61998CC0099_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
I Introduction
1. In the present case the Republic of Austria seeks the annulment of Commission Decision SG(98) D/1124 to open a formal investigation procedure under Article 93(2) of the EC Treaty (now Article 88(2) EC) in respect of State aid C 84/97 (ex N 509/96) in favour of Siemens Bauelemente OHG (hereinafter Siemens) for the modification of that company's semiconductor manufacturing plant in Villach.
2. The case turns primarily on the procedure governing notified State aid. At issue in particular is the effect of the principles established in that regard by the Court in Lorenz (hereinafter the Lorenz principles). The Court held in that judgment:
If the Commission, after having been informed by a Member State of a plan to grant or alter aid, fails to initiate the contentious procedure provided for in Article 93(2), by giving notice to the Member State concerned to submit its comments, the latter may, at the expiration of a period sufficient to enable the aid to undergo a preliminary investigation, grant the proposed aid, provided that it has given prior notice to the Commission, and this aid will then come under the system of existing aid.
3. Austria contends essentially that after the notification of the planned measure the Commission failed to initiate the procedure provided for in Article 93(2) within the period referred to in Lorenz and that Austria correctly gave notice of its intention to implement the aid. Under the principles established in Lorenz the aid thus became existing aid. Consequently the contested decision to open the formal investigation procedure under Article 93(2) must be annulled since it wrongly categorises the aid as new aid and prohibits the Austrian Government from paying the aid before the procedure under Article 93(2) has resulted in a final decision.
II Facts and procedure
4. In April 1996, press reports indicated that the Austrian authorities intended to provide aid to Siemens for the modification of its semiconductor production site in Villach.
5. By letter of 13 May 1996 the Commission requested Austria to supply details of the planned aid. By letter of 5 June 1996 Austria confirmed that it contemplated granting research and development aid to Siemens. Furthermore it declared that it would notify the planned measures in due course.
6. By letter of 21 June 1996 Austria notified the aid for approval. According to the notification, the aid was to be granted to a Siemens project in the field of power semiconductors. The total project costs of ATS 4 563.7 million would be covered to the extent of ATS 371 million by State aid provided partly by the federal authorities and partly by the Bundesland Kärnten and the city of Villach. The biggest portion of the notified aid was reserved for research and development (ATS 348.2 million), the rest for environmental protection measures (ATS 17 million) and training (ATS 5.8 million).
7. Following the notification and before the adoption of the contested decision to open the procedure under Article 93(2) of the Treaty, an exchange of letters between the Commission and Austria took place. That exchange, which is at the heart of the present proceedings, extended over a period of more than one and a half years.
8. The Commission requested further information on the notified measure on five occasions by letters of 26 July 1996, 17 February 1997, 2 May 1997, 6 August 1997 and 10 November 1997 (hereinafter the first, second, third, fourth and fifth letters). In each of those letters the Commission pointed out that a request for further information cancelled the start of the two-month period allowed for processing the notification and that according to the third sentence of Article 93(3) of the Treaty the Member States must not put their proposed measure into effect before the Commission has made its views known.
9. Austria replied by letters of 2 January 1997, 19 March 1997, 13 June 1997, 4 September 1997 and 20 November 1997.
10. At this stage of the Opinion that brief chronology suffices. The content of those letters will be discussed below when I assess the appropriateness of the Commission's requests for information.
11. In Austria's reply of 20 November 1997 to the Commission's fifth letter, the Austrian Government informed the Commission of its intention not to wait any longer and to implement the notified aid. In its view, the question contained in the Commission's fifth letter could have been answered easily from the documents and information already provided by Austria. Furthermore, the questions contained in the third and fourth letters could also have been asked earlier and did not concern essential elements of the project. Accordingly, the notification was completed and the Commission had been in possession of all the information necessary for its preliminary assessment at a much earlier stage. The fifth letter could thus not be taken as a request for necessary further information and could therefore not cancel the start of the period within which the Commission had to take a position on the notified aid. At most it could be interpreted as a request for Austria's consent to an agreed extension of the two-month period, which Austria refused to give. According to the judgment in Lorenz the envisaged aid had thus come under the system for existing aid and Austria could therefore put the aid into effect.
12. By an undated fax the Commission objected to Austria's plan to put the aid into effect. By letter of 10 December 1997 Austria stated that the fax could not be regarded as a proper objection.
13. By fax of 16 December 1997 the Commission gave notice to Austria of its decision taken that day to open a formal procedure according to Article 93(2) of the EC Treaty as regards the envisaged aid for Siemens and announced that a longer letter would follow.
14. The letter containing the text of the contested decision followed on 9 February 1998. It stated as its object
State aid Nr. C 84/97 (ex N 509/96) Austria
Measures in favour of Siemens Bauelemente OHG.
15. After describing the case history, the company and the aid proposal and giving its appraisal of the legality of the aid, the Commission reached the following conclusions:
On the basis of the above assessment, the Commission has serious doubts at this stage as to the compatibility of the proposed State aid with the common market within the meaning of Article 92(3) of the EC Treaty. Specifically, the Austrian authorities have not demonstrated the incentive effect of the proposed R & D aid, [have] not demonstrated that the aid is necessary, and [have] not demonstrated that the project is eligible for funding as "precompetitive development activity". [As f]or the environmental and training aid proposals, these have to be assessed against the criteria mentioned above.
The Commission has therefore decided to open the procedure under Article 93(2). The Commission hereby gives the Austrian Government the opportunity to present, within one month of the receipt of this letter, any comments and further relevant information.
The Commission reminds the Austrian authorities that under Article 93(3), the Member State concerned [must] ... not implement the proposed aid until the procedure allowed for in Article 93(2) has resulted in a final decision. ...
16. By letter of 6 March 1998 Austria submitted its comments to the Commission as requested together with further documentation on the substance of the case. However, it expressly reiterated its position on the illegality of the decision to open a formal procedure. Therefore, it stated, its comments and any further cooperation on the substance of the case were without prejudice to its main argument, namely that in accordance with the Lorenz judgment the Commission had lost the right to institute formal proceedings. The comments on the substance were made only in the alternative and in the interest of continued good cooperation with the Commission.
17. By application of 6 April 1998, registered at the Court on the following day, Austria introduced the present action for annulment of the Commission's decision of 9 February 1998
III The applicable procedural rules
18. Article 92(1) of the EC Treaty (now Article 87(1) EC) provides: Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts competition ... shall, in so far as it affects trade between Member States, be incompatible with the common market.
19. That prohibition is neither absolute nor unconditional. Article 92(3) in particular confers on the Commission a wide discretion to allow aid by way of derogation. In that regard, the assessment of whether an aid measure is or is not compatible with the common market requires the examination and appraisal of economic facts and conditions which may be both complex and liable to change rapidly.
20. Article 93 of the Treaty provides for procedures under which it is the Commission's exclusive role to monitor aid schemes and to keep them under constant review. Any finding that aid might be incompatible with the common market should, subject to review by the Community Courts, be the outcome of an appropriate procedure for the implementation of which the Commission is responsible. Article 93(3), which is of particular relevance for the present case, states as follows:
The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the common market having regard to Article 92, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measure into effect until this procedure has resulted in a final decision.
21. Under Article 94 of the EC Treaty (now Article 89 EC) the Council, acting on a proposal from the Commission and after consulting the Parliament, may adopt appropriate regulations for the application of Articles 92 and 93. It may in particular determine the conditions in which Article 93(3) shall apply.
22. Until recently the Community legislature has used those regulatory powers only with regard to specific sectors such as agriculture, transport and shipbuilding.
23. Thus the general procedural rules for the application of Articles 92 and 93 developed gradually on the basis of the wording and the system of the Treaty through judgments of the Community Courts. On several procedural questions the Commission also issued communications to Member States and published notices in the Official Journal of the European Communities.
24. On 22 March 1999 (more than 40 years after the entry into force of the Treaty of Rome) the Council adopted Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (hereinafter the Regulation). The Regulation contains legally binding general procedural rules applicable to aid in all sectors. It was adopted in order to codify and reinforce the previous practice of the Commission and to increase transparency and legal certainty.
25. In the present case, however, the Regulation does not apply. The Commission adopted the contested decision more than a year before the Regulation entered into force in April 1999.
26. It might nevertheless be argued that the Regulation contains valuable information about the state of the law before its entry into force, since one of its declared objectives is to codify the Commission's preexisting practice. That seems to have been why the Commission referred several times in the course of the oral procedure to rules contained in the Regulation.
27. However, even in so far as the Regulation is a codification the question may still arise whether the preexisting practice was lawful. More importantly, in so far as it goes beyond the preexisting practice the Regulation is of no relevance to the present case. It must be kept in mind that the Regulation is also intended to reinforce the former practice, which presumably means to strengthen the control of aid. In fact the Regulation introduces new instruments into the control system and modifies in several important respects the existing mechanisms.
28. Moreover, in any given procedural system the rights and obligations of the different actors are closely interconnected and each procedural rule is inextricably linked to the others. Since the new system established by the Regulation strikes a somewhat novel and different balance between the interests of the Community, of Member States and of other interested parties, it would in my view be hazardous to isolate individual rules of that Regulation and to claim that those rules (which would be necessarily taken out of their context) codify the preexisting state of the law.
29. In the light of the foregoing, I will in the present case base my analysis exclusively on the former procedural regime shaped as already stated by the wording of Article 93 of the Treaty itself, the case-law of the Court and communications from the Commission.
30. Since both parties also refer to a document published by the Commission in 1995 and entitled Guide to procedures in State aid cases (hereinafter the guide), I must make some preliminary remarks about the status of that document.
31. The guide was apparently neither communicated by letter to the Member States nor published as a communication from the Commission in the C series in the Official Journal of the European Communities.
32. The book in which the guide is contained states in its introduction as follows:
... This volume is a collection of the basic texts on State aid, showing how the Community competition policy has developed in this area. ... To provide as complete a picture as possible, the collection includes texts of different kinds, which have not necessarily been published in the Official Journal and naturally also have differing legal status. ...
33. The guide itself contains in an introductory section the following statements:
... [T]he procedural rules in State aid cases have never been codified. This brief guide is intended to make up for that deficiency. The source materials the Treaty articles, Council and Commission legislation, communications from the Commission to the Member States and notices in the EC Official Journal are reproduced or in the case of Court judgments summarised elsewhere in this volume. ...
Legal status
The guide attempts to describe the current state of law and practice derived from these various sources. The Commission's understanding of the law is, of course, subject to any different interpretation ultimately given to it by the Court of Justice. Nor does the guide preclude the adoption of different procedural rules for State aid in particular sectors or circumstances at a later date.
34. In my view, the guide as such is not intended to and, in any event, cannot directly create rights or obligations. Its declared purpose is to describe the current state of the law. It expressly subordinates the Commission's understanding of the law to the interpretation ultimately to be given to it by the Court. Its objective is thus descriptive and not normative. Even if it was intended to create new rights or obligations it could not validly do so. Under the Treaty the Commission has no power to adopt legally binding rules regarding State aid procedure.
35. Member States and other interested parties may however rely on the principles of equal treatment and the protection of legitimate expectations. One of the guide's objectives is to describe the current state of the Commission's practice. It was published in order to further transparency and to codify the current state of the law. Even if the guide does not have the character of rules of law which the Commission is always bound to observe, it nevertheless sets forth rules of conduct indicating the practice to be followed. Therefore, as in the case of any other internal directive, the Commission may not depart from the rules presented in the guide without giving reasons, since otherwise the principle of equal treatment would be infringed. The same follows from the principle of legitimate expectations. It is well established that the Commission may not depart without an appropriate warning from a settled administrative practice. The guide constitutes conclusive evidence for the existence of such a settled practice.
36. I turn now to a short description of the basic procedural principles governing the control of State aid, in order to place the rules established by the Court in Lorenz within their context.
37. The procedural regime as laid down in Article 93 of the Treaty and developed through the Court's case-law is different in respect of existing and new aid. Whilst the former is subject to Article 93(1) and (2), the latter is governed by Article 93(2) and (3) of the Treaty.
38. Article 93(1) entrusts the Commission with the task of keeping existing aid under constant review in cooperation with the Member States. In the framework of that review the Commission proposes to the latter any appropriate measures required by the progressive development or by the functioning of the common market. Under Article 93(2), if, after giving notice to the parties concerned to submit their comments, the Commission finds that aid is not compatible with the common market having regard to Article 92 of the Treaty, or is being misused, 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.
39. As regards new aid, Article 93(3) institutes a system of preventive control. The Commission must be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the common market having regard to Article 92, it must without delay open the contentious procedure under Article 93(2). The last sentence of Article 93(3) prohibits the State concerned from putting its proposed measures into effect until that procedure has resulted in a final decision.
40. In its judgment of 11 December 1973 in Lorenz and in subsequent judgments the Court has held that the initial stage of review under Article 93(3) has as its object to allow the Commission to form a prima facie opinion on the partial or complete conformity with the Treaty of the plans which have been notified to it. The objective pursued by that provision, which is to prevent the implementation of aid contrary to the Treaty, implies that the prohibition laid down by the last sentence of Article 93(3) is effective during the whole of the preliminary period. Therefore, in order to take account of the interest of Member States of being informed of the position quickly in spheres where the need to intervene may be urgent, the Commission must act diligently. If the Commission, after having been informed by a Member State of a plan to grant or alter aid, fails to initiate the contentious procedure provided for in Article 93(2), the latter may, at the expiration of a reasonable period, which the Court has considered should be two months (hereinafter the Lorenz period), grant the proposed aid, provided that it has given prior notice to the Commission, and this aid will then come under the system of existing aid.
41. Furthermore, according to the same case-law, if, at the end of the preliminary examination, the Commission considers that the aid conforms with the Treaty, it is in the interest of good administration to inform the State concerned. The aid in question, implemented by the State concerned after it has been informed of the Commission's positive assessment, becomes existing aid subject to the system of permanent control under Article 93(1) of the Treaty. If, however, the Commission considers that the aid in question is not compatible with the common market, it must without delay open the contentious procedure under Article 93(2), which implies the obligation to give notice to interested parties to submit their comments within a determined period of time.
IV Admissibility
42. As a preliminary point it must be established whether Austria's action for the annulment of the decision to open the contentious procedure under Article 93(2) of the Treaty is admissible in view of the fact that the final decision on the compatibility of the aid measure with the common market has not yet been taken.
43. It follows from the judgments in Spain v Commission and in Italy v Commission that a Commission decision to initiate the procedure provided for in Article 93(2) may in certain circumstances be an actionable decision under Article 173 of the EC Treaty (now Article 230 EC).
44. According to those judgments a Member State must be able to challenge such a decision where it classifies aid as new aid, thus determining the choice of the corresponding procedure. Such a decision has legal effects in that, in accordance with Article 93(3), it prevents the State from implementing the aid proposal submitted to the Commission. Moreover, those effects are irreversible: either the Member State complies with the standstill obligation, with the consequence that the detrimental effects of the resulting delay cannot be effaced by a subsequent decision that the aid is compatible with the common market or by proceedings brought against a final decision of the Commission; or else it implements the aid, with the consequence that even a final decision by the Commission declaring the aid compatible with the common market cannot regularise the implementing measures which must be deemed to have been adopted in breach of the prohibition laid down in the last sentence of Article 93(3).
45. In the present case Austria considered that under the Lorenz principles the notified aid measure had come under the system for existing aid. The Commission disagreed. In the contested decision it reminded the Austrian authorities of the standstill obligation under Article 93(3). It thus by implication classified the aid as new aid, with the aforesaid potentially detrimental legal consequences for Austria. Accordingly, Austria's action for annulment is admissible.
V Substance
46. As already stated, Austria essentially argues that under the Lorenz principles the aid in issue became existing aid within the meaning of Article 93(1). Consequently, the contested decision is invalid in that it wrongly treats the aid as new aid and prohibits Austria from implementing the aid before the procedure under Article 93(2) has resulted in a final decision.
47. The Commission in its defence relies on one main and two subsidiary grounds.
48. In its view, first, the principles established in Lorenz do not apply because the aid was implemented before any notification. The Commission contends that the Austrian authorities made an unconditional and legally binding promise to Siemens to grant the aid in issue before their first contacts with the Commission. Since Austria did not respect the standstill obligation under the third sentence of Article 93(3), it lost the right to invoke the Lorenz principles.
49. Secondly, and in the alternative, on the date on which the Austrian Government informed the Commission of its intention to implement the aid (20 November 1997) the period established by the Court in Lorenz had not yet expired. In that respect the Commission puts forward two arguments. On the one hand, the period never began to run since Austria's notification was never complete. On the other hand, the period to be allowed should be longer than two months in view of the specific circumstances of the case.
50. In the further alternative (if on 20 November 1997 the Lorenz period had already expired), the Commission argues that the aid in question did not automatically become existing aid. Where a Member State invokes the Lorenz principles the Commission has a right of objection and in the present case it exercised that right in the correct form and in time.
51. In the light of those arguments the following questions arise:
Did Austria put the aid into effect before notification and are the Lorenz principles therefore inapplicable?
If the Lorenz principles are applicable, when did the Lorenz period start to run?
Was the duration of the Lorenz period two months?
If the Lorenz period had expired, did the Commission have a right of objection and did it exercise that right in the correct form and in time?
A Do the principles established in Lorenz apply?
52. It is well established case-law that a Member State cannot invoke the Lorenz principles where it has put a planned aid measure into effect before notification. The judgment in Lorenz was based inter alia on the interest of Member States in being informed rapidly in situations where an aid measure is urgently required. That legitimate interest does not exist where a State has put the measure into effect before notification. If a Member State wishes to implement measures as rapidly as possible and has doubts as to whether a planned measure is State aid, it may safeguard its interests by informing the Commission, thus placing the latter under an obligation to define its position within a period of two months.
53. The Commission contends that in the present case Austria put the measure in favour of Siemens into effect before notification.
54. In its view, putting into effect in Article 93(3) means not only the action of granting aid to the recipient, but also the prior action of instituting the aid at a legislative level according to the constitutional rules of the Member State concerned. Aid is therefore deemed to have been put into effect as soon as the legislative machinery enabling it to be granted without further formality has been set up.
55. Furthermore, the Commission argues that under Austrian law a written promise to grant aid triggers the authorities' legal obligation to grant the aid. Such a promise therefore has the same effects as legislation instituting aid and puts aid into effect for the purposes of the last sentence of Article 93(3).
56. In order to prove that Austria made such a legally binding promise the Commission relies on two newspaper articles published on 5 April 1995 and 26 April 1996. The first indicates that Villach was in competition for the Siemens investment with other sites in Eastern Germany and in Ireland and that Chancellor Vranitzky had in principle given his assurance that aid in favour of Siemens would be granted. The second quotes a manager of Siemens as saying that the Siemens board of directors was in favour of the investment in Villach since the Austrian Federation, the Land Kärnten and the city of Villach have given their written assurance to Siemens to grant aid of ATS 370 million. The Commission also relies on an internal letter of 16 February 1996 in which the management of the Siemens semiconductor unit asks the Siemens board to release the necessary funds for the investment in Villach and which refers to a recommendation by the competent Austrian authority to the Austrian Finance Ministry to grant aid of ATS 371 million.
57. In my view, the evidence submitted to the Court does not support the Commission's contention that Austria had made a legally binding and unconditional promise to grant the aid in question. Austria and Siemens appear to have been always aware of their obligations under the Community State aid rules. The evidence also suggests that throughout the procedure the Commission itself treated the aid as aid notified prior to implementation.
58. First, it is common ground that even at the date of the introduction of the present action for annulment the Austrian authorities had not granted the envisaged aid.
59. Secondly, the press articles and the letter cited by the Commission are not conclusive. The press articles do not mention whether Austria's alleged promise was conditional or unconditional. The first article refers to an assurance given only in principle, which suggests the existence of conditions. And the letter of 16 February 1996 mentions the notification to the EU as a necessary preliminary requirement. In any event, it must be doubtful whether even more detailed press reports could be regarded as conclusive.
60. Thirdly, throughout the administrative procedure the Commission referred to the aid as notified aid and registered it under N 509/96 (registration for notified aid) and not under NN (registration for non-notified aid). Even in the contested decision the Commission refers to the aid as notified aid.
61. Finally, and most importantly, Austria has submitted to the Court a letter of 18 April 1996 in which the Austrian authorities informed Siemens that they intended to grant aid in favour of the Siemens project in Villach to a maximum of ATS 371 million. That letter stated that the envisaged aid was subject to Commission authorisation and would only be granted if compatible with Treaty obligations.
62. It follows, without its being necessary to discuss in more detail the Commission's theories about the meaning of putting into effect, that in the present case Austria did not implement the planned aid measure in favour of Siemens before notification. Accordingly, the procedural rules governing notified aid, which include the principles established by the Court in Lorenz, apply.
B When did the period laid down by the Court in Lorenz start to run?
63. The parties disagree as to whether on 20 November 1997 the date on which the Austrian Government informed the Commission of its intention to implement the aid the period established by the Court in Lorenz had already expired. As stated above the Commission argues that the period in question began later than assumed by the Austrian Government and was in the circumstances of the case longer than two months. In the present section I will deal with the first issue and discuss whether the Commission's fifth letter with questions of 10 November 1997 could, as the Commission claims, cancel the start of the Lorenz period within which the Commission must terminate its initial assessment of the aid.
64. According to the Commission, the Lorenz period starts to run only when it has received a complete notification. A notification is incomplete when it does not contain all the information the Commission needs in order to form a view of the compatibility of the measure with the Treaty. If a notification is incomplete the Commission requests further information. That request cancels the start of the period allowed for processing the notification. The period then begins to run afresh from the date on which the requested further information is received.
65. The Commission also claims that it alone is competent to decide on the need for further information. It enjoys a wide discretion when assessing which questions are necessary. Consequently, any judicial review touching on the relevance of those questions must be limited to examining infringements of essential procedural requirements or misuse of power. Furthermore, the burden of proof as regards the relevance of questions lies with the contesting Member State. When assessing whether a request for further information is necessary one must also take into account the collegiate nature of the Commission and the difficulties that it entails, the political sensitivity of a given case and the potentially dangerous effects of the application of the Lorenz principles. As to those dangerous effects the Commission warns that the result may be that aid is granted before a decision has been taken on authorisation even though it may prove incompatible with the common market; that that result cannot be corrected by a subsequent application of Article 93(1) of the Treaty; moreover competitors do not have an appropriate remedy and the Commission might face claims for damages under the second paragraph of Article 215 of the EC Treaty (now Article 288 EC).
66. On the basis of that interpretation of the law the Commission objects to Austria's contention that the notification was completed at the latest by letter of 19 March 1997. In its view and in the circumstances of the case the third, fourth and fifth letters with questions of 2 May, 6 August and 10 November 1997 were necessary for the assessment of the aid measure in question.
67. The Austrian Government agrees with the Commission's basic views on when the Lorenz period begins. It accepts in particular the Commission's right to request further information, the effect of such a request on the beginning of the Lorenz period and the Commission's margin of appreciation as regards the relevance of questions.
68. Austria argues however that in view of the nature of the initial stage of the procedure neither the requirement of a complete notification nor the right to request further information should be construed too broadly. In its view, it is unacceptable that the Commission should artificially prolong the preexamination procedure by asking new irrelevant questions, each time shortly before the expiry of the two-month period. In the circumstances of the case the notification was completed after Austria's reply to the second letter and the information requested by the Commission in its third, fourth and fifth letters was not necessary to terminate the initial stage of the procedure. In any event, the Commission could and should have asked those questions at an earlier stage of the procedure. Finally, and in the further alternative, a total period of 19 months between the notification of the aid proposal and the decision to open the procedure under Article 93(2) goes beyond what is reasonable under Lorenz.
69. In order to resolve the issues raised by those arguments the following questions must be answered:
Is it correct, as both parties assume, that only a complete notification causes the Lorenz period to start running?
If so, when is a notification complete?
Once the notification is complete and the Lorenz period starts to run, can the Commission cancel the start by a request for further information with the result that it starts running afresh with the receipt of the Member State's reply?
Which party has to prove the start of the Lorenz period and what is the appropriate standard of judicial review?
In the circumstances of the present case, did the Lorenz period start to run, and if so, when?
(1) The requirement of a complete notification for the Lorenz period to start
70. In my view, the parties are right when they assume that only a complete notification starts the Lorenz period.
71. That follows, first, from the purpose of the obligation to notify laid down in the first sentence of Article 93(3), which is to provide the Commission with the opportunity to review in sufficient time (before implementation), and in the general interest of the Community, any plan to grant or alter aid. For the purposes of the initial review stage provided for by Article 93(3) the notification must enable the Commission to distinguish, swiftly and on completion of a simplified verification procedure, measures which as from their notification clearly appear to be compatible (or which are manifestly not even in the nature of aid) from measures which in contrast raise doubts as to their compatibility and therefore require further investigation.
72. Where a notification is fragmentary and incomplete in the sense that a Member State fails to provide information essential for that first evaluation, the Commission's task of concluding its initial review in a useful way is made impossible or at least much more difficult. If an incomplete notification were to trigger the start of the Lorenz period, the Commission would de facto be obliged to initiate the second stage of the procedure, with its greater consumption of resources, in many unnecessary cases.
73. That is why the Court has expressly held that it is only after being put in a position to form its first opinion that the Commission is bound to act without delay and to open the second stage of the procedure under Article 93(2).
74. Secondly, where a Member State fails to provide a sufficiently complete notification, its interest in obtaining legal certainty and being able to implement the aid as rapidly as possible (the main rationale underlying the Lorenz principles) is not worthy of protection.
75. The Court held in Lorenz that the Commission must act diligently and must take account of the interest of Member States of being informed of the position quickly in spheres where the necessity to intervene can be of an urgent nature by reason of the effect that these Member States expect from the proposed measures of encouragement. The Court also held that the Commission could not be regarded as acting with proper diligence if it failed to define its attitude within a reasonable period of two months.
76. The Commission's obligation to take a decision within two months is thus based on a combination of two considerations. The first is that the Commission must act in all administrative proceedings in accordance with the principles of good administration and take its decisions within a reasonable period of time. The second consideration is the more specific obligation to take account of the notifying Member State's interest in obtaining legal certainty and being able to implement the notified aid measure as rapidly as possible.
77. That second consideration is the main rationale for the Court's decision to impose on the Commission the precise and relatively short two-month time-limit for concluding the initial stage of the procedure. Clear-cut time-limits, such as the one established in Lorenz, are only necessary where legal certainty is at stake. In circumstances where the Community Courts rely on the principle of good administration alone, they do not usually postulate precise time-limits. Instead, they determine the reasonableness of the period needed according to the circumstances of the case and in particular in the light of the context, the various procedural stages followed by the Commission, the conduct of the parties in the course of the procedure, the complexity of the case and its importance for the various parties involved.
78. In my view, a Member State can invoke its interest in obtaining legal certainty and in being able to implement the aid rapidly only if it complies fully with the notification obligation contained in the first sentence of Article 93(3). Where a Member State obstructs the Commission's initial review by a fragmentary notification, its interest in rapid implementation of the aid cannot be particularly strong and it cannot legitimately expect the Commission to conclude the preliminary stage within two months. Such a Member State may rely only on the first consideration, namely the principles of good administration, which bind the Commission in all circumstances independently of the State's behaviour.
79. That interpretation is confirmed by the parallel case-law on the failure to comply with the standstill requirement laid down in the third sentence of Article 93(3). As already stated, the Court has held on several occasions that the strict Lorenz principles do not apply where a Member State has implemented the aid before notification or before a positive decision by the Commission. The Commission is then bound only by its general obligation to act diligently and within a reasonable period of time.
80. The same follows even more clearly from the judgments in Boussac and Italy v Commission in which the Member States concerned infringed both the obligation to defer the implementation of the aid under the third sentence of Article 93(3) and the obligation to make a sufficiently complete notification under the first sentence. In both cases more than two months elapsed between the initial letter from the notifying State and the Commission's decision to initiate the contentious procedure. None the less, the Court rejected the applicants' arguments that the Commission had failed to initiate the procedure under Article 93(2) within a reasonable period of time. In doing so the Court did not rely exclusively on the breach of the standstill requirement under the last sentence of Article 93(3), but referred also to the breach of the notification requirement under the first sentence of the same provision. The Court held in particular that the information provided by the notifying State was far from complete, that necessary particulars and definitive information were communicated only at a later stage and that delays in the procedure were caused by the State concerned not cooperating actively during the administrative inquiry. It may be deduced from that reasoning that the same solution should apply where the State concerned complies with the standstill requirement but infringes the requirement of a complete notification.
81. Accordingly, only a complete notification causes the Lorenz period to run.
(2) When is a notification complete?
82. Austria contends, as already stated, that the requirement of completeness should not be understood or applied too strictly.
83. Two alternative approaches are conceivable.
84. On the first view, any notification which allows the Commission to form a prima facie opinion and to decide whether the second, contentious stage of the procedure should be initiated is sufficient to trigger the beginning of the Lorenz period. In line with that approach, the Commission stated in 1981 in a letter to the Member States that a notification is incomplete for the purposes of the Lorenz principles when it does not contain the information necessary for the Commission to form an initial view of the compatibility of the measure with the Treaty.
85. Alternatively, taking a stricter approach, only a notification which contains all the information necessary for the Commission to take a final decision on the compatibility of the aid starts the period in question. Apparently more in line with that approach, the Commission states in the abovementioned guide that a notification is incomplete when it does not contain the information necessary for the Commission to form a view of the compatibility of the measure with the Treaty. The new procedural Regulation follows the second approach.
86. In my view, in the field of State aid control the Member States have a general obligation to provide the Commission in good faith with all the necessary and relevant information at their disposal. That follows from the Member States' obligation to cooperate with the Commission as laid down in Articles 93(1) and 5 of the EC Treaty (now Article 10 EC).
87. That does not however resolve the more specific issue of the minimum requirements for an initial notification to start the Lorenz period. It should not be forgotten that the initial notification is not the only opportunity for the Member States to provide and for the Commission to gather the necessary information for a final decision.
88. I consider that a notification which allows the Commission to form a prima facie opinion and to decide whether the contentious procedure must be initiated (the first approach) must suffice for the purpose of triggering the Lorenz period.
89. In order to conclude the first stage the Commission does not necessarily need the same amount and type of information as for its final decision. The initial notification must enable the Commission to distinguish measures which are manifestly compatible with the State aid rules from measures which raise serious doubts as to their compatibility. If the Commission has such doubts it may open the second stage of the procedure by giving notice to the parties concerned to submit their comments. The second stage enables the Commission to collect missing information in order to take a fully informed final decision.
90. The stricter second approach would also require something from the notifying State which might in many cases be impossible to deliver. Neither the notifying Member State nor the Commission knows ex ante what information will ultimately be necessary for a final decision on the compatibility of the aid. The need for further information may only become apparent in the course of the second procedural stage after the Commission has received the comments of third parties. Circumstances in which the notifying State provides from the outset all the information necessary for the final decision are therefore difficult to imagine.
91. For the same reasons the second approach conflicts with the principle of legal certainty and introduces instability in a mechanism designed to combat precisely that phenomenon. For the Lorenz principles to be effective the notifying State must be able to assess during the initial review stage whether its notification is sufficiently complete. Under the stricter second approach, however, a Member State which during the first stage provided in good faith all the information necessary for an initial evaluation of the aid might later and ex post be found unable to rely on Lorenz. Once the Commission has received the comments of third parties during the second stage, it might feel the need to request further information in order to take a final decision. I find it unacceptable that in such a situation the notifying State should retroactively lose its right to rely on Lorenz.
92. Accordingly, a notification is complete for the purposes of starting the Lorenz period where it contains all the information necessary for the Commission to form an initial view of the compatibility of the measure with the Treaty.
(3) The Commission's right to request further information and the effects of a request for information on the start of the Lorenz period
93. According to the guide, if a notification is incomplete the Commission requests the further information required. Such a request cancels the start of the Lorenz period. The period begins to run afresh from the date on which the further information requested is received.
94. The parties agree on the legality and usefulness of that basic mechanism. Austria maintains however that the Commission's right to request further information must be subject to limitations.
95. To my knowledge the Court has not yet expressly confirmed or denied the compatibility of the Commission's practice with the Treaty. It might even be inferred from the case-law that the Court was reluctant to address the issue. Advocate General Sir Gordon Slynn objected to it as otherwise the administration could in all cases and more than once extend time by asking for information. By contrast Advocate General Tesauro accepted it provided that it did not bring de facto within the scope of the preliminary examination tests and appraisals that should instead be carried out under the Article 93(2) procedure.
96. In my view, the right to request further information and the effects of such a request must be assessed mainly by reference to the requirement of a complete notification discussed above.
97. It follows from that discussion that, where an initial notification is complete or has subsequently been completed by, for example, replies to requests for information, the Lorenz period must automatically start to run. Once a notification is sufficiently complete a request for further information cannot retroactively cancel the beginning of the Lorenz period. The opposite solution would jeopardise the notifying Member State's legitimate interest in obtaining legal certainty and being able to implement the aid rapidly. If the Commission were to have a boundless right to prolong the initial review stage by new and ex hypothesi unnecessary requests for supplementary information, the danger of abuse would indeed be great and the purpose of the Lorenz principles could be undermined. The same follows from more general considerations of legal certainty. In particular, both national courts called upon to apply the directly effective prohibition contained in the third sentence of Article 93(3) and competitors must be able to ascertain when the Lorenz period started to run.
98. Where, by contrast, a notification is incomplete and does not enable the Commission to form a prima facie opinion, the Commission has not only the right, but even an obligation, to investigate further and to request supplementary information from the notifying State. That follows from its general obligation under the first indent of Article 155 of the EC Treaty (now Article 211 EC) and its specific role under Article 93. However, even in the case of an incomplete notification a request for information does not really cancel retroactively the start of the Lorenz period. There is no need for any such retroactive effect because in the absence of a complete notification the period in question never began to run. A request for further information must therefore be analysed merely as a statement by the Commission that in its view the notification is not yet complete and that consequently the Lorenz period has not yet started to run.
99. Accordingly, in the case of a complete notification a request for further information cannot cancel the start of the Lorenz period.
(4) The burden of proof and the standard of judicial review
100. It follows from the foregoing analysis that the completeness requirement is the decisive factor for the solution of the present case.
101. The Commission argues that the burden of proof as regards the need for supplementary information lies with the contesting Member State and that the Commission alone is competent to decide whether a notification is complete and therefore whether further questions are necessary. It also argues that it enjoys in that regard a wide discretion. Judicial review of the need for further questions must be limited.
102. In my view, as regards the first issue (the burden of proof), each party has to prove the facts on which its claim is based. Austria, which relies on the effects of the Lorenz doctrine, must therefore demonstrate either that its initial notification was complete or that it was subsequently completed sufficiently early for the two-month period to be concluded before 20 November 1997.
103. As regards the second issue (the standard of judicial review), it is appropriate to recall first the definition in issue: a notification is sufficiently complete where it allows the Commission to form a prima facie opinion on the compatibility of the aid.
104. The notion of a complete notification is thus not a precise one with clear boundaries. Even a prima facie assessment of the compatibility of an aid measure with the Treaty entails complex economic and social assessments. The borderline between information necessary for such a first assessment and insufficient information cannot be delimited exactly.
105. I accept therefore that the Commission enjoys a wide margin of appreciation as regards the necessity for further questions and that the Court should intervene only where the Commission distorts the facts, commits a manifest error of assessment of the facts, misuses its powers or abuses the procedure.
106. Contrary to the Commission's contention, however, the collegiate nature of the Commission, the political sensitivity of a case and the potentially dangerous effects of the Lorenz doctrine are not appropriate criteria to be taken into account when assessing whether the Commission has exceeded the limits of its margin of appreciation.
107. Whether a Member State's notification enabled the Commission to form a prima facie opinion or not is an objective question. Any subjective difficulties which the Commission encounters and which are not caused by the notifying Member State should not influence the assessment of the completeness of the notification. That would run counter to the main rationale underlying the Lorenz mechanism, namely to take account of the Member State's legitimate interest in obtaining legal certainty and being able to implement the notified measure as rapidly as possible. That interest does not become less worthy of protection where the Commission cannot agree internally, where the question is politically sensitive or where a failure by the Commission to act in time would have serious consequences.
108. Accordingly, first, Austria must prove that its notification was complete and that the Commission's requests for information were therefore not necessary. Secondly, the Commission enjoys in that regard a wide margin of appreciation and is subject only to limited judicial review. Thirdly, the limitation of the review is justified only by the complexity of the assessment; it is not justified by any political considerations.
(5) In the circumstances of the present case when did the Lorenz period start to run?
109. It will be recalled that Austria notified an aid package of ATS 371 million. The largest part was to be allocated to research and development (ATS 348.2 million), the rest to environmental protection measures (ATS 17 million) and training (ATS 5.8 million). Following the initial notification on 21 June 1996 the Commission requested further information on five occasions. Austria replied to the first four requests. Then, instead of answering the question contained in the Commission's fifth letter, Austria informed the Commission by letter of 20 November 1997 of its intention to implement the notified aid.
110. In order to assess whether the notification was completed before 20 November 1997, I will now look in more detail at the decisive exchange of letters.
111. By letter of 26 July 1996 (the first letter) the Commission requested further details of the envisaged aid since the initial notification did not contain all the information necessary to form an opinion on the compatibility of the measure with the Treaty. The first letter contained more than 20 detailed questions on the planned measure.
112. In September 1996 an informal meeting took place between representatives of the Commission, Austria and Siemens. Then some three months later, in January 1997, Austria sent a lengthy and detailed reply to the Commission's request for further information.
113. The Commission posed six supplementary questions on the aid (letter of 17 February 1997, the second letter), to which Austria replied by letter of 19 March 1997.
114. The appropriateness of the Commission's next steps in the procedure is contested by Austria.
115. On 2 May 1997 the Commission sent another letter to Austria (the third letter) in which it asked whether the notified training aid was to be granted according to a specific Guideline on the promotion of general training measures at the level of undertakings (Richtlinie zur Förderung von generellen betrieblichen Schulungsmassnahmen), which is one of the measures implementing the Austrian law on the promotion of the labour market (Arbeitsmarktförderungsgesetz).
116. In its reply of 13 June 1997 Austria stated that the training aid was to be granted on a different legal basis.
117. By letter of 6 August 1997 (the fourth letter) the Commission requested Austria to reply to three questions: first, what was the current state of technical advancement of the project and what project costs had been incurred so far? Secondly, what had been the object and the costs of the preliminary studies carried out between October 1995 and January 1996? Thirdly, as regards the new clean room at the heart of the new facilities in Villach for power semiconductors, for which the foundation stone had been laid in June 1996, when had the construction plans been completed and the construction contract signed?
118. Austria replied to those three questions by letter of 4 September 1997.
119. In its last letter with questions of 10 November 1997 (the fifth letter) the Commission pointed out that according to certain remarks made by the Austrian authorities the city of Villach had still to decide about its contribution to the Siemens aid and that the Commission was not sure whether the city's envisaged contribution had already been taken into account when notifying the aid. It thus requested Austria to confirm that the notified aid corresponded to the total amount of aid to be granted by the three donors Austria, the Bundesland Kärnten and the city of Villach.
120. As stated above, Austria contested in its letter of 20 November 1997 the appropriateness of the third, fourth and fifth letters and informed the Commission of its intention to implement the aid in accordance with the Lorenz principles.
121. In the contested decision the Commission gave, in essence, the following reasons for its serious doubts about the compatibility of the project with the common market and for therefore opening the second, contentious stage of the procedure:
As regards the research and development aid, Austria had not demonstrated the incentive effect of the proposed aid, had not demonstrated that the aid was necessary and had not demonstrated that the project was eligible for funding as a precompetitive development activity.
As regards the environmental aid, it remained to be established whether the funded project went beyond national and European legal requirements.
As regards the training aid, it remained to be established whether the training project must be classified as specific or as general vocational training.
122. On the basis of those factual elements Austria contends that its notification was completed by its letter of 19 March 1997 and at the latest by its letter of 4 September 1997. The Lorenz period therefore started automatically either on 24 March 1997 or at the latest on 10 September 1997 (the respective dates of receipt of the two letters). It follows that the fifth letter with questions of 10 November 1997 could not affect the running of the Lorenz period.
123. The Commission argues that its third, fourth and fifth letters with questions of 2 May, 6 August and 10 November 1997 were all necessary for its assessment of the aid and that even on 20 November the date on which Austria informed the Commission of its intention to implement the aid the notification was not yet complete.
124. In my view, Austria's analysis is correct. The evidence submitted to the Court shows that after receiving on 24 March 1997 Austria's reply to the second request for information, the Commission was in a position to form a prima facie opinion on the compatibility of the measure with the Treaty and that the Lorenz period therefore started to run on that date.
125. The first striking point in that regard is the very different nature of, on the one hand, the Commission's first and second letters with requests for information and, on the other hand, the third, fourth and fifth letters.
126. The first letter contains more than 20 detailed questions. In those questions the Commission refers extensively to statements made by the Austrian authorities in the initial notification. Most of the questions are concerned with the largest element of the aid package, namely research and development aid. Many of them address core issues such as the incentive effect of the aid and the classification of the aided activities as precompetitive development activity. The Commission's doubts in respect of those issues form the backbone of the contested decision to open the contentious procedure. The second letter contains six detailed questions, five of which directly refer to Austria's reply to the first letter. Three of the six questions concern again the research and development element.
127. By contrast, in its third, fourth and fifth letters the Commission asks only very few questions (respectively one, three and one). The questions contained in the third and fifth letters concern only ancillary aspects of the notified project, namely the training aid (less the 2% of the total package) and the financial contribution by the city of Villach (at most 6% of the notified aid). They concern not so much the compatibility of the notified measures, but rather the discovery and investigation of other unnotified measures (the abovementioned Richtlinie and a presumed separate aid by the city of Villach). In the light of convincing arguments advanced by Austria in the reply, the relevance of the three questions contained in the fourth letter is equally doubtful. None of the questions in the three letters refers directly to the notification or to answers given on earlier questions. Neither the questions in those letters nor Austria's replies are reflected to any significant extent in the contested decision. The serious doubts underlying that decision were already present before the Commission sent its third, fourth and fifth letters and none of those letters was designed to give Austria an opportunity to eliminate such doubts.
128. Background information submitted by the Commission to the Court constitutes the second element which clearly suggests that the notification was completed by Austria's reply to the second letter.
129. The Commission mentions in its defence an internal memorandum of 28 April 1997 (approximately six weeks after Austria's reply to the second letter with questions) submitted by Directorate General IV to Commissioner Van Miert. The competent Directorate General expressed in that memorandum doubts about the compatibility of the notified measure with the applicable framework for State aid for research and development and about the necessity of the aid. The Directorate General suggested consultation with the other Directorates General on the basis of a draft decision initiating the contentious procedure under Article 93(2) of the Treaty.
130. The Commission also mentions in its defence comprehensive and very complex discussions between various services of the Commission and within the college of Commissioners on draft decisions regarding several national aid projects in favour of semiconductor producers including the Austrian aid project at issue. According to the Commission, those discussions lasted from May 1997 to December 1997. The Commission mentions also a newspaper article of 20 June 1997 referring to Commissioner Cresson and entitled Cresson halts EU block on state aids to chips ventures.
131. All those elements lead to the conclusion that the fact-finding part of the Commission's investigation was completed with the receipt in March 1997 of Austria's reply to the second letter with questions. The Commission manifestly needed the supplementary nine months until its decision to open the second stage of the procedure in December not in order to collect further information but to reach an (internally controversial) decision on the basis of information already at its disposal.
132. It follows that the notification was completed by Austria's letter of 19 March 1997. As claimed by Austria the Lorenz period therefore started automatically on the date of receipt of that letter, namely on 24 March 1997. Since the third, fourth and fifth letters merely served the purpose of prolonging artificially the initial stage of the control procedure, the Commission used its right to request further information not for a legitimate purpose (completion of a fragmentary notification), but for the different and unrelated objective of gaining time. Consequently, the Commission abused the procedure in question and exceeded the boundaries of its margin of appreciation as regards the completeness of the notification.
133. I have already explained above why neither the collegiate nature of the Commission nor the political sensitivity of a given case, nor yet the potentially grave consequences of an application of the Lorenz doctrine, can be taken into account when assessing whether or not a notification was sufficiently complete to start the Lorenz period. In order not to repeat myself I would just add that the Commission had two perfectly legitimate options when confronted with the present politically sensitive case.
134. The Commission could, first, have asked Austria for an agreed extension of the two months Lorenz time-limit in order to allow more in- depth discussion within the Commission. Such an agreed extension is compatible with the Treaty and the case-law, since the entity protected by the Lorenz principles, namely the notifying Member State, must also have the right to waive that protection (at least temporarily). A notifying Member State can normally be expected to agree to such an extension, if there is a realistic chance that the Commission will decide not to open the second stage, more costly in terms of time and resources.
135. Secondly, protracted discussions within the Commission are an indicator of serious difficulties in determining whether a plan to grant aid is compatible with the common market. The best way to overcome those difficulties is to hear the views of other interested parties and therefore to consult other Member States and the sectors concerned. In that connection it must be kept in mind that the Commission is under no obligation at the preliminary stage to hear third parties. The Court has therefore held that whenever the initial examination does not enable the Commission to overcome all the difficulties involved, the Commission is under a duty to obtain all requisite opinions and for that purpose to initiate the procedure under Article 93(2).
136. I accordingly conclude that the Lorenz period started on 24 March 1997.
C Was the duration of the Lorenz period two months?
137. The Commission argues that the reasonable period of time for the completion of the initial stage of the procedure posited in Lorenz is not a strict deadline and that its duration depends on the circumstances of the particular case. That follows, in its view, from the formulation of the Lorenz judgment itself, from several statements in the Advocate General's Opinion in that case, from the fact that in certain cases the Commission is obliged to conclude the initial stage within a shorter period than two months and, finally, from the need to have flexible deadlines for the Commission to be able to take its often complex State aid decisions.
138. The Commission also argues that in the particular circumstances of the present case the duration of the Lorenz period was longer than two months. During the whole procedure Austria never mentioned the urgency of the case. In any event, the case cannot have been urgent, because Siemens realised the planned investments without waiting for a decision on the aid. Finally, Austria is barred from relying on the Lorenz period because it was itself responsible for a major part of the total delay.
139. In my view, it follows from the Lorenz judgment itself, in particular if read in the light of the Advocate General's Opinion, that the time-limit in question is of a mandatory nature.
140. It is true that the Court uses in the operative part of the judgment the seemingly open-ended concept of a period sufficient to enable the aid to undergo a preliminary examination. It is also true that in the body of the judgment the Court refers to a reasonable period.
141. However, the Court gave a specific definition of that concept for the purposes of the Lorenz situation and stated: It is appropriate ... to be guided by Articles 173 and 175 of the Treaty which, in dealing with comparable situations, provide for a period of two months.
142. In his Opinion Advocate General Reischl had proposed the principle eventually adopted, namely that notified aid becomes existing aid on the expiry of a reasonable period for a preliminary examination. But he suggested that the reasonable period required might vary in length from case to case. He admitted that such a solution had the disadvantage of introducing legal uncertainty, but in his view there was no other solution as long as the Council had not adopted, under Article 94 of the Treaty, a regulation determining precise time-limits. He also suggested that in order to alleviate the problem of the uncertain duration of the initial examination period the Commission could make provisional statements in which it declared that examination was still in progress and would not be completed until after a certain period of time.
143. Unlike the Advocate General, the Court was not ready to accept the disadvantages of legal uncertainty and therefore laid down the two-month time-limit in issue. Nor was it convinced by the idea of provisional statements by the Commission. Indeed the possibility of making such statements might have induced the Commission to prolong the initial stage artificially. As regards respect for the legislative powers of the Council, the Court expressly pointed to the absence of a procedural Regulation before positing the two-month time-limit. Respect for the institutional balance is, in my view, also the explanation for the Court's careful language (it is appropriate ... to be guided by Articles 173 and 175 of the Treaty).
144. The fact that Lorenz established a mandatory maximum time-limit is confirmed by the subsequent cases in which the Court quotes that judgment as laying down a two-month period and not merely a reasonable period.
145. Furthermore, to interpret Lorenz as laying down a flexible time-limit would manifestly conflict with the main rationale of that judgment, namely to protect the notifying States' interest in obtaining legal certainty and being able to implement the aid rapidly. As already stated, a notifying Member State must be able to ascertain ex ante whether it can go ahead on the basis that the aid has come under the system of existing aid. Legal certainty and thus a mandatory time-limit are particularly important where the issue whether an aid has become existing aid arises in national proceedings (as was the case in Lorenz).
146. The Commission itself has always interpreted Lorenz as laying down a mandatory maximum time-limit. For example, in the abovementioned letter to Member States the Commission states that it must complete the initial stage within a period set at two months by the Court of Justice.
147. The fact that the Commission has itself in certain cases set shorter time-limits is laudable since it helps to speed up procedures and furthers the interest of the notifying State in being able to implement the aid as rapidly as possible. If the Commission has set shorter time-limits then it must observe them, since a Member State can, in my view, rely on the principle of legitimate expectations. But a voluntary restriction of its own margin of action does not imply that the Commission has the power unilaterally to set time-limits longer than two months and thus to deprive the notifying Member State of rights established by the Court's case-law. As regards the possible need for more time for the initial review in complex cases, I have already stated that the Commission can always ask the notifying State for an agreed extension of the two-month period and that the latter normally has a strong incentive to give its assent.
148. As regards the alleged lack of urgency and Austria's own failure to speed up the procedure, the Commission stresses that Austria took approximately five months to respond to the first letter requesting further information and one and a half months to respond to the third letter. The latter delay was moreover caused by a mistake on the part of the Austrian Chancellery.
149. In that regard, it must first be stated that there is no legal obligation under the Treaty to reply rapidly to the Commission's requests for information so long as the State in question complies with the first and last sentence of Article 93(3) of the Treaty. It is merely in the notifying State's own interest to act swiftly in order not to contribute to the total delay. It follows that a Member State is barred from relying on Lorenz only where it infringes either the standstill or the notification requirement but not where it fails to reply rapidly to requests for supplementary information.
150. Furthermore, in view of the interests at stake, a procedure for the approval of notified aid must be presumed to be urgent in all cases where the Member State concerned has not expressly agreed to an extension of the available period for the initial review. Contrary to the Commission's view, that presumption is also valid in cases where the investment is made before the aid is granted. The notifying State and the undertaking concerned continue to have an obvious interest in rapid clearance of the aid plan in order to limit the financing costs of the investment in question.
151. Consequently, the duration of the Lorenz period was two months.
D Could the Commission validly object to Austria's decision to put the aid into effect and, if so, did it object in the proper form and in good time?
152. The Commission maintains that, after receiving prior notice from a Member State that it intends to implement a notified proposal in accordance with the Lorenz principles, the Commission may still, within a reasonably short period, raise an objection with the effect that the aid cannot be legally granted and does not become existing aid.
153. In its view, that right of objection follows, first, from a passage in the Lorenz judgment itself in which the Court held that aid which is implemented during the Commission's silence after a period necessary for its preliminary examination is subject to the rules on existing aid. Moreover, the obligation of a Member State to give prior notice of its intention to implement the aid as established by the Court in Lorenz makes sense only if the Commission has a right of objection. A right of objection is also essential in order to prevent the potentially serious consequences of the application of the Lorenz doctrine for the common market. Finally, in the absence of a right of objection the notifying Member State could itself effectively determine the scope and outcome of the procedure. Thus, even in cases where the expiry of the time-limit is miscalculated or where a notice has not reached the Commission (if wrongly forwarded, for example due to an error of transmission), the Commission would not be entitled to object and the aid would become existing aid.
154. Austria maintains in the first place that under the Lorenz principles the Commission does not enjoy a specific right of objection. In the alternative, it claims that in the circumstances of the case the Commission did not exercise that right in good time.
155. I find it doubtful whether, under the applicable procedural regime, the Commission enjoys, as it claims, a right of objection.
156. The decisive passages of the Lorenz judgment and later cases referring to it mention only two conditions for the Lorenz effect to take place: the aid comes under the system for existing aid and may be granted by a Member State if (a) the Commission fails to initiate the contentious procedure under Article 93(2) within two months and (b) the Member State concerned gives prior notice of the implementation of the aid. To postulate a right of objection would introduce a third condition never envisaged by the Court, namely the absence of an objection by the Commission within a certain period of time. With that third condition, legal uncertainty (as to what form the objection should take, within what period it should be raised or what its precise legal effects are) is reintroduced into a mechanism designed to resolve the issue of uncertainty.
157. Furthermore, contrary to the Commission's view, it appears that the Court postulated the obligation to give prior notice for other purposes than to enable the Commission to raise an objection. The purpose appears rather to have been to establish with legal certainty for all interested parties and for national courts the date after which the aid comes under the regime of existing aid and/or to facilitate the Commission's task of constant review of that type of aid.
158. Finally, if the Commission considers that the Lorenz period has not expired (for example because the notification was never complete), it does not need a special right of objection. Since one of the two abovementioned conditions for triggering the Lorenz effect is not fulfilled, the aid does not become existing aid but remains new aid. Consequently the Commission may validly take the decision to initiate the procedure under Article 93(2) of the Treaty and state in that decision that the standstill obligation under Article 93(3) continues to apply. Moreover, if there are doubts about the expiry of the Lorenz period, the burden of challenging the Commission's decision before the Court is on the Member State.
159. For the purposes of the present case, however, it is not necessary to decide whether or not the Commission has a right of objection. Even if the Commission enjoyed that right it was exercised too late.
160. At this point it is necessary to examine in more detail the events starting with Austria's letter of 20 November 1997 in which it informed the Commission of its intention to implement the aid.
161. The parties disagree on the date on which that letter reached the Commission. According to Austria the Commission received the letter on the same day, namely on 20 November 1997. The Commission contends that it received the document only on 24 November 1997.
162. By an undated fax which was apparently received by Austria on 28 November 1997 the Commission objected to Austria's plan to put the aid into effect and announced that it would take a decision on the notified measure at the appropriate moment.
163. By letter of 10 December 1997 Austria stated that the Commission's objection was unsubstantiated and could not be regarded as a proper one. Austria was thus still entitled to implement the aid.
164. On 12 December 1997 a meeting took place between the Commission, Austria and Siemens but did not produce any concrete results.
165. By fax of 16 December 1997 the Commission gave notice to Austria of its decision taken that day to open a formal investigation procedure under Article 93(2) of the Treaty. That fax states merely that the decision had been taken and a longer letter would follow.
166. The letter containing the contested decision followed on 9 February 1998.
167. As regards the proper form, to raise an objection can only mean to initiate within a given supplementary period of time the Article 93(2) procedure. Mere informal statements by the Commission that it objects to the Member State's decision to implement the aid cannot have legal effects in the context of the Lorenz principles. To take such informal statements into consideration would create legal uncertainty and provide the Commission with a further opportunity to prolong the initial stage of the procedure in situations where the notifying Member State considers that it has already lasted too long. That is also the position of the Commission in the abovementioned guide when it describes the raising of an objection as follows:
The Commission understands the case-law to mean that after receiving notice from the Member State that it intends to implement the proposal, the Commission may still, within a reasonable short period (say, two weeks), take a decision to open the Article 93(2) procedure.
168. It follows that the undated and unsubstantiated fax which apparently reached Austria on 28 November 1997 cannot be regarded as a proper objection.
169. As regards the running of time, it appears from a handwritten annotation on the cover sheet of Austria's letter of 20 November 1997 that the letter reached the Secretariat-General of the Commission on the same date. The fact that it was not registered by the Commission until 24 November 1997 is irrelevant for the purpose of calculating the time between prior notice and objection since a Member State has neither any influence on nor any knowledge of any internal transmission difficulties within the Commission.
170. The fax of 16 December 1997 in which the Commission informed Austria that it had decided on that day to open the procedure under Article 93(2) reached Austria more than three and a half weeks after its letter of 20 November 1997 and therefore, in my view, out of time. The Commission itself mentions in the quoted passage of the guide two weeks as an appropriate time-limit for initiating the Article 93(2) procedure. The Community legislature has imposed in the new regulation a time-limit of 15 working days. Under the procedural regime applicable in the present case, the period between the notice of implementation of the aid and the decision to initiate the Article 93(2) procedure must be shorter than three and a half weeks. That is because ex hypothesi the notification was completed at least two months before the Member State gave notice of its intention to implement the aid and the Commission therefore had sufficient time to decide whether to initiate the second stage of the procedure. Consequently, any supplementary period must be limited to the strict minimum. That reasoning applies a fortiori in the present case where the notification had been completed approximately eight months before Austria's decision to go ahead and where the Commission therefore had far more than two months to reach a decision.
171. The Commission's reaction on 16 December 1997 therefore came too late. It is accordingly unnecessary in my view to examine Austria's contention that the relevant date is not 16 December 1997 but 9 February 1998, the date of the Commission's letter containing the contested decision. If that date were taken into account, the delay would be manifestly excessive. It seems to me however that in a case like the present where an urgent response from the Commission is required, it is appropriate to have regard to the date on which the Commission communicates its decision to the Member State, even informally; it is realistic to accept that the formulation of the decision may take a substantial time. It is unnecessary however to pursue that question in the present case.
172. In any event the result in my view is that, even if the Commission had a right of objection, it did not exercise that right in time.
VI Conclusion
173. It follows from the foregoing that Austria was entitled to rely on the Lorenz principles; that on 20 November 1997 when it declared its intention to implement the aid the Lorenz period had expired; and that even if the Commission enjoys a right of objection it did not exercise that right in time.
174. I accordingly conclude that, since the contested decision wrongly categorises the aid as new aid and prohibits the Austrian Government from implementing the aid, it should be annulled.
175. In my opinion the Court should therefore:
(1) annul Commission Decision SG(98) D/1124;
(2) order the Commission to pay the costs.