and therefore was not covered by the authorising decision. 75. Regulation No 1013/97 and the authorising decision are clear regarding the total amount granted, the maximum sum per category of aid and the Kingdom of Spain's obligation to cut capacity by 30 000 cgrt. 76. I recall that Regulation No 1013/97 and the authorising decision empower the Spanish Government to grant exceptional aid to a number of shipyards in order to facilitate restructuring by, inter alia, capacity reduction. The linear relationship asserted by the Spanish Government between the total aid deemed permissible and the extent of the capacity reduction is neither mentioned in Regulation No 1013/97 nor in the authorising decision. Article 1(1) of the regulation provides that with a view to restructuring the publicly-owned shipyards in Spain, the Commission may authorise additional operating aid. Under Article 1(4) of the regulation, it may only do so bearing in mind the objectives and the maximum amounts laid down in that text. For these purposes and within these maximum limits, the aid measures may be deemed compatible with the common market provided they are necessary to attain the said objectives. As to the special tax credits at issue here, as is evident from the authorising decision, they were justified because of the fact that the yards concerned were no longer eligible for tax credits under the general tax legislation. When, subsequently, they again became eligible, this category of aid was no longer necessary. The fact that Regulation No 1013/97 created scope for granting special aid to Spanish yards does not release the Commission from its obligation to examine whether the justification, that is the necessity for the aid, continued to exist. The fact that one category of aid out of a whole package of measures ceases to be necessary obviously has no bearing on the obligation to restructure and to cut capacity, which are conditions attached to the authorisation of the package. 77. The Spanish Government's submission that the Commission's reasoning implies that the authorisation granted is in fact provisional is also unfounded. The authorisation was granted definitively, clearly under the assumption that the special grounds justifying the various parts of the package of exceptional measures would continue to exist. It was precisely the exceptional nature of the measures that obliged the Commission to continue to monitor the need for measures strictly. 78. The Spanish Government's assertion that general credits under general measures applicable at national level are not aid in the sense intended by the Treaty is correct per se. However that is not the point at issue. As is clear from the above, the authorisation does not allow the granting of special tax credits alongside general tax credits. The aid authorised was exceptional and was specifically intended to compensate for the loss of the entitlement to general tax credits and thus to facilitate restructuring. So when the yards again became eligible for normal tax credits under the general rules, the aid ceased to be justified. The Commission is not therefore aggregating the separate amounts, but stating that the aid ceased to be justified once the yards' claim to loss compensation under the general legislation revived. 79. Nor do I consider the Spanish Government's complaint regarding the Commission's method of calculation to be tenable. In setting the maximum aid in special tax credits the Commission used information supplied by the Spanish Government. These data were based on estimated net results before tax (losses). The Commission has indicated that an estimate based on the future taxable base would have been more accurate, but also considerably more problematic and uncertain. Since the Commission had to set a maximum and had in any event to do so on the basis of estimates, the Commission deemed it neither necessary nor possible to exact greater accuracy of the Spanish authorities. The level of tax credits for which the yards were eligible was calculated on the basis of Law 13/96, using the taxable base. In calculating the excess aid in the form of tax credits paid to the shipyards for 1997, the Commission operated in accordance with the provisions of that law. This I consider to be the only correct approach in the light of the rationale of the authorising decision. Law 13/96 specifies that special tax credits are to be granted on the same basis as general tax credits. The aid paid under this law corresponds to the amount the shipyards would have been able to claim had they remained part of a profit-making holding company able to consolidate profits and losses. That sum is calculated using the taxable base, that is the accounting result, corrected in respect of permanent items and items temporarily not coming into consideration. Although the authorising decision does not specify the basis for assessment, this does not detract from the validity of the Commission's chosen approach. The authorisation pertained to precisely those special tax credits envisaged when the Spanish law was adopted. When the special tax credits ceased to be justified, the unlawfully paid aid had to be calculated using the legislative rules under which the tax credits had been granted. 80. The Spanish Government's arguments according to which the Commission's basic premiss should have been the criteria used for calculating the maximum permissible amount for this tax aid at ESP 58 billion, is also unpersuasive. As I have set out above, this method of calculation, based on anticipated net results, was required in order to give a reliable prior estimate of the tax credits likely to be lost by the yards concerned if they became part of a loss-making holding company. However in calculating the amount of unlawfully paid aid retrospectively, the logic of the legislative rules under which the aid was originally paid must be used. It is not a question of estimates based on forecasts, but rather of the calculation of a sum, to be done using certain criteria, all of which are to be found within the law itself. 81. For what it may be worth, I would further observe that, this action is not about whether the ceiling of ESP 58 billion was exceeded, but rather whether Law 13/96 should still have been applied when from 1997 it ceased to be justified as the shipyards concerned were again eligible for tax credits under general legislation. 82. I therefore conclude that the third and fourth pleas in law are unfounded. VI - Conclusion 83. In the light of the foregoing I propose that the Court should: (a) dismiss the application of the Kingdom of Spain as unfounded; (b) order the applicant to pay the costs pursuant to Article 69(2) of the Rules of Procedure. 1: - Original language: Dutch. 2: - OJ 2000 L 37, p. 22. 3: - OJ 1990 L 380, p. 27. 4: - OJ 1995 L 332, p. 1. 5: - OJ 1997 L 148, p. 1. 6: - OJ 1997 C 354, p. 2. 7: - OJ 1999 C 113, p. 13. 8: - Case 730/79 [1980] ECR 2671, paragraph 17. 9: - Council Regulation (EC) No 659/1999 of 22 March 1999, laying down detailed rules for the application of Article 93 of the EC Treaty (OJ 1999 L 83, p. 1). 10: - See Case C-294/90 British Aerospace and Rover v Commission [1992] ECR I-493. 11: - Case C-278/95 P [1997] ECR I-2507. 12: - OJ 1998 L 202, p. 1. 13: - See Case British Aerospace and Rover (cited in footnote 10) and Case T-140/95 Ryanair v Commission [1998] ECR II-3327. 14: - Case C-47/91 Italy v Commission ECR [1994] 4635, paragraph 26. 15: - See Case C-122/94 Commission v Council [1996] ECR I-881, and Siemens v Commission (cited in footnote 11).