Judgment — ECLI:EU:T:2006:59
Date: 2006-02-22
Language of the case: French
Court formation: First Chamber, Extended Composition
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Formal investigation procedure;Admissibility and examination of applications, forms of order sought and pleas in law;Aid to shipbuilding;General
Procedure: Action for annulment - successful
Origin: France

Summary’: ‘The vessel was financed by private investors who subsequently leased the vessel to CIL. The investors were entitled to deduct their investment costs from their taxable income in accordance with a fiscal scheme approved by the Commission …’ 87 With respect to CIL, however, that decision stated at the same place: ‘The tax breaks had an estimated aid intensity equivalent to 34% net and enabled CIL to hire the vessel at a very low price. CIL is the operator (and eventual owner) of the vessel. … It is obliged to exploit the vessel for a minimum of five years mainly to and from Saint-Pierre-et-Miquelon. Furthermore, after the five years CIL is obliged to buy the vessel from the investors.’ 88 The investors were thus legitimately able to believe that they were not targeted by the decision to open the procedure, given that it stated that the tax scheme under which they had been allowed to deduct their investment from their taxable income – the Loi Pons – had been approved by the Commission. 89 Moreover, it is apparent from the content of the discussions which took place between the French authorities and the Commission during the preliminary investigation procedure that the only beneficiary of the aid mentioned at that stage of the procedure was CIL, ‘the owner-operator’ of the vessel, and not the private investors (see the letter of 12 May 1999 from the French authorities to the Commission). It is, moreover, in that context that CIL − and not the private investors − was able to participate in the administrative procedure (see recitals 10 and 11 of the contested decision). 90 The initial designation of CIL as the beneficiary of the alleged aid is, moreover, supported by the fact that the decision to open the procedure refers to the beneficiary of the aid in the singular, not in the plural as in the contested decision. In the decision to open the procedure, the Commission asked the French authorities (penultimate paragraph in the part entitled ‘Letter’) to send promptly a copy of that decision to ‘the beneficiary of the aid’. 91 Accordingly, as they were not identified as beneficiaries of the aid in the decision to open the procedure, the private investors were not, at that stage, given notice to submit their comments pursuant to Article 88(2) EC or called upon to submit comments within a prescribed period within the meaning of Article 6(1) of Regulation No 659/1999. 92 In those circumstances, it is also appropriate to examine the Commission’s reply to the request from EURL Le Levant 114 by letter of 19 July 2001, by which it extended the one-month period granted to the interested parties to submit their comments on the decision to open the procedure. The last sentence of Article 6(1) of Regulation No 659/1999 provides that ‘[i]n duly justified cases, the Commission may extend the prescribed period’ normally consisting of one month allowed to the parties to submit their comments on the decision to open the procedure. 93 However, by letter of 24 July 2001, the Commission replied to the letter from EURL Le Levant 114 by noting that the one-month period from the date of publication of the decision to open the procedure allowed for the lodging of comments by the interested parties had ‘long since lapsed’, without adopting a position on the request for an extension of that period made by EURL Le Levant 114. That refusal is all the more deplorable because the decision to open the procedure did not identify the private investors as beneficiaries of the aid to be recovered but, on the contrary, gave the impression that the beneficiary was CIL, which had been named as the operator and ultimate owner of the vessel. 94 Accordingly, by refusing to allow an extension of the period as requested and thereby failing to give EURL Le Levant 114 an opportunity to submit its comments on the decision to open the procedure, without even giving reasons why the request of 19 July 2001 was not ‘duly justified’, the Commission infringed the third sentence of Article 6(1) of Regulation No 659/1999. 95 If there had not been such a procedural failure, that is, if the applicants or EURL Le Levant 114 had actually had an opportunity during the formal investigation procedure to submit their comments on having been named as beneficiaries of the aid to be recovered, the possibility cannot be excluded that the procedure might have led to a different result, in particular with respect to the assessment of the incompatibility of the aid with the common market in accordance with the criteria laid down in Article 87(1) EC. 96 Furthermore, the Commission cannot entrench itself behind a formalist interpretation of its State aid obligations, given that the main issue here is the fact that an individual against whom the Commission is preparing to adopt an adverse decision designating that party as a beneficiary of incompatible aid from whom that aid is to be recovered must be given the opportunity to submit comments prior to the adoption of such a decision. 97 In the present case, it is clear that the contested decision was adopted without such an opportunity having been given to the private investors. By refusing to hear EURL Le Levant 114 and by not identifying the investors as beneficiaries of the potentially incompatible aid to be recovered in the decision to open the procedure, the Commission violated a general principle of Community law. That principle requires that any person against whom an adverse decision may be taken must be given the opportunity to make his views known effectively regarding the facts held against him by the Commission as a basis for the disputed decision. Thus, in a procedure based on Article 86(3) EC (ex Article 90(3) of the EC Treaty), where, as in State aid cases, the Member State is the addressee of the Commission’s decision, the Court has held that the undertakings which are the beneficiaries of the State aid in question have the right to be heard, stating that those undertakings were the direct beneficiaries of the State measure at issue, that they were expressly named in that measure and explicitly targeted by the contested decision and that the economic consequences of that decision directly affect them (Joined Cases C‑48/90 and C‑66/90 Netherlands and Others v Commission [1992] ECR I‑565, paragraphs 50 and 51). 98 It follows from the foregoing that the Commission infringed Article 88(2) EC and Article 6(1) of Regulation No 659/1999. 99 Accordingly, the Court finds that the second plea is well founded, without it being necessary to consider the plea alleging violation of the principles on which Article 6 of the ECHR is based. 2. The third plea: infringement of Article 87(1) EC, and the ninth plea: infringement of the obligation to state reasons – Arguments of the parties 100 The applicants state, first, that the contested decision infringes Article 87(1) EC in classifying the private investors as beneficiaries of the aid when the measure in question does not confer any competitive advantage on them and does not affect trade between Member States. Only an economic operator on whom an advantage is conferred and is thereby in a favourable position compared to his competitors could be classified as a beneficiary undertaking within the meaning of that provision. The search for the actual beneficiary of aid, who may or may not be the formal addressee of the measure, thus entails identifying the undertaking which actually enjoys an economic benefit in its commercial dealings which is likely to distort competition (Case C‑303/88 Italy v Commission [1991] ECR I‑1433, paragraph 57). 101 In the present case, the applicants maintain that there is a fundamental difference between the private investors, who are the direct addressees of the tax advantages granted, and the undertaking concerned, namely the operator CIL, which is the indirect beneficiary of the economic advantage in the market in question and, consequently, the beneficiary of the State aid (for an example of the distinction between the beneficiary of a tax benefit and the beneficiary of an economic advantage, see Case C‑156/98 Germany v Commission [2000] ECR I‑6857, paragraphs 26 and 27). The tax benefit is only a means in the aid mechanism and not a benefit which actually distorts competition at the level of the private investors. The contested decision thus confuses the tax benefit received directly by the private investors, as indicated in recital 35, with the competitive advantage which is likely to flow indirectly from that benefit, which benefits only CIL. The fact that the investors receive a tax benefit does not necessarily mean that they receive a competitive advantage on a given market which affects trade between Member States. 102 Likewise, the applicants maintain that the contested decision breaches the obligation to state reasons by failing to specify exactly what the advantage received by the private investors was (Joined Cases C‑329/93, C‑62/95 and C‑63/95 Germany and Others v Commission [1996] ECR I‑5151, paragraph 56). On that point, they complain that the contested decision, without seeking to determine what economic advantage they could receive when they had no operational responsibility for the vessel, nevertheless finds that they were beneficiaries of the aid simply because they received income tax concessions in stating in recital 39 that, although it is doubtful whether any of the private individual investors can be held responsible for the misuse of the aid, they have nevertheless benefited and continue to benefit from the tax concessions as owners of a vessel which was bought on attractive terms. 103 The contested decision also contains contradictory reasoning in attempting to assign the effects of an economic advantage to the private investors, whereas it was in reality granted either to the shipyard as shipbuilding aid or to CIL for the management and operation of the vessel. Thus, as regards the shipyard, recital 41 of the contested decision states that no recovery should take place from it since it cannot be held responsible for the operation of the vessel after delivery. By contrast, a few paragraphs earlier, recital 37 states that the shipyard can be said to have benefited indirectly in that the aid enabled it to obtain an order that it might not otherwise have won. Likewise, with respect to CIL, the Commission should have found that it was responsible for the alleged non-compliance with the substantive OECD rules because it is in charge of the use of the vessel. Considered from this angle, the contested decision does not explain how recovery from the private investors will deprive the operator and manager of the joint ownership of the ultimate benefit of the economic advantage once the vessel has been sold to it at a favourable price. 104 Second, the applicants maintain that the contested decision infringes Article 87(1) EC and the obligation to state reasons by failing to state how the aid in question is likely to affect competition and trade within the Community (Intermills v Commission, paragraph 38; Joined Cases 296/82 and 318/82 Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985] ECR 809, paragraphs 22 to 24; and Germany and Others v Commission, paragraphs 52 and 53). The applicants state in particular that the contested decision does not identify the market on which competition was allegedly distorted and on which the private investors allegedly enjoyed an advantage. Thus, the contested decision does not clarify whether the relevant market is the cruise services market or the market for products relating to cruise vessels, or what the geographical dimensions of such a market might be: global, regional or local to Saint-Pierre-et-Miquelon. Likewise, the contested decision does not identify the distortion of competition at issue, which is all the more difficult to do because the Loi Pons is applicable to all taxpayers and a tax measure which benefits all taxpayers equally does not distort competition (see Commission Notice (EC) 96/C 266/14 pursuant to Article [88](2) of the EC Treaty to the other Member States and other interested parties concerning aids granted by Spain for the purchase of commercial vehicles – the Plan Renove Industrial (OJ 1996 C 266, p. 10)). The Loi Pons is selective only as regards the ultimate beneficiaries in that it confers full advantages only on certain undertakings established in the French overseas territories. Lastly, the private investors’ tax situation has no effect on trade between Member States. 105 Third, the applicants observe that Commission Decision 1999/719/EC of 30 March 1999 on State aid which France is planning to grant as development aid in the sale of two cruise vessels to be built by Chantiers de l’Atlantique and operated by Renaissance Financial in French Polynesia (OJ 1999 L 292, p. 23; ‘the Renaissance decision’), which found that aid which the French Republic intended to grant in the form of tax concessions granted to private investors under the Loi Pons was compatible with the common market, adopts this distinction between investor and operator, because it states that Renaissance Financial, and not the individual investors (natural persons), had to be regarded as the effective beneficiary of the aid. The Renaissance decision also states that the effective beneficiary of the aid would be the shipyard if the conditions laid down in the decision were not complied with, in particular if the aid proved to be contrary to Article 4(7) of the Seventh Directive. Regarding the application of the OECD criteria, in particular the condition of residency of the actual owner and the condition that the undertaking which is the beneficiary of the aid must not be a non-operational subsidiary of a foreign company, neither the Renaissance decision, nor Commission Decision 92/569/EEC of 31 July 1992 concerning proposed aid by Germany to the Chinese shipping company Cosco for the construction of container vessels (OJ 1992 L 367, p. 29; ‘the Cosco decision’), nor the decision to open the procedure in the present case identifies the investors concerned as actual owners of the vessel or as beneficiaries of the aid. 106 The Commission submits, first, that the Le Levant operation was set up in order to enable the private investors to take advantage of a tax benefit. The fact that that package was legal under French law does not in itself make it lawful from the point of view of the rules governing State aid. After noting that cases of application of the Loi Pons in shipbuilding were to be notified to it, the Commission argues that, because of the fiscal transparency of the EURLs, each private investor received an income tax benefit from the deduction allowed under the Loi Pons in favour of certain undertakings investing overseas. Consequently, the effect of the State aid resulting from the benefit under the Loi Pons in the form of tax concessions was to provide operating aid in favour of the supply of cruises by the owners and operators of the vessel. 107 The Commission submits, second, that the contested decision states clearly, from the title onwards, that the aid in question concerns the operation of a cruise vessel intended for operation in Saint-Pierre-et-Miquelon. The Commission’s analysis with respect to the assessment of the development component and the economic spin-offs from the Le Levant operation also shows that it was indeed to the operation of a cruise vessel and the supply of cruises that the contested decision refers. That is also readily apparent from the very nature of the Loi Pons and the features of the Le Levant operation. The Commission adds that the contested decision states clearly that the investors, the then owners of the vessel, obtained tax benefits intended to offset specific difficulties associated with a productive investment intended to be utilised overseas for a period of five years, at the end of which they were to sell the vessel to CIL at a price which would pass the aid on to it, so that CIL would become the ultimate beneficiary of the aid once the vessel had been sold to it at a favourable price (recitals 36, 39 and 40 of the contested decision). Lastly, the Commission states that recital 16 of the contested decision specifies the framework for the assessment of the aid in question, namely Article 4(7) of the Seventh Directive, and that recital 33 contains the conclusion of that assessment, namely that that aid did not meet the criteria laid down in that provision. There is nothing in the analysis from which it might be inferred that the beneficiary of the aid was to be the shipyard. 108 The Commission submits, third, that the contested decision does not contradict its earlier decision-making practice. Regarding the Renaissance decision, it observes that it was indeed a case of application of the Loi Pons and that the French authorities had indicated to the Commission that the financing plan in question provided for the use of structures involving individuals and that, when the investment was to be leased to the operating undertaking, the administrative authorities would check that the tax benefit had been transferred to that undertaking through a markdown of the fees to be borne by it. However, that decision had been adopted on the basis of the information provided by the Member State, according to which the investors in question were metropolitan companies and the package used allowed for effective retrocession of the tax aid to the owner-operator, which is a material configuration different from the one in this case. Regarding the Cosco decision, the Commission states that the situation was fundamentally different from the present one, since the Chinese owner-operator Cosco had ordered container vessels from German shipyards and the notified aid was intended to cover part of the contract price of the vessels in question. – Findings of the Court 109 Article 87(1) EC provides that ‘[s]ave as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market’. 110 Classification as aid, in the sense of State aid incompatible with the common market, requires that all the conditions set out in that provision are fulfilled (Case C‑142/87 Belgium v Commission(‘Tubemeuse’) [1990] ECR I‑959, paragraph 25; Case C‑482/99 France v Commission [2002] ECR I‑4397, paragraph 68; and Case C‑280/00 Altmark Trans and Regierungspräsidium Magdeburg [2003] ECR I‑7747, paragraph 74). It follows from Article 87(1) EC that those conditions are as follows. First, there must be an intervention by the State or through State resources. Second, the intervention must be likely to affect trade between Member States. Third, it must confer an advantage on the recipient by favouring certain undertakings or the production of certain goods. Fourth, it must distort or threaten to distort competition. 111 The Court also notes that it is settled case-law that the statement of reasons in an adverse individual decision must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Community Court to exercise its power of review (Case C‑367/95 P Commission v Sytraval and Brink’s France [1998] ECR I‑1719, paragraph 63). 112 In the assessment of the incompatibility of the aid, the contested decision merely indicates that the aid granted for the vessel Le Levant must be assessed in the light of Article 4(7) of the Seventh Directive, ‘given that it concerns aid for shipbuilding granted as development assistance in 1996 under an aid scheme (the Loi Pons) approved in 1992’ (recital 16). According to the decision, although the aid meets the OECD development aid criteria, which were communicated in the letter of 3 January 1989 from the Commission to the Member States (recitals 18, 19 and 21), it does not contain a genuine development component (recitals 20 and 22 to 33). Consequently, the contested decision finds the aid to be incompatible with the common market. 113 The contested decision does not, however, examine how the conditions laid down in Article 87(1) EC for a finding of incompatibility with the common market are met in the present case. 114 The Court notes that the conditions provided for in Article 87(1) EC must be met for State aid to be found to be incompatible with the common market. If the aid in question is compatible with the common market because the conditions laid down in Article 87(1) EC are not met, the Seventh Directive – which was adopted on the basis of Article 87(3)(e) EC – does not apply, because that directive necessarily supposes that the aid in question is incompatible with the common market under Article 87(1) EC. 115 First, regarding the condition in Article 87(1) EC relating to trade between Member States being affected, it is apparent from the contested decision that the aid in question concerns the operation of a vessel intended for operation in Saint-Pierre-et-Miquelon (title and recital 5). 116 It must be borne in mind that the islands of Saint-Pierre-et-Miquelon constitute a French administrative area situated in the north Atlantic off the coast of Newfoundland. It is one of the ‘overseas countries and territories’ (OCTs) which are not part of the territory of the Community. 117 In not offering any explanation on this point, the contested decision does not explain how the aid granted in the context of the Le Levant operation is likely to affect trade between Member States as contemplated in Article 87(1) EC. 118 Second, regarding the condition relating to the identification of the advantage conferred on the beneficiary of the aid and the fact that it favours certain undertakings or the production of certain goods, it is apparent from the contested decision that, although the direct beneficiaries of the aid were the private investors, the effects of the aid on competition related to CIL’s ability to operate the vessel on favourable terms out of Saint-Pierre-et-Miquelon (Article 1 and recital 5). 119 However, given that the shipyard did not benefit directly from the aid (recital 37), that the private investors are identified by the contested decision only as owners of a vessel which was then leased to CIL (recital 5) and that CIL, which operates the vessel on favourable terms, is not the beneficiary of the aid at this stage and therefore cannot be considered liable to repay the aid (recital 40), the question arises as to how, in those circumstances, the financing of the construction of a vessel by those investors with the help of tax concessions conferred on them a benefit capable of favouring certain undertakings or the production of certain goods. 120 In failing to examine how the private investors’ obtaining a tax benefit constitutes a competitive advantage as contemplated in Article 87(1) EC when the contested decision attributes that competitive advantage to CIL, the contested decision does not explain how the private investors were placed in an advantageous position by the aid in question. 121 Likewise, the contested decision does not provide any explanation as to how the private investors’ leasing of the vessel to CIL was capable of transferring a potential competitive advantage from the private investors to the operator of the vessel. 122 The Court notes, moreover, on this point that the contested decision departs from the approach adopted by the Commission in the Renaissance decision. In that case, the Commission found aid granted by France in the form of tax benefits granted pursuant to the Loi Pons for the construction of two cruise vessels intended to be operated by Renaissance Financial in French Polynesia to be compatible with the common market. The financial package in question was similar to that used in the present case, in that it also provided for the acquisition of the ownership of the vessels by private investors, who subsequently leased the vessels to Renaissance Financial so that that company could operate them for five years in French Polynesia. In the Renaissance decision, the Commission found that the benefit of the aid had been transferred by the private investors to the operator of the vessel, who was the effective beneficiary because that operator had leased the vessels and undertaken to purchase those vessels at the end of a five-year period. 123 Third, regarding the condition relating to distortion or threat of distortion of competition, it is clear – as acknowledged by the Commission at the hearing – that there is nothing in the contested decision explaining how and on what market competition is affected or likely to be affected by the aid. 124 This absence of analysis is all the more striking because, in response to the comments submitted by the French authorities to the Commission on 14 June 2000, in which the French authorities stated that Saint-Pierre-et-Miquelon had benefited from the commercial spin-off effects of the vessel Le Levant because a number of shipping companies had indicated their intention to put in there, the contested decision states in recital 31 that it was not necessary to take account of those comments in order to assess the compatibility of the aid with the common market, since that statement was not quantified and probably could not be so and that such a statement did not relate directly to the development component of the Le Levant operation. In so doing, the Commission refused to consider the information relating to a possible cruise market on the islands, or elsewhere, which might be affected by the distortion of competition. 125 Consequently, the contested decision does not explain how the aid in question here meets three of the four conditions laid down in Article 87(1) EC for a finding that that aid is incompatible with the common market. 126 The Court also notes that the aid was granted under a tax scheme – the Loi Pons – which allowed for tax concessions for investments made in the overseas departments and territories and that that scheme had been approved by the Commission in 1992 (recitals 5 and 16). 127 The press release published by the Commission on 23 December 1992 concerning the Loi Pons stated that it based its assessment ‘on the socioeconomic situation of the French overseas departments which justifies maintaining them as areas which can utilise the derogation provided for in Article 92(3)(a) of the EC Treaty [now Article 87(3)(a) EC]’. That derogation covers cases of aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment. 128 Thus, the contested decision also fails to explain why the aid in question is not capable of benefiting from the Commission’s earlier decision not to raise objections to the tax measures provided for by the Loi Pons, in particular with respect to productive investments in the tourism sector in Saint-Pierre-et-Miquelon. 129 The Court also notes that the Commission’s earlier practice shows that, in other decisions relating to shipbuilding aid, it considered whether the conditions in Article 87(1) EC were met (Cosco decision; Commission Decision 1999/657/EC of 3 March 1999 on the aid which Germany has granted by way of development assistance to Indonesia in connection with the construction of two dredgers by Volkswerft Stralsund and the sale of the dredgers to Pengerukan (Rukindo) (OJ 1999 L 259, p. 19); and Commission Decision 1999/675/EC of 8 July 1999 on the State aid implemented by Germany in favour of Kvaerner Warnow Werft GmbH (OJ 1999 L 274, p. 23)). 130 In the Cosco decision in particular, the Commission examined the aid not only in the light of Article 4(7) of the Seventh Directive, but also on the basis of Article 87(1) EC. In that case, the aid in question was development aid which the German Government intended to grant to the People’s Republic of China in the form of loans to finance container vessels. Those vessels were to be operated by Cosco, a State-owned corporation established in Peking. The vessels were to be built in Germany by German shipyards. In the Cosco decision, the Commission found that the aid in question distorted or threatened to distort competition in the common market and affected trade between Member States both in the shipbuilding and in the shipping sectors to an extent contrary to the common interest within the meaning of Article 87(1) EC. 131 It follows from all of the foregoing that the statement of reasons in the contested decision is flawed, such that the Court is not able to exercise its power of judicial review. 132 Consequently, the Court finds that the ninth plea is also well founded and that, accordingly, the contested decision must be annulled because the Commission failed to comply with its obligation to state reasons as required by Article 253 EC, without it being necessary to consider the other complaints and pleas put forward by the applicants. The issue of whether the applicants and the Commission may rely on certain documents annexed to the application – Arguments of the parties 133 The Commission submits that the applicants may not rely before the Court on arguments of fact which were not part of the administrative procedure (Case T‑110/97 Kneissl Dachstein v Commission [1999] ECR II‑2881, paragraph 102), whilst observing that the question of the applicants’ participation in that procedure falls to be discussed as part of the substance of the case. Those arguments are superfluous when they merely reiterate facts put forward in documents which were part of the administrative procedure and are inadmissible when they raise facts which were not part of the administrative procedure. On the latter point, the applicants may not rely on the following documents in the judicial proceedings: the request for approval of the Le Levant operation submitted by the Bank and CIL on 19 August 1996, the approval of the operation by the French Budget Ministry on 26 November 1996, the prospectus approved by the French Commission des opérations de bourse on 3 December 1996, the record of the agreement of 9 December 1996 between the Bank and CIL, the written authority for the management and operation of the vessel by CIL, the cross-promises of purchase and sale between the Bank and CIL and the cross-promises of purchase and sale between the EURLs and the Bank. 134 The Commission submits that it, on the other hand, is entitled to rely on those documents in order to demonstrate that the allegations in the application are unfounded, and that the Court is empowered to take account of them. 135 The applicants argue that the Commission’s reasoning presupposes that the administrative procedure takes place in a transparent and equitable manner, which was not the case here. Moreover, the documents referred to by the Commission must necessarily be considered in this action because they relate to the grounds for annulment on which the applicants rely. Furthermore, those documents and the assertions derived from them do not concern the administrative procedure but rather the Le Levant operation and serve to identify the methodological errors committed by the Commission. – Findings of the Court 136 According to settled case-law, in the context of an action for annulment under Article 230 EC, the lawfulness of a Community measure falls to be assessed on the basis of the elements of fact existing at the time when the measure was adopted. In particular, the assessments made by the Commission must be examined solely on the basis of the information available to the Commission at the time when those assessments were made (Case C-394/01 France v Commission, paragraph 34; Joined Cases T‑371/94 and T‑394/94 British Airways and Others v Commission [1998] ECR II‑2405, paragraph 81; Kneissl Dachstein v Commission, paragraph 47; and Joined Cases T‑111/01 and T‑133/01 Saxonia Edelmetalleand ZEMAG v Commission [2005] ECR II-1579, paragraph 67). 137 In the present case, the question of whether the disputed documents may be used is now a moot point, as the Court has decided to annul the contested decision on grounds of procedural irregularities and failure to state reasons. 138 In any event, under the second plea, the Court has found that the Commission disregarded its obligations and did not take the necessary steps to enable the applicants to submit their comments in the course of the formal investigation procedure provided for in Article 88(2) EC. 139 The applicants were therefore entitled to rely on the disputed documents in support of their action for annulment of the contested decision and the Commission could contest those arguments in the judicial proceedings. In any event, however, the Court may assess those documents only within the limits of the powers at its disposal. If those documents contain facts which are liable to contradict the facts which the Commission had before it during the administrative procedure and on the basis of which the contested decision was adopted, the Court may not substitute its assessment for that of the Commission of the economic or legal implications which those facts might have on its analysis. As rightly pointed out by the Commission in its pleadings, if the Court were to do so, it would be conducting its own analysis and drawing its own conclusions from the new facts alleged rather than appraising the lawfulness of the contested decision. This is not the function of the Court of First Instance. If the Community Courts may not substitute their own assessment of the facts, especially in the economic field, for that of the originator of the decision (Case C‑225/91 Matra v Commission [1993] ECR I‑3203, paragraph 23, and Joined Cases T‑298/97, T‑312/97, T‑313/97, T‑315/97, T‑600/97 to T‑607/97, T‑1/98, T‑3/98 to T‑6/98 and T‑23/98 Alzetta and Others v Commission [2000] ECR II‑2319, paragraph 130), still less may they conduct a fresh assessment on the basis of facts which were not part of the administrative procedure before the Commission. Costs 140 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 Commission has been unsuccessful, it must be ordered to bear its own costs and to pay the costs incurred by the applicants, including those relating to the interim proceedings. On those grounds, THE COURT OF FIRST INSTANCE (First Chamber, Extended Composition) hereby: 1. Annuls Commission Decision 2001/882/EC of 25 July 2001 on the State aid implemented by France in the form of development assistance for the cruise vessel Le Levant, built by Alstom Leroux Naval for operation in Saint-Pierre-et-Miquelon; 2. Orders the Commission to bear its own costs and to pay the costs incurred by the applicants, including those relating to the interim proceedings. Vesterdorf Cooke García-Valdecasas Labucka Trstenjak Delivered in open court in Luxembourg on 22 February 2006. E. Coulon B. Vesterdorf Registrar President Table of contents Legal context The ‘Loi Pons’ and the Commission’s decision not to raise objections under Articles 87 EC and 88 EC Council Directive 90/684/EEC on aid to shipbuilding Provisions relating to the administrative procedure Facts and procedures Description of the Le Levant operation Administrative procedure The contested decision Legal proceedings Forms of order sought Law The admissibility of the action with respect to certain applicants 1. The authorities granted on behalf of certain EURLs – Arguments of the parties – Findings of the Court 2. The authorities granted by certain natural persons on their own behalf – Arguments of the parties – Findings of the Court Substance 1. The second plea – Arguments of the parties – Findings of the Court 2. The third plea: infringement of Article 87(1) EC, and the ninth plea: infringement of the obligation to state reasons – Arguments of the parties – Findings of the Court The issue of whether the applicants and the Commission may rely on certain documents annexed to the application – Arguments of the parties – Findings of the Court Costs * Language of the case: French.