Judgment — ECLI:EU:T:1999:127
Date: 1999-06-17
Language of the case: English
Court formation: Fourth Chamber, Extended Composition
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: General;Applications by natural or legal persons;Notification and obligation to suspend payment of the aid;Measures in respect of which a plea of illegality may be raised
Procedure: Action for annulment - unfounded
Origin: Portugal

summary examination of State aid forming part of the preliminary stage under Article 88(3) EC does not enable the Commission to take account of the interests of third parties. However, the procedure incorporates sufficient guarantees and is therefore fully justified by the need to avoid delay where it is clear that the measure notified by the Member State concerned or complained about by a third party does not constitute State aid or constitutes aid compatible with the common market. The rights of third parties are protected by the possibility of their instituting proceedings, if appropriate, against the Commission's decision not to initiate the Article 88(2) EC procedure (Cook v Commission, cited above, paragraphs 22 to 24, and Case C-225/91 Matra v Commission [1993] ECR I-3203, paragraphs 16 to 18). 62. In this case, the legitimate interests of the applicants are in any event protected in particular by the right, of which they have availed themselves in the present action challenging the decision of 11 January 1996, to claim, in relation to the tax reliefs granted to DAI, that the approval decision is inoperative by virtue of Article 241 EC (see paragraphs 43 to 50 above). 63. In those circumstances, there is no basis for the allegation of failure to observe the rights of third parties in the procedure for the adoption of the decision of 3 July 1991. The second part of the first plea, alleging lack of transparency in that procedure, cannot therefore be upheld. (c) The alleged impropriety of the internal procedure for the adoption of the decision of 3 July 1991 Arguments of the parties 64. The applicants query the conformity with the Commission's Rules of Procedure of the procedure for the adoption of the decision of 3 July 1991. In order to verify whether the authentic version of the abovementioned decision, in the Portuguese language, was in fact placed before the College of the Members of the Commission for adoption and authentication, it is necessary to compare the text of document SEC (91) 1266, mentioned in the minutes of the Commission meeting of 3 July 1991, with the letter of 15 July 1991, mentioned above, addressed to the Portuguese Government. 65. According to the Commission, the minutes of its meeting of 3 July 1991 show that the approval decision was adopted by the Members of the Commission and was duly authenticated by the President and the Secretary General, as required by its Rules of Procedure. Findings of the Court 66. The applicants have not produced any significant evidence capable of raising serious doubts as to the legality of the procedure for adoption of the approval decision. On the contrary, it is clear from the minutes of the Commission's meeting of 3 July 1991, produced by the Commission, that the approval decision was in fact adopted by the Members of the Commission and authenticated by the President and the Secretariat General. 67. In that context, having regard to the presumption of validity attaching to Community acts and in the absence of the slightest evidence produced by the applicants that the procedure for the adoption of the approval decision was irregular, the third part of the first plea must be rejected, and it is unnecessary to accede to the applicants' request that a comparison of the documents be made (see Case T-9/89 Hüls v Commission [1992] ECR II-499, paragraph 384, and Case T-156/94 Siderúrgica Aristrain Madrid v Commission [1999] ECR II-0000, paragraph 217). 68. It follows that the first plea must be rejected. The second plea: breach of the alleged obligation to examine the individual grants of aid to DAI Arguments of the parties 69. The applicants criticise the Commission for declining in this case to examine the tax reliefs for DAI in the light of Article 92 of the EC Treaty and Article 88 EC. The Court of Justice did not hold, in Italy v Commission, cited above, that the specific measures implementing a general aid scheme do not have to be notified to the Commission or that it is not necessary to examine them individually once the general scheme has been approved. The requirement of notification is lifted only where 'the factors to be taken into consideration by the Commission in assessing [the implementing measures] are the same as those which it applied on examining the general scheme (paragraph 21 of the judgment). The Member States are therefore required to notify grants of aid envisaged in pursuance of such a general aid scheme if they do not constitute a straightforward or foreseeable application of that scheme and to the extent that the grants of aid need to be appraised in the light of factors other than the general scheme itself, in particular where they are liable to exacerbate existing defects in the market, such as surplus capacity. In this case, the approval of Decree-Law 95/90 does not authorise Portugal to apply it in the sugar sector where the aid affects the delicate balance which the common agricultural policy endeavours to establish. 70. The Commission contests that interpretation of the judgment in Italy v Commission. The distinction drawn by the applicants would lead to considerable legal uncertainty. 71. The interveners endorse that view. DAI also states that the applicants' thesis disregards the underlying logic of the approval of a general aid scheme by the Commission. Such approval is intended to reconcile coherent monitoring of State aid - which must not exceed the limits set by the general scheme or infringe specific rules of Community law - with the need to relieve the Commission of some of its administrative burdens, whilst offering undertakings the requisite legal certainty. Findings of the Court 72. In Italy v Commission the Court of Justice held that once a general aid scheme has been approved by the Commission, the individual implementing measures do not need to be notified to it unless reservations to that effect were expressed in the approval decision. Indeed, direct examination of each individual aid in the light of Article 92 of the EC Treaty would enable the Commission to go back on its approval decision and would be contrary to the principles of protection of legitimate expectations and legal certainty. 73. The distinction contended for by the applicants is incompatible with the abovementioned principles. An individual aid granted in implementation of a general aid scheme cannot in principle be regarded as an unforeseeable application of that scheme. In the first place, it would be contrary to the principles of protection of legitimate expectations and legal certainty to require notification of individual measures with a view to their being re-examined by the Commission under Article 92 of the EC Treaty on the basis of factors which it had already taken into account when approving the general scheme. Secondly, if the situation changes after the general aid scheme concerned has been approved, that fact will be taken into consideration by the Commission, in compliance, of course, with the principle of legal certainty, as part of its constant monitoring of existing aid schemes under Article 88(1) EC (see for example Case C-44/93 Namur-Les Assurances du Crédit v OND [1994] ECR I-3829, paragraph 34). As regards the circumstances relied on by the applicant relating to the particular situation of certain agricultural sectors, with, for example, surplus production, it must be borne in mind that the Commission's approval of a general aid scheme does not in any circumstances remove the individual aid measures adopted under that scheme from the scope of all the specific rules governing the sector concerned. As has already been held (see paragraphs 55 and 56), compliance with those rules is not subject in this case to the requirement of prior notification of the planned individual measures. 74. In this case, if, when examining the general aid scheme established by Decree-Law 95/90, the Commission had considered that the grant of such aid in certain specific sectors necessitated a direct examination under Article 92 of the EC Treaty, it would have been able and obliged to impose the requirement, in the approval decision, that individual grants of aid in that sector be notified. However, thedecision of 3 July 1991 imposes no obligation to notify individual grants of aid in the sugar sector. It only makes the authorisation of the tax reliefs at issue subject to two precise conditions: the tax reliefs must not exceed 10% of the investments made and must be compatible with the Community provisions applicable to the agricultural sector concerned. It follows that the Commission was not entitled to examine the tax reliefs granted to DAI directly in relation to Article 92 of the EC Treaty provided that they were in conformity with the two abovementioned conditions, as it found them to be in the contested decision. 75. It follows that the second plea in law must be rejected. The third plea: incompatibility of the tax reliefs at issue with the common agricultural policy Arguments of the parties 76. According to the applicants, the implementation of the common agricultural policy takes precedence over the application of Article 92 of the EC Treaty and Articles 88 and 89 EC and over action undertaken in the context of the Structural Funds. The Court of Justice upheld that primacy of the objectives of the common agricultural policy over the Treaty rules on State aid in its judgment in Case C-311/94 Ijssel Vliet v Minister van Economische Zaken [1996] ECR I-5023, paragraphs 31 to 33. 77. In this case, any aid for the setting up of a beet sugar refinery is contrary to the objectives of the common agricultural policy in the sugar sector. No exception under Article 92(3) of the EC Treaty can therefore be applied to it. 78. The allocation of a sugar quota to mainland Portugal by the Treaty of Accession does not justify support for the setting up of a beet sugar refinery in that country using State aid and/or Community co-financing. The applicants maintain, relying on Article 241 EC, that the abovementioned Decision 94/173 is illegal in that it does not exclude the possibility of such support and cannot be used as a valid legal basis for the contested decision. No principle or rule of Community law legitimises the part of Decision 94/173 which provides that investments relating to the production or refining of beet sugar in mainland Portugal, intended to make use of the quota of 60 000 tonnes of white sugar allocated by the Act of Accession, may benefit from Community co-financing. 79. Such support has adverse effects on the conditions prevailing in the sugar markets and on the situation of third parties, namely producers of beet sugar in the other Member States or Portuguese refiners of cane sugar. The production of beet sugar in Portugal would lead to a surplus of 83 000 tonnes over consumption in that country which, contrary to the Commission's contentions, is not in deficit as regardssugar. It would thus considerably increase the EAGGF's financial burden by leading to intervention purchases of 60 000 tonnes of beet sugar and export refunds for cane sugar from African, Caribbean and Pacific countries, refined and sold by the applicant companies on the world market. Moreover, it would aggravate structural over-production in the Community, where surplus sugar production exceeded 5 300 000 tonnes in the year 1995 to 1996. Finally, the beet sugar industry set up in Portugal using the aid at issue might prove not to be viable. Portugal has also obtained an increase of its annual quota from 60 000 to 70 000 tonnes in order to ensure the viability of the beet sugar refinery under construction. 80. The Commission states in reply that a sugar quota of 60 000 tonnes was allocated to mainland Portugal in the Act of Accession to enable farmers in a region offering few alternatives in terms of agricultural production to grow sugar beet. As mainland Portugal did not at that time have any sugar production capable of serving as a reference, the quota of 60 000 tonnes of white sugar was regarded as the minimum necessary to allow profitable operation of a sugar refinery using sugar beet grown in the region. There was never any doubt as to the need for regional processing facilities to be installed owing to the substantial costs of transporting sugar beet as compared with production costs. Moreover, in the context of the common organisation of the sugar market, the quotas allocated to the Member States are intended for the sugar-producing undertakings established within their territory. Owing to the delay in setting up a refinery in Portugal, a transitional measure authorised a sugar plant in Spain to refine sugar beet harvested in Portugal, the sugar produced being 'considered as having been produced by the Portuguese undertaking in question (Article 24(1a) of Regulation No 1785/81, as amended by Council Regulation (EEC) No 1107/88 of 25 April 1988 (OJ 1988 L 110, p. 20). That measure made it possible to commence beet sugar production in Portugal in 1986 but only on a small scale. It was in order to give the necessary impetus to the construction of a profitable sugar beet refinery in that country, and thereby encourage Portuguese farmers to embark on beet sugar production, that the sugar quota allocated to mainland Portugal was raised to 70 000 tonnes by the abovementioned Regulation No 1599/96 of 30 July 1996 (see the proposal for a Council Regulation amending Regulation No 1785/81 (OJ 1996 C 28, p. 6)). 81. The Portuguese Government states that Portugal's inability to use the sugar quota allocated to it by the Act of Accession owing to the inadequacy of its agricultural structures in the beet sugar sector renders the Treaty of Accession ineffective in that regard and deprives the Portuguese economy of the benefit of the advantages inherent in the market policy to which that economy contributes by bearing a share of the Community charges, in particular through the Guarantee Section of the EAGGF. That situation, which is inequitable, is even more anomalous because Portugal is treated in its entirety by Regulation No 2052/88 as a target region for the economic and social cohesion policy. 82. DAI supports that argument. It contends that the applicants have provided no evidence to show that the beet sugar industry which is to utilise the quota allocatedto Portugal is not viable, would need fresh aid and would increase the financial burden of the EAGGF. 83. Furthermore, in pursuing the various aims laid down in Article 33 EC, the Community institutions may consider it appropriate to allow one or other of them temporary priority in order to satisfy the economic conditions in view of which their decisions are made (Joined Cases 279/84, 280/84, 285/84 and 286/84 Rau and Others v Commission [1987] ECR 1069, paragraph 21). Findings of the Court 84. In the contested decision, the Commission had the power and the duty to examine only the propriety of the tax reliefs granted in this case to DAI having regard to the conditions it imposed in its approval decision and, in particular, to the rules applicable to the sugar sector. 85. In this case, the applicants allege that the tax reliefs granted to DAI are incompatible with the aims of the common agricultural policy in the sugar sector. Essentially, the creation of a beet sugar production industry in Portugal would aggravate Community over-capacity in that sector and would give rise to considerable costs for the intervention scheme. 86. It must be borne in mind at the outset that a common market organisation pursues a set of distinct aims, reflecting the various objectives of the common agricultural policy, as defined by Article 33(1) EC. It seeks in particular to ensure optimum employment of farmers and ensure a fair standard of living for them, to stabilise markets and to assure the availability of supplies to consumers at reasonable prices. Moreover, Article 33(2) EC provides that, in working out the common agricultural policy, account is to be taken of the particular nature of agricultural activity, which results from the social structure of agriculture and from structural and natural disparities between the various agricultural regions, the need to effect the appropriate adjustments by degrees and the fact that in the Member States agriculture constitutes a sector closely linked with the economy as a whole. 87. Furthermore, as DAI emphasised, the Community institutions have a permanent duty to reconcile any conflict between those individual aims. For the purposes of that duty to reconcile, they may allow one of them temporary priority in order to satisfy the demands of the economic or other conditions in view of which their decisions are made (Rau v Commission, cited above, paragraph 21). 88. In this case, it is necessary to verify whether the tax reliefs at issue, which are intended to facilitate the development of certain economic regions in accordance with Article 92(3)(c) of the EC Treaty, are compatible with the aims pursued by the rules applicable to the sugar production and processing sector. 89. An analysis of those rules shows that the tax reliefs in favour of DAI, intended to promote the setting up of a beet sugar refinery in mainland Portugal, conform with the aims pursued and the rules laid down, in connection with the common agricultural policy, by Regulation No 1785/81. It is precisely that regulation which sets, in Article 24(2) as amended by the Treaty of Accession, a quota of 60 000 tonnes - later raised to 70 000 tonnes - for mainland Portugal, after specifying in Article 24(1) that Portugal will allocate part of that quota 'to each undertaking situated in that region which is likely to start up sugar production. Moreover, Article 44 clearly allows State aid for, among other things, the production of beet sugar to be authorised under Article 92 of the EC Treaty and Articles 88 and 89 EC. 90. Moreover, the tax reliefs at issue are compatible with the Community policy on public intervention in favour of structural actions in the field of agriculture. In that connection, Article 16(5) of Regulation No 866/90 provides expressly that Member States may, in addition to the measures specifically provided for in that regulation, grant aid for processing and marketing agricultural products under the conditions laid down in Article 92 of the EC Treaty and Articles 88 and 89 EC. In addition, the aid for setting up a sugar refinery at issue in this case also conforms with the criteria for selecting investments eligible for financial support from the Guidance Section of the EAGGF. Decision 94/173, which lays down those criteria, expressly excludes in point 2.8 of the Annex all investments in the sugar sector except those intended to allow use of the quota provided for by the Act of Accession of Portugal. Contrary to the applicants' claims (see paragraph 77 above), that exception provided for by Decision 94/173 is accounted for by the allocation, by Regulation No 1785/81, of a quota for mainland Portugal specifically in order to enable undertakings established there to 'start up sugar production. The aid at issue in this case thus conforms with the sectoral limitations relating to the co-financing of investments in the sugar processing and marketing sector, which are applicable by analogy to State aid for investments in that sector, in accordance with the Guidelines for State aid in connection with investments in the processing and marketing of agricultural products, dated 2 February 1996, mentioned above (paragraph 13). 91. In that context, the applicants' arguments concerning aggravation of the over-production of sugar in the Community and an increase in the charges borne by the Guidance Section of the EAGGF, are not such as to call in question the compatibility of aid for the setting up of a beet sugar refinery in Portugal with the common agricultural policy in the sugar sector. Since, as held in the foregoing paragraphs, that aid is designed to permit use of the quota of 70 000 tonnes of sugar expressly allocated to mainland Portugal so that the undertakings can 'start up production there, by Regulation No 1785/81 which established a common market organisation in that sector, it cannot be denied that they contribute to attainment of the aims pursued in the context of the common agricultural policy. Moreover, the 70 000 tonne production capacity of the new beet sugar refinery to be set up in Portugal could in any event lead only to a relatively small increase inthe sugar surplus in the Community, which attained some 5 300 000 tonnes in the year 1995 to 1996 according to the figures cited by the applicants. 92. Finally, the file contains no persuasive evidence casting doubt on the viability of the beet sugar refinery receiving the aid at issue. In that regard the applicants merely refer in very general terms to the absence of outlets and uncertainties in price developments and express doubts as to the success of sugar-beet growing in mainland Portugal owing to climatic conditions and Portuguese farmers' lack of experience in that field. They have produced no precise and concrete evidence in support of those assertions. 93. It follows from all those considerations that the applicants have not shown that the tax reliefs granted to DAI are incompatible with the aims of the common agricultural policy, as implemented by the relevant rules. 94. The third plea cannot therefore be upheld. 95. It follows that the claim for annulment of the contested decision, in so far as it is concerned with aid granted in the form of tax reliefs, must be rejected as unfounded. B - Aid for vocational training Arguments of the parties 96. The applicants rely on the sole plea of infringement of Article 92(3)(c) of the EC Treaty. The aid for vocational training at issue is caught by the prohibition in Article 92(1) of the EC Treaty and cannot qualify for the exception provided for in Article 92(3)(c) owing to the adverse consequences of all the State aid in favour of DAI on competition and the common agricultural policy. Those consequences, which adversely affect the interests of the Community and of third parties, should be appraised in relation to all the support granted, which amounts to 61.65% of the total investment, according to the figures supplied by the Commission. 97. The Commission is of the opinion that each type of aid must be appraised individually. In this case, the aid for vocational training is intended to finance about 68% of the cost of the vocational training given to DAI staff and fulfils the conditions laid down by Article 92(3)(c) of the EC Treaty. In the agricultural sector, the Commission systematically authorises aid of that kind fostering employment, representing up to 100% of the expenditure, owing to the particular features of that sector and the diversity of the systems of vocational training in the various Member States, the costs borne by the employer in one country being funded by the State in another. Findings of the Court 98. The three types of aid examined in the contested decision, namely the tax reliefs, aid for vocational training and investment aid under Regulation No 866/90, are covered by different sets of legal provisions and must therefore be examined individually in the light of those rules and the aims which they pursue, subject, if appropriate, to verification of their compatibility with the specific rules applicable in the sugar processing and marketing sector. The aid for vocational training must therefore be considered separately in the light of Article 92(3)(c) of the EC Treaty. 99. In that connection, it is settled case-law that, as regards the application of Article 92 of the EC Treaty, 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. In its review of legality, the Court must therefore restrict itself to determining whether the Commission has exceeded the scope of its discretion by a manifest error of assessment or by misuse of powers (Matra v Commission, cited above, paragraphs 24 and 25). 100. In this case it should be noted that the purpose of the aid for vocational training at issue was to facilitate the creation of a new beet sugar refining industry in mainland Portugal with a view to fostering the activity of farmers in a region offering few alternatives in terms of agricultural production. In that context, the applicants have put forward no argument sufficient to call into question the notion that the vocational training aid at issue will contribute to the development of certain economic activities without adversely affecting trading conditions to an extent contrary to the common interest. 101. It follows that the claim for annulment of the contested decision to the extent to which it relates to vocational training aid must be rejected as unfounded. C - Investment aid under Regulation No 866/90 102. The applicants put forward two pleas in law in support of the claim for annulment of the contested decision in so far as it relates to investment aid under Regulation No 866/90. First, they submit that grants of State aid fulfilling the conditions laid down by that regulation to qualify for Community co-financing are nevertheless subject to the application of Article 92 of the EC Treaty and Article 88 EC. Second, they claim that Regulation No 866/90 excludes co-financing of the aid at issue in this case. The first plea: infringement of Article 92 of the EC Treaty and Article 88 EC Arguments of the parties 103. The applicants maintain that, in the sugar sector, only aid permitted under Article 92 of the EC Treaty and Article 88 EC is eligible for Community co-financing under Regulation No 866/90. 104. In implementation of Article 36 EC (ex Article 42), Article 44 of Regulation No 1785/81 provides that Article 92 of the EC Treaty and Articles 88 and 89 EC are to apply to production and marketing of the products listed in Article 1(1) of that regulation, which include in particular beet sugar and cane sugar. As those provisions of the Treaty were made applicable to a specific agricultural product, it would be contrary to the objectives of Article 3 of the EC Treaty (now, after amendment, Article 3 EC) not to apply them to that sector, having regard to economic or Community policy developments, on the basis of Article 36 EC. 105. In any event, Regulation No 866/90 does not specifically repeal the abovementioned provisions of Regulation No 1785/81. In those circumstances, in so far as that regulation is of general scope, Article 16(5) thereof cannot be interpreted as excluding the application of Article 92 of the EC Treaty and Article 88 EC to State aid eligible for co-financing under Regulation No 866/90, since that would render the Treaty provisions ineffective in the entire agricultural sector. Article 16(5) merely confirms the clear applicability of the general rules laid down by Article 92 of the EC Treaty and Article 88 EC to aid measures not fulfilling the conditions for Community co-financing. 106. Similarly, the applicants dispute the distinction drawn by the Commission between aid directly linked with sugar production falling within the scope of Regulation No 1785/81 and structural measures in the field of sugar processing and marketing, which should be assessed only on the basis of Regulation No 866/90. According to the applicants, Regulation No 1785/81 provides fair guarantees both for processors (beet or cane sugar refiners) and for producers. All the measures adopted in the beet sugar processing sector are thus covered solely by the exhaustive rules laid down by that regulation. 107. According to the Commission, the aid at issue is not directly linked with the production of sugar beet. It is not therefore covered by the rules on the common organisation of the market in sugar set up by Regulation No 1785/81. It constitutes structural aid intended to facilitate investments to promote processing and marketing of beet sugar and as a result should be appraised solely in relation to Regulation No 866/90 and the selection criteria set out in Decision 94/173. 108. It is apparent from Article 16(5) of Regulation No 866/90 that Article 92 of the EC Treaty and Articles 88 and 89 EC apply only if the aid measures depart from the conditions or detailed arrangements laid down in that regulation or if the amount of the aid exceeds the ceilings which it lays down. 109. The Portuguese Government maintains that the involvement of the Member State concerned in structural action benefiting from the support of the Guidance Section of the EAGGF constitutes Community aid and not State aid within the meaning of Article 92 of the EC Treaty and Article 88 EC. It does not therefore come within the scope of those provisions of Regulation No 1785/81 which provide for the applicability of the provisions on State aid. 110. DAI contends that Article 16(5) of Regulation No 866/90 is based on Article 36 EC and excludes the application of Article 92 of the EC Treaty and Articles 88 and 89 EC to State aid for investments eligible for Community co-financing. Findings of the Court 111. The argument on which the applicants rely essentially to show that the Commission should, in the contested decision, have checked whether the investment aid in question might qualify for exception under Article 92(3) of the EC Treaty is based on Article 44 of Regulation No 1785/81, which provides, on the basis of Article 36 EC, that Article 92 of the EC Treaty and Articles 88 and 89 EC apply to production of and trade in agricultural products only to the extent determined by the Council. 112. Article 44 of Regulation No 1785/81 makes aid measures linked to the functioning of the common organisation of the market in sugar subject to the application of Article 92 of the EC Treaty and Articles 88 and 89 EC, but does not include in such measures actions of a structural nature conducted under the auspices of the Guidance Section of the EAGGF, which do not fall within the scope of Regulation No 1785/81 but within that of Regulation No 866/90. The latter regulation, like Regulation No 1785/81, is based on Article 36 EC, referred to above, and Article 43 of the EC Treaty (now, after amendment, Article 37 EC), relating to the drawing up and implementation of the common agricultural policy, lays down the provisions applicable to State aid in its field of application. 113. In particular, Regulation No 866/90 does not exclude the possibility of Member States granting, regardless of any Community contribution, certain national investment aid which comes within its field of application. It makes expressly subject to Articles 92 of the EC Treaty and Articles 88 and 89 EC the grant of such aid, which is not eligible for Community co-financing since it does not meet either the criteria which that regulation defines, or those referred to by Decision 94/173. 114. In that context, in the absence of any similar provision in Regulation No 866/90 expressly providing for the application of Articles 92 of the EC Treaty and Articles 88 and 89 EC to aid eligible for Community co-financing under the Guidance Section of the EAGGF, such aid must be assessed in the specific context of the common action undertaken in accordance with that regulation and cannot be the subject of examination under Article 92 of the EC Treaty and Article 88 EC. 115. Moreover, even if Article 44 of Regulation No 1785/81 could be interpreted as specifically providing for the application of Article 92 of the EC Treaty and Articles 88 and 89 EC to every aid measure concerning sugar production and marketing, it must, in any event, be applied having regard to the aims of the common agricultural policy, whose precedence over the application of the Treaty provisions relating to competition is enshrined in the Treaty itself, in Article 36 EC (see Ijssel Vliet, cited above, paragraphs 31 to 33). 116. The application of Article 92 of the EC Treaty and Article 88 EC to aid eligible for Community co-financing in the context of Regulation No 866/90 would be liable to frustrate the pursuit of certain aims of the common agricultural policy by means of specific structural action undertaken in conformity with the criteria laid down in Decision 94/173, which establishes priorities for co-financing of investments covered by that regulation. 117. In that regard, Regulation No 866/90 itself ensures the consistency of investment aid, co-financed by the Community and the Member State concerned pursuant to that regulation, with the common agricultural policy, in particular in the specific sector of sugar, by providing for the adoption of selection criteria (fifth recital and Article 8) and the establishment of sectoral plans (Articles 2 and 7) intended inter alia to guarantee such consistency. In this case, the selection criteria defined by Decision 94/173 pursuant to Article 8(3) of Regulation No 866/90 exclude all investments in the sugar sector with the exception, in particular, of those which provide for use of the quota allocated to mainland Portugal by Regulation No 1785/81, as amended by the Act of Accession. 118. It follows that the application of Article 92 of the EC Treaty and Article 88 EC to investment aid eligible for Community co-financing under Regulation No 866/90 would be incompatible with the precedence over the rules on competition accorded by the Treaty to the common agricultural policy. 119. On all those grounds, aid eligible for Community co-financing under Regulation No 866/90 is not subject to the application of Article 92 of the EC Treaty and Article 88 EC. 120. The first plea, alleging infringement of those articles, cannot therefore be upheld. The second plea: incompatibility of the aid at issue with Regulation No 866/90 Arguments of the parties 121. In support of their second plea, which they put forward in the alternative, the applicants maintain that co-financing aid for the Portuguese beet sugar sector is incompatible with the requirement that Community action be consistent with thecommon agricultural policy, to which importance is attached in the preamble to Regulation No 866/90 (fifth recital) and which is imposed by Articles 1(2)(b), 2 and 8(2) of that regulation. 122. In particular, the investment aid at issue cannot be based on Decision 94/173. The latter is unlawful in so far as it does not comply with the conditions for co-financing imposed by Regulation No 866/90, which does not authorise the co-financing of aid which is incompatible with the common agricultural policy. 123. The Commission denies that the aid at issue fails to comply with the conditions and procedures laid down by Regulation No 866/90. That aid is intended solely to enable the Portuguese authorities to facilitate the setting up of a sugar processing plant in order to ensure the take-up of sugar beet harvested in the region with a view to using the white sugar quota allocated to mainland Portugal. Findings of the Court 124. This plea is based essentially on the argument that the investment aid at issue is excluded by Regulation No 866/90 because it is incompatible with the common agricultural policy and cannot be based on Decision 94/173, which is itself incompatible with that policy. It need merely be pointed out in that regard, as has already been held (see paragraphs 89 and 90 above), that aid granted with a view to utilising the quota allocated to mainland Portugal is not incompatible with the aims of the common agricultural policy. The second plea cannot therefore be upheld. 125. It follows that the present action for annulment must be dismissed as unfounded in its entirety. Costs 126. Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the applicants have been unsuccessful, they must be ordered to pay their own costs, together with those of the defendant and DAI, which have applied for them. 127. Pursuant to the first paragraph of Article 87(4) of the Rules of Procedure, the Portuguese Republic must bear its own costs. On those grounds, THE COURT OF FIRST INSTANCE (Fourth Chamber, Extended Composition) hereby: 1. Dismisses the application; 2. Orders the applicants to bear their own costs and to pay those of the defendant and the intervener DAI - Sociedade de Desenvolvimento Agro-industrial SA; 3. Orders the Portuguese Republic to bear its own costs. Moura Ramos García-Valdecasas Tiili Lindh Mengozzi Delivered in open court in Luxembourg on 17 June 1999. H. Jung R.M. Moura Ramos Registrar President 1: Language of the case: English.