JUDGMENT OF THE GENERAL COURT (Tenth Chamber)
8 September 2021 (*)
(State aid – Aid to Litgas for the supply of a minimum quantity of LNG to the LNG terminal at the sea port of Klaipėda – Decision not to raise objections – Safeguarding procedural rights – EU framework for State aid in the form of public service compensation – Service of general economic interest – Compensation for a service of general economic interest – Boil-off costs – Balancing costs – Security of supply – Article 14 of Directive 2004/18/EC – Body of consistent evidence)
In Case T‑193/19,
Achema AB, established in Jonava (Lithuania),
Achema Gas Trade UAB, established in Jonava,
represented by J. Ruiz Calzado, J. Wileur and N. Solárová, lawyers,
applicants,
v
European Commission, represented by K. Herrmann and A. Bouchagiar, acting as Agents,
defendant,
supported by
Republic of Lithuania, represented by K. Dieninis and R. Dzikovič, acting as Agents,
and by
Ignitis UAB, formerly Lietuvos energijos tiekimas UAB, established in Vilnius (Lithuania), represented by K. Kačerauskas, lawyer,
interveners,
APPLICATION under Article 263 TFEU seeking annulment of Commission Decision C(2018) 7141 final of 31 October 2018 in State aid case SA.44678 (2018/N) – modification of aid for LNG terminal in Lithuania,
THE GENERAL COURT (Tenth Chamber),
composed of A. Kornezov (Rapporteur), President, K. Kowalik-Bańczyk and G. Hesse, Judges,
Registrar: P. Cullen, Administrator,
having regard to the written part of the procedure and further to the hearing on 10 February 2021,
gives the following
Judgment
I.      Background to the dispute
1        The applicants, Achema AB and Achema Gas Trade UAB, are companies governed by Lithuanian law which form part of the group Achemos Grupė. Achema produces and supplies nitrogen fertilisers and chemical products. Achema Gas Trade, a subsidiary of Achema, is a supplier of natural gas.
A.      The 2013 decision
2        On 20 November 2013, the European Commission adopted Decision C(2013) 7884 final in which State Aid SA.36740 (2013/NN) was declared compatible with the internal market (‘the 2013 decision’).
3        That decision concerned State aid measures, adopted by the Republic of Lithuania in favour of Klaipėdos Nafta AB (‘KN’), which was majority-owned by the Lithuanian State. Those measures were intended to finance the construction and operation by KN of a liquefied natural gas terminal (‘the LNG terminal’) in the sea port of Klaipėda (Lithuania), in order to ensure security of gas supply in Lithuania. The aid made provision for three main components for financing the LNG terminal, namely:
–        a special levy imposed on all users of the gas transmission network (‘the LNG supplement’), collected by the transmission network operator and transferred to KN once approved by the national regulatory authority (‘the NRA’), in order to cover part of the costs of building the LNG terminal and the related infrastructure which cannot be financed by other sources, as well as the fixed costs of operating the terminal; provision was made to collect the LNG supplement for a period of 55 years from the launch of the LNG terminal;
–        a requirement for certain companies supplying heat and electricity (‘the obligated purchasers’) to purchase a minimal mandatory quota of gas imported through the LNG terminal (‘the purchase obligation’); the aim of that obligation was to ensure the technical minimum LNG volume necessary for the LNG terminal to remain operational at all times, estimated, at that time, at 0.54 billion cubic meters (bcm) per year (‘the LNG mandatory quantity’); an off-take quota was thus established for each obligated purchaser as a percentage of the LNG mandatory quantity; the quotas were to be purchased from the designated supplier (‘the designated supplier’); the purchase price paid by the obligated purchasers to the designated supplier was regulated by the NRA and covered the total costs borne by the designated supplier for the supply of the LNG mandatory quantity (cost plus); that system placed the costs linked to the supply of the LNG mandatory quantity on the obligated purchasers, who could, in turn, pass those costs on to their final consumers; the purchase obligation was planned to last for 10 years, but that period could be shortened if the development and integration of the Lithuanian gas market could ensure a minimal level of purchases enabling the LNG terminal to function in a stable manner without a purchase obligation;
–        the financing of the construction of the LNG terminal infrastructure was covered by a State guarantee.
4        In the 2013 decision, the Commission found, first, that the investment aid measures, namely the State guarantee and part of the LNG supplement (in so far as the latter covered investment costs), were compatible with the internal market on the basis of Article 107(3)(c) TFEU, and, second, that the operating aid measures, namely the purchase obligation and another part of the LNG supplement (in so far as the latter covered the fixed costs of operating the LNG terminal), were compatible with the internal market, in accordance with Article 106(2) TFEU.
5        By judgment of 12 September 2019, Achemos Grupė and Achema v Commission (T‑417/16, not published, EU:T:2019:597), the Court dismissed the action for annulment brought by Achema and Achemos Grupė against that decision. By judgment of 29 April 2021, Achemos Grupė and Achema v Commission (C‑847/19 P, not published, EU:C:2021:343), the Court dismissed the appeal brought by Achema and Achemos Grupė against the judgment of 12 September 2019, Achemos Grupė and Achema v Commission (T‑417/16, not published, EU:T:2019:597).
B.      Facts subsequent to the 2013 decision
6        On 10 February 2014, following a call for tenders, the Lithuanian Ministry of Energy appointed the public company Litgas UAB as the designated supplier.
7        On 21 August 2014, following a call for tenders, Litgas signed a contract with Statoil for the supply of LNG for 5 years, that is to say, until 2019, for a quantity of 0.54 bcm of LNG per year to be delivered in accordance with a predetermined schedule of four cargoes per year, delivered once per quarter.
8        On 1 January 2015, the LNG terminal entered into commercial operation and Litgas began to supply LNG to the LNG terminal upstream and, downstream, gas to the obligated purchasers.
9        Next, the Lithuanian authorities decided, without giving prior notification to the Commission, to make certain amendments to the aid measures forming the subject matter of the 2013 decision (‘the 2016 amendments’). Those amendments entered into force on 1 January 2016 and remained applicable until 31 December 2018 and are summarised as follows:
–        Litgas, as the designated supplier, was entrusted with a service of general economic interest, consisting of an obligation to provide a mandatory quantity of LNG to the LNG terminal (‘the SGEI at issue’); the SGEI at issue would be financed by a new component of the LNG supplement in favour of Litgas, the purpose of which was to compensate Litgas for the costs it incurred in connection with the SGEI at issue which were not entirely covered by the revenue generated by the resale downstream of gas at a regulated price; that new component of the LNG supplement in favour of Litgas would be added to the LNG supplement in favour of KN referred to in paragraph 3 above;
–        the methodology for calculating the regulated price paid by the obligated purchasers to Litgas for the purchase of the LNG mandatory quantity was changed; that price was now calculated by the NRA by reference to the market price, on the basis of the average gas market prices, taking into account data relating to contracts for the supply of gas traded on the Lithuanian gas exchange and on a bilateral basis;
–        the LNG mandatory quantity was reduced from 0.54 bcm per year to 0.37 bcm per year;
–        the quantity of gas that each obligated purchaser had to purchase from Litgas was now determined only on the basis of its individual demand for gas; if the gas demand from all the obligated purchasers taken together was less than the LNG mandatory quantity, Litgas was to sell the quantities not resold to obligated purchasers on the national or international market.
10      The objective of the 2016 amendments was, in essence, to place the economic burden associated with the supply of the LNG mandatory quantity not on the obligated purchasers, as was previously the case, but on all gas consumers. According to the 2016 amendments, the obligated purchasers were to purchase from the designated supplier only the quantities they needed at prices that were indeed regulated but reflected the average market price. By contrast, it was gas consumers, now liable to pay the new component of the LNG supplement the beneficiary of which was Litgas, who would finance the difference between the costs of supplying the SGEI at issue and Litgas’s revenues.
11      On 18 February 2016, following renegotiation of the contract referred to in paragraph 7 above, Litgas and Statoil signed an amended contract, according to which, first, the annual quantity of LNG supplied by Statoil to Litgas was reduced to 0.37 bcm per year, second, the duration of the contract was extended until 2024 and, third, the LNG price was reduced.
C.      Administrative procedure and the contested decision
12      The Lithuanian authorities pre-notified the 2016 amendments to the Commission on 26 February 2016.
13      On 7 July 2016, Achema and Achemos Grupė lodged a complaint with the Commission against the Republic of Lithuania, alleging that the 2016 amendments amounted to unlawful State aid incompatible with the internal market (‘the complaint’).
14      In January 2018, the Lithuanian authorities informed the Commission of their intention to modify the 2016 amendments as of 1 January 2019 (‘the 2019 amendments’). Those amendments, to be applicable from 1 January 2019 until 31 December 2023, can be summarised as follows:
–        the compensation granted to Litgas for the provision of the SGEI at issue, financed by the new component of the LNG supplement, would henceforth be calculated using a new methodology;
–        the purchase obligation would be abolished; thus, the obligated purchasers would now be able to obtain gas freely on the market, and Litgas would be exposed to market forces downstream.
15      On 9 July 2018, the Lithuanian authorities notified the Commission, in accordance with Article 108(3) TFEU, of the aid measure forming the subject matter of the 2016 amendments and that constituting the subject of the 2019 amendments.
16      On 31 October 2018, the Commission adopted Decision C(2018) 7141 final in State aid case SA.44678 (2018/N) relating to modification of the aid for the LNG terminal in Lithuania, a summary of which was published in the Official Journal of the European Union (OJ 2019 C 14, p. 1; ‘the contested decision’).
17      In the contested decision, in the first place, the Commission analysed, in recitals 102 to 208 of that decision, the 2016 amendments and concluded, in essence, that the new component of the LNG supplement in favour of Litgas intended to compensate for the SGEI at issue constituted unlawful State aid but was compatible with the internal market, in accordance with the Communication from the Commission on the European Union framework for State aid in the form of public service compensation (2011) (OJ 2012 C 8, p. 15; ‘the SGEI Framework’) and Article 106(2) TFEU.
18      In the second place, in recitals 209 to 226 of the contested decision, the Commission analysed the 2019 amendments and concluded, in essence, that the component of the LNG supplement in favour of Litgas intended to compensate for the SGEI at issue, as amended in 2019, constituted State aid compatible with the internal market, in accordance with the SGEI Framework and Article 106(2) TFEU.
19      In conclusion, while regretting that the Republic of Lithuania put into effect the new component of the LNG supplement, in favour of Litgas, during the period from 2016 until 2019, in breach of Article 108(3) TFEU, the Commission decided not to raise objections to the aid measures forming the subject matter of the 2016 and 2019 amendments, in accordance with Article 4(3) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 TFEU (OJ 2015 L 248, p. 9). In so doing, the Commission authorised the 2016 and 2019 amendments without initiating the formal investigation procedure provided for in Article 108(2) TFEU.
II.    Procedure and forms of order sought
20      The applicants brought the present action by application lodged at the Court Registry on 4 April 2019.
21      On 19 June 2019, the Commission lodged the defence.
22      The applicants lodged their reply on 4 September 2019.
23      The Commission lodged the rejoinder on 25 October 2019.
24      On 11 November 2019, the President of the Tenth Chamber of the General Court granted the Republic of Lithuania and Ignitis UAB, successor in title to Litgas, leave to intervene in support of the form of order sought by the Commission.
25      The Republic of Lithuania and Ignitis lodged their statements in intervention on 6 February 2020.
26      On 1 April 2020, the Commission informed the Court that it had no observations to make on the statements in intervention of the Republic of Lithuania and Ignitis.
27      On 3 April 2020, the applicants submitted their observations on the statements in intervention of the Republic of Lithuania and Ignitis.
28      On 8 May 2020, the applicants submitted a reasoned request for a hearing, under Article 106(2) of the Rules of Procedure of the General Court.
29      On 20 November 2020, in the context of the measures of organisation of procedure laid down in Article 89(3) of its Rules of Procedure, the Court requested the Commission to produce certain documents. The Commission complied with that request on 18 December 2020.
30      On 13 January 2021, by way of measures of organisation of procedure provided for in Article 89(3) of its Rules of Procedure, the Court invited the parties to express their views on the documents produced by the Commission on 18 December 2020. The Commission and the applicants complied with that request by letters of 26 and 29 January 2021 respectively.
31      The parties presented oral argument and answered the oral questions put to them by the Court at the hearing on 10 February 2021.
32      The applicants claim, in essence, that the Court should:
–        annul the contested decision;
–        order the Commission, the Republic of Lithuania and Ignitis to pay the costs.
33      The Commission, supported by the Republic of Lithuania and Ignitis, contends that the Court should:
–        dismiss the action;
–        order the applicants to pay the costs.
III. Law
34      The applicants submit a single plea in law in support of the action, by which they claim that the Commission infringed its obligation to initiate the formal investigation procedure under Article 108(2) TFEU, and, accordingly, infringed their procedural rights, on the ground that, according to the applicants, the Commission should have had doubts about the compatibility of the aid measures forming the subject matter of the 2016 and 2019 amendments with the internal market.
A.      Admissibility of the action
35      In the present case, neither the Commission nor the interveners dispute the admissibility of the action. However, since the conditions of admissibility of an action under Article 263 TFEU are a matter of public policy, they should be examined by the Court of its own motion (see, to that effect, judgment 25 March 2009, Alcoa Trasformazioni v Commission, T‑332/06, not published, EU:T:2009:79, paragraph 33).
36      According to the case-law, if the specific status of ‘interested party’ within the meaning of Article 1(h) of Regulation 2015/1589, in conjunction with the specific subject matter of the action, is conferred on an applicant, that status is sufficient to distinguish it individually, for the purposes of the fourth paragraph of Article 263 TFEU, where that action seeks, as in the case at hand, to safeguard the procedural rights available to it under Article 108(2) TFEU (see, to that effect, judgments of 24 May 2011, Commission v Kronoply and Kronotex, C‑83/09 P, EU:C:2011:341, paragraph 48, and of 27 October 2011, Austria v Scheucher-Fleisch and Others, C‑47/10 P, EU:C:2011:698, paragraph 44).
37      In the present case, it is not disputed that the applicants are ‘interested parties’ within the meaning of Article 1(h) of Regulation 2015/1589, ‘whose interests might be affected by the granting of aid’, which thus by definition have an ‘interest’ in the opening of the formal investigation procedure leading to the adoption of a decision by the Commission and, accordingly, have an interest in bringing an action against the contested decision. It is important to point out that (i) the applicants were among the main taxpayers in respect of the LNG supplement, (ii) Achema was one of the authors of the complaint lodged against the 2016 amendments, (iii) it had participated in the administrative procedure which led to the contested decision and (iv) Achema Gas Trade was a competitor of Litgas, the beneficiary of the aid.
38      It follows that the applicants are entitled to challenge the contested decision in their capacity as interested parties within the meaning of Article 1(h) of Regulation 2015/1589, by raising a single plea in law, alleging that the Commission infringed its obligation to initiate the formal investigation procedure under Article 108(2) TFEU, and, accordingly, infringed their procedural rights.
B.      Substance
39      The applicants adduce a body of evidence seeking to demonstrate the doubts that the Commission should have had at the time of its preliminary examination of aid measures forming the subject matter of the 2016 and 2019 amendments relating to (i) the length of the procedure; (ii) other circumstances in which the contested decision was adopted and (iii) the content of that decision.
40      It is appropriate to recall at the outset the principles governing the review of legality, on the basis of Article 263 TFEU, of a decision not to raise objections, before examining the body of evidence put forward by the applicants.
1.      Applicable principles
41      According to the case-law, the preliminary stage provided for in Article 108(3) TFEU is intended merely to allow the Commission a sufficient period of time for reflection and investigation so that it can form a prima facie opinion on the draft aid plans notified to it, thus enabling it either to conclude, without the need for detailed examination, that the aid is compatible with the FEU Treaty or, by contrast, to make a finding that the content of those plans raises doubts as to that compatibility (judgment of 3 May 2001, Portugal v Commission, C‑204/97, EU:C:2001:233, paragraph 34).
42      In that regard, where an applicant seeks the annulment of a decision not to raise objections on the basis of Article 263 TFEU, it essentially contests the fact that the decision taken by the Commission in relation to the contested measure was adopted without that institution initiating the formal investigation procedure, thereby infringing its procedural rights. In the context of that type of action, the applicant may, in order to preserve the procedural rights which it enjoys under the formal investigation procedure, rely only on pleas which show that the assessment of the information and evidence which the Commission had or could have had at its disposal during the preliminary examination phase of the measure notified ought to have raised doubts as to the compatibility of that measure with the internal market
(see, to that effect, judgments of 22 December 2008, Régie Networks, C‑333/07, EU:C:2008:764, paragraph 81; of 9 July 2009, 3F v Commission, C‑319/07 P, EU:C:2009:435, paragraph 35; and of 24 May 2011, Commission v Kronoply and Kronotex, C‑83/09 P, EU:C:2011:341, paragraph 59), bearing in mind that the information that the Commission ‘could have had at its disposal’ includes that which seemed relevant for the assessment to be carried out and which could have been obtained, upon request by the Commission, during the preliminary examination phase (see, to that effect, judgment of 20 September 2017, Commission v Frucona Košice, C‑300/16 P, EU:C:2017:706, paragraph 71).
43      The existence of doubts such as to justify initiating the procedure laid down in Article 108(2) TFEU is reflected in the objective existence of serious difficulties which the Commission encountered when examining whether the measure at issue constituted aid or whether it was compatible with the internal market. It is clear from the case-law that the concept of serious difficulties is an objective one. (see, to that effect, judgment of 21 December 2016, Club Hotel Loutraki and Others v Commission, C‑131/15 P, EU:C:2016:989, paragraph 31).
44      The existence of such difficulties must be sought both in the circumstances in which the contested measure was adopted and in its content, in an objective manner, comparing the grounds of the decision with the information available to the Commission when it took a decision on the compatibility of the disputed aid with the internal market. It follows that judicial review by the Court of the existence of serious difficulties will, by its nature, go beyond simple consideration of whether or not there has been a manifest error of assessment. A decision adopted by the Commission without initiating the formal investigation phase may be annulled on that ground alone, because of the failure to initiate the inter partes and detailed examination laid down in the FEU Treaty, even if it has not been established that the Commission’s assessments as to substance were wrong in law or in fact (see judgment of 6 May 2019, Scor v Commission, T‑135/17, not published, EU:T:2019:287, paragraph 100 and the case-law cited).
45      Moreover, in accordance with the objective of Article 108(3) TFEU and its duty of sound administration, the Commission may, amongst other things, engage in a dialogue with the notifying State or with third parties in an endeavour to overcome, during the preliminary procedure, any difficulties encountered. That power presupposes that the Commission may adjust its position according to the results of the dialogue engaged in, without that adjustment having to be interpreted, a priori, as establishing the existence of serious difficulties (see, to that effect, judgment of 21 December 2016, Club Hotel Loutraki and Others v Commission, C‑131/15 P, EU:C:2016:989, paragraph 35). It is only if those difficulties could not be overcome that they are found to be serious and that they must lead the Commission to have doubts, thus prompting it to initiate the formal investigation procedure (see, to that effect, judgments of 2 April 2009, Bouygues and Bouygues Télécom v Commission, C‑431/07 P, EU:C:2009:223, paragraph 61, and of 27 October 2011, Austria v Scheucher-Fleisch and Others, C‑47/10 P, EU:C:2011:698, paragraph 70).
46      It is for the applicant to prove the existence of doubts, which it may do by reference to a body of consistent evidence, concerning, first, the circumstances and the length of the preliminary examination procedure and, second, the content of the contested decision (judgments of 27 September 2011, 3F v Commission, T‑30/03 RENV, EU:T:2011:534, paragraph 55; of 8 January 2015, Club Hotel Loutraki and Others v Commission, T‑58/13, not published, EU:T:2015:1, paragraph 40; and of 6 May 2019, Scor v Commission, T‑135/17, not published, EU:T:2019:287, paragraphs 102 and 104).
47      According to the case-law, the partially incomplete and insufficient content of the contested decision may show that the Commission adopted that decision in spite of the existence of serious difficulties (see, to that effect, judgment of 10 February 2009, Deutsche Post and DHL International v Commission, T‑388/03, EU:T:2009:30, paragraph 118).
48      It is in the light of that case-law that it is necessary to examine the body of evidence adduced by the applicants in order to determine whether, taken together, that evidence shows that the Commission should have had doubts during the preliminary examination of the aid measures forming the subject matter of the 2016 and 2019 amendments.
2.      The evidence relating to the length of the administrative procedure
49      The applicants submit, in essence, that the extremely long duration of the entire administrative procedure, that is to say, approximately 2 years and 9 months, demonstrates the complexity of the measures at issue and constitutes objective evidence of the existence of serious difficulties in the examination of their compatibility with the internal market.
50      The Commission, supported by the Republic of Lithuania and Ignitis, maintains, in essence, that the length of the procedure was reasonable in the light of the particular circumstances of the case and that, in any event, the duration of the administrative procedure does not in and of itself support the conclusion that the Commission should have initiated a formal investigation procedure.
51      In that regard, it should be noted that, in the present case, the Commission merged into a single procedure the examination of the aid measure resulting from the 2016 amendments, which was the subject of both pre-notification by the Lithuanian authorities and of a complaint, and that of the aid measure resulting from the 2019 amendments. In those circumstances, it is necessary to examine, in the first place, the length of the procedure concerning the 2016 amendments and, in the second place, the length of the procedure concerning the 2019 amendments.
52      At the outset, it must be noted that the question in this case is not whether or not the length of the preliminary examination was reasonable but whether that duration is indicative of serious difficulties (see, to that effect, judgment of 27 September 2011, 3F v Commission, T‑30/03 RENV, EU:T:2011:534, paragraph 69). It is therefore not for the Court to examine, in the context of the present dispute, whether the length of the procedure could be justified and, consequently, whether or not the Commission infringed its obligation to give a decision within a reasonable time, but only whether the length of the procedure can objectively constitute evidence of the existence of serious difficulties during the examination of the measures at issue.
53      In the first place, as regards the length of the administrative procedure concerning the aid measure resulting from the 2016 amendments, it should be noted that it was, first of all, pre-notified by the Lithuanian authorities to the Commission on 26 February 2016, then the subject of a complaint on 7 July 2016 and, lastly, notified to the Commission by those authorities on 9 July 2018. Since the contested decision was adopted on 31 October 2018, it is apparent that the administrative procedure concerning the 2016 amendments lasted, in total, 2 years, 8 months and 5 days from the date of their pre-notification.
54      First, as regards the pre-notification procedure, it should be recalled that it was formalised in the Code of Best Practice for the conduct of State aid control procedures (OJ 2009 C 136, p. 13; ‘the 2009 Code of Best Practice’).
55      That code, applicable rationae temporis at the time of pre-notification, established a procedural mechanism the aim of which is to make State aid procedures more efficient, easier to apply and more predictable. Thus, although, as is moreover stated in paragraph 8 of the 2009 Code of Best Practice, that code does not alter any rights or obligations as set out in the FEU Treaty and the various regulations governing State aid procedures, the Commission cannot depart from its own rules under pain of being found, where appropriate, to be in breach of the general principles of law, such as equal treatment or the protection of legitimate expectations (see judgment of 3 September 2020, Vereniging tot Behoud van Natuurmonumenten in Nederland and Others v Commission, C‑817/18 P, EU:C:2020:637, paragraph 100 and the case-law cited).
56      The 2009 Code of Best Practice provides, in essence, in point 10, that the purpose of the pre-notification phase is to facilitate the notification of the proposed project in order to enable the Commission to carry out its preliminary examination optimally as soon as the notification is received. According to Article 2(2) of Regulation 2015/1589, the notification is to provide all necessary information in order to enable the Commission to take a decision pursuant to Article 4 (decisions on preliminary examination of the notification) and Article 9 (decisions to close the formal investigation procedure) of the regulation. The essential objective of the pre-notification phase is, therefore, to reduce the risk that the notification is found to be incomplete, thereby delaying the examination procedure of the notified project.
57      As regards the length of the pre-notification phase, it is apparent from paragraph 14 of the 2009 Code of Best Practice that, as a general rule, pre-notification contacts should not last longer than 2 months and should be followed by a complete notification. Should those contacts not bring the desired results, the Commission services may declare the pre-notification phase closed. The same paragraph of that code states that contacts may nevertheless last several months in complex cases.
58      In the present case, the pre-notification phase of the aid measure resulting from the 2016 amendments, which began on 26 February 2016, lasted 2 years, 4 months and 13 days until it was formally notified on 9 July 2018. It follows that the indicative time frames within which the pre-notification phase should generally be completed were greatly exceeded, which constitutes evidence, as is apparent from the very wording of the abovementioned passages of the 2009 Code of Best Practice, of the complexity of the case.
59      Second, the Court finds that the Commission also considerably exceeded the indicative time frames applicable to the examination of complaints concerning State aid.
60      It should be borne in mind that the second subparagraph of Article 12(1) of Regulation 2015/1589, in the version in force at the time when the complaint was lodged, required the Commission to examine ‘without undue delay’ any complaint submitted by any interested party. In addition, in accordance with point 47 of the 2009 Code of Best Practice, the Commission undertook to use its best endeavours to investigate a complaint within an indicative time frame of 12 months from its receipt.
61      In the present case, the period between the date on which the complaint was lodged, namely 7 July 2016, and the adoption of the contested decision on 31 October 2018, in which the Commission adopted a position on the complaint, was 2 years, 3 months and 24 days. The length of the examination of the complaint therefore greatly exceeded the indicative time frame of 12 months prescribed in the 2009 Code of Best Practice.
62      The mere fact that the Commission had to examine in parallel both the pre-notification of the aid measure resulting from the 2016 amendments and the complaint cannot explain the extremely long duration of the procedure. First, the subject matter of the pre-notification and that of the complaint were the same, that is to say, the 2016 amendments. The complaint did not therefore extend the scope of the examination of the measures at issue. Second, it must be stated that the 2016 amendments were made in a factual and legal context already known to the Commission, since the purpose of those amendments was to amend certain aspects of part of the aid measures which formed the subject matter of the 2013 decision, especially given that those amendments were adopted barely 3 years after the 2013 decision.
63      It follows that the particularly long duration of the administrative procedure concerning the aid measure resulting from the 2016 amendments constitutes an objective indication of the complexity of the particular case and of the existence of serious difficulties encountered by the Commission in its examination. Moreover, in paragraph 51 of its defence, the Commission itself acknowledges that the 2016 amendments were characterised by ‘a certain degree of complexity’.
64      In the second place, as regards the aid measure resulting from the 2019 amendments, it should be noted that that measure was first pre-notified by the Lithuanian authorities in January 2018, as stated by the Commission in its defence, then notified on 9 July 2018. Since the contested decision was adopted on 31 October 2018, the administrative procedure concerning the 2019 amendments lasted approximately 10 months in total, as from the date of their pre-notification.
65      As was pointed out in paragraph 57 above, pre-notification contacts should not generally take longer than 2 months, except in complex cases. In the present case, the pre-notification phase of the aid measure resulting from the 2019 amendments lasted approximately 7 months until the formal notification, which took place on 9 July 2018, which suggests that those amendments were somewhat complex, as the Commission itself acknowledges in paragraph 51 of its defence.
66      In the third place, contrary to the Commission’s contention, the very significant length of the administrative procedure in the present case, taken as a whole, cannot be explained by the fact that the Commission chose to examine together, in the same procedure and decision, two separate aid measures, namely that resulting from the 2016 amendments and that resulting from the 2019 amendments.
67      First, if the Commission had no doubts as to the compatibility of the aid measure forming the subject matter of the 2016 amendments with the internal market, it could have closed its examination of that aid within the indicative time limits laid down in the 2009 Code of Best Practice, and therefore well before the Lithuanian authorities envisaged introducing the 2019 amendments and the Commission became aware of them.
68      Second, even assuming that, as from the pre-notification, in January 2018, of the aid measure resulting from the 2019 amendments, the Commission examined only the latter, with the result that the pre-notification phase relating to the 2016 amendments lasted only from 26 February 2016 to January 2018, the fact remains that such a period, amounting to more than 22 months, is also very much longer than the indicative time limits laid down in the 2009 Code of Best Practice.
69      Similarly, although the Commission attempts to explain the length of the procedure by the ‘language applied’ and the ‘necessity of translation’, that argument is not substantiated in any way. The Commission does not specify the number or length of the documents which had to be translated or the delays apparently caused by the need for such a translation.
70      It must therefore be concluded that the length of the administrative procedure concerning the aid measure resulting from the 2016 amendments and, to a lesser extent, that of the procedure concerning the aid measure resulting from the 2019 amendments, constitutes evidence of the existence of serious difficulties.
71      That being so while the length of the preliminary examination can constitute an indication of the existence of serious difficulties, it does not of itself suffice to show the existence of such difficulties (see, to that effect, judgment of 24 January 2013, 3F v Commission, C‑646/11 P, not published, EU:C:2013:36, paragraph 32 and the case-law cited). It is only if it is reinforced by other factors that the expiry of a time period may lead to the conclusion that the Commission encountered serious difficulties necessitating initiation of the procedure under Article 108(2) TFEU (see, to that effect, judgment of 25 November 2014, Ryanair v Commission, T‑512/11, not published, EU:T:2014:989, paragraph 75).
3.      The evidence relating to the circumstances in which the contested decision was adopted
72      The applicants maintain, in essence, that several circumstances surrounding the adoption of the contested decision confirm that the Commission should have had doubts about the compatibility of the measures at issue with the internal market.
73      The circumstances relied on by the applicants concern, in essence, first, the exchanges between the Commission, the Lithuanian authorities and the applicants, second, the fact that the Lithuanian authorities allegedly submitted incomplete or incorrect information in the context of the procedure which led to the 2013 decision, third, the fact that the action for annulment brought against the 2013 decision was pending before the Court when the contested decision was adopted and, fourth, the fact that, in the contested decision, the Commission allegedly failed to analyse certain important facts and that decision allegedly contains misleading or erroneous statements.
74      The Commission, supported by the Republic of Lithuania and Ignitis, counters that the circumstances relied on by the applicants are incapable of establishing the existence of doubts justifying the opening of a formal investigation procedure.
75      It must be noted, at the outset, that the mere fact that discussions took place between the Commission and the Member State concerned during the preliminary examination phase and that, in that context, the Commission asked for additional information about the measures submitted to it for review cannot in itself be regarded as evidence that the Commission was faced with serious difficulties of assessment. It is however conceivable that the content of the discussions between the Commission and the notifying Member State during that phase of the procedure might, in certain circumstances, be capable of indicating the existence of such difficulties. In addition, the sending of a high number of requests for information to the notifying Member State by the Commission may, in association with the length of the preliminary examination, constitute an indication of serious difficulties (see, to that effect, judgments of 9 December 2014, Netherlands Maritime Technology Association v Commission, T‑140/13, not published, EU:T:2014:1029, paragraphs 73 and 74, and of 8 January 2015, Club Hotel Loutraki and Others v Commission, T‑58/13, not published, EU:T:2015:1, paragraph 47).
76      It is therefore appropriate to examine first the number, and then the content, of the exchanges between the Commission, the Lithuanian authorities and the applicants.
77      In the first place, as regards the number of exchanges between the Commission, the Lithuanian authorities and the applicants, it must be noted that, in the present case, the Commission addressed at least eight requests for information to the Lithuanian authorities, on 18 April and 15 November 2016, 2 February, 7 February, 21 April and 6 July 2017, and 31 July and 20 September 2018. The Lithuanian authorities replied to those requests for information on 9 June 2016, 27 January and 7 April 2017 (that reply concerned the requests for information of 2 and 7 February 2017), 24 April and 22 September 2017, and 3 September and 24 September 2018.
78      In addition, there were at least six meetings between the Commission and the Lithuanian authorities, on 25 June 2016, on an unknown date in November 2016, and on 9 November 2017, 8 February, 16 March and 10 April 2018.
79      Furthermore, the complainants met with the Commission on 30 June 2016 and 19 December 2017. On 4 October 2016, the Commission sent the complainants an email reporting on the progress of the complaint.
80      It is apparent from the content and chronology of those exchanges that most of them concerned the 2016 amendments. Six of the requests for information referred to in paragraph 77 above, that is to say, those of 18 April and 15 November 2016, 2 February, 7 February, 21 April and 6 July 2017, concerned the 2016 amendments only, whereas the other two, of 31 July and 20 September 2018, concerned both the 2016 and 2019 amendments. The complaint related to the 2016 amendments only. Similarly, it is apparent from the content and the chronology of the discussions that took place at the meetings between the Commission and the Lithuanian authorities that those of 25 June, November 2016 and 9 November 2017 related exclusively to the 2016 amendments, whereas those of 8 February and 10 April 2018 concerned above all the 2019 amendments, and the meeting of 16 March 2018 concerned both the 2016 and the 2019 amendments. The meetings between the Commission and the complainants of 30 June 2016 and 19 December 2017 concerned the 2016 amendments.
81      In the second place, as regards the content of the exchanges between the Commission, the Lithuanian authorities and the applicants, it should be noted that those exchanges highlight the complexity of the 2016 amendments and the difficulties encountered by the Commission in its examination of those amendments.
82      First, the requests for information sent by the Commission to the Lithuanian authorities set out a long list of, in total, more than 100 questions and sub-questions, some of them complex, concerning various aspects of the 2016 amendments, such as the possibility of operating the LNG terminal on a standby regime, the calculation and scope of the compensation granted to Litgas, and the costs incurred by Litgas in connection with the SGEI at issue, the need for the purchase obligation, and the structure of the regulated price paid, downstream, by the obligated purchasers to Litgas.
83      Second, it is apparent from those exchanges that the idea of amending certain essential elements of the 2016 amendments, which led to the subsequent adoption of the 2019 amendments, emerged during exchanges between the Commission and the Lithuanian authorities, which suggests that the Commission probably had doubts as to the compatibility of the 2016 amendments with the internal market. That is an indication that the Commission was faced with serious difficulties of assessment during its investigation.
84      Thus, first of all, in its request for information of 15 November 2016, the Commission asked the Lithuanian authorities about the possibility of shortening the 10-year period in which the purchase obligation was planned to be in force, and asked them whether they were prepared to amend the pre-notified measure in order to limit the purchase obligation only to periods when the minimum regasification capacity could not be reached based on capacity bookings that were not triggered by the purchase obligation (questions 15 and 16).
85      Next, according to the minutes of the meeting of 9 November 2017, drawn up by the Commission, the Lithuanian authorities were ‘open to consider’ the possibility of abolishing the purchase obligation and limiting the compensation granted to Litgas. Furthermore, according to the minutes of the meeting between the Commission and the complainants of 19 December 2017, drawn up by the Commission, the Commission stated that ‘the compensation mechanism [for the SGEI at issue] may need to be re-evaluated’ and that it ‘may seek to introduce competitive pressure on the downstream market’.
86      According to an email from the applicants’ lawyer annexed to the application, containing a summary of the exchanges that took place during that meeting, the Commission informed the complainants that it intended to require the Lithuanian authorities, first, to abolish the purchase obligation in order to ‘open the way for Achema’s subsidiary and other potential gas suppliers to compete with Litgas on the downstream market’ and, second, to bring about a change in the methodology for calculating the compensation granted to Litgas in order to ‘reduce the distortions of competition and bring the situation closer to normal market conditions’. The Commission’s argument that that email has no probative value must be rejected, since the content of that email, drafted in tempore non suspecto, corresponds, in essence, to that of the minutes of the same meeting drawn up by the Commission.
87      Moreover, according to the minutes of the meeting between the Commission and the Lithuanian authorities of 10 April 2018, drawn up by the Commission, the Lithuanian authorities insisted on the need to compensate Litgas for the balancing costs, whereas the Commission had reiterated that Litgas should be exposed to market forces on the downstream market.
88      Finally, it is apparent from the reply of the Lithuanian authorities of 3 September 2018 to the Commission’s fifth question contained in the request for information of 31 July 2018 that the Commission asked the Lithuanian authorities no longer to compensate Litgas for balancing costs as from 2019.
89      Those circumstances indicate that the exchanges in question did not relate exclusively to factual or technical information, the purpose of which was to enable the Member State to prepare a complete notification, but also contained evidence showing the existence of doubts on the part of the Commission as to certain essential elements of the 2016 amendments, thus demonstrating the serious difficulties of assessment encountered by the Commission.
90      Therefore, contrary to the assertions of the Commission and the interveners, the number and content of the exchanges between it, the Lithuanian authorities and the applicants concerning the 2016 amendments must be regarded as indicative of serious difficulties, particularly since the purpose of the 2016 amendments was to amend the aid measures which were the subject of the 2013 decision, meaning that the Commission was already aware of the factual and legal context in which those amendments took place.
91      Taken together with the particularly long duration of the administrative procedure concerning the aid measure resulting from the 2016 amendments, these circumstances constitute evidence of the existence of serious difficulties during the examination of that measure.
92      By contrast, as regards the 2019 amendments, it is apparent from the case file that only two requests for information and three meetings between the Commission and the Lithuanian authorities, related, in part, to those amendments. Those requests for information contained merely a few questions of a purely factual nature and the minutes of the meetings, drawn up by the Commission and drafted in general terms, stated merely, in essence, that those meetings had concerned the 2019 amendments. Consequently, the number and content of the exchanges between the Commission, the Lithuanian authorities and the applicants do not indicate any particular difficulties as regards the 2019 amendments.
93      Moreover, the other evidence raised by the applicants, summarised in paragraph 73 above, does not demonstrate the existence of serious difficulties with regard to the 2016 or 2019 amendments, in so far as it either criticises, in reality, the 2013 decision, even though the lawfulness of that decision is not the subject of the present dispute, or refers to the content of the contested decision and will therefore be examined below. Similarly, the mere fact that the 2013 decision was the subject of proceedings pending before the Court at the time when the contested decision was adopted does not constitute evidence of the existence of serious difficulties.
94      It is therefore necessary to examine whether the interim conclusion drawn on the basis of the evidence relating to the length of the administrative procedure and to the circumstances surrounding the adoption of the contested decision, as summarised in paragraphs 91 and 92 above, is supported or invalidated by the evidence relied on by the applicants relating to the content of the contested decision.
4.      The evidence relating to the content of the contested decision
95      The applicants put forward six items of evidence relating to the content of the contested decision which, in their view, demonstrate that there were errors of assessment and insufficient reasoning, and therefore doubts about the compatibility of the measures at issue with the internal market.
96      It is appropriate to examine, first of all, the second item of evidence raised by the applicants, concerning the necessity and scope of the SGEI entrusted to Litgas, and, next, the other evidence raised by the applicants, in the order of submission.
(a)    The evidence relating to the allegedly deficient and insufficient analysis of the necessity and scope of the SGEI at issue
97      The applicants submit, in essence, that the SGEI at issue was not necessary to ensure security of gas supply in Lithuania and that, in any event, it was disproportionate. In addition, the Commission did not analyse whether the SGEI at issue was compatible with Article 3(2) of Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ 2009 L 211, p. 94), which, according to the applicants, it is not.
98      The Commission, supported by the Republic of Lithuania and Ignitis, disputes the applicants’ arguments.
99      Under Article 106(2) TFEU, undertakings entrusted with the operation of SGEIs are to be subject to the rules contained in the Treaties, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them, provided that the development of trade is not affected to such an extent as would be contrary to the interests of the European Union.
100    Point 12 of the SGEI Framework states that the aid granted by a Member State under Article 106(2) TFEU must relate to a ‘genuine’ SGEI, within the meaning of that provision, to which a correct definition must be given. Thus, point 13 of the SGEI Framework states, in particular, that Member States cannot attach specific public service obligations to services that are already provided or can be provided satisfactorily and under conditions, such as price, objective quality characteristics, continuity and access to the service, consistent with the public interest, as defined by the State, by undertakings operating under normal market conditions.
101    According to settled case-law, Member States have a wide discretion to define what they regard as SGEIs and that definition can be questioned by the Commission only in the event of ‘manifest error’. The scope of the Court’s review of the Commission’s assessments necessarily takes that limitation into account (see judgment of 7 November 2012, CBI v Commission, T‑137/10, EU:T:2012:584, paragraphs 99 and 100, and the case-law cited).
102    It is therefore necessary to examine first of all the necessity and then the proportionality of the SGEI at issue and, finally, the compatibility of that SGEI with Article 3(2) of Directive 2009/73.
103    Thus, in the first place, as regards the necessity of the SGEI at issue, it should be noted that, in recitals 119 to 128 of the contested decision, the Commission found, in essence, that, under the 2016 and 2019 amendments, the Lithuanian authorities had entrusted Litgas with a genuine SGEI, consisting in an obligation to provide a minimum mandatory quantity of LNG to the LNG terminal, namely 0.37 bcm per year, which was necessary to ensure the stable operation of that terminal and security of gas supply in Lithuania. According to the Commission, the mere construction of the LNG terminal did not guarantee security of supply in Lithuania. In order to achieve that objective, it was also necessary to keep the LNG terminal constantly operational. In order to do so, it was necessary to store a certain quantity of LNG in the LNG terminal tanks and to release LNG continually into the natural gas system. According to the Commission, the SGEI at issue guaranteed a regular supply of gas to the LNG terminal in accordance with a fixed timetable during the year, including during periods when gas demand was low, which ensured stable operation of the LNG terminal.
104    In that regard, it should be noted, first, that, in view of the broad discretion enjoyed by the Member States in defining what they regard as SGEIs, in accordance with the case-law cited in paragraph 101 above, and of the specific situation in Lithuania, characterised by almost total dependence on a single source of gas supply (as described in recitals 20 to 23 of the contested decision), the applicants have not demonstrated that the Commission should have had doubts as to whether the SGEI at issue was genuine and necessary.
105    The applicants do not dispute either the need for a regular supply of gas to the LNG terminal in order to ensure its stable operation or the Commission’s finding in the contested decision that the SGEI at issue enabled that objective to be achieved. Furthermore, by ensuring the stable operation of the LNG terminal, the SGEI at issue made it possible to ensure the diversification of gas sources in Lithuania and, therefore, security of supply and energy independence of that Member State, where previously, in view of the isolated nature of its energy market, Lithuania was almost entirely dependent on gas from a single supply source.
106    Second, the applicants’ argument to the effect that, in essence, the Commission should have assessed whether market forces were sufficient to ensure the minimum quantity of LNG required for the LNG terminal to remain operational, without needing to entrust the SGEI at issue to Litgas, can only be rejected.
107    It is apparent from recital 125 of the contested decision that the Commission examined alternative options to the SGEI at issue, such as annual capacity bookings and spot bookings. It concluded that they were not appropriate for attaining the objective pursued, that is to say, ensuring the stable operation of the LNG terminal, since, first, annual capacity bookings would make it possible to redirect the quantities reserved to another delivery point if the LNG prices justified it and, second, spot bookings were not sufficiently reliable, since the LNG terminal’s activities have to be planned two weeks in advance.
108    The applicants have not adduced any evidence to show that the Commission should have had doubts in that regard. At the hearing, they relied on the reply of the Lithuanian authorities of 9 June 2016 to the Commission’s request for information of 18 April 2016, from which it is apparent, in essence, that, if Litgas needed to purchase additional quantities of LNG, in addition to those provided under the contract with Statoil, it could purchase them on the spot market. That does not in any way mean that the LNG terminal could be operated permanently solely on the basis of that type of booking, and therefore independently of the SGEI at issue.
109    In addition, the applicants have not provided any evidence capable of showing that, in the absence of the SGEI at issue, one or more operators on the market would be able, individually or collectively, to guarantee the supply of the minimum mandatory quantity of LNG to the LNG terminal under conditions comparable to those of the SGEI at issue, that is to say, regular supplies according to a fixed timetable during the year. On the contrary, the fact, which is not disputed, that, during certain periods of the year, Litgas was the only user of the LNG terminal shows that, in the absence of the SGEI at issue, economic operators would use that terminal only intermittently, only in certain periods of the year, in accordance with demand, which would risk causing disruptions in supply and not ensuring the continuous operation of that terminal throughout the year.
110    Third, the applicants claim that there are LNG terminals situated elsewhere in the European Union which do not require an SGEI in order to be operational, which, in their view, demonstrates that the SGEI at issue was not necessary.
111    Even if it were established, that fact cannot lead to the conclusion that the Commission should have had doubts as to the necessity of the SGEI in the present case. The applicants do not identify the LNG terminals located elsewhere in the European Union which are comparable to that in Klaipėda and which operate under market conditions comparable to those prevailing on the gas market in Lithuania, in particular in so far as concerns the need to diversify sources of supply and to ensure, for that purpose, stable operation of the LNG terminal.
112    Moreover, the applicants cannot base an argument on Annex O.1, which they provided in the context of their response to the measure of organisation of procedure of 13 January 2021. That annex reproduces statements made by a former Lithuanian Minister for Energy in December 2020. It must be noted that, according to settled case-law, the lawfulness of a decision concerning State aid falls to be assessed by the EU Courts in the light of the information available to the Commission at the time when the decision was adopted (see judgment of 2 September 2010, Commission v Scott, C‑290/07 P, EU:C:2010:480, paragraph 91 and the case-law cited).
113    In the second place, it is necessary to examine whether the Commission should have had doubts as to the proportionality of the SGEI at issue. In that regard, the applicants merely maintain, in essence, that the Commission should not have relied on the volume of the minimum quantity of LNG required to allow the LNG terminal to remain operational indicated by the Lithuanian authorities, but should have determined that volume itself, given that the Lithuanian authorities had calculated it incorrectly in the procedure leading to the adoption of the 2013 decision.
114    That argument cannot be accepted. Since the applicants have not stated, let alone provided any evidence capable of suggesting, that the minimum quantity of LNG required in order to allow the LNG terminal to remain operational of 0.37 bcm per year, used in the contested decision, was disproportionate or excessive, they have also failed to demonstrate that the Commission should have had doubts in that regard. The mere fact that the initial volume of the minimum quantity of LNG required to enable the LNG terminal to remain operational, namely 0.54 bcm per year, later had to be revised downwards, to 0.37 bcm per year, does not indicate any doubts, but rather suggests that the aid measures resulting from the 2016 and 2019 amendments reduced the scope and accordingly the cost of the SGEI at issue. By that argument, the applicants appear to be criticising, in reality, the 2013 decision, even though the legality of that decision does not form the subject matter of the present dispute.
115    The applicants also claim that the Commission failed to analyse the reasons for the fall in gas demand in Lithuania since the adoption of the 2013 decision. While it is true that the Commission did not examine the reasons for that fall, it nevertheless examined in detail, in recitals 26 to 28 of the contested decision, the fall in gas demand in Lithuania as from 2011. The applicants do not explain why, in their view, the absence of a specific analysis of the reasons for the fall in gas demand in Lithuania had an impact on the Commission’s assessments.
116    In the third place, as regards the applicants’ argument that the measures at issue do not comply with Article 3(2) of Directive 2009/73, it must be noted that, under that provision, having full regard to the relevant provisions of the FEU Treaty, in particular Article 106 thereof, Member States may impose on undertakings operating in the gas sector, in the general economic interest, public service obligations which may relate to security, including security of supply, regularity, quality and price of supplies, and environmental protection, including energy efficiency, energy from renewable sources and climate protection. Such obligations are to be clearly defined, transparent, non-discriminatory, verifiable and are to guarantee equality of access for natural gas undertakings of the European Union to national consumers.
117    In that regard, the Commission noted, in recital 122 of the contested decision, that, in accordance with Article 3(2) of Directive 2009/73, security of supply is an objective capable of justifying a public service obligation.
118    The applicants claim that the Commission failed to analyse, in the contested decision, whether the measures at issue were ‘non-discriminatory’ and guaranteed ‘equality of access for natural gas undertakings of the [European Union] to national consumers’, within the meaning of Article 3(2) of Directive 2009/73. They claim, first, that the purchase obligation reserves a share of national consumers for Litgas and does not therefore guarantee equality of access to consumers in Lithuania, an issue not analysed by the Commission. Second, according to the applicants, the SGEI at issue is discriminatory in that it was entrusted to Litgas with no proper tendering procedure.
119    It is true that, as the applicants maintain, in the contested decision the Commission did not explicitly analyse whether the measures at issue were non-discriminatory and guaranteed equal access to national consumers, within the meaning of Article 3(2) of Directive 2009/73.
120    However, it should be noted, first, that, according to settled case-law, the reasoning for a Commission decision must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see, to that effect, judgment of 4 June 2020, Hungary v Commission, C‑456/18 P, EU:C:2020:421, paragraph 57 and the case-law cited).
121    Accordingly, the contested decision must be read in the light of the 2013 decision, which forms part of its context, in which the Commission had previously concluded that the purchase obligation was compatible with Article 3(2) of Directive 2009/73, including with the requirements of non-discrimination and equal access to national consumers.
122    In those circumstances, since the purchase obligation was introduced in 2013, and its compatibility with Article 3(2) of Directive 2009/73 had already been examined in the 2013 decision, without the Commission’s findings on that point being challenged before the EU Courts, the Commission was entitled to consider that that matter did not give rise to serious difficulties in the present case.
123    Second, the applicants’ argument that the SGEI at issue is discriminatory since it was entrusted to Litgas without a proper tendering procedure overlaps with the evidence concerning the alleged infringement of EU public procurement rules and will therefore be examined in paragraphs 130 to 149 below.
124    In those circumstances, it must be concluded that the applicants have not demonstrated that the Commission should have had doubts as to the necessity and scope of the SGEI at issue.
(b)    The evidence relating to the failure to examine the measures at issue in the light of Article 107(3)(c) TFEU
125    The applicants submit, in essence, that the lack of analysis, in the contested decision, of the reasons why the Commission decided to examine the compatibility of the measures at issue not in the light of Article 107(3) (c) TFEU and, in particular, the Guidelines on State aid for environmental protection and energy 2014-2020 (OJ 2014 C 200, p. 1), but only in the light of Article 106(2) TFEU and the SGEI Framework, constitutes evidence of the existence of doubts as to the compatibility of the measures at issue with the internal market.
126    The Commission, supported by the Republic of Lithuania and Ignitis, disputes the applicants’ arguments.
127    As stated in paragraphs 97 to 124 above, the applicants have not demonstrated that the Commission should have had doubts concerning the classification of the measures at issue as a genuine SGEI or concerning their necessity and scope. Accordingly, in those circumstances, the Commission was not in doubt as to the appropriate legal basis for assessing the compatibility with the internal market of an aid measure intended to finance an SGEI, namely Article 106(2) TFEU. Consequently, the Commission could, without having any doubts, analyse the compatibility of the measures at issue with the internal market in the light of that provision and the SGEI Framework.
128    The applicants’ argument that, in essence, the Commission should have analysed the measures at issue also in the light of Article 107(3)(c) TFEU and the Guidelines on State aid for environmental protection and energy 2014-2020 cannot, therefore, be accepted. Given that, in the contested decision, the Commission concluded that the measures at issue could benefit from the derogation laid down in Article 106(2) TFEU, it was not necessary to examine whether they were also in any event compatible with the internal market by virtue of other legal bases such as Article 107(3)(c) TFEU.
129    In those circumstances, the applicants’ arguments summarised in paragraph 125 above must be rejected.
(c)    The evidence relating to an alleged infringement of EU public procurement rules
130    The applicants claim, in essence, that, in the contested decision, the Commission erred in finding that the appointment of Litgas by the Lithuanian authorities as the designated supplier was compliant with point 19 of the SGEI framework because, according to the applicants, the EU public procurement rules were not observed.
131    The Commission, supported by the Republic of Lithuania and Ignitis, disputes the applicants’ arguments.
132    According to point 19 of the SGEI Framework, aid will be considered compatible with the internal market on the basis of Article 106(2) TFEU only where the responsible authority, when entrusting the provision of a SGEI to the undertaking in question has complied or commits to comply with the applicable Union rules in the area of public procurement. This includes any requirements of transparency, equal treatment and non-discrimination resulting directly from the Treaty and, where applicable, secondary Union law. Aid that does not comply with such rules and requirements is considered to affect the development of trade to an extent that would be contrary to the interests of the Union within the meaning of Article 106(2) TFEU.
133    In the present case, it is apparent from recitals 158 and 159 of the contested decision that Litgas was selected as a designated supplier responsible for the SGEI at issue following a tendering procedure in which only undertakings in which the Lithuanian State held shares conferring at least two thirds of the voting rights and whose activities did not include the transmission or distribution of gas could participate. The Commission considered, in recitals 150 to 160 of the contested decision, that the award to Litgas of the SGEI at issue complied with point 19 of the SGEI Framework on the ground, in essence, that the contract at issue was excluded from the scope of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114), pursuant to Article 14 thereof, since that contract concerned the protection of the essential interests of the Republic of Lithuania.
134    Under Article 14 of Directive 2004/18, that directive is not to apply to public contracts when they are declared to be secret, when their performance must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions in force in the Member State concerned, or when the protection of the essential interests of that Member State so requires.
135    The Court has previously held that it was for the Member States to define their essential security interests. Nevertheless, measures adopted by the Member States in connection with the legitimate requirements of national interest are not excluded in their entirety from the application of EU law solely because they are taken, inter alia, in the interests of public security (see judgment of 20 March 2018, Commission v Austria (State printing office), C‑187/16, EU:C:2018:194, paragraphs 75 and 76 and the case-law cited).
136    The derogation provided for by Article 14 of Directive 2004/18, must, in accordance with the settled case-law relating to derogations from fundamental freedoms, be interpreted strictly. Furthermore, even though Article 14 of Directive 2004/18 affords the Member States discretion in deciding the measures considered to be necessary for the protection of their essential security interests, that article cannot, however, be construed as conferring on Member States the power to derogate from the provisions of the TFEU simply by invoking those interests. A Member State which wishes to avail itself of that derogation must show that such derogation is necessary in order to protect its essential security interests. Accordingly, a Member State which wishes to avail itself of that derogation must establish that the protection of such interests could not have been attained within a competitive tendering procedure as provided for by Directive 2004/18 (see, to that effect, judgment of 20 March 2018, Commission v Austria (State printing office), C‑187/16, EU:C:2018:194, paragraphs 77 to 79 and the case-law cited).
137    It is therefore necessary to examine, first, whether, in the present case, the Lithuanian authorities have relied on a genuine essential interest of their State, within the meaning of Article 14 of Directive 2004/18, and then, if so, whether that essential interest could have been protected in the context of a competitive tendering procedure such as that provided for by Directive 2004/18.
138    As regards, in the first place, the existence of a genuine essential interest of the Lithuanian State, the Commission stated, in recital 156 of the contested decision, that the task of keeping the LNG terminal operational on a permanent basis had to be regarded as essential in order to safeguard security of gas supply in Lithuania, since any disruption could jeopardise the functioning of the terminal itself, and therefore, ultimately, the supply of gas in Lithuania.
139    The applicants do not dispute either the need for a regular supply of gas to the LNG terminal in order to ensure the continuous operation of that terminal, or the fact that any disruption in delivery of the mandatory quantity of LNG could compromise the continuing operation of that terminal and, consequently, the supply of gas in Lithuania. The fact, relied on by the applicants, that the SGEI at issue is ‘less strategic’ than that relating to the construction of the LNG terminal does not in any way detract from the essential interest of the Lithuanian State in keeping that terminal operational throughout the year in order to ensure, ultimately, security of gas supply and the energy independence of the Republic of Lithuania. The construction of that terminal does not in itself guarantee the essential interests of the Lithuanian State, unless that terminal is operational on a stable and permanent basis, in order to ensure diversification of that Member State’s supply sources.
140    As regards, in the second place, the question whether that essential interest could have been protected in the context of a competitive tendering procedure such as that provided for by Directive 2004/18, first, the applicants claim, in essence, that the Commission did not analyse whether there were other means of guaranteeing the protection of security of gas supply in Lithuania, while permitting competitive tendering in accordance with the procedures laid down in Directive 2004/18.
141    However, contrary to the applicants’ submission, it is apparent from recital 156 of the contested decision that the Commission analysed the possibility of adopting alternative measures allowing competitive tendering in accordance with the procedures laid down in Directive 2004/18, by rejecting them on the ground that the award of the SGEI at issue to an undertaking not controlled by the Lithuanian State would risk negatively affecting the provision of the SGEI on account of the risk that the selected undertaking might maintain or develop ties in the future with the former single gas supplier.
142    Second, the applicants submit, in essence, that it would have been possible to safeguard the essential interests invoked by the Lithuanian State by means of other measures, while subjecting the relevant market to competition.
143    First of all, the applicants submit that those interests could be safeguarded just as well by subjecting tenderers to a condition of being ‘independent from Gazprom’, subject to penalties in the event of infringement of those clauses. However, as Ignitis maintains, such a condition would not have been capable of ensuring that the successful tenderer would be protected from the influence of the former single gas supplier, since such an influence can take place in various forms that are sometimes concealed and difficult to identify, which are capable, moreover, of changing over time, so that the risk of circumvention remains a genuine threat. Providing for penalties or the termination of the contract forming the subject matter of the SGEI at issue in the event of non-compliance with that condition does not constitute an adequate remedy, in so far as such sanctions or termination of the contract could result in disruption of supply, which would jeopardise the essential interests of the Lithuanian State.
144    Next, the applicants submit that the Lithuanian State could have ensured protection of its essential interests by requiring that it hold a golden share in the capital of the designated supplier. That argument is not sufficiently substantiated, since there are multiple measures of a different nature that can be classified as a golden share. Therefore, in the absence of clarification by the applicants as to the exact scope of such a measure, it is impossible to assess the allegedly less intrusive nature of such a measure and its compatibility with other provisions of EU law, such as the free movement of capital and Directive 2004/18.
145    Finally, the applicants advocate the use of a tendering procedure open to public companies from other Member States. However, such an approach could have resulted in the protection of the essential interests of the Lithuanian State being granted to another State. The ratio legis of the derogation provided for in Article 14 of Directive 2004/18 is precisely to enable the Member State concerned itself to protect its own essential interests.
146    Nor can the applicants rely on the judgment of 20 March 2018, Commission v Austria (State printing office) (C‑187/16, EU:C:2018:194). The essential interest invoked by the Lithuanian State in the present case can be explained by the almost total dependence of that Member State on a single gas supply source and by the overriding requirement in the general interest to diversify its sources of supply as quickly and as sustainably as possible, in order to reduce its dependence on that single supply source. In those circumstances, the Commission was entitled, without having any doubts, to conclude that it would have been impossible or excessively difficult to guarantee security of gas supply in Lithuania if the designated supplier were an undertaking not controlled by the Lithuanian State, since such an undertaking could, before and even after the contract had been awarded, establish shareholding or commercial links with the former single gas supplier, enabling that supplier to influence its conduct in a way that could negatively affect the provision of the SGEI at issue. That objective of diversification of sources of supply, which is, moreover, an objective pursued and supported by the European Union itself, whose scope ultimately concerns the security of the European Union as a whole, was absent in the case which gave rise to the judgment of 20 March 2018, Commission v Austria (State printing office) (C‑187/16, EU:C:2018:194).
147    In the light of the foregoing, it must be concluded that the applicants have not shown that the Commission should have had doubts as to the applicability of Article 14 of Directive 2004/18.
148    Lastly, the applicants’ argument that the Commission wrongly considered, in recitals 158 to 160 of the contested decision, that, irrespective of the applicability of the derogation in Article 14 of Directive 2004/18, the tendering procedure was consistent with point 19 of the SGEI Framework, is ineffective, since it was found that the application of the derogation provided for in Article 14 of Directive 2004/18 did not give rise to doubts in the present case.
149    In those circumstances, it must be held that the applicants have not demonstrated the existence of doubts as to compliance with the requirements arising from paragraph 19 of the SGEI Framework.
(d)    The evidence relating to the allegedly inadequate statement of reasons for the contested decision as regards the 2019 amendments
150    The applicants submit, in essence, that the statement of reasons for the contested decision as regards the compatibility with the internal market of the aid measure which formed the subject matter of the 2019 amendments is insufficient, which constitutes an indication of the existence of doubts as to the compatibility of that measure with the internal market.
151    The Commission, supported by the Republic of Lithuania and Ignitis, disputes the applicants’ arguments.
152    It should be noted, as a preliminary point, that the statement of reasons for the contested decision as regards the compatibility with the internal market of the aid measure which formed the subject matter of the 2019 amendments is apparent from a combined reading of points 7.3 and 8.3 of the contested decision. In point 8.3 of the contested decision, concerning the compatibility with the internal market of the aid measure which was the subject of the 2019 amendments, the Commission confined itself, in essence, to assessing whether the 2019 amendments were capable of calling into question the analysis in point 7.3 of the contested decision, relating to the compatibility with the internal market of the aid which formed the subject matter of the 2016 amendments. Since they are two successive measures, the second of which amends the first, the Commission cannot be criticised in the present case for having followed such an approach, contrary to what the applicants claim.
153    That said, it should be noted that the applicants criticise three specific aspects of the statement of reasons in the contested decision in that regard.
154    First, they claim that the Commission failed to analyse the existence of a market failure in 2019 and the need to continue to entrust the SGEI at issue to Litgas beyond 2019.
155    The Commission demonstrated, in recitals 119 to 128 of the contested decision, that the SGEI at issue was necessary and constituted a ‘genuine’ SGEI, within the meaning of Article 106(2) TFEU. In those circumstances, it could, without having any doubts, in recitals 213 and 214 of the contested decision, conclude, in essence, that, given that the 2019 amendments had no impact on the nature of the SGEI at issue, that SGEI continued to be regarded as a ‘genuine’ SGEI, within the meaning of that provision.
156    The applicants do not explain why, in their view, the evolution of the market between 2016 and 2019 called into question the conclusions in recitals 119 to 128 of the contested decision as regards the necessity and scope of the SGEI at issue. In particular, they do not claim that, between 2016 and 2019, Lithuania achieved sufficient diversification in gas supply, with the result that the SGEI at issue is no longer necessary, or that the LNG terminal could operate uninterruptedly on a purely commercial basis. The only change to which the applicants refer consists in the abolition of the purchase obligation made pursuant to the 2019 amendments. However, the abolition of the purchase obligation, which concerns the downstream market, in no way guarantees the stable and permanent supply of the LNG terminal and still less the diversification of the sources of supply that the SGEI at issue seeks to ensure. The Commission was entitled therefore, without being in any doubt, to take the view that that abolition had no impact on the necessity of the SGEI at issue.
157    Second, the applicants submit that the statement of reasons in the contested decision as regards the methods for calculating compensation under the 2019 amendments is insufficient, since the Commission devoted only one recital to that question, referring to its reasoning concerning the situation in 2016.
158    That argument cannot be accepted. In recitals 220 to 224 of the contested decision, the Commission explained in detail the new methodology for calculating the compensation granted to Litgas for the SGEI at issue, by reason of the 2019 amendments, and the reasons why it would not give rise to overcompensation.
159    Third, the applicants claim that there are inconsistencies in the contested decision as regards whether Litgas carries on an unregulated activity on the gas market, which are indicative of the existence of doubts as to the compatibility of the 2019 amendments with the internal market.
160    The Court observes, in that regard, that the contested decision does indeed contain contradictory findings on that issue. First, in recital 148 of the contested decision and footnote 17 thereof, the Commission stated that Litgas ‘does not perform any other activities than SGEI being assessed under this Decision’, while, on the other hand, in recital 197 of the contested decision, the Commission found that Litgas ‘also performs a limited number of activities unrelated to the scope of the SGEI’. At the hearing, both the Commission and Ignitis confirmed that Litgas carried out certain non-regulated activities unrelated to the scope of the SGEI at issue.
161    However, it is not disputed that Litgas had to keep separate accounts for its activities relating to the SGEI at issue and for its non-regulated activities, which are therefore unrelated to the SGEI at issue; this would make it possible to separate clearly the costs incurred by Litgas in connection with the SGEI from those incurred outside the scope of the SGEI, and to calculate the SGEI compensation solely on the basis of the former. The contradiction vitiating the contested decision, regrettable though it may be, is not therefore indicative of serious difficulties, since it is not capable of raising doubts concerning the extent of the compensation for the SGEI at issue.
162    In those circumstances, the applicants have not shown that the statement of reasons for the contested decision with regard to the 2019 amendments was insufficient or incomplete or that the Commission should have had doubts in that regard.
(e)    The evidence relating to compensation for the SGEI at issue
163    That evidence put forward by the applicants consists of two parts, which concern, first, the unnecessary and disproportionate nature of the compensation for the SGEI at issue awarded under the 2016 amendments, as highlighted by the 2019 amendments, and, second, the extension, without a call for tenders, of the contract between Litgas and Statoil.
(1)    The unnecessary and disproportionate nature of the compensation for the SGEI at issue awarded under the 2016 amendments, as highlighted by the 2019 amendments
164    The applicants maintain, in essence, that the SGEI compensation resulting from the 2019 amendments shows that the SGEI compensation under the 2016 amendments was unnecessary and disproportionate. They claim that the contested decision is inconsistent and does not explain why, in the context of the 2016 amendments, it was considered necessary to compensate the entirety of the boil-off costs and the balancing costs borne by Litgas, whereas, under the 2019 amendments, the compensation for the SGEI at issue then included only part of the boil-off costs and none of the balancing costs.
165    The applicants also claim, first, that since the other users of the LNG terminal also bore boil-off costs and balancing costs, the compensation granted to Litgas under the 2016 amendments should have been limited to the difference between Litgas’s costs and those of the other users. Second, the fact that Litgas’s balancing costs were no longer compensated under the 2019 amendments calls into question the necessity of that compensation under the 2016 amendments.
166    The Commission, supported by the Republic of Lithuania and Ignitis, argues, notably, that the reduction in the compensation for the SGEI at issue in 2019 compared with that in force from 2016 to 2019, in particular as regards the part of the compensation relating to boil-off costs and balancing costs, resulted from the abolition of the purchase obligation, which took place in 2019.
167    The Court finds in that regard that, under the 2016 amendments, the compensation granted to Litgas for the SGEI at issue, financed by the new component of the LNG supplement, was calculated, in essence, on the basis of the following three factors: (i) the difference between the LNG price paid, upstream, by Litgas to Statoil and the regulated market price at which Litgas sold, downstream, to the obligated purchasers and to the free market; plus (ii) compensation for the ‘justified’ costs incurred in connection with the SGEI at issue, namely the operating costs, boil-off costs, balancing costs and the costs of financing a long-term State guarantee; plus (iii) a regulated profit margin, determined by the NRA.
168    That methodology was amended in 2019. According to the new methodology resulting from the 2019 amendments, the compensation granted to Litgas for the SGEI at issue, which continued to be financed by the new component of the LNG supplement introduced in 2016, was calculated, in essence, on the basis of the following two factors: (i) the difference between the LNG price paid, upstream, by Litgas to Statoil, and the actual average price of gas imported into Lithuania, calculated by the NRA; to which was added, (ii) compensation for part of the boil-off costs and the costs of financing a long-term State guarantee.
169    It follows, in particular, that, while all the boil-off costs and balancing costs incurred by Litgas were included in the compensation for the SGEI at issue during the period from 2016 to 2019, Litgas was compensated, under the 2019 amendments, for only part of the boil-off costs and not at all for the balancing costs that it incurred.
170    It is therefore necessary to examine whether the Commission should have had doubts in its assessment, first, of compensation for the boil-off costs and, second, of that for balancing costs, included in the compensation for the SGEI at issue in accordance with the 2016 amendments.
(i)    Compensation for the boil-off costs
171    According to the contested decision, boil-off costs are costs caused by the evaporation of the amount of LNG which occurs when LNG is stored in the LNG terminal tanks before being released into the natural gas system. They are therefore essentially quantities of LNG lost as a result of evaporation. Those costs represented 56% of the total costs incurred by Litgas in connection with the SGEI at issue in 2017.
172    As noted in paragraph 169 above, Litgas was compensated for all of those costs by virtue of the 2016 amendments, whereas, under the 2019 amendments, it is now to be compensated for only part of those costs, as follows: when it is the sole user of the LNG terminal, it is compensated for all of those costs; by contrast, when it is not the only user of the LNG terminal, it is compensated only for the difference between the boil-off costs incurred by Litgas and the average of that type of costs borne by the other users of the LNG terminal during the same period.
173    It is not disputed that the nature of those costs remained unchanged between 2016 and 2019 and that, both before and after the 2019 amendments, the LNG terminal was used both by Litgas and by other users, so that both the former and the latter incurred boil-off costs, albeit in varying proportions. More specifically, it is apparent from the contested decision in that regard that the inflexible import schedule under the SGEI at issue requires Litgas to import, upstream, pre-defined quantities of LNG at regular intervals, irrespective of downstream demand. That discrepancy between the quantities delivered upstream and downstream demand thus obliges it to store LNG during low-demand periods and to release the quantities stored only later, when demand increases, thereby incurring boil-off costs caused during storage. It is also apparent that, during part of the year, in particular in winter, Litgas was the sole user of the LNG terminal. During the other periods of the year, in particular in the summer, both Litgas and other suppliers used the LNG terminal and incurred such costs. However, the other suppliers used the LNG terminal according to demand and could therefore regasify and resell their LNG more quickly, which is why their boil-off costs were lower.
174    As the applicants correctly point out, the Commission did not explain in the contested decision why, in its view, in the context of the 2016 amendments, it was necessary to provide full compensation for the boil-off costs, whereas, under the 2019 amendments, it was no longer necessary to compensate all the costs, but only, in essence, the difference between those borne by Litgas and those borne by the other users of the LNG terminal.
175    First, given that, as stated in paragraph 171 above, boil-off costs represented a significant part of Litgas’s costs and, therefore, of the compensation for the SGEI at issue under the 2016 amendments, the Commission was obliged to examine with particular care how Litgas was compensated for those costs, in order to ensure that it was compensated only for the costs necessary for the provision of the SGEI.
176    Second, it is apparent from recitals 54, 62, 138 and 141 of the contested decision that the Commission stated that the compensation due to Litgas under the 2016 amendments covered only ‘economically justified’ costs, that is to say, the costs in connection with the SGEI at issue and incurred efficiently. In the absence of any explanation in the contested decision, it seems at the very least inconsistent to consider that all the boil-off costs were ‘economically justified’ costs linked to the SGEI at issue and incurred efficiently for the period from 2016 to 2019, whereas only part of those costs was considered to be ‘economically justified’, in connection with the SGEI and incurred efficiently from 2019.
177    Third, according to point 11 of the SGEI Framework, State aid may be declared compatible with Article 106(2) TFEU if it is ‘necessary for the operation’ of the SGEIs concerned. It was therefore for the Commission to ascertain whether the compensation for the entirety of the boil-off costs under the 2016 amendments was ‘necessary’ for the operation of the SGEI at issue, given that only part of those costs was considered necessary as from 2019.
178    In that regard, it should be noted that, in the absence of the obligations arising from the SGEI at issue, Litgas would have been able to import LNG according to seasonal demand fluctuations, like other terminal users, thus avoiding part of the boil-off costs, but at the same time incurring such costs without any SGEI, albeit lower ones, like other economic operators.
179    In those circumstances, the Commission should have examined whether the compensation for the entirety of the boil-off costs incurred by Litgas should have been regarded as ‘necessary’ for the operation of the SGEI at issue, or whether, on the contrary, it was only necessary to compensate the costs incurred by Litgas which Litgas would not have incurred in the absence of the SGEI.
180    Fourth, the Commission seeks to explain the difference between the compensation for boil-off costs resulting from the 2016 amendments and that resulting from the 2019 amendments by the abolition of the purchase obligation which took place in 2019. According to the Commission, that abolition enabled Litgas to release gas more efficiently into the transmission system from 2019 onwards, because it was no longer obliged to provide the mandatory LNG quota to the obligated purchasers, and consequently to reduce its losses relating to evaporation.
181    However, it is not apparent from any passage in the contested decision that the Commission considered that the difference in the compensation of those costs was due to the existence of the purchase obligation during the period from 2016 to 2019 and to the abolition of that obligation in 2019. The Commission cannot supplement the reasoning in the contested decision during the proceedings (see, to that effect, judgment of 24 May 2007, Duales System Deutschland v Commission, T‑289/01, EU:T:2007:155, paragraph 132).
182    In any event, that explanation shows, in fact, that the examination carried out by the Commission in that regard was incomplete and insufficient. The contested decision shows that the Commission did not in any way examine whether the purchase obligation determined, in any way whatsoever, the extent of the boil-off costs incurred by Litgas in the context of the SGEI at issue.
183    As explained in paragraph 173 above and as is apparent from recitals 65 to 67, 168 and 169 of the contested decision, the reason for the high boil-off costs incurred by Litgas lay not in the downstream purchase obligation but in the inflexible and predefined schedule for LNG imports upstream. In that regard, the Commission expressly stated, in recital 213 of the contested decision, that the abolition of the purchase obligation in 2019 did not change ‘in any respect the nature of the [SGEI]’ and that, despite that abolition, Litgas continued to be obliged to provide the minimum quantity of 0.37 bcm per year to the LNG terminal in order to keep it operational. In paragraphs 110 and 111 of its defence, the Commission confirmed that the abolition of the purchase obligation in 2019 had ‘no impact’ on ‘the necessity of [the] SGEI mission’, ‘its scope’ or ‘the compensation methodology [or] the aid to Litgas’.
184    Therefore, the examination carried out in the contested decision as regards the compensation for the entirety of the boil-off costs, in accordance with the 2016 amendments, was incomplete, insufficient and inconsistent, which constitutes objective evidence of the doubts which the Commission should have had in that regard.
185    By contrast, the applicants do not put forward any evidence capable of showing that the Commission should have had doubts concerning the reduced compensation for those costs, in accordance with the 2019 amendments.
(ii) Compensation for balancing costs
186    According to the contested decision, balancing costs are those incurred, in particular, under swap contracts concluded by Litgas with other gas suppliers, in order to respond, on a specific basis, to fluctuations in demand. The conclusion of such swap contracts is necessary because of the inflexibility of the schedule for the supply of gas upstream, as agreed in the contract between Litgas and Statoil, which does not correspond to downstream demand, since there are significant seasonal fluctuations. Thus, under those swap contracts, Litgas could either supply gas to other suppliers when it had excess quantities of gas, or borrow gas, when it had insufficient quantities of gas. Those costs represented (0-10%) of the total costs incurred by Litgas in connection with the SGEI at issue in 2017. The balancing costs could also include costs incurred by Litgas to store LNG temporarily in a storage facility in Inčukalns (Latvia), even though, at the date of adoption of the contested decision, Litgas had not yet made use of that facility.
187    It is not disputed that the nature of those costs remained unchanged between 2016 and 2019 and that, both before and after 2019, both Litgas and the other users of the LNG terminal incurred such costs, albeit in varying proportions, as is apparent from recital 70 of the contested decision, according to which, since other users had flexible gas contracts, their balancing costs were ‘minimal’.
188    As the applicants correctly point out, the Commission did not explain, in the contested decision, why, in its view, in the context of the 2016 amendments, it was necessary to compensate Litgas for the entirety of the balancing costs, whereas, under the 2019 amendments, it was no longer compensated for any of them.
189    In that regard, it should be noted that the findings set out in paragraphs 175 to 184 above concerning boil-off costs apply equally, mutatis mutandis, to balancing costs.
190    First, as was noted in paragraph 186 above, balancing costs represented a not insignificant part of Litgas’s costs and, therefore, of the compensation for the SGEI at issue under the 2016 amendments. Accordingly, the Commission had to pay particular attention to the way in which Litgas was compensated for those costs, in order to ensure that it was compensated for necessary costs only. In the contested decision, the Commission did not in any way explain the reasons why it considered that compensation for the same SGEI, the nature and scope of which remained unchanged, was compatible with the internal market both in the version resulting from the 2016 amendments and in the version resulting from the 2019 amendments, despite the clear differences in compensation for those costs.
191    Second, in the absence of any explanation in the contested decision, it seems at the very least inconsistent to consider that all the balancing costs were ‘economically justified’ costs in connection with the SGEI at issue and incurred efficiently for the period between 2016 and 2019, whereas they were no longer regarded as such from 2019.
192    Third, it is common ground that Litgas incurred such costs both during the period between 2016 and 2019 and subsequently. Nor is it disputed that the other users of the LNG terminal also bore such costs, without any SGEI, even though, according to the contested decision, the balancing costs of those users were ‘minimal’. Accordingly, the Commission should have examined whether the compensation for the entirety of the balancing costs incurred by Litgas should have been regarded as ‘necessary’ for the operation of the SGEI at issue, or whether, on the contrary, it would have only been necessary to compensate for the costs incurred by Litgas which it would not have incurred in the absence of the SGEI.
193    Fourth, the contested decision shows that the Commission did not in any way examine whether the purchase obligation determined, in any way whatsoever, the extent of the balancing costs incurred by Litgas in connection with the SGEI at issue. There is nothing in the contested decision to show that, following the abolition of the purchase obligation, there was a perfect match between the gas supply schedule agreed between Litgas and Statoil upstream and fluctuations in demand on the open market downstream, with the result that Litgas would no longer be forced, from 2019, to have recourse to swap contracts or the Inčukalns storage facility. In actual fact, it is apparent from the contested decision that balancing costs were incurred mainly on account of the inflexibility of the supply schedule under the contract with Statoil, and not on account of the purchase obligation.
194    Moreover, it is apparent from the documents before the Court that it was the Commission that had asked the Lithuanian authorities no longer to compensate Litgas for balancing costs in the context of the 2019 amendments in order to avoid distortion of competition. The reply of the Lithuanian authorities of 3 September 2018 to the Commission’s fifth question contained in the request for information of 31 July 2018 confirms that the Commission had requested the Lithuanian authorities
no longer to compensate Litgas for balancing costs as from 2019. It is apparent from that document that the Commission appears to have had doubts as to the need to compensate Litgas for those costs on the basis of the 2016 amendments. There is no objective element of the contested decision to show that the Commission was able to overcome those doubts at the end of the procedure.
195    Accordingly, the examination carried out by the Commission in the contested decision with regard to compensation for the entirety of the balancing costs, in accordance with the 2016 amendments, was incomplete, insufficient and inconsistent, which constitutes objective evidence of the existence of serious difficulties encountered in its examination and, therefore, of doubts which the Commission should have had in that regard.
(2)    The extension, without a call for tender, of the contract between Litgas and Statoil
196    The applicants submit, in essence, that, because of the extension, in 2016, of the contract between Litgas and Statoil, without a tendering procedure, the price paid by Litgas to Statoil for the LNG supply was higher than the market price. Consequently, according to the applicants, the compensation granted to Litgas in the context of the 2016 and 2019 amendments, which covered, inter alia, the difference between the price paid by Litgas to Statoil and the average market price, was not limited to the minimum necessary to provide the SGEI at issue, and was therefore disproportionate.
197    The Commission, supported by the Republic of Lithuania and Ignitis, disputes the applicants’ arguments.
198    It should be noted that, in 2012, the Lithuanian authorities launched a tendering procedure to select an economic operator responsible for providing the mandatory quantity of LNG to the designated supplier, following which Statoil’s tender was considered to be the most economically advantageous. Consequently, on 21 August 2014, Litgas signed an LNG supply contract with Statoil for a duration of 5 years and a quantity of 0.54 bcm of LNG per year. That contract was then renegotiated without a new tendering procedure being launched. Thus, on 18 February 2016, Litgas and Statoil signed an amended contract, the main amendments of which were (i) the reduction from 0.54 to 0.37 bcm per year of the annual quantity of LNG provided by Statoil to Litgas, (ii) the extension of the length of the contract until 2024, that is to say, by 5 years in addition to the 5-year period initially envisaged and (iii) a reduction in the LNG price.
199    In that regard, it should be noted, first, that neither the initial contract of 2014 nor the amended contract signed in 2016 constitute the subject matter of the State aid measures at issue in the present case. They consist exclusively of the new component of the LNG supplement intended to compensate for the SGEI at issue in the context of the 2016 and 2019 amendments.
200    Second, the applicants do not claim that the extension of that contract was contrary to the EU rules on public procurement, as they state in paragraph 106 of the reply, but rather that Litgas was overcompensated, since, by failing to organise any competitive procedure for the new contract, it paid too high a price for the supply of LNG, with the result that the compensation granted to Litgas was not limited to the minimum necessary to provide the SGEI at issue.
201    Accordingly, the applicants’ argument could be relevant for the outcome of the present dispute only if they succeeded in adducing evidence capable of suggesting that the effect of that extension was to render the compensation for the SGEI at issue disproportionate.
202    However, the applicants’ argument in that regard is not sufficiently substantiated. They merely assert that, if a new procurement procedure had taken place, the LNG price obtained following such a call for tenders ‘could’ have been cheaper, and complain that the Commission failed to analyse whether, instead of extending the contract, there were ‘any alternatives’ allowing Litgas to minimise its costs, such as the termination of its contract with Statoil and the conclusion of a new contract with another supplier on the basis of a competitive procedure.
203    Thus, the applicants have failed to adduce any evidence capable of suggesting specifically that the price revised downwards under the amended contract of 18 February 2016 was higher than the prices charged on the European market. They merely mention that the ‘Asian’ prices of LNG fell in 2016 and that there was a ‘decline in prices globally’ in respect of LNG, without, however, demonstrating that the price agreed with Statoil when the contract was amended was higher than those resulting from that ‘decline’. Moreover, the applicants cannot rely on Annex O.1, provided by them in the context of their response to the measure of organisation of procedure of 13 January 2021, for the reasons set out in paragraph 112 above.
204    In addition, the applicants focus their criticism on the agreed price, whereas the Commission was required to take into consideration all the essential elements of that contract. In that regard, as noted in paragraph 198 above, the amendments, which took place barely one year after the first delivery of LNG by Statoil to Litgas, in addition to the extension of the contract, also provided for a significant reduction in the annual quantity of LNG which Litgas was obliged to purchase. Thus, in the absence of those amendments, Litgas would have been obliged either unilaterally to terminate its contract with Statoil, subject to the risk of incurring possible penalties, or to continue importing larger quantities of LNG during the remainder of the contract, that is to say, from 2016 until 2020, even if those quantities exceeded what was necessary for the provision of the SGEI at issue.
205    Accordingly, the applicants have failed to show that the Commission should have had doubts as to whether the extension of the contract between Litgas and Statoil rendered the compensation for the SGEI at issue disproportionate.
(f)    The evidence relating to the alleged negative effects of the SGEI at issue on competition and trade between Member States
206    The applicants submit, in essence, that the Commission did not sufficiently assess in the contested decision the negative effects of the SGEI at issue on competition in the gas supply sector in Lithuania and on trade between Lithuania and other Member States, contrary to section 2.9 of the SGEI Framework.
207    The Commission, supported by the Republic of Lithuania and Ignitis, contests the applicants’ arguments.
208    As has already been pointed out in paragraph 99 above, under Article 106(2) TFEU, undertakings entrusted with the operation of SGEIs are to be subject to the rules contained in the Treaties, in particular, to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them, provided that the development of trade must not be affected to such an extent as would be contrary to the interests of the European Union.
209    Section 2.9 of the SGEI Framework lays down rules seeking to ensure that the development of trade is not affected to an extent that is contrary to the interests of the Union within the meaning of Article 106(2) TFEU. It is necessary to examine the arguments put forward by the applicants in order to determine whether the Commission should have had doubts concerning the compliance of the measures at issue with the requirements in that point.
210    First, the applicants’ argument that the Commission did not assess the impact of the measures at issue on the gas supply in Lithuania and the Baltic Sea Region, contrary to point 54 of the SGEI Framework, must be rejected. On the one hand, point 54 of the SGEI Framework refers to ‘exceptional’ cases which have ‘significant adverse effects on other Member States and the functioning of the internal market’. However, the applicants do not explain why, in their view, in the present case the aid measures at issue constitute an ‘exceptional’ case and have ‘significant adverse effects on other Member States and the functioning of the internal market’ within the meaning of point 54 of the SGEI Framework.
211    On the other hand, the only specific argument put forward by the applicants in that regard amounts, in essence, to a claim that the Innovation and Networks Executive Agency (INEA) and the Commission refused to finance the construction of an LNG terminal in Estonia on the ground that it was no longer necessary for the Baltic Sea Region’s security of gas supply because of the construction of the LNG terminal in Klaipėda. However, even assuming that that argument relied on a proven factual basis, it has no effect on the examination of the aid measures at issue, which concern only the new component of the LNG supplement in favour of Litgas which seeks to grant Litgas compensation for the SGEI at issue. Those measures therefore do not concern the construction of the LNG terminal in Klaipėda. Therefore, it is not a distortion caused by the aid measures at issue, for the purposes of point 54 of the SGEI Framework.
212    Second, as regards the applicants’ argument that the Commission did not ‘seriously’ analyse whether the length of the mandate entrusted to Litgas was justified in the light of objective criteria, contrary to point 55 of the SGEI Framework, it should be noted that, as is apparent from recital 144 of the contested decision, the duration of the SGEI at issue of 10 years was linked to the duration of the contract concluded between Litgas and Statoil, as extended in 2016. The applicants have not explained why, in their view, that criterion does not constitute an objective criterion, within the meaning of point 55 of the SGEI Framework.
213    As regards, third, the applicants’ argument that the Commission infringed point 56 of the SGEI Framework, it should be noted that, according to that point, a situation in which a more detailed assessment may prove necessary is where a Member State entrusts a public service provider, without a competitive selection procedure, with the task of providing an SGEI in a non-reserved market where ‘very similar’ services are already being provided or can be expected to be provided in the near future in the absence of the SGEI.
214    Even supposing that, in the present case, the tendering procedure that led to the award of the SGEI at issue to Litgas cannot be considered a ‘competitive selection procedure’ within the meaning of point 56 of the SGEI Framework, the applicants have not adduced any evidence capable of suggesting that the SGEI entrusted to Litgas was provided in a market where very similar services were already being provided or could be expected to be provided in the near future in the absence of the SGEI, within the meaning of point 56. It follows from the contested decision that the SGEI at issue was designed to ensure the stable operation of the LNG terminal throughout the year, independently of significant seasonal fluctuations in demand. It is also apparent that the other LNG providers in Lithuania which used the LNG terminal, without any SGEI, did so only in accordance with those fluctuations, and that, during certain periods of the year, Litgas was the sole user of the LNG terminal. Therefore, contrary to the applicants’ submission, it is not apparent from the contested decision that other LNG providers provided or were likely to provide in the near future ‘very similar’ services to those covered by the SGEI at issue.
215    Fourth, the applicants claim that, in the contested decision, the Commission failed to analyse whether, under the 2016 amendments, Litgas could, despite the requirement to maintain separate accounts for regulated and non-regulated activities, have obtained an undue advantage in non-regulated activities. That argument is purely speculative, since the applicants have not provided any evidence to suggest that such a possibility is likely or took place, irrespective of that separation of accounts.
216    Fifth, as regards the applicants’ argument to the effect that, in the contested decision, the Commission failed to analyse the effect of the 2019 amendments on competition, it should be noted that, for the reasons set out in paragraph 152 above, the reasoning in the contested decision on that point is apparent from a combined reading of points 7.3.9 and 8.3 thereof. In that regard, in recitals 204 and 205 of the contested decision, which are set out in section 7.3.9 thereof, first, the Commission considered that the potential negative effects on competition and trade were minimal, because the LNG mandatory quantity that forms the subject matter of the SGEI at issue was only 0.37 bcm per year, whereas the LNG terminal had a capacity of 3.75 bcm, with the result that a large part of the capacity of that infrastructure could also be used by other gas suppliers. Second, it pointed out that the measures at issue had only a limited duration, that is to say, from 1 January 2016 to 1 January 2019 for the 2016 amendments and from 1 January 2019 to 31 December 2024 for the 2019 amendments, which prevented the emergence of long-term distortions of competition. Therefore, contrary to the applicants’ submission, it is apparent from the contested decision that the Commission analysed the impact of the 2019 amendments on competition.
217    Moreover, the applicants have not succeeded in showing that the Commission should have had doubts as to the possibility that the aid granted under the 2019 amendments could drive Litgas’s competitors out of the market. The LNG mandatory quantity under the 2019 amendments was only 0.37 bcm per year, which corresponded to a limited percentage of the total volume of gas sold in Lithuania.
218    In those circumstances, it must be held that the applicants have failed to show that the Commission should have had doubts regarding the alleged negative effects of the SGEI at issue on competition and trade between Member States.
C.      Overall assessment
219    Lastly, it is necessary to carry out an overall assessment of the body of evidence put forward by the applicants in order to determine whether, viewed as a whole, that evidence shows that the Commission was not in a position, on the date of adoption of the contested decision, to overcome all the serious difficulties encountered as regards the compatibility of the measures at issue with the internal market.
220    In the first place, as regards the 2016 amendments, it is apparent from the foregoing considerations that the particularly long duration of the administrative procedure (paragraphs 53 to 63 above), the circumstances surrounding the adoption of the contested decision (paragraphs 75 to 91 above), and the incomplete, insufficient and inconsistent examination as regards the compensation for the entirety of boil-off costs and balancing costs of Litgas (paragraphs 164 to 195 above) indicate doubts which the Commission ought to have had in that regard. That latter factor carries significant weight in the overall assessment, in so far as those costs represent a significant part of Litgas’s total costs and, therefore, significantly affect the amount of compensation for the SGEI at issue during the period from 2016 to 2019. That body of objective and consistent evidence of serious difficulties, viewed as a whole, serves to show that the compatibility of the State aid resulting from the 2016 amendments with the internal market gave rise to doubts within the meaning of Article 4 of Regulation 2015/1589 which should have led the Commission to initiate the procedure referred to in Article 108(2) TFEU.
221    In the second place, as regards the aid resulting from the 2019 amendments, the only evidence relied on by the applicants which suggests that the Commission could have had doubts as to the compatibility of that aid with the internal market is that concerning the length of the administrative procedure (paragraphs 64 and 65 above). According to settled case-law, while the length of the preliminary examination can constitute an indication of the existence of serious difficulties, it does not of itself suffice to show the existence of such difficulties (see, to that effect, judgment of 24 January 2013, 3F v Commission, C‑646/11 P, not published, EU:C:2013:36, paragraph 32 and the case-law cited). Accordingly, since the applicants have not succeeded in demonstrating the existence of other evidence of serious difficulties concerning the 2019 amendments, they have not demonstrated that the Commission should have had doubts as to the compatibility of the aid resulting from those amendments with the internal market.
222    It follows from the foregoing that the single plea in law put forward by the applicants must be upheld in so far as it concerns the State aid resulting from the 2016 amendments and must be rejected as to the remainder.
223    Consequently, the contested decision must be annulled in so far as the Commission decided not to raise objections to the State aid resulting from the 2016 amendments and the remainder of the action must be dismissed.
IV.    Costs
224    Under Article 134(3) of the Rules of Procedure, where each party succeeds on some and fails on other heads, the parties are to bear their own costs.
225    In the present case, since the applicants and the Commission have been unsuccessful in part, they must each bear their own costs.
226    Under Article 138(1) of the Rules of Procedure, the Member States which have intervened in the proceedings are to bear their own costs. The Republic of Lithuania must therefore bear its own costs.
227    Moreover, under Article 138(3) of the Rules of Procedure, the Court may order an intervener other than those referred to in Article 138(1) and (2) to bear its own costs. Ignitis must therefore bear its own costs.
On those grounds,
THE GENERAL COURT (Tenth Chamber)
hereby:
1.      Annuls Commission Decision C(2018) 7141 final of 31 October 2018 in State aid case SA.44678 (2018/N) relating to modification of aid for LNG terminal in Lithuania, in so far as the Commission decided not to raise objections to the State aid resulting from the 2016 amendments;
2.      Dismisses the action as to the remainder;
3.      Orders Achema AB, Achema Gas Trade UAB, the European Commission, the Republic of Lithuania and Ignitis UAB to bear their own costs.
Kornezov
Kowalik-Bańczyk
Hesse
Delivered in open court in Luxembourg on 8 September 2021.
E. Coulon
M. van der Woude
Registrar
President
*      Language of the case: English.