62022TJ0713_RES
Cases T‑713/22 and T‑720/22
Portumo – Madeira – Montagem e Manutenção de Tubaria, SA (Zona Franca da Madeira) and OthersandNova Ship Invest, Unipessoal, Lda (Zona Franca da Madeira)
v
European Commission
Judgment of the General Court (Fifth Chamber) of 6 November 2024
(State aid – Madeira Free Zone – Aid scheme implemented by Portugal – Decision finding that the scheme does not comply with Decisions C(2007) 3037 final and C(2013) 4043 final, declaring that scheme to be incompatible with the internal market and ordering recovery of aid paid under it – Concept of ‘existing aid’ within the meaning of Article 1(b)(ii) of Regulation (EU) 2015/1589 – Recovery – Legitimate expectations – Legal certainty – Freedom to provide services – Freedom of establishment – Freedom of movement for workers)
Aid granted by a Member State – Existing aid and new aid – Measure amending an existing aid scheme – Implementation of the scheme in breach of the conditions laid down in the Commission’s approval decision – Alteration affecting the substance of the scheme – Classification as new aid
(Art. 108 TFEU; Council Regulation 2015/1589, Art. 1(c))
(see paragraphs 19, 80, 81)
Aid granted by a Member State – Prohibition – Derogations – Aid capable of being regarded as compatible with the internal market – Aid for the development of particular areas – Regional operating aid for outermost regions – Commission decision authorising an aid scheme aiming at the promotion of development of the island of Madeira – Conditions for granting the aid under that scheme – Restrictive interpretation – Activities performed outside the island of Madeira by companies registered on that island – Activities not eligible for the aid under the authorised scheme
(Art. 107(3)(a) TFEU; Commission Notice 2006/C 54/08)
(see paragraphs 33-60)
Aid granted by a Member State – Prohibition – Derogations – Aid capable of being regarded as compatible with the internal market – Aid for the development of particular areas – Regional operating aid for outermost regions – Commission decision authorising an aid scheme aiming at the promotion of development of the island of Madeira – Conditions for granting the aid under that scheme – Restrictive interpretation – Condition relating to the creation or maintenance of jobs in the Autonomous Region of Madeira – Requirement not met
(Art. 107(3)(a) TFEU; Commission Notice 2006/C 54/08)
(see paragraphs 66-76)
Aid granted by a Member State – Prohibition – Derogations – Discretion of the Commission – Adoption by the Commission of guidelines governing examination of the compatibility of aid with the internal market – Consequences – Self-limitation of its discretion – Obligation to examine the exceptional circumstances relied on by the Member State for the purpose of requesting an assessment of the compatibility of the aid solely under Article 107(3) TFEU
(Art. 107(3) TFEU; Commission Notice 2006/C 54/08)
(see paragraphs 85-90)
Aid granted by a Member State – Prohibition – Derogations – Aid capable of being regarded as compatible with the internal market – Aid for the development of particular areas – Regional operating aid for outermost regions – Compatibility with the internal market – Condition – Observance of the principle of proportionality
(Art. 107(3)(a) TFEU; Commission Notice 2006/C 54/08)
(see paragraphs 91-97)
Aid granted by a Member State – Prohibition – Derogations – Aid capable of being regarded as compatible with the internal market – Assessment in the light of Article 107(3) TFEU – Restrictive effects of any incompatibility decision on fundamental freedoms – Irrelevant
(Art. 107(3) TFEU)
(see paragraphs 98-103)
Aid granted by a Member State – Recovery of unlawful aid – Aid granted in breach of the procedural rules of Article 108 TFEU – Legitimate expectations entertained by the recipients – None save in exceptional circumstances
(Art. 108 TFEU)
(see paragraphs 112-119)
Aid granted by a Member State – Recovery of unlawful aid – Breach of the principle of legal certainty – None
(Art. 108 TFEU)
(see paragraphs 122-134)
Résumé
The General Court dismisses the actions for annulment brought by several companies against the decision of the European Commission declaring certain aid paid to undertakings established on the island of Madeira, under a previously authorised scheme, to be incompatible with the internal market and ordering its recovery. In that context, the Court provides further clarification as to the relationship between the fundamental freedoms enshrined by the TFEU and the rules of that Treaty relating to State aid.
In order to promote regional development and diversification of the economic structure of the island of Madeira, the Portuguese Republic established an aid scheme for a defined area on that island, called the Madeira Free Zone (MFZ).
First approved by the European Commission in 1987 as compatible regional aid, that scheme was amended in 2002. In 2007, the Commission authorised a third scheme which was further amended in 2013 (
1
) (‘Regime III’).
Regime III, as approved by the Commission, took the form of a reduction in corporate income tax on profits resulting from activities effectively and materially performed in Madeira, an exemption from municipal and local taxes and an exemption from tax on the transfer of immovable property for the setting up of a business in the MFZ, up to maximum aid amounts based on ceilings set according to the number of jobs held by the beneficiary.
On completion of a monitoring exercise in respect of that scheme relating to 2012 and 2013, the Commission decided to initiate the formal investigation procedure under Article 108(3) TFEU. On conclusion of that procedure, the Commission found, by a decision of 4 December 2020, (
2
) that Regime III, as implemented by Portugal, differed substantially from the scheme authorised by the 2007 and 2013 decisions. Classifying that scheme as ‘new aid’ which had been unlawfully implemented and was incompatible with the internal market, the Commission ordered recovery of the aid from the beneficiaries.
By their actions, four companies which benefited from aid paid under Regime III, as implemented, seek annulment of that decision by the General Court.
Findings of the Court
In support of their actions, the applicants submitted, inter alia, that the interpretation used by the Commission, in the contested decision, of the conditions for accessing Regime III infringed the principles of free movement of citizens and of workers, freedom of establishment and freedom to provide services, by making it more difficult or more costly for undertakings that have benefited from Regime III or their employees to exercise those freedoms.
In that regard, it should be noted that, as in the judgments in Cases T‑95/21 (
3
) and T‑131/21, (
4
) the Court finds that the Commission did not err when it interpreted the conditions for accessing Regime III and found that that scheme, as implemented by Portugal, differed substantially from the regime authorised by the 2007 and 2013 decisions and was, accordingly, a new aid scheme.
Next, the Court states that the applicants’ arguments alleging infringement of the principles of free movement of citizens and of workers, freedom of establishment and freedom to provide services are seeking, in essence, to question the finding, in recital 198 of the contested decision, made by the Commission on the basis of Article 107(3)(a) TFEU, that Regime III, as implemented, is incompatible with the internal market.
To the extent that those arguments are seeking to dispute the finding that Regime III, as implemented, is incompatible, the Court notes that it is admittedly apparent from the case-law that, when the Commission intends to declare aid to be compatible with the internal market, it must satisfy itself that the declaration of compatibility in question, which authorises the Member State to pay the aid concerned, will not entail an infringement of other provisions of EU law including, in particular, of the principles of free movement.
However, that case-law cannot require that the Commission, where it intends to declare aid to be incompatible, declare it to be compatible and therefore authorise its payment, on the ground that any incompatibility decision would have restrictive effects on the undertakings benefiting from that aid, whether by preventing its payment or by requiring its recovery.
Otherwise, the prohibition on incompatible State aid would be frustrated by the principles of free movement of citizens and of workers, freedom of establishment and freedom to provide services, even though the TFEU rules on competition, in particular those on State aid, are fundamental in nature and are the expression of one of the essential tasks with which the European Union is entrusted.
Accordingly, the Court concludes that the applicants could not effectively invoke the principles of free movement of citizens and of workers, freedom of establishment and freedom to provide services against the contested decision in so far as it finds, on the basis of Article 107(3)(a) TFEU, that Regime III, as implemented, is incompatible, and orders recovery thereunder.
The court adds that, even assuming that those principles can be relied on by the applicants and that – in so far as it interprets the conditions for accessing Regime III in such a way that the scheme, as implemented, is incompatible, and orders recovery of the aid paid under that scheme – the contested decision has restrictive effects on the freedoms invoked, those effects are, in any event, justified by the legitimate objective pursued by Regime III, which aims at promoting regional development and diversification of the economic structure of Madeira, as an outermost region, and are proportionate to that objective. In that regard, the Court notes that neither the finding that Regime III, as implemented, is incompatible with the internal market nor the recovery of the aid unlawfully paid under that scheme prevents companies registered in the MFZ from being established or from providing services outside the Autonomous Region of Madeira, or even from recruiting workers who reside or perform their activity outside that region. Finally, the Court finds that the Commission was not obliged to make a decision on an alternative aid scheme proposed by the applicants. On that point, the Court observes that, according to the case-law, the Commission is not required to make a decision in the abstract on every alternative measure conceivable, since, although the Member State concerned must set out in detail the reasons for adopting the aid scheme at issue, in particular in relation to the eligibility criteria used, it is not required to prove, positively, that no other conceivable measure, which by definition would be hypothetical, could better achieve the intended objective. If that Member State is not under any such obligation, the applicants are not entitled to ask the Court to require the Commission to take the place of the national authorities in that task of normative prospecting in order to examine every alternative measure possible.
In the light of the foregoing, the Court rejects the applicants’ arguments as unfounded. It also rejects all the other pleas in law relied on and, consequently, dismisses the actions in their entirety.
(
1
)	Commission Decisions of 27 June 2007 in Case N 421/2006 and of 2 July 2013 in Case SA.34160 (2011/N) (‘the 2007 and 2013 authorisation decisions’).
(
2
)	Commission Decision (EU) 2022/1414 of 4 December 2020 on aid scheme SA.21259 (2018/C) (ex 2018/NN) implemented by Portugal for Zona Franca da Madeira (ZFM) – Regime III (OJ 2022 L 217, p. 49) (‘the contested decision’).
(
3
)	Judgment of 21 September 2022, Portugal v Commission(Madeira Free Zone) (T‑95/21, EU:T:2022:567).
(
4
)	Judgment of 21 June 2023, Região Autónoma da Madeira v Commission (T‑131/21, not published, EU:T:2023:348).