62001TO0198_EN
Parties
Grounds
Operative part
Parties
In Case T-198/01 R,
Technische Glaswerke Ilmenau GmbH, established in Ilmenau (Germany), represented by G. Schohe, avocat, with an address for service in Luxembourg,
applicant,
v
Commission of the European Communities, represented by V. Kreuschitz and V. Di Bucci, acting as Agents, with an address for service in Luxembourg,
defendant,
APPLICATION for suspension of the operation of Article 2 of Commission Decision 2002/185/EC of 12 June 2001 on State aid implemented by Germany for Technische Glaswerke Ilmenau GmbH (OJ 2002 L 62, p. 30), and in the alternative, an application for interim measures,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
OF THE EUROPEAN COMMUNITIES
makes the following
Order
Grounds
Legal context
1 Article 87(1) EC inhibits State aid which is incompatible with the common market.
2 Council Regulation (EC) No 659/99 of 22 March 1999 laying down detailed rules for the application of Article [88] of the EC Treaty (OJ 1999 L 83, p. 1) came into force on 16 April 1999.
3 Article 4(4) of the Regulation provides that the Commission is required to initiate a formal investigation procedure in respect of alleged aid, where a preliminary examination raises doubts as to its compatibility with the common market. Under Article 6(1) of the Regulation the Commission is to call upon the Member State concerned and other interested parties to submit comments within a prescribed period. Under Article 6(2) the comments received are to be submitted to the Member State concerned which has the opportunity to reply to them.
4 Article 14 of Regulation No 659/99 concerns recovery of the aid. Paragraph 3 provides:
Without prejudice to any order of the Court of Justice of the European Communities pursuant to Article [242] of the Treaty, recovery shall be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission's decision. To this effect and in the event of a procedure before national courts, the Member States concerned shall take all necessary steps which are available in their respective legal systems, including provisional measures, without prejudice to Community law.
5 Article 20(1) of Regulation No 659/99 provides:
Any interested party may submit comments pursuant to Article 6 following a Commission decision to initiate the formal investigation procedure. Any interested party which has submitted such comments and any beneficiary of individual aid shall be sent a copy of the decision taken by the Commission pursuant to Article 7.
6 Article 17 of the Insolvenzordnung (German insolvency rules, hereinafter the InsO) of 5 October 1994 (BGBl. I, p. 2866) defines the circumstances in which it is appropriate, under German law, to initiate insolvency proceedings:
1. The general reason for initiating proceedings is insolvency.
2. A debtor is insolvent when he is unable to meet his financial obligations as they become due. As a general rule, a debtor is presumed to be insolvent when he has stopped making payments.
Facts and proceedings
7 Technische Glaswerke Ilmenau GmbH is a German company established in Ilmenau in the Land of Thuringia. It is active in the field of glassware manufacture.
8 The company was set up in 1994 by Mr and Mrs Geiß, with the aim of taking over four of the 12 glass production lines (furnaces) of the former Ilmenauer Glaswerke GmbH (hereinafter IGW), a company which had been liquidated by the Treuhandanstalt (a public trust management company which subsequently became the Bundesanstalt für vereinigungsbedingte Sonderaufgaben, hereinafter the BvS). The furnaces in question came from the nationalised assets of the Volkseigener Betrieb Werk für Technisches Glas Ilmenau which, before the reunification of Germany, was the centre of glass manufacture in the former German Democratic Republic.
9 The sale of the four furnaces by IGW to the applicant was carried out in two stages, namely, by a first contract of 26 September 1994 (hereinafter asset deal 1), approved by the Treuhandanstalt in December 1994, and by a second contract of 11 December 1995 (hereinafter asset deal 2), approved by the BvS on 13 August 1996.
10 Under asset deal 1, the purchase price of the first three furnaces came to a total of DEM 5 800 000 (EUR 2 965 493) and was to be paid in three instalments, on 31 December 1997, 1998 and 1999 respectively. Payment was secured by a change of DEM 4 000 000 (EUR 2 045 168) and a bank guarantee of DEM 1 800 000 (EUR 920 325).
11 It is not disputed that none of those payments was made.
12 Under asset deal 2, the fourth furnace was also sold by IGW to the applicant - as no other investors were interested - at the price of DEM 50 000 (EUR 25 565).
13 It is also not disputed that the applicant had cashflow problems in 1997. In view of those problems, it entered into negotiations with the BvS. These culminated in a contract dated 16 February 1998 by which the BvS waived payment of DEM 4 000 000 of the purchase price under asset deal 1 (the purchase price waiver).
14 By letter dated 1 December 1998, the Federal Republic of Germany notified the Commission of various measures designed to consolidate the applicant's financial position, one of which was the purchase price waiver. Part of that notification related to a restructuring plan for the applicant for the period 1998 to 2000, including, in particular, the search for a new private investor able to contribute DEM 3 850 000 (EUR 1 968 474).
15 By letter SG (2000) D/102831 dated 4 April 2000, the Commission initiated the formal investigation procedure laid down in Article 88(2) EC. It considered that the German authorities had made various grants of State aid in connection with asset deal 1 and asset deal 2. That alleged aid is described in the notice published in the Official Journal of the European Communities of 29 July 2000 [Invitation to submit comments pursuant to Article 88(2) of the EC Treaty, concerning aid measure C 19/2000 (ex NN 147/98) - Aid in favour of Technische Glaswerke Ilmenau GmbH - Germany (OJ 2000 C 217, p. 10)], in which the Commission considered provisionally that two of the measures in question could be regarded as aid incompatible with the common market, namely the purchase price waiver and a loan of DEM 2 000 000 granted to the applicant by the Aufbaubank of Thuringia (TAB) on 30 November 1998, under aid scheme NN 74/95 [approved by Decision SG (96) D/1946].
16 On 7 July 2000 Germany submitted to the Commission its observations on the initiation of the formal investigation procedure. In its view, the purchase price waiver did not constitute State aid; it was consistent with the behaviour of a private creditor seeking to maximise recovery of the debt owing to him, since if the debt were required to be repaid in full the applicant would probably go into liquidation.
17 Further to the communication of 29 July 2000, the applicant presented its observations to the Commission on 28 August 2000. It asked the Commission to allow it access to the non-confidential part of the file (or, alternatively, to provide it with a summary of the documents contained in that part of the file and also an inventory of those documents) and subsequently to give it the opportunity to submit fresh observations.
18 By letter dated 11 October 2000, the BvS granted the applicant extensions of the time-limits for paying the balance of the purchase price fixed by asset deal 1, namely DEM 1.8 million (EUR 920 325), and also for paying the interest outstanding between 1 January 1998 and 20 June 2000, which amounted to DEM 198 800 (EUR 101 645), but without additional interest, fixing new due dates of 31 December 2003, 2004 and 2005. It was thus envisaged that the sum of DEM 666 600 (EUR 340 827) would be repaid on each of those dates.
19 By communication of 20 November 2000 the German Government presented its observations to the Commission on the observations submitted to the Commission on 28 September 2000 by one of the applicant's competitors, Schott, in the course of the formal investigation procedure.
20 On 24 November 2000, Mr Arnold, a chartered accountant, submitted on behalf of the Land of Thuringia a report on the applicant's recent financial position and prospects of profitability (the Arnold report).
21 On 27 February 2001 the German Government sent the Commission a copy of the Arnold report, stating that the applicant was in the process of adapting its restructuring plan, a copy of which would be supplied to the Commission if the Commission considered that the outcome of the proceedings might depend on it.
22 On 12 June 2001 the Commission adopted Decision 2002/185/EC on State aid implemented by Germany for Technische Glaswerke Ilmenau GmbH (OJ 2002 L 62, p. 30, hereinafter the contested decision). The Commission, having expressly waived its right to examine within the same formal investigation procedure other potential aid, such as the conversion of the bank guarantee of DEM 1 800 000, constituted under asset deal 1, into a junior-ranking mortgage debt (nachrangige Grundschuld) and the deferral until 2003 of payment of the remaining purchase price fixed in the contract (recitals 42, 64 and 65 in the preamble to the contested decision), the Commission reached the conclusion that the purchase price waiver was inconsistent with the behaviour of a private investor and constituted State aid within the meaning of Article 87(1) EC, which could not be regarded as compatible with the common market.
23 The Commission considered, for three reasons (recitals 76 to 80), that the BvS, by granting the purchase payment waiver, did not behave like a private creditor. Even if the implementation of asset deal 2 were dependent on the purchase price waiver, there is, according to the contested decision, no evidence to suggest that by abandoning the debt owned of it under asset deal 1 and by implementing asset deal 2, BvS would have borne lower costs than if it had insisted on payment of the full purchase price fixed in the first, the result of which would have been that asset deal 2 was not put into effect (recital 81). The Commission also rejected the applicant's argument that the purchase price waiver was no more than an adjustment of the privatisation contract inasmuch as the Land of Thuringia disbursed less in the way of investment grants than was agreed, on the ground that the BvS and the Land of Thuringia were different legal entities (recital 82). The Commission deduced that the BvS acted to safeguard the existence of the company, not to minimise the financial burden placed on it by the operation (recital 83).
24 According to the contested decision, the purchase price waiver could not qualify for an exemption as ad hoc aid for restructuring, since the conditions laid down in the Community guidelines on State aid for rescuing and restructuring firms in difficulty (OJ 1994 C 368, p. 12) were not fulfilled. In particular, the applicant's restructuring plan is not based on realistic assumptions and the restoration of its long-term viability is doubtful (recitals 92 to 97).
25 The Commission also drew attention to the condition imposed on restructuring aid that the restructuring plan must contain measures to offset as far as possible adverse effects on competitors (recitals 98 to 101). However, notwithstanding the observations of one of the applicant's competitors who stated that there was structural overcapacity in some of the product markets in which [the applicant] was active, the Commission concluded that, according to the information available to it, the overall market does not seem to be suffering from overcapacity (recital 101).
26 Finally, the Commission concluded that the condition as to the proportionality of the aid was not fulfilled, since there was no private investor contribution within the meaning of the guidelines referred to above (recitals 102 to 107). Furthermore, noting that, according to the same competitor, the applicant was systematically selling its products below market price, and even below cost price, and had received continuous loss compensation, the Commission could not rule out the possibility that the company may have used those resources for market-distorting activities not linked to the restructuring process (recital 103). It concluded that the purchase price waiver was therefore not compatible with the common market (recital 109).
27 Consequently, in Article 1 of the contested decision, the purchase price waiver is declared to be State aid, implemented for the applicant, incompatible with the common market. Article 2, requires the Federal Republic of Germany to effect recovery of the aid, including interest, without delay and in accordance with the procedures of national law. Under Article 3 of the contested decision, Germany is also required to inform the Commission, within two months of notification of this Decision, of the measures taken by the Federal Republic of Germany to comply with it.
28 The applicant concedes that it had known of the contested decision since 19 June 2001, when representatives of the BvS sent it a copy.
29 By letter of 23 August 2001, the German Government informed the Commission that it intended, subject to the latter's agreement, to defer recovery of the disputed aid in order not to compromise negotiations between the applicant and a potential new investor.
30 By application lodged at the Registry of the Court of First Instance on 28 August 2001, the applicant brought an action for the annulment of the contested decision.
31 By letter of 17 September 2001, the Commission refused to suspend recovery of the disputed aid and insisted that the German authorities request its immediate repayment.
32 By letter of 26 September 2001, two investors expressed their intention to conclude an agreement with the applicant before the end of the year, envisaging an investment of DEM 4 000 000.
33 By letter of 2 October 2001, the BvS sent the applicant a copy of the Commission's letter of 17 September 2001 and gave it formal notice to repay, by 15 October 2001, the sum of DEM 4 830 481.10 (EUR 2 469 785.77), which was the amount of the disputed aid plus interest amounting, according to its own calculations, to DEM 830 481.10 (EUR 424 618.24). The BvS, taking formal note that the applicant had informed it of its intention to bring an action before the Court of First Instance for suspension of operation of the contested decision, also stated that, in order to avoid prejudging the outcome of that action, it would not insist on recovery of the disputed aid before the court hearing the application for interim measures had given a ruling.
34 In a subsequent letter of intent dated 10 October 2001, the investors and Mr Geiß expressed their intention to reach a final agreement by 31 December 2001. Under that agreement, the investors would acquire a significant majority shareholding in the applicant's capital in consideration for an investment of DEM 4 000 000 in the company and a fair compensation payment for Mr Geiß.
35 By separate document lodged at the Registry of the Court of First Instance on 15 October 2001, the applicant brought an action under Articles 242 EC and 243 EC for suspension of operation of Article 2 of the contested decision, either until judgment was given on the substance of the case or until another date to be fixed or in the alternative, any other interim or supplementary measure considered necessary or appropriate. The application is based, in particular, on a report drawn up on 4 October 2001 by the firm of chartered accountants Pfizenmayer & Birkel (the first Pfizenmayer report).
36 On 29 October 2001, the Commission submitted its written observations on that application for interim measures.
37 The parties submitted oral argument before the President of the Court on 6 November 2001 (the first hearing). At that hearing, a statement made under oath the previous day by Mr Geiß and the applicant's manager, Mr Hübler (the managers' statement) was lodged and added to the file by the President of the Court. At the end of that hearing, the President of the Court, without any objection by the parties, decided to grant the applicant until 17 December 2001 to lodge additional information and also written evidence, certified by a chartered accountant, relating to its future prospects, especially in the event that it should be successful in the present proceedings but unsuccessful in the main action. The Commission was granted until 15 January 2002 to present any observations on the additional information and documents lodged by the applicant.
38 On 13 November 2001 the Commission lodged, with its defence in the main proceedings, an application for the case to be decided under an expedited procedure, in accordance with Article 76a of the Rules of Procedure of the Court of First Instance, as amended on 6 December 2000 (OJ 2000 L 322, p. 4). The applicant raised an objection to that application in its observations lodged on 11 December 2001.
39 On 17 December 2001, additional observations and another accountancy report dated 10 December 2001 compiled by Mr Pfizenmayer (the second Pfizenmayer report) were lodged, with other documents, by the applicant.
40 On 15 January 2002 the Commission lodged further observations on the applicant's additional observations and on the second Pfizenmayer report.
41 On 17 January 2002 the parties were notified of the decision of the Court of First Instance (Fifth Chamber, Extended Composition) not to grant the Commission's application for the case to be decided under an expedited procedure.
42 On 18 January 2002, the President of the Court decided to admit to the file in the case a short statement of final observations lodged on that day by the applicant (the applicant's final statement) on the Commission's further observations.
43 On 25 January 2002, at the invitation of the President of the Court, the Commission lodged its own statement of final observations on that of the applicant (the Commission's final statement).
44 In the light of those more extensive observations, the parties and the experts, Mr Arnold and Mr Pfizenmayer, were asked to attend another hearing (the second hearing), in order to answer additional questions put by the President of the Court relating to urgency and to the alleged variations between the Arnold report and the first and second Pfizenmayer reports.
45 At that hearing, which was held on 8 February 2002, the parties submitted observations relating in particular to the different conclusions which they drew from the Arnold and the first and second Pfizenmayer reports. In reply to the questions put to him by the President of the Court, Mr Pfizenmayer confirmed the conclusions of his second report and stated that the applicant would go into compulsory liquidation if it were required to repay the disputed aid, but that it would not happen before judgment was delivered on the substance of the case if fulfilment of that obligation were suspended. For his part, Mr Arnold said that he had not inspected the applicant's books since drawing up his report in November 2002 but was of the opinion, from reading the first and second Pfizenmayer reports and from his previous knowledge of the applicant's situation, that although its financial situation was improving, the company could not survive if it had to repay the contested aid immediately.
46 In response to those statements, the President of the Court invited the parties, at the hearing, to find an amicable settlement to the application for interim measures and suggested to them the possible wording of such a settlement.
47 Although the applicant, after consulting Mr Pfizenmayer and Mr Arnold, was able to indicate its agreement to that proposal immediately, the Commission, by communication dated 18 February 2002, set out the reasons why it had decided not to accept it.
Law
48 By virtue of Articles 242 EC and 243 EC read in conjunction with Article 4 of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p. 1), the Court of First Instance may, if it considers that circumstances so require, order the suspension of operation of the contested act or prescribe the necessary interim measures.
49 Under the first subparagraph of Article 104(1) of the Rules of Procedure, an application to suspend the operation of a measure is to be admissible only if the applicant has challenged that measure in proceedings before the Court of First Instance. That rule is not a mere formality but presupposes that the main action, on which the action for interim measures is based, can be examined by the Court of First Instance. However, in accordance with settled case-law, to rule on admissibility at the stage of an application for interim measures when admissibility cannot, prima facie, be totally ruled out, is tantamount to prejudicing the decision of the Court of First Instance in the main action (Case T-342/00 R Petrolessence and SG2R v Commission [2001] ECR II-67, paragraph 17, and Joined Cases T-195/01 R and T-207/01 R Government of Gilbraltar v Commission [2001] ECR II-3915, paragraph 47).
50 Article 104(2) of the Rules of Procedure provides that an application for interim measures is to state the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case (fumus boni juris) for the interim measures applied for. Those conditions are cumulative, so that an application for interim measures must be dismissed if any one of them is absent (Case C-268/96 P(R) SCK and FNK v Commission [1996] ECR I-4971, paragraph 30; Case T-73/98 R Prayon-Rupel v Commission [1998] ECR II-2769, paragraph 25; and Case T-237/99 R BP Nederland and Others v Commission [2000] ECR II-3849, paragraph 34). Also, where appropriate, the judge hearing the application for interim measures weighs up the interests involved (Case C-445/00 R Austria v Council [2001] ECR I-1461, paragraph 73, and Government of Gibraltar v Commission, cited above, paragraph 48).
51 Under Article 107(3) of the Rules of Procedure, even though an order for interim measures takes effect until final judgment is delivered, it may nevertheless fix a date on which the interim measure is to lapse (see to this effect the order of the President of the Court in Case 160/84 R Oryzomyli Kavallas and Others v Commission [1984] ECR 3217, paragraph 9). In the words of Article 107(4), [t]he order shall have only an interim effect, and shall be without prejudice to the decision on the substance of the case by the Court of First Instance. The provisional nature of an order for interim measures is also apparent from the particular aim of the measures it can impose, which is to safeguard the interests of one of the parties to the proceedings in order to prevent the judgment in the main proceedings from being rendered illusory by being deprived of any practical effect (Case C-313/90 R CIRFS and Others v Commission [1991] ECR I-2557, paragraph 24).
Admissibility
52 In order to challenge the admissibility of this application, the Commission claims that the applicant ought to have waited for the BvS to bring proceedings for recovery of the disputed aid in the German courts and then have availed itself of all the remedies available before the national courts (Case 310/85 R Deufil v Commission [1986] ECR 537, paragraph 22; Case 142/87 R Belgium v Commission [1987] ECR 2589, paragraph 26, hereinafter the Tubemeuse order; and Case C-276/99 Germany v Commission [2001] ECR I-8055). In that connection, referring to that case-law, the Commission stated during the first hearing that, in proceedings for suspension of operation of a Commission decision, the national court was required to comply with the principles of Community law.
53 In its claim, the applicant explains its decision not to wait for the BvS to bring an action before the German courts by claiming that the German court has no discretion in the assessment of the applicant's interest in obtaining suspension of operation or the Commission's interest in the immediate implementation of the decision. The mere fact of defending a civil action brought in a German court for recovery of the disputed aid would not mean that the debt was not payable and, consequently, that the managers would not need to initiate liquidation proceedings. Moreover, it would have no influence on the progress of the civil action after the liquidation proceedings had commenced. Referring, during the hearing, to the objection raised by the Commission, the applicant maintained that it was apparent from Article 14(3) of Regulation No 659/99 that a request for repayment made by the Commission, such as that formulated in Article 2 of the contested decision, could be suspended only by the Community judicature. It would therefore have been pointless to wait for an action for recovery to be brought before the German courts, since that court did not have the power to order interim measures in connection with the implementation of such a decision.
54 In that regard, the President of the Court points out, first, that, according to now settled case-law, to allow a recipient of aid to plead, in proceedings brought before the national courts, the invalidity of a Commission decision ordering the Member State concerned to recover the aid granted to the recipient, would effectively enable the recipient of the aid to circumvent the definitive nature which a decision necessarily assumed, by virtue of the principle of legal certainty, once the time-limit laid down by Article 230 EC for bringing proceedings had expired (Case C-188/92 TWD Textilwerke Deggendorf [1994] ECR I-833, paragraphs 17 and 18, and Case C-178/95 Wiljo [1997] ECR I-585, paragraph 21). It follows that, in principle, a recipient of State aid who, after learning of the adoption of a decision declaring the aid to be incompatible with the common market and ordering its recovery, brings an action for annulment of that decision before the Court of First Instance, may seek an order for interim measures under Articles 242 EC and 243 EC.
55 That interpretation is endorsed by Article 14(3) of Regulation No 659/99, under which recovery of aid which is unlawful or incompatible with the common market is to be effected without delay and in accordance with the procedures under the national law of the Member State concerned, without prejudice, exclusively, to any order for interim measures made by the Community judicature.
56 Furthermore, it must be added that, at least prima facie, neither the orders in Deufil v Commission, cited above, and Tubemeuse, nor the judgment in Germany v Commission, cited above, on which the Commission particularly relied during the first hearing, substantiate the Commission's objection. The mere fact that the President of the Court considered, in those orders, in connection with his assessment of the criterion of urgency, that the recipient of the aid in question in those cases still had the opportunity to bring actions before the national court against possible recovery proceedings brought by the national authorities, and that that opportunity would eliminate the risk of their suffering serious and irreparable damage in the event of implementation of the decisions at issue, in no way leads to the conclusion that an action brought before the Community judicature without waiting for recovery proceedings to be initiated formally in the national courts is inadmissible.
57 Likewise, the Commission's interpretation does not seem to be substantiated by the judgment in Germany v Commission, cited above. The mere fact that in that case the German court stayed national proceedings brought by the German authorities for an order for repayment of aid declared incompatible with the common market by a decision in respect of which the President of the Court of Justice had previously, on an application from the Member State concerned, refused to order suspension of operation (see the order in Case C-399/95 R Germany v Commission [1996] ECR I-2441) cannot serve as a basis for the conclusion that the recipient of that aid, as in the present case, is not entitled to seek, before the President of the Court, suspension of the obligation to repay the aid, provided that, at the proper time, he challenged the legality of the relevant decision before the Court of First Instance.
58 It must be concluded, prima facie, that in the present case there is therefore nothing to support the conclusion that the main action cannot possibly be admissible. It follows that a recipient of State aid, who has brought such an action within the prescribed time-limit, may ask the President of the Community Court to order interim measures in respect of a Commission decision requiring him to repay the aid.
Prima facie case
59 In order to establish that the requirement of a prima facie case is satisfied, the applicant refers to the five pleas raised in its main application. Since the first hearing, the emphasis has nevertheless been placed on the first and third pleas, which allege infringement of Article 87(1) EC and of the applicant's right to a fair hearing. The others three pleas allege, respectively, infringement of Article 87(3)(c) EC, of the general duty to state reasons and of the final sentence of the second paragraph of Article 20(1) of Regulation No 659/99.
60 The Commission claims that all of those pleas are, even prima facie, untenable.
61 The first and third pleas must be examined first.
Arguments of the parties
62 The applicant's first plea seeks to establish that the purchase price waiver did not constitute aid within the meaning of Article 87(1) EC. The plea falls into three parts.
63 First, the applicant states that the Land of Thuringia did not fulfil - for reasons unknown to the applicant - the promise which it had made in connection with asset deal 1 to pay the applicant DEM 4 000 000 in order to reduce the purchase price of DEM 5 800 000 agreed with the BvS. That promise of aid had enabled the applicant to accept the purchase price under asset deal 1 proposed by the BvS. The applicant states that the promise of the Land of Thuringia did not constitute State aid, because it had been made within the framework of an aid programme for small and medium-sized enterprises (SMEs), such as itself, in the region concerned (23rd framework plan of the joint programme for improving regional economic structures, of which the measures had been approved by the Commission in Decision N 157/94, SG (94) D/11038, of 1 August 1994). The applicant also maintains that, during the formal investigation procedure, the Commission never contested those facts, even though the existence of the promise had been brought to its attention in the applicant's observations of 28 August 2000. The German Government endorsed that interpretation in its communication to the Commission dated 27 February 2001. Moreover, in the contested decision (recital 82), the Commission acknowledged the existence of the promise and merely denied that it had legal relevance. The applicant maintains that the Commission cannot therefore now deny the existence of that promise (Case T-16/91 Rendo and Others v Commission [1996] ECR II-1827, paragraph 45).
64 At the first hearing, the applicant recalled that it had claimed in the formal investigation procedure that, under German civil law, the applicant had, as the result of Thuringia's failure to keep its promise, a right as against the BvS to an amendment (zivilrechtlicher Anspruch auf Anpassung) to asset deal 1. In its further observations, it states that that right is provided for where the basis of a contract (that is to say, the circumstances which led the parties to conclude the contract) has changed. That is the position in this case, because the basis of asset deal 1 lay in the promise of aid from the Land of Thuringia.
65 Secondly, according to the applicant, the Commission interpreted the criterion of private investor too narrowly. It ought to have considered the purchase price waiver from the point of view of a private holding company or of a private group of undertakings, which would have been motivated by long-term viability prospects and by the credibility of its own image. The Commission therefore disregarded the business judgment rule, according to which the imaginary investor has extensive freedom to make a financial assessment, when it considered that a reasonable economic operator would not have granted such a purchase price waiver.
66 Finally, in support of its first plea, the applicant maintains that, when the Commission stated in the contested decision that the aid amounted to the sum of DEM 4 000 000, it failed to adduce positive proof. Although the Commission does not dispute that the applicant would have gone into liquidation if the BvS had required full payment of the purchase price fixed in asset deal 1, the Commission had forgotten that the BvS would then have been unable to sell it the fourth furnace, which was the subject-matter of asset deal 2. Furthermore, the purchase price waiver could contain a constituent of State aid only in so far as it came from State resources within the meaning of Article 87(1) EC. Now, according to the calculation made in the contested decision (recital 78), the BvS's loss of revenue, supposing that the applicant had gone into liquidation as the consequence of being required to pay the full purchase price, would only have been equal to the amount reserved to the creditors, not DEM 4 000 000.
67 In support of its third plea, the applicant points out that the Commission - in infringement of the applicant's right to a fair hearing - failed to contact it directly during the formal investigation procedure. The principle of good administration requires the Commission to carry out a diligent and impartial examination of the case according to the facts existing at the date on which it adopted its decision (Case T-6/99 ESF Elbe-Stahlwerke Feralpi v Commission [2001] ECR II-1523, paragraph 93). The failure to contact the applicant should be assessed in the light of the specific circumstances, namely, in the present case, the applicant's requests to the Commission for details of the decision to initiate the formal investigation procedure and for access to the file (Case T-42/96 Eyckeler & Malt v Commission [1998] ECR II-401, paragraph 75 et seq.; Joined Cases T-186/97, T-187/97, T-190/97 to T-192/97, T-210/97, T-211/97, T-216/97 to T-218/97, T-279/97, T-280/97, T-293/97 and T-147/99 Kaufring and Others v Commission [2001] ECR II-1337, paragraph 153, and ESF Elbe-Stahlwerke Feralpi v Commission, cited above, paragraphs 126, 128 and 130).
68 In its additional observations, the applicant states that it has just learned - from a letter dated 27 November 2001 from the BvS - that, during the formal investigation procedure, the Commission, on 28 December 2000, asked Schott specific questions to which the company replied on 23 January 2001. According to the applicant, those replies, a copy of which is annexed to its additional observations, supplemented the observations previously submitted by the company on 28 September 2000, to which only the contested decision refers. Those replies were never notified to either the German Government or to the applicant, as they ought to have been. What is more, the Commission adopted that decision on the basis of the documents in its possession after it had received the responses, notwithstanding the suggestion of the Federal Republic of Germany that it should send the Commission additional information, including the final version of the restructuring plan. In view of the nature of the questions put to Schott by the Commission and Schott's replies, the Commission might have reached a different conclusion if it had granted the German Government and the applicant the opportunity to comment on those replies (Case C-288/96 Germany v Commission [2000] ECR I-8237, hereinafter the Jadekost judgment, and the Opinion delivered by Advocate General Cosmas in that case, ECR I-8241, point 63; and Case C-301/87 France v Commission [1990] ECR I-307, hereinafter the Boussac judgment).
69 Pointing out the importance of its third plea, the applicant maintains that it raises the significant and - in relation to the relevant case-law - unprecedented question of the extent of the rights enjoyed by the recipients of aid in a formal investigation procedure. In view of the potentially fatal consequences, as in this case, of the adoption of an unfavourable decision at the end of that procedure, the recipient must have the right to comment on the key points to arise during it. In the present case, it had been able to comment only on the points which were known to the Commission before that procedure was initiated, as they were stated in the communication published in the Official Journal.
70 The Commission claims that none of the pleas put forward by the applicant has any real chance of being upheld in the main proceedings. As regards the first plea, it maintains, firstly, in its written observations that if, as the applicant argues, the purchase price waiver cancels out the failure to pay the promised grant of an equivalent amount, that unquestionably establishes that it constituted State aid in the same way as the promised grant. In its additional observations, the Commission points out that the applicant has not adduced any evidence either that the promise allegedly made by the Land of Thuringia existed or that it was a decisive factor in the conclusion of asset deal 1. It would be absurd, considering the amount in question, to assume that the promise was verbal. Moreover, it is apparent from the observations submitted by the applicant during the formal investigation procedure, that the promise was made in writing. The Commission infers from that that no promise was made.
71 The Commission states, in its additional observations, that the arguments presented in the applicant's further observations in relation to the first plea (see paragraph 64 above) go far beyond what the President of the Court requested during the first hearing of the parties. Furthermore, it states that the German Government did not rely on that kind of argument during the formal investigation procedure. Only the evidence actually adduced by the German Government in that procedure is conclusive, because the Federal Republic of Germany took part only in that procedure. In any event, the alleged promise could only have been made subject to the Commission's approval and, without its consent, the applicant could not entertain any legitimate expectations (Case C-5/89 Commission v Germany [1990] ECR I-3437, paragraphs 13 and 14; Case C-169/95 Spain v Commission [1997] ECR I-135, paragraph 51, and Case C-24/95 Alcan Deutschland [1997] ECR I-1591, paragraph 25). That approval would be unnecessary only if the aid had been promised under a previously approved scheme of aid to SMEs and if the applicant could, in this instance, be regarded as such. However, that is not the position since the applicant has adduced no evidence of it.
72 The Commission also argues that the applicant's reference to the term private investor is incorrect, since the contested decision (paragraphs 78 to 83) is based on the different criterion of private creditor. Furthermore, if the purchase price waiver is not consistent with the behaviour of a private creditor, the full amount then inevitably constitutes aid, because what matters is the result for the recipient undertaking, not the actual costs for the donor body.
73 According to the Commission, the third plea put forward by the applicant is based on a complete misunderstanding of the formal investigation procedure and misinterprets the relevant Community case-law, in accordance with which interested third parties have neither rights of defence, nor the right to comment on a draft decision or to have access to the file, but only the right to be heard following publication of the decision to initiate that procedure (Case C-367/95 P Commission v Sytraval and Brink's France [1998] ECR I-1719, and Case T-613/97 Ufex and Others [2000] ECR II-4055). As regards the alleged infringement of the right to a fair hearing constituted by the failure to forward the additional observations requested from Schott, the Commission, while admitting its error, points out that such an infringement of the right to a fair hearing can lead to the annulment of a contested decision only if, without it, the formal investigation procedure might have culminated in a different result (the Boussac judgment, paragraphs 30 and 31, and Case C-142/87 Belgium v Commission [1990] ECR I-959, hereinafter the Tubemeuse judgment, paragraphs 45 to 48). That is not the case in the present circumstances because Schott's additional observations did not have any influence on the contested decision.
Findings of the President of the Court
74 It must be pointed out, first of all, with regard to the first plea, that the arguments, submitted by the applicant in its further observations, concerning the right to amendment of the contracts under German law, do not appear to constitute new pleas within the meaning of Article 48(2) of the Rules of Procedure. They are more likely to be details, provided in the light of the Commission's written observations, concerning the effect of the breaking of the promise alleged to have been made by the Land of Thuringia.
75 As regards proof of the promise made by the Land of Thuringia, it should be pointed out that the Commission refused to take into consideration, in the contested decision, the breaking of the alleged promise and its consequences and merely observed that [a]ny claims which TGI may have against the [Land of Thuringia] and the BvS must be treated separately (recital 82). It therefore appears, as the applicant claims, that, in the contested decision, the Commission did not challenge the existence of the alleged promise. In that regard, it must be borne in mind that a decision must be self-sufficient and that the reasons on which it is based may not be stated in written or oral explanations given subsequently when the decision in question is already the subject of proceedings brought before the Community judicature (Rendo and Others v Commission, cited above, paragraph 45; Case T-77/95 Ufex and Others v Commission [2000] ECR II-2167, paragraph 54; and Case T-323/99 INMA and Itainvest v Commission [2002] ECR II-545, paragraph 76). Consequently, the doubts relating to the existence of the promise expressed by the Commission in its additional observations cannot, at least prima facie, be supported.
76 State aid is a legal concept which must be interpreted on the basis of objective factors. Accordingly, the classification of State measures by the Commission as new or already existing aid must, in principle, having regard both to the specific features of the case and to the technical or complex nature of its assessments, be subject to a comprehensive review by the Community judicature (Case T-67/94 Ladbroke Racing v Commission [1998] ECR II-1, paragraph 52, confirmed on appeal in Case C-83/98 P France v Ladbroke Racing and Commission [2000] ECR I-3271, paragraph 25; and Government of Gibraltar v Commission, cited above, paragraph 75).
77 In the present case, the applicant argues that the promise of a grant was made under a previously approved scheme of aid for the SMEs (23rd framework plan, referred to above), and that, consequently, the purchase price waiver following the breach of that promise must be regarded as being covered by the same scheme. According to the application in the main proceedings, to which the present application refers, that scheme permitted Germany to grant aid of up to 43% of the total investment, where an SME was involved, instead of the maximum of 27% imposed otherwise. The Commission did not contest the fact that that limit was not exceeded in the present case. The Commission's argument that the consequences of the breaking of the alleged promise ought to be regarded as that promise would be regarded, that is, as unnotified State aid, cannot rule out, at least without a more thorough examination, the applicant's argument.
78 In those circumstances, the Commission's further argument that it is irrelevant for the applicant to invoke the abovementioned aid scheme, since the applicant is not - in the absence of appropriate proof - an SME, likewise cannot, prima facie, be upheld. In that regard, it must be noted, first, that, during the formal investigation procedure, the German Government submitted information to prove that the applicant is an SME (recital 48 of the contested decision). For its part, the Commission held, in the contested decision, that the question whether the applicant is an SME or not does not affect the outcome of the assessment of the compatibility of the purchase price waiver (recital 55) although it had stated, in the seventh and eighth recitals in the preamble, that, in 1997 the applicant had 226 employees and a turnover of DEM 28 048 000 (EUR 14 340 715), but that Mr Geiß, its main shareholder, was also at that time the sole shareholder of two other companies, no longer trading, one of which had 74 employees.
79 Therefore, the applicant's arguments relating to the first plea cannot, prima facie, be ruled out.
80 As regards the third plea, it must be pointed out, first of all, that decisions adopted by the Commission in the field of State aid are addressed to the Member States concerned (Commission v Sytraval and Brink's France, cited above, paragraph 45). However, it is clear that the interests of a recipient of aid risk being seriously affected by the decision adopted at the end of a formal investigation procedure. According to settled case-law, observance of the rights of the defence is, in all procedures initiated against a person which are liable to culminate in a measure adversely affecting that person, a fundamental principle of Community law which must be guaranteed even in the absence of any rules governing the procedure in question (see to this effect the judgments in Jadekost, paragraph 99, Boussac, paragraph 29, and Ufex and Others v Commission, cited above, paragraphs 85 and 86).
81 With regard to the Commission's duty to inform the parties concerned that a formal investigation procedure has been initiated, the Court of Justice has held that the Commission is under a duty to carry out all the requisite consultations if its initial examination leads it to doubt whether the measure in question is compatible with the common market (Commission v Sytraval and Brink's France, cited above, paragraph 39). Furthermore, according to settled case-law, the sole aim of publishing a notice in the Official Journal is to obtain from persons concerned all information required for the guidance of the Commission with regard to its future action (Case 70/72 Commission v Germany [1973] ECR 813, paragraph 19, and Case T-266/94 Skibsværftsforeningen and Others v Commission [1996] ECR II-1399, paragraph 256). This case-law confers on the parties concerned the role of information sources for the Commission in a formal investigation procedure. It follows that, far from enjoying the same rights to a fair hearing as those which individuals against whom a procedure has been initiated are recognised as having, the parties concerned have only the right to be involved in the procedure to the extent appropriate in the light of the circumstances of the case (Joined Cases T-371/94 and T-394/94 British Midland Airways v Commission [1998] ECR II-2405, paragraphs 59 and 60, and Ufex and Others v Commission, cited above, paragraph 89).
82 Furthermore, an aid recipient's right to state his views in respect of a decision to initiate a formal investigation procedure is expressly recognised in Article 21 of Regulation No 659/99.
83 The applicant claims, in essence, that it follows from the principles of sound administration and equity that, in view of the seriousness of the possible consequences for the aid recipient of the adoption of an unfavourable decision at the end of the formal investigation procedure, the Commission had the obligation to allow the applicant to comment on the main points raised during that procedure. Referring to the unprecedented nature of the question of the precise extent of the rights of the recipient, as against the other parties concerned in that procedure, the applicant relies, by analogy, on the recent case-law of the Court of First Instance in respect of the rights of the defence (Eyckeler & Malt v Commission, cited above, paragraphs 75 et seq., Kaufring and Others v Commission, cited above, paragraph 153, and ESF Elbe-Stahlwerke Feralpi v Commission, cited above, paragraphs 126, 128 and 130).
84 Without its being necessary to ascertain, for the purposes of the present proceedings, whether the applicant may invoke the infringement of the rights of defence of the Member State to which the contested decision is addressed, which the Commission has committed and acknowledged, it must be stated that the recipient of State aid cannot be accorded the general right to comment on all the potentially key points raised during the formal investigation procedure. Indeed, it is apparent from the case-law cited in paragraph 80 above that that right is not recognised (see to the same effect the Opinion delivered by Advocate General Geelhoed in Joined Cases C-328/99 and C-399/00 Italy v Commission and SIM 2 Multimédia v Commission, pending before the Court, paragraphs 91 and 92). Such a right would exceed the right to be heard and might, in fact, entitle a recipient to an exchange of views and arguments with the Commission, a right which, until now, has always been denied to all the parties concerned within the meaning of Article 88(2) EC and Article 20 of Regulation No 659/99 (Commission v Sytraval and Brink's France, cited above, paragraph 59).
85 However, it is quite clear that the Commission has the duty to treat impartially all the parties concerned in a formal investigation procedure. The Commission's duty not to discriminate between the parties concerned is associated with the right to sound administration, which is one of the general principles that are observed in a State governed by the rule of law and are common to the constitutional traditions of the Member States (see, by analogy, Case T-54/99 max.mobil Telekommunikation Service v Commission [2002] ECR II-313, paragraph 48). In that regard, it must be pointed out that Article 41(1) of the Charter of Fundamental Rights of the European Union proclaimed at Nice on 7 December 2000 (OJ 2000 C 364, p. 1, hereinafter the Charter of Fundamental Rights) confirms that [e]very person has the right to have his or her affairs handled impartially, fairly and within a reasonable time by the institutions and bodies of the Union. It follows that, notwithstanding the restricted nature of the aid recipient's rights to participate and receive information, as described above, the Commission, as the body responsible for the procedure, may have, at least prima facie, an obligation to communicate to the recipient observations which it has expressly requested from a competitor following observations initially lodged by that recipient. To allow the Commission to choose, during the procedure, to ask a competitor of the recipient for specific further information without granting the recipient the opportunity to acquaint himself with the observations submitted in reply and, if appropriate, to respond to them, runs the risk of significantly reducing the practical effect of that recipient's right to be heard.
86 However, such an irregularity results in annulment of the contested decision only if, had it not been for the irregularity, the outcome of the formal investigation procedure might have been different (Jadekost, paragraph 101). That is not the position in the present case, according to the Commission, which concedes that it committed a procedural error on that point, because Schott's additional observations had had no influence on the contested decision. The applicant argues, on the other hand, that they did indeed influence the Commission's decision not to approve the disputed aid, as is apparent, it claims, in particular, from recitals 102 and 103 (see paragraph 26 above). In that regard, it must be pointed out that those recitals constitute a significant part of the reasons for the Commission's conclusion that the disputed aid did not comply with the condition of proportionality which it had to fulfil in order to be regarded as restructuring aid compatible with the common market.The Commission stated at the second hearing, that the information supplied in Schott's additional observations was not taken into consideration. However, since the reference to the company in recital 103, if only as a competitor of the applicant, and to the allegedly aggressive, market-distorting activities in recital 102 may, when read normally, be understood as applying both to that company's additional observations and to its initial observations, the court hearing the main action could decide that the Commission was influenced by all of Schott's observations when it adopted its conclusion on the measure under consideration. That is all the more true in the light of the fact that one of the questions the Commission asked Schott related specifically to the alleged price war policy applied by the applicant. There is therefore a real possibility that, if the irregularity in question had not occurred, the formal investigation procedure might have culminated in a different result.
87 It must therefore be concluded that the third plea put forward by the applicant is also, prima facie, well founded.
88 In the light of the foregoing, the pleas of fact and law raised by the applicant do not appear to be ungrounded (Case C-149/95 P(R) Commission v Atlantic Container Line and Others [1995] ECR I-2165, paragraph 26, and BP Nederland and Others, cited above, paragraph 37). In those circumstances, the present application cannot be dismissed on the ground that a prima facie case has not been made out and it is therefore necessary to consider whether it satisfies the condition of urgency.
Urgency
Arguments of the parties
89 The applicant states, first, that there is urgency in the light of the serious and irreparable damage which will stem from the immediate operation of the contested decision. It claims, primarily, that if the decision is implemented, the company will go into liquidation or alternatively, that it will suffer the irremediable loss of its market position. Secondly, it maintains that the suspension of operation requested is essential in order to prevent the potential investors from finally backing out.
90 Since neither the applicant nor Mr & Mrs Geiß have the financial resources to repay the contested aid, as required under the contested decision, the necessary elements of insolvency within the meaning of Article 17 of the InsO are present. The initiation of insolvency proceedings would not enable the applicant to recover but would automatically lead to its dissolution. It would cause it to lose its customers, who could no longer be sure that it could continue. Since the undertakings entered into between suppliers and buyers of glass products in the markets concerned are long-term, that is, for the whole of the period during which the customer markets or uses the product which incorporates or requires the glass product in question, the applicant's customers would have to sign long-term contracts, from the time the bankruptcy proceedings opened, with another glass-product subcontractor and therefore could not return to the applicant if they wished to. Finally, since the furnaces have to operate 24 hours a day 365 days a year, the loss of the customers would soon cause a stoppage in production, because the applicant would no longer be able to cover its production costs. That vicious circle would be repeated and would worsen until all the furnaces closed. The serious and irreparable damage which would result could not be repaired because neither the subsequent annulment of the contested decision nor damages would allow the applicant to recover after such a bankruptcy. On the other hand, the grant of the suspension sought would enable the applicant to survive, at least until judgment was given in the main proceedings.
91 Referring to the orders in Petrolessence and SG2R v Commission, cited above (paragraphs 47 and 53), and BP Nederland and Others v Commission, cited above (paragraph 60), the applicant concludes that the fact that its survival would be jeopardised is proved with a sufficient degree of probability in accordance with the burden of proof as established in that case-law. The applicant also insists on the fact that the loss of customers following the initiation of bankruptcy proceedings would be definitive, which would mean mass redundancies. Such a situation constitutes urgency (Case T-41/96 R Bayer v Commission [1996] ECR II-381, paragraph 59).
92 As for the withdrawal of the investors, the applicant states that the only investors who, in letters of intent, expressed their interest in the applicant, will take back their promises if the applicant does not obtain suspension of recovery of the aid. In the applicant's final statement, the Commission's claim that those investors have withdrawn is contested. The applicant points out the difficulty of completing such negotiations in the light of the obligation to pay the contested aid. At the second hearing, it stated that it had negotiated with a new investor, but that there was not yet any definitive contract, in view of the sword of Damocles which that obligation represents.
93 The Commission maintains that the present claim does not succeed in establishing a causal link between the imminence of the applicant's bankruptcy and the repayment of the contested aid. Referring to the conclusions in the Arnold report, the Commission states, in essence, that the applicant's very worrying position has nothing to do with the obligation to repay the aid, but is due to its over-borrowing. That situation dates back to 1999, when the applicant closed its balance-sheet with negative equity. The Commission observes that it is apparent from that report that, as well as the sum of approximately DEM 11 500 000 (EUR 5 879 857) needed for maintenance and modernisation investment, the applicant has other debts amounting to more than DEM 20 000 000 (EUR 10 225 838). According to the calculations contained in that report, the overdraft would be DEM 7 842 000 (EUR 4 009 551) in 2001 and DEM 2 215 000 (EUR 1 132 512) in 2002, and those sums would not include the sum payable under the contested decision. In those circumstances, if the investors involved in the current negotiations were prepared to invest only DEM 4 000 000 in the applicant's capital, that would do nothing to change the applicant's financial situation. The first Pfizenmayer report in no way states that, if the obligation to pay the contested aid were suspended, the applicant would be able to continue its activities successfully.
94 In its additional observations, the Commission challenges the conclusions in the second Pfizenmayer report. It submits that, if the applicant had used another expert, he would have examined the conclusions in the first Pfizenmayer report with a critical eye and the President of the Court would have a more credible prognosis available. Since the Arnold report was prepared in November 2000, there would be at least one other expert who knew the applicant well and who could supply the information requested by the President of the Court within the period allowed. Referring to a second formal investigation procedure involving the applicant (see in that regard the invitation to submit comments pursuant to Article 88(2) of the EC Treaty, concerning aid measure C 44/2001 (ex NN 147/98) - Aid in favour of Technische Glaswerke Ilmenau GmbH - Germany (OJ 2001 C 272, p. 2), the Commission also alleges that the second Pfizenmayer report is incomplete, because it does not refer to the existence of that second procedure. Furthermore, there are inconsistencies between the conclusions of the second Pfizenmayer and Anold reports with regard to the level of investment needed. The Commission states that Mr Pfizenmayer should at least have considered the possibility that the second formal investigation procedure might also end in an order for further repayment. The second Pfizenmayer report gives no reasons for its opinion that rationalisation investment of DEM 4 750 000 considered indispensable by the Arnold report is no longer necessary.
95 Furthermore, the second Pfizenmayer report makes no mention of the alleged agreement with the new investors, the conclusion of which the applicant describes as imminent. The Commission states that the second Pfizenmayer report ought at least to have explained why the intention to conclude a final investment agreement could not be fulfilled.
Findings of the President of the Court
96 It is settled case-law that the urgency of an application for interim measures must be assessed in relation to the necessity for an order granting interim relief in order to prevent serious and irreparable damage to the party requesting the interim measure (Case C-213/91 R Abertal and Others v Commission [1991] ECR I-5109, paragraph 18; BP Nederland and Others v Commission, cited above, paragraph 48, and Government of Gibraltar v Commission, cited above, paragraph 95).
97 It is for the party alleging serious and irreparable damage to establish its existence (Case C-278/00 R Greece v Commission [2000] ECR I-8787, paragraph 14). It does not need to be established with absolute certainty that the harm is imminent; it is sufficient that the harm in question, particularly when it depends on the occurrence of a number of factors, should be foreseeable with a sufficient degree of probability (Commission v Atlantic Container Line and Others, cited above, paragraph 38; Prayon-Rupel v Commission, cited above, paragraph 38, and BP Nederland and Others v Commission, cited above, paragraph 49).
98 It must be stated at the outset that the applicant has not adduced evidence to show that the hesitation on the part of the investors with whom it has had talks was connected, at least principally, with the obligation to repay the contested aid. Since the allegation of harm resulting from the withdrawal of promises of investment, made in particular in letters of intent, is invoked only in the alternative, it is therefore necessary to consider the applicant's main argument, that implementation of Article 2 of the contested decision would inevitably and very rapidly lead to its bankruptcy.
99 Although it is firmly settled case-law that damage of a pecuniary nature cannot, save in exceptional circumstances, be regarded as irreparable, or even as being reparable only with difficulty, if it can ultimately be the subject of financial compensation (orders of the President of the Court of Justice in Case C-471/00 P(R) Commission v Cambridge Healthcare Supplies [2001] ECR I-2865, paragraph 113, and of the President of the Court of First Instance in Case T-339/00 R Bactria v Commission [2001] ECR II-1721, paragraph 94), it is also settled case-law that an interim measure is justified if it appears that, without that measure, the applicant would be in a position that could imperil its existence before final judgment in the main action (Case T-53/01 R Poste Italiane v Commission [2001] ECR II-1479, paragraph 120).
100 In the present proceedings, it is apparent from the first Pfizenmayer report and from the managers' statement, both unequivocally endorsed on this point by the second Pfizenmayer report, that, if the applicant had to repay the contested aid in implementation of Article 2 of the contested decision, it would, in all probability, very soon go into liquidation. In that regard, Mr Pfizenmayer declared in his first report, on the basis of the applicant's accounts to 28 August 2001, that if the applicant has to repay the contested aid immediately, it will no longer be viable and that, even if insolvency proceedings were brought, it would be unable to continue. In his second report, he can see no reason, on the basis of the applicant's intermediate statement of accounts to 31 October 2001, to alter that conclusion. In short, it is stated in the report that the applicant simply does not have adequate funds to pay the sum in question. At the second hearing, Mr Pfizenmayer categorically told the President of the Court that the company would go into liquidation if the obligation to repay the contested aid were not suspended. That assessment was shared by Mr Arnold on the basis of his reading of the first and second Pfizenmayer reports. Mr Arnold also took the view that the current improvement in the applicant's financial situation is not enough to enable it to repay the amount of the aid.
101 It appears, in fact, that the mere presentation of an unconditional formal notice by the BvS claiming repayment of the contested aid from the applicant is enough to make its debt payable within the meaning of Article 17(2) of the InsO. It is clear from the BvS letter of 2 October 2000 (see paragraph 33 above) that, from the moment this claim is rejected, the debt corresponding to the contested aid would become payable immediately, with the consequence that the applicant would be formally, under German law, in a state of insolvency if it is unable to pay it. In the light of the evidence adduced by the applicant in these proceedings and the statements made by the experts during the second hearing, it is established that the applicant is unable to make that payment. Consequently, if interim measures are not granted, it would in all probability go into liquidation in a very short space of time.
102 The Commission's argument that there is no causal link between the imminence of the applicant's bankruptcy and the repayment of the contested aid is not persuasive. The first and second Pfizenmayer reports demonstrate sufficiently that, in spite of the high level of the applicant's borrowing (estimated at DEM 17 627 000 (EUR 9 012 542) at 31 October 2001 and DEM 16 839 000 (EUR 8 609 644) at 31 December 2001), the applicant's current liquidity position is such that it would probably be able - particularly in the light of the net improvement in its financial situation, the spreading of several debts and, above all, the respreading of the balance of the purchase price under asset deal 1 (see paragraph 18 above) - to pay all its debts as they became due.
103 In that regard, the first Pfizenmayer report refers to the completion of the reconstruction of furnaces 3 and 4 in 2001, the participation of the company's employees in its recovery in exchange for relinquishing part of their salary and the positive trend in orders, and concludes that the company will survive long-term if it does not have to repay the contested aid immediately. This prognosis is supported by the second Pfizenmayer report. That report shows a positive annual result of the order of DEM 178 000 (EUR 91 009) for 2001 and DEM 542 000 (EUR 277 120) for 2002, with estimates of DEM 743 000 (EUR 379 889) and DEM 985 000 (EUR 503 622) for 2003 and 2004 respectively. As regards the applicant's overall liquidity position, while the Arnold report showed a shortfall in remaining liquidity (verbleibende Liquiditätsunterdeckung) of DEM 7 842 000 (EUR 4 009 551) on 31 December 2001, the second Pfizenmayer report estimates that the shortfall will be only DEM 87 000 (EUR 44 482) in 2001 and that a positive balance of DEM 31 000 (EUR 15 850) is expected in 2002. This latter report therefore forecasts that, if there are no exceptional difficulties, the applicant will attain its objectives. With regard to the projected liquidities, investments of DEM 2 100 000 (EUR 1 073 712) in 2002, DEM 325 000 (EUR 166 169) in 2003 and DEM 2 700 000 (EUR 1 380 488) in 2004 are forecast and form an integral part of the applicant's new financial plan. Mr Pfizenmayer concludes that, if the applicant obtains the interim measures sought, it will be viable at least until the Court rules on the substance.
104 It is apparent from the careful preparation and very detailed nature of the second Pfizenmayer report, and also from the statements made by Mr Arnold during the second hearing as regards its reliability, that the Commission's criticism of the choice of Mr Pfizenmayer to prepare that report is unfounded.
105 The alleged significant difference between the second Pfizenmayer report and the Arnold report highlighted by the Commission relates essentially to the forecasts of the amount of investment needed. The Commission points out that, while Mr Arnold assesses it to be DEM 11 500 000 (EUR 5 879 856) in 2001 and 2002, the second Pfizenmayer report bases its estimate on a new plan and forecasts only DEM 7 800 000 (EUR 3 988 076) of investment for the same period. The Commission notes that the envisaged rationalisation investment is absent from the new investment plan of 29 November 2001 and that no explanation is given for that absence. The Commission concludes that it is unlikely that the applicant is experiencing the predicted positive change notwithstanding such a reduction in major investment.
106 Those criticisms do nothing to weaken the credibility of the second Pfizenmayer report. In the first place, it is clear, merely from reading the report, that it includes investment forecasts for the period 2001-2007 and that investment of DEM 11 475 000 (EUR 5 867 074) is forecast for that period. Therefore, the only significant difference between that report and the Arnold report relates to the schedule for the forecast investment. It is also apparent that the most urgent investment has been either already made in 2001 [for example, the replacement of furnaces 3 and 4 for the sum of DEM 4 180 000 (EUR 2 137 200)], or also forecast for 2002 by the second Pfizenmayer report [for example, the reconstruction of furnace 2 for the sum of DEM 2 000 000 (EUR 1 022 583)]. Moreover, Mr Pfizenmayer stated, at the second hearing, that the necessary stoppage of furnace 2 while it was being rebuilt in 2002 would not prevent the applicant from meeting the growing demand from its customers for sight lenses (which is what is manufactured in that furnace), since it has sufficient stock. He said that the applicant, in its new investment plan, has only respread the necessary investment by postponing the less important investment in order to adjust to its cashflow situation and to the fact that the aid of DEM 3 000 000 (EUR 1 533 875) initially forecast in the Arnold report would probably not be granted. Mr Pfizenmayer also pointed out - without being contradicted on that point either by Mr Arnold or by the Commission - that the only major investment he did not forecast, but which was forecast in the Arnold report, was DEM 1 250 000 (EUR 639 114) earmarked for the purchase of new presses. He described that investment as a luxury and therefore, not urgent.
107 It is apparent from the foregoing that it has been established as sufficiently likely that the applicant would be able to survive at least until judgment is given in the main proceedings, if the obligation to repay the contested aid were suspended. On the other hand, the immediate implementation of the contested decision would very soon, if not immediately, jeopardise its very existence.
108 As regards the reference made by the Commission to the second formal investigation procedure initiated on 3 July 2001 in respect of aid allegedly granted to the applicant, it is not necessary to adopt a position concerning the applicant's claim of a lack of impartiality on the part of the Commission which led it to take a final decision detrimental to the applicant's interests, but merely to state that the additional financial problems which such a decision might create cannot be taken into account within the framework of the present proceedings. Furthermore, it is apparent from the second Pfizenmayer report and the statements made by Mr Pfizenmayer at the second hearing that the two items of alleged aid to which the second procedure relates, namely the conversion of the loan from the Aufbaubank of Thuringia into a mortgage loan and deferral of payment of the balance of the purchase price under asset deal 1, have been taken into account in the applicant's liabilities. As for the saving the applicant could make from 31 December 2003 as a result of that deferral, Mr Pfizenmayer pointed out, without being contradicted either by the Commission or by Mr Arnold, that under German accountancy law it is not possible to submit an advance estimate of the extent of such a saving, that is, before repayment of the deferred debt.
109 The applicant has therefore managed to establish that it will suffer serious and irreparable damage if no interim measure is ordered. Since the condition relating to urgency is fulfilled in this case, the President of the Court considers it necessary to weigh up all the interests at stake.
Weighing of interests
Arguments of the parties
110 Regarding the weighing of interests, the applicant states that the damage it fears must be compared with that which the Commission may invoke (Case T-111/01 R Saxonia Edelmetalle v Commission [2001] ECR II-2335, paragraph 12, and Petrolessence and SG2R v Commission, cited above, paragraph 18). It submits that it is necessary to compare the damage which the applicant will suffer if interim measures are not granted but the contested decision is annulled with the damage to the Community interest if interim measures are granted but the main action is dismissed. In that regard, account should be taken not only of the serious and irreparable damage which the applicant will suffer if the present claim is rejected, but also of the loss of the 225 jobs it provides, the losses incurred by Mr and Mrs Geiß and also the fact that Schott would acquire or strengthen a dominant position on the market in question if the applicant goes bankrupt. The applicant has never engaged in the anti-competitive conduct which has been alleged, such as selling at a loss, and, in spite of the Commission's speculations in the contested decision (recitals 35 et seq., 51 and 101), its activities have therefore not had measurable detrimental effects on the market. At the first hearing, relying on the judgment of the Court of Justice in Case 222/84 Johnston [1986] ECR 1651, and on Article 52 of the Charter of Fundamental Rights, it emphasised the fact that it must always be possible to obtain interim measures against decisions ordering the repayment of State aid.
111 In its additional observations, the applicant states that its own turnover, amounting to about DEM 35 000 000 (EUR 17 895 215), is less than 1% of Schott's turnover, which is about DEM 4 000 000 000 (EUR 2 045 167 524). If recovery of the contested aid were suspended until judgment was given in the main proceedings, the Commission could not claim that there had been any restriction of competition to the detriment of that company. According to the applicant, since Schott will survive in any event, it is important to the Community interest to protect competition with it.
112 The Commission states that the Community interest requires, in the present case, the immediate recovery of the contested aid. Since its foundation, the applicant has survived as a result of numerous grants of aid in various forms, most of which the Commission was able to approve, after thorough examination, with the exception, in particular, of the purchase price waiver. The grant of suspension of operation which is sought could have an influence on similar applications which would probably be brought by the applicant if the Commission adopted other unfavourable decisions in respect of certain aid, whether or not already granted, in favour of the applicant, thus allowing the applicant to pursue its activities without effective monitoring of that aid, a task entrusted to the Commission under the Treaty. Referring to the Tubemeuse judgment (paragraph 51), the Commission maintains that, even where recovery has to be effected within the framework of bankruptcy proceedings, the withdrawal of unlawful and incompatible aid by means of recovery is the normal consequence of the unlawfulness established.
Findings of the President of the Court
113 It should be noted, first of all, that the first subparagraph of Article 88(2) EC provides that if the Commission finds that aid granted by a State or through State resources is not compatible with the common market it is to decide that the State concerned must abolish or alter such aid within a period of time to be determined by the Commission. It follows that the general interest in the name of which the Commission fulfils the tasks entrusted to it, by Article 88(2) EC and Article 7 of Regulation No 659/99, in order to ensure, essentially, that the functioning of the common market is not distorted by State aid harmful to competition, is particularly important (see to this effect Case T-86/96 R Arbeitsgemeinschaft Deutscher Luftfahrt-Unternehmen and Hapag-Lloyd v Commission [1998] ECR II-641, paragraph 74, and Government of Gibraltar v Commission, cited above, paragraph 108). The purpose of the obligation of the Member State concerned to abolish aid which is incompatible with the common market is to re-establish the previously existing situation (Case C-348/93 Commission v Italy [1995] ECR I-673, paragraph 26, and Alcan Deutschland, cited above, paragraph 23).
114 Consequently, in connection with an application for interim measures seeking the suspension of operation of the obligation imposed by the Commission to repay aid which it has declared to be incompatible with the common market, the Community interest must normally, if not always, take precedence over the interest of the aid recipient in avoiding enforcement of the obligation to repay it before judgment is given in the main proceedings.
115 However, it is possible for the recipient of such aid to obtain interim measures provided that the conditions relating to a prima facie case and urgency are met, as in the present case. To decide otherwise would risk making it practically impossible to use the opportunity, granted by Articles 242 EC and 243 EC, as provided for in Article 14(3) of Regulation No 659/99, of obtaining effective interim legal protection, even in cases relating to State aid. In that regard, it must be pointed out that such protection is a general principle of Community law which underlies the constitutional traditions common to the Member States (Johnston, cited above, paragraph 18, and Case T-77/01 Diputación Foral de Alava [2002] ECR II-81, paragraph 35). The principle is also laid down in Articles 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms and in Article 47 of the Charter of Fundamental Rights.
116 It is therefore necessary to ascertain whether there are exceptional circumstances in the present case which might justify balancing the interests in favour of granting interim measures.
117 It must be stated, first of all, that the contested aid, since it is only DEM 4 000 000 (EUR 2 045 167), represents less than 6% of the total of DEM 67 425 000 (EUR 34 473 855) of aid granted to the applicant under asset deal 1 and asset deal 2. Furthermore, with the exception of the purchase price waiver, the Commission does not dispute the compatibility of most of the other aid with various existing aid schemes (recitals 56 to 65 of the contested decision). It is only from the time the purchase price was waived in 1998 that the applicant actually began its financial activities. It is therefore probably unrealistic, in the present case, to consider that, if it had to repay the contested aid immediately, it would be able to regain its previous specific competitive position on the glass market or markets in question (since no specific market is identified in recitals 35 and 36 of the contested decision). As the applicant claims, such repayment could easily serve only to consolidate the dominant position occupied by Schott, the applicant's main competitor in the Community and the only one to express its views during the formal investigation procedure. Schott, whose dominant position is not denied by the Commission, has a turnover which is very significantly higher than that of the applicant. It cannot therefore be accepted that that competitor would suffer considerable damage if interim measures were granted in this case. Furthermore, Schott is also established in the Land of Thuringia.
118 It follows that there are exceptional and very particular circumstances in the present case which lean in favour of granting interim measures.
119 However, in the light of the Community interest in actual recovery of the State aid, including restructuring aid which is, a priori, granted to companies experiencing financial difficulties, full suspension of the operation of the contested decision until judgment is delivered in the main proceedings cannot be justified.
120 On the other hand, in the very particular circumstances of this case, the grant of limited interim measures is justified and is an appropriate response to the need to afford effective interim legal protection.
121 Although complying with the general interest, which requires that State aid which has been declared incompatible with the common market and recovery of which has been ordered, should, notwithstanding the particular circumstances of the present case, be recovered, at least partially, and since that is achievable, it is appropriate to order partial suspension of the operation of the contested decision until 17 February 2003, which is the date by which, according to the documents in the case and, above all, the explanations provided by the experts and the managers' statements, the applicant's position should have stabilised. That suspension must be subject to several conditions: first, the applicant is to lodge at the Registry of the Court of First Instance and at the Commission, by 5 August 2002, an interim report on its financial situation to 1 July 2002; second, the applicant is to repay to the BvS a first instalment of the contested aid in the sum of EUR 256 000 by 31 December 2002 and is to lodge at the Registry of the Court of First Instance and at the Commission, within one week of making the payment, written proof of the said part repayment of the contested aid; third, the applicant is to lodge at the Registry of the Court of First Instance and at the Commission, by 31 January 2003, a report on its financial situation to 31 December 2002.
122 On the basis of the latter report, the President of the Court will decide, after receiving any written observations from the Commission, to be lodged by 11 February 2003 at the latest, and, if necessary, after hearing the oral submissions of the parties again, whether the grant of additional interim measures in the present proceedings is justified.
123 It should be pointed out, furthermore, that, under Article 108 of the Rules of Procedure the judge hearing an application for interim measures may at any time vary or cancel an interim order on account of a change in circumstances (Case C-40/92 R Commission v United Kingdom [1992] ECR I-3389, paragraph 33, Joined Cases T-7/93 R and T-9/93 R Langnese Iglo and Schöller v Commission [1993] ECR II-131, paragraph 46, and Government of Gibraltar v Commission, cited above, paragraph 116). It follows from that case-law that, by a change in circumstances, what are especially envisaged are factual circumstances capable of altering the assessment made in each particular case of the criterion of urgency. Furthermore, according to the Court of Justice, that possibility reflects the fundamentally precarious nature in Community law of measures granted in interim relief proceedings (Case C-440/01 P(R) Commission v Artegodan [2002] ECR I-1489, paragraph 62).
124 Where appropriate, it will therefore be for the Commission to contact the Court of First Instance if, in particular, the interim report which the applicant is required to submit reveals that the serious and irreparable damage it fears is not connected with the obligation to repay the contested aid but with the applicant's level of overborrowing - as the Commission now claims but has not proved - and/or with the insufficient increase in the applicant's turnover during 2002.
Operative part
On those grounds,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
hereby orders:
1. The operation of Article 2 of Commission Decision 2002/185/EEC of 12 June 2001 on State aid implemented by Germany for Technische Glaswerke Ilmenau GmbH is suspended until 17 February 2003.
2. The suspension is subject to the following conditions: first, the applicant is to lodge at the Registry of the Court of First Instance and at the Commission, by 5 August 2002, an interim report on its financial situation to 1 July 2002; second, the applicant is to repay to the BvS a first instalment of the contested aid in the sum of EUR 256 000 by 31 December 2002 and shall lodge at the Registry of the Court of First Instance and at the Commission, within one week of making the payment, written proof of the said part repayment of the contested aid; third, the applicant is to lodge at the Registry of the Court of First Instance and at the Commission, by 31 January 2003, a report on its financial situation to 31 December 2002.
3. Costs are reserved.