Judgment — ECLI:EU:T:2004:336
Date: 2004-11-18
Language of the case: Italian
Court formation: Fourth Chamber, Extended Composition
Based on: Treaty establishing the European Coal and Steel Community (1951);Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Formal investigation procedure;Investments and financial aid;Existing aid and new aid;General;Commission discretion;Aid for environmental purposes
Procedure: Action for annulment - unfounded;Action for damages - unfounded
Origin: Italy

summary of the authorised scheme in that letter cannot be interpreted as an amendment of the scheme. Incidentally, the Italian Republic and the Commission stated in their answers to the questions put by the Court, referred to at paragraph 36 above, that the procedure initiated in 1998 was aimed merely at the refinancing of the existing scheme and did not affect the content or the scope of that scheme. 120 Ferriere’s request, dated 26 March 1997, to the Autonomous Region of Friuli-Venezia Giulia for aid did not mention any standard with which the plant sought to comply. Furthermore, the letter from the Region dated 15 February 1999 attached to the notification submitted by the Italian authorities on 18 February 1999, referred to at paragraphs 53 and 54 above, expressly states that there are no mandatory standards or other legal obligations to which the undertaking would be subjected and further states that the investment, made in order to improve the results from the environmental aspect, goes further than the Community standards. As stated at paragraphs 53 and 54 above, moreover, the Italian authorities did not maintain, at the time of the second notification, that the aid granted to Ferriere constituted a measure implementing the approved scheme. 121 Admittedly, during the administrative procedure, Ferriere, in its letter of 13 November 2000, referred to at paragraph 25 above, made reference, without indicating the legal basis, to ‘limit values’ prescribed by the legislation in force, explaining that those values also complied with the guidelines in Council Directive 96/61/EC of 24 September 1996 concerning integrated pollution prevention and control (OJ 1996 L 257, p. 26), which was transposed into domestic law by Legislative Decree No 372 of 4 August 1999, i.e. at a date later than its application for aid and the notification of February 1999. However, those documents, which do not themselves contain any value in figures, merely make recommendations for the issue of authorisation in connection with industrial plant which bears no relation to the aid case in issue here. 122 In its application, Ferriere also referred to Council Directive 86/188/EEC of 12 May 1986 on the protection of workers from the risks related to exposure to noise at work (OJ 1986 L 137, p. 28), implemented in Italy by Legislative Decree No 277 of 15 August 1991, and referred in a footnote to various measures of Community or national law laying down limit values with which its investment complies. The applicant refers, in Community law, to Council Directive 91/689/EEC of 12 December 1991 on hazardous waste (OJ 1991 L 377, p. 20), amended by Council Directive 94/31/EC of 27 June 1994 (OJ 1994 L 168, p. 28) and implemented in Italy by Legislative Decree No 22 of 5 February 1997. The applicant also mentions a number of measures of domestic law, namely Decree No 203 of the President of the Republic of 24 May 1988 on smoke and dust emissions in the atmosphere, Law No 447 of 26 October 1995 on emissions of noise nuisance outside industrial plant and one of its implementing regulations, Implementing Decree No 675900 of the President of the Council of Ministers of 14 November 1997. 123 However, irrespective of the fact that on the date of the application for aid, 26 March 1997, those requirements were for the most part not new, Ferriere has not identified, either during the administrative procedure or during these proceedings, the standards which, in its submission, were provided for by those provisions and to which its investment was intended to adapt the industrial plant. As that information was not produced and thus could not be taken into consideration in drafting the contested decision, it cannot be relied on to challenge the legality of that decision (Case 234/84 Belgium v Commission [1986] ECR 263, paragraphs 11 and 16). As regards, moreover, the provisions of Community law on which the applicant relies, first, it is apparent that Directive 86/188 was concerned with the provision of information to and the protection and medical supervision of workers exposed to certain noise levels at their place of work, but does not deal with standards to be complied with by undertakings. Second, there is no indication in the file that Ferriere produces hazardous waste such as that referred to in Directive 91/689 and is therefore affected by the provisions of that directive. 124 Thus, it must be held that Ferriere was not in a position to indicate, either during the administrative procedure or during the present proceedings, the precise new standards, applicable in the sector in which it is active, with which its investment was intended to comply. The arguments based on provisions of Community law or national law, which are not new or which have no connection with the grant of the aid in issue, are inadmissible in part, since they are raised for the first time before the Court, and unfounded in part, since they have no connection with the investment in question. The inevitable conclusion is that Ferriere has failed to establish the relationship between its investment and any new standards concerning its sector. 125 Accordingly, there is no need to determine whether the standards referred to by the approved aid scheme are to be understood as mandatory or indicative standards or to ascertain whether any standard introduced after the commissioning in the 1970s of the plant to be replaced should be characterised as aid, as Ferriere maintains, as the applicant has failed to identify any standards whatsoever to which it wished to adapt its plant. Likewise, the argument that the 1994 and 2001 Guidelines would allow aid to be granted, by way of incentive, in the absence of mandatory standards or in circumstances where the investment goes beyond the standards to be complied with is of no relevance here, since the provision establishing the approved scheme requires that, in order to be eligible for aid, the investment must be aimed at the adaptation of the plant to new standards which apply to the sector. 126 It follows from the foregoing that the Commission was correct to consider that the impugned aid could not be regarded as a measure implementing the approved scheme but was a new measure. 127 It follows, moreover, that Ferriere’s argument, referred to at paragraph 102 above, that the Commission infringed the principle of sound administration by initiating a formal procedure in respect of a measure implementing an approved scheme cannot be upheld either. 128 The first substantive plea must therefore be rejected. Second substantive plea: the contested decision should have been adopted in the light of the 1994 Guidelines and not the 2001 Guidelines – Arguments of the parties 129 Ferriere claims that its investment should have been examined in the light of the 1994 Guidelines. It submits that the contested decision has an incorrect legal basis. The aid should have been evaluated on the basis of the criteria set out in the 1994 Guidelines and not by reference to those in the 2001 Guidelines. The Commission also failed to observe the principle of protection of legitimate expectations on that point. 130 The applicant submits that, as interpreted by the Commission, point 82 of the 2001 Guidelines (cited at paragraph 12 above) is illegal. The new guidelines could be applied to aid which had already been notified only in so far as a formal procedure had not yet been initiated in respect of that aid. 131 The Italian Republic claims that the aid should have been evaluated in the light of the 1994 Guidelines, which were in force when it was granted, on 8 October 1998, and not according to the law in force at the time of adoption of the contested decision. 132 The Commission contends that the planned aid was incompatible with the common market in the light of the 2001 Guidelines and that it could not have been authorised under the 1994 Guidelines either. 133 It further claims that the objection of illegality in respect of point 82 of the 2001 Guidelines was not raised in the application that that it is therefore inadmissible under Article 48(2) of the Rules of Procedure of the Court of First Instance. In any event, point 82 merely provides for the immediate application of the new system in accordance with the general principles of the application of the law ratione temporis, which does not breach the principle of protection of legitimate expectations. – Findings of the Court 134 The compatibility with the common market of planned aid aimed at environmental protection is assessed in accordance with the combined provisions of Articles 6 EC and 87 EC and by reference to the Community guidelines which the Commission has previously adopted for the purposes of such an examination. The Commission is bound by the guidelines and notices that it issues in the area of supervision of State aid where they do not depart from the rules in the Treaty and are accepted by the Member States (Case C-351/98 Spain v Commission [2002] ECR I-8031, paragraph 53). The parties concerned are therefore entitled to rely on those guidelines and the Court will ascertain whether the Commission complied with the rules it has itself laid down when it adopted the contested decision (Case T-35/99 Keller and Keller Meccanica v Commission [2002] ECR II-261, paragraphs 74 and 77). 135 In the present case, it must first of all be determined what Community guidelines on State aid in relation to environmental protection the Commission was required to apply when adopting its decision. 136 The objection of illegality expressly raised in the reply is admissible, contrary to the Commission’s contention, since it constitutes the expansion, in paragraphs 12 to 18 of the reply, of a plea raised by implication in paragraph 54 of the application (see, to that effect, Case T-118/96 Thai Bicycle v Commission [1998] ECR II-2991, paragraph 142). 137 It follows from points 81 and 82 of the 2001 Guidelines (see paragraph 12 above) that those guidelines entered into force on the date on which they were published, on 3 February 2001, and that the Commission was then required to apply them to all notified aid projects, even where they were notified prior to the publication of the Guidelines. Contrary to the applicant’s interpretation, the immediate application of the new guidelines is not subject to any reservation, and therefore does not preclude a case, such as this, in which a formal procedure has been initiated. 138 First, what is stated at points 81 and 82, which are inspired by Article 254(2) EC on the entry into force of regulations and directives of the Council and of the Commission, proceeds from the principle that, subject to derogations, acts of the institutions are immediately applicable (Case 270/84 Licata v ESC [1986] ECR 2305, paragraph 31, and Case C-122/96 Saldanha and MTS [1997] ECR I-5325, paragraphs 12 to 14). 139 Second, the principle of protection of legitimate expectations cannot be usefully invoked here, since, like the principle of legal certainty, it concerns situations existing before the entry into force of new provisions (Case C-34/92 GruSa Fleisch [1993] ECR I-4147, paragraph 22). Ferriere is not in such a situation, but in the temporary situation in which a Member State has notified a new aid project to the Commission and requested that it examine the compatibility of the aid with the Community rules, the grant of the aid being dependent on the outcome of that examination. Furthermore, and in any event, since the two successive sets of guidelines were essentially identical, as previously stated (see paragraph 77 above), the applicant’s legitimate expectation cannot have been affected. 140 Consequently, the contested decision was adopted legally in application of the 2001 Guidelines, which entered into force on 3 February 2001. Third plea: Ferriere’s investment pursued an environmental objective which rendered it eligible on that basis for aid for environmental protection – Arguments of the parties 141 Ferriere maintains that its investment was eligible for aid for environmental protection. It meets the objectives of the Community policy on the environment set out in Article 174 EC and satisfies the requirements of the Community directives and recommendations. The investment entails, in particular, improvements from the point of view of atmospheric pollution, the elimination of hazardous waste, noise nuisance and working conditions, the last two of which are expressly mentioned in the provision establishing the approved scheme. 142 The applicant also claims that it was possible to isolate from the total cost the cost corresponding to environmental protection, which the region evaluated at ITL 11 000 million out of a total investment of ITL 20 000 million. 143 The Commission failed to take account of the environmental purpose of the project and considered, arbitrarily, that the purpose of the investment was predominantly economic, whereas the objective of the new process was specifically to make the production system ecological. While it is logical that a new plant should be more economically efficient than an old one, the former rolling line was still perfectly satisfactory in functional and technological terms and was replaced by innovative equipment in order to eliminate the disadvantages which the old process represented for the environment. 144 The Italian Republic claims that the investment in question was determined principally on grounds linked with environmental protection. 145 The Commission contends that the aid was not justified in the present case, since the investment would have been made in any event for reasons unconnected with environmental protection; the reduction in nuisance and pollution was the necessary and intrinsic consequence of a predominant and inescapable economic and technological choice. Nor is it possible to isolate the additional costs associated with the environmental aspect. In addition, the documents produced for the first time at the stage of the reply, on the assumption that they are admissible, cannot have an impact on the legality of the contested decision, which was adopted in the light of the matters which came to its knowledge during the administrative procedure. – Findings of the Court 146 The Commission declared the aid incompatible for the reasons stated at paragraph 30 above, namely that the investment, which was intended to replace old equipment by an innovative plant, was not based on environmental objectives but was being done for economic and industrial purposes, which precluded the grant of aid for environmental protection. It further considered that the advantages for environmental protection were inherent in the process, which did not make it possible to isolate from the total cost of the investment the part corresponding to environmental protection (recitals 29 and 31 to 33 to the decision). 147 The benefit of the Community provisions on State aid for environmental protection depends on the purpose of the investment in respect of which aid is sought. Thus the 2001 Guidelines (points 36 and 37, cited at paragraphs 10 and 11 above), which are identical in that regard to the 1994 Guidelines (point 3.2.1, cited at paragraph 6 above), mention investments intended to reduce or eliminate pollution or nuisances, or to adapt production methods, and state that only the additional investment cost linked with environmental protection is eligible for aid. The eligibility for aid for environmental protection of an investment which meets, inter alia, economic considerations assumes that those considerations are not in themselves sufficient to justify the investment in the form chosen. 148 It follows from the scheme of the 2001 Guidelines, which is identical in that regard to the scheme of the 1994 Guidelines, that any investment which adapts plant to standards, whether mandatory or not, national or Community, which exceeds such standards or which is carried out in the absence of any standards is not eligible for aid, but only investment whose very object is that environmental performance. 149 The Commission was therefore entitled to declare the project incompatible with the common market in so far as it did not satisfy that requirement. 150 It is therefore irrelevant that the applicant maintains that its investment brings improvements from the point of view of environmental protection, as is the fact that the contested decision recognises the advantages of the investment from the point of view of environmental protection or of the health and safety of workers. 151 Admittedly, it is possible that a project should have an objective of improving economic productivity and at the same time an objective of environmental protection, but the existence of the second objective cannot be inferred from the mere finding that the new equipment has a less negative impact on the environment than the old equipment, which may be merely a collateral effect of a change in technology for economic purposes or of the renewal of used equipment. In order that a partially environmental object of the assisted investment may be accepted in such a case, it is necessary to establish that the same economic performance could have been obtained by using less costly, but more environmentally harmful, equipment. 152 The outcome of the dispute therefore does not depend on whether the investment brings environmental improvements or whether it goes beyond existing environmental standards, but, primarily, on whether it was carried out in order to bring such improvements. 153 On this point, the applicant maintains that the objective of the new process was to render the production system ecological, as explained in detail in annexes B and C to its request for aid dated 26 March 1997. Those documents confirm the technological advance represented by the new, fully-automated process for the production of welded steel mesh, which has the consequences of reducing noise from the plant and eliminating dust emissions. They therefore confirm the interest of such a plant from an economic and industrial point of view, an interest which suffices to justify the decision to make the investment. 154 Ferriere also claims that its previous plant was still operating perfectly satisfactorily when it decided to replace it in order to acquire an innovative technique eliminating the environmental disadvantages of the old process. In that regard, the documents produced for the first time with the reply, which were therefore not communicated to the Commission during the administrative procedure, can have no impact on the lawfulness of the contested decision (see Belgium v Commission, paragraph 16). Incidentally, those documents show at the most that as early as 1993-1994 the undertaking was planning to acquire a new innovative plant. Furthermore, the fact, which seems to be accepted by the Commission at recital 29 to the contested decision, that the new rolling line did not entail an increase in production capacity does not establish the environmental objective of the investment. 155 It is apparent, in short, that Ferriere had equipment more than 25 years old which it wished to replace by a new plant using a technologically innovative process incorporating the performance for environmental protection of any modern equipment. The inevitable conclusion is that the investment follows on from a decision of the undertaking to modernise its production equipment and that it would in any event have been made in that form. 156 Consequently, the Commission did not make an error of assessment in taking the view that it was not established that the investment had a genuinely environmental purpose. The Commission was entitled to consider that the advantages of the investment for environmental protection were inherent in that innovative plant. Furthermore, the analysis of the advantages of the investment from the point of view of working conditions is not in contradiction with the grounds of which the applicant complains, since according to point 6 of the 2001 Guidelines actions aimed at safety and hygiene are not covered by those guidelines. 157 Second, apart from finding that the investment had no environmental purpose, the contested decision states that the cost of the investment intended to protect the environment could not be isolated from the total cost of the operation. That ground of the contested decision is not superfluous, since if the project chosen entailed an additional cost by comparison with a different, hypothetical, project offering the same economic performance in less environmentally favourable conditions, it might be inferred that the investment had an environmental object (see paragraph 151 above). 158 On that point, Ferriere claims that the environmental part of its investment corresponds to the part of the total costs of the investment which was recognised by the Autonomous Region of Friuli-Venezia Giulia as eligible for aid, namely ITL 11 000 million (EUR 5.68 million). 159 When invited in a written question put by the Court, referred to at paragraph 35 above, to specify the evidence on the basis of which the additional investment cost of environmental protection could be evaluated at ITL 11 000 million of the ITL 20 000 million representing the total cost of the investment, Ferriere merely referred to the assessment made by the region. At the hearing, the applicant acknowledged that it was difficult to draw distinctions in the case of a process which in itself improves environmental protection and it indicated that the region had excluded general expenditure. 160 The letters from Ferriere to the region, dated 26 May and 26 June 1998, which are on the file and which present the detailed budget of the investment broken down into its various components, do not answer the question. The Court has been given no further explanation which would enable it to understand the method followed and to conclude that the ITL 11 000 million correspond to the environmental cost of the investment. While it is possible to understand the difficulty in isolating the cost in a case such as this where the advantages for the environment are inherent in the process, the principles laid down in the 2001 Guidelines, which are similar to those in the 1994 Guidelines, preclude the total cost of an investment from being eligible for aid and require that the additional costs involved in attaining the objective of protecting the environment be identified. 161 However, neither the applicant nor the Italian Republic has provided any explanation on that point. In particular, they have not indicated the procedure followed by the Autonomous Region of Friuli-Venezia Giulia in arriving at a determination of the amount of the investment eligible for aid. 162 Consequently, the Commission could lawfully consider in the contested decision that it was not possible to isolate in the investment the expenditure specifically intended for environmental protection. 163 Accordingly, the Commission was entitled to consider that Ferriere’s investment was not eligible for aid for environmental protection. 164 It follows from all of the foregoing that the Commission could lawfully declare the aid incompatible with the common market. Ferriere and the Italian Republic are therefore not entitled to request annulment of the contested decision. The submissions seeking annulment of that decision must therefore be rejected. The application for compensation for the alleged harm Arguments of the parties 165 Ferriere maintains that it suffered harm owing to the illegality of the contested decision, which impairs freedom of economic initiative and the right of property, to the initiation of the formal procedure and to the time taken to close it. As it was unable to have the aid which the region was prepared to grant it, it was required to borrow in order to finance the investment and was deprived of the possibility of using the amount advanced for other purposes. 166 The applicant claims compensation for the period during which it was unable to have the aid. The compensation should correspond to an amount allowing it to pay the statutory interest and compensation for monetary devaluation and should be calculated as from 26 April 1999, which corresponds to the end of the two-month period following receipt of the notification, on 25 February 1999, and is the date on which the Commission should have recognised that the aid was compatible with the common market. 167 The Commission contends that the conditions for engaging liability are not met. Among the fundamental rights, only those which protect legal certainty and legitimate expectations are in theory capable of being included in the category of rules whose breach may render the institutions liable. Furthermore, the serious and manifest nature of the breach is in any event absent in the present case. Last, the applicant does not show the alleged interference with freedom of economic initiative and the right to property. 168 The Commission further contends that the alleged harm is neither certain nor determinable, as undertakings do not have a right to receive State aid, still less at a fixed date. Even on the assumption that the aid did come under an authorised scheme, the delay in paying it would not be imputable to the Commission but to the Italian authorities, who chose to notify the aid and then to suspend payment thereof. The claim for default interest is unfounded as regards reparation of harm. Last, as regards monetary depreciation, actual damage is not made out. Findings of the Court 169 Ferriere’s claim for compensation, submitted on the basis of Articles 235 EC and 288 EC, seeks to establish the non-contractual liability of the Community owing to the harm allegedly caused to it as a result of the unlawfulness of the contested decision. 170 According to established case-law, in order for the Community to incur non-contractual liability, the applicant must prove the unlawfulness of the alleged conduct of the institution concerned, actual damage and the existence of a causal link between that conduct and the damage pleaded (Case 26/81 Oleifici Mediterranei v EEC [1982] ECR 3057, paragraph 16, and Case T-40/01 Scan Office Design v Commission [2002] ECR II-5043, paragraph 18). If any one of those conditions is not satisfied, the action must be dismissed in its entirety and it is unnecessary to consider the other conditions for non-contractual liability (Case C-146/91 KYDEP v Council and Commission [1994] ECR I-4199, paragraphs 19 and 81, and Case T-170/00 Förde-Reederei v Council and Commission [2002] ECR II-515, paragraph 37). 171 As the first condition of the which Community’s non-contractual liability within the meaning of the second paragraph of Article 288 EC, relating to the unlawfulness of the contested measure, is not fulfilled, the claim for compensation must be rejected in its entirety and there is no need to examine the other conditions of that liability, namely actual damage and the existence of a causal link between the Commission’s conduct and the damage pleaded. 172 It follows from all the foregoing that the application must be dismissed in its entirety. Costs 173 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if these have been applied for in the successful party’s pleadings. Furthermore, Article 87(4) of the Rules of Procedure provides that the Member States are to bear their own costs when they have intervened in the proceedings. 174 Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Commission. 175 In accordance with Article 87(4) of the Rules of Procedure, the Italian Republic must be ordered to bear its own costs. On those grounds, THE COURT OF FIRST INSTANCE (Fourth Chamber, Extended Composition) hereby: 1. Dismisses the action; 2. Orders the applicant to bear its own costs and to pay those incurred by the Commission; 3. Orders the Italian Republic to bear its own costs. Legal Tiili Meij Vilaras Forwood Delivered in open court in Luxembourg on 18 November 2004. H. Jung H. Legal Registrar President 1 – Language of the case: Italian.