(1)

On 27 May 1970 the Belgian Government, through its Permanent Representatives accredited to the European Communities, notified the Commission that the Société Nationale des Chemins de Fer Belges (the Belgian National Railway Company, hereinafter referred to as ‘the SNCB’) intended to lodge a claim with the Sute from which it holds the concession for financial compensation for the economic disadvantage which it allegedly suffered by reason of the application of through international railway tariffs for goods covered by the ECSC Treaty. The SNCB assessed that disadvantage for 1971, on the basis of the principles defined in Article 11 (1) of Council Regulation No 1191/69 of 26 June 1969, adopted pursuant to Articles 75 and 94 of the Treaty of Rome, concerning the obligations inherent in the concept of a public service in transpon by rail, road and inland waterway, at Bfrs 500000000. The international tariffs in question were established pursuant to an Agreement concluded on 21 March 1955 between the representatives of the Governments of the Member States of the European Coal and Steel Community, meeting within the Council; that Agreement was subsequently amended by three Supplementary Agreements of 1 May 1956, 1 May 1959 and 1 March 1974. It was based on Article 70 of the Treaty of Paris and on Article 10 of the Convention on the Transitional Provisions annexed to that Treaty. The Belgian Government based its application somewhat succinctly on Regulation No 1191/69 of the Council. In fact it should be understood that it was relying upon the nature ‘of obligations inherent in the concept of a public service’ within the meaning of that regulation which, it considered, were entailed in the application of the ECSC international railway tariffs. Since the Belgian Government foresaw that such applications would also be submitted in other Member States it requested the Commission to consult those States ‘in order that an identical view of this matter be taken in the su countries’. A meeting of a group of experts appointed by the governments was held in Brussels on 10 September 1970. At that meeting particular consideration was given to whether the application of the ECSC through international tariffs constitutes a public service obligation and, more specifically, a tariff obligation within the meaning of Article 2 (5) of Regulation No 1191/69 and if so, whether such obligation entails economic disadvantages within the meaning of Article 5 (2) of the said regulation. As the views taken by the various national delegations in the course of that meeting displayed considerable differences it was agreed that the problem should be discussed at another meeting before the end of 1970. An impression of the subsequent course of events may be obtained from the correspondence between the Director General for Transport of the Commission and the Belgian Permanent Representation. The Commission's departments went into the deuils of the question and the Director General notified the Permanent Representation on 2 July 1973 that ‘the Community and inter-governmental provisions do not entail … the obligation to apply fixed prices by prescribing particular tariff measures and they accordingly do not impose a tariff obligation within the meaning of Article 2 (5) of Regulation No 1191/69 which could give rise to compensation pursuant to that regulation’. Having found that the Belgian Government had granted compensation to the SNCB amounting to Bfrs 410000000 in 1971 and Bfrs 520000000 in 1972 pursuant to that regulation, the Commission, through the Director General for Transport, requested the Belgian Government to ‘communicate to it all necessary deuils as to the reasons why that government considered it appropriate to grant the said compensation’. There then occurs an interlude with the Council: on 11 October 1973 the Netherlands delegation to the Council requested that the Agreement of 21 March 1955 be amended to bring it up to date and take account of the enlargement of the Community. The Council took note of that request and, in the course of its session of 22 November 1973, required the Permanent Representatives Committee to consider the matter. In reply to a request by the Commission of 2 July 1973 the Belgian Permanent Representation notified the Commission on 7 December 1973 that the table of sums granted to the SNCB in the framework of the normalization of the accounts, adopted definitively for the 1971 financial year and provisionally for the 1972 and 1973 financial years, referred to the amounts in compensation for the ECSC tariffs as aids granted pursuant to Regulation No 1107/70 of the Council of 4 June 1970, adopted pursuant to Articles 75, 77 and 94 of the Treaty and relating to the granting of aids for transport by rail, road and inland waterway. The Permanent Representation stated that ‘in our opinion this decision is in accordance with the view of the Commission on this point’. Accordingly the Belgian Government had, for the year 1971, decided on, and for the financial years 1972 and 1973 was considering, the replacement of the compensation granted pursuant to Regulation No 1191/69 by an equivalent aid covered by Article 3 (2) of Regulation No 1107/70. The latter provision provides that: ‘… Member States shall… [not] impose obligations inherent in the concept of a public service which involve the granting of aids pursuant to Article 77 of the Treaty except in the following cases or circumstances: (2) As regards reimbursement for the discharge of obligations inherent in the concept of a public service: until the entry into force of relevant Community rules, when payments are made to rail… transport undertakings as compensation for public service obligations imposed on them by the State or public authorities and covering…: — tariff obligations not falling within the definition given in Article 2 (5) of Regulation (EEC) No 1191/69’. The Commission, having had this new measure considered in deuil by its departments, in collaboration both with the Belgian experts and the Advisory Committee on Aids to Transpon set up under the above-mentioned Regulation No 1107/70, notified the Permanent Representation, by way of a letter from the Director General of 24 June 1974, that ‘it is impossible to consider as compatible with the common market pursuant to Article 3 (2) of Regulation No 1107/70 an aid the object of which is to cover such charges’, that is to say the charges entailed by the alleged tariff obligation imposed within the meaning of Anide 2 (5) of Regulation No 1191/69. The Commission observed, as an ancillary point, that ‘in any event, the Commission must, in accordance with Article 93 (3) of the EEC Treaty, be informed of an aid granted pursuant to Article 3 (2) of Regulation No 1107/70’. That was the date on which mention was first made of that provision of the Treaty. The Commission concluded by requesting the Belgian Government to notify it, if possible before the end of July 1974, of its views on this point and of the measures which it intended to take to rectify the situation. On 29 November 1974, that is six months later, the Belgian Permanent Representation informed the Director General, in reply to his letter of 24 June 1974, that ‘it may in fact be concluded that all the conditions necessary for the application “to the letter” of Regulation No 1191/69 have not been fulfilled’ and that ‘Belgium concedes this point’; on the other hand, the Belgian Representation considered that ‘the matter in question is indeed a public service obligation of a tariff nature, not a tariff obligation as referred to in Regulation No 1191/69, which justifies the application of Article 3 (2) of Regulation No 1107/70’. In short, whilst the Belgian Government had ceased to grant the compensation pursuant to the former regulation it continued to grant it pursuant to provisions in the latter regulation. In support of its argument the Permanent Representation referred to the judgment of the French Conseil d'Etat of 22 December 1961, Société Nationale de Chemins de Fer Français v Ministère des Travaux Publia, des Transports et du Tourisme, observed that the Agreement of 21 March 1955‘exceeded the requirements of Article 70 of the Treaty’ and added that the Member States were empowered to request the amendment of the said Agreement, pursuant to the wording of Article 17 thereof. With regard to the Commission's reply to the effect that it required to be informed, pursuant to Article 93 (3) of the Treaty, of an aid granted pursuant to Article 3 (2) of Regulation No 1107/70, the Representative maintained that the formality in question had been completed by a letter No 28.103/G.12.123 of'21 January 1974 which ‘was addressed to you by my predecessor; that letter mentioned inter alia for 1974 an aid within the meaning of Regulation No 1107/70 of 4 June 1970 amounting to 530000000 francs in respect of the ECSC tariffs’. Finally, the Permanent Representative transmitted to the Commission the request of the Belgian Government for a review of its position. I have been unable to find this lener on the file but it is clear from subsequent correspondence that the Commission conceded that it had been informed that the aid granted by the Belgian Government amounted to 410000000 francs for 1971, 441500000 for 1972, 489000000 for 1973 and that the budgetary estimates for 1974 and 1975 amounted to 530000000 and 525000000 francs respectively. 21 January 1974 is thus the date which must prima foot be adopted in establishing whether, in accordance with Article 93 (3), the Commission was ‘informed, in sufficient time to enable it to submit its comments’, of the plan to establish an aid which might be considered compatible with the common market pursuant to Article 92 or to Article 77 of the Treaty and whether the Commission, considering that that plan was not compatible with the common market having regard to Article 92, initiated without delay the procedure provided for in Article 92 (2). In this connexion, whilst it may be admitted that the notification was indeed made in good time so far as the amounts for the financial years 1974 and 1975 are concerned, I also consider that, having regard to the complexity of the problem and to the prior exchange of correspondence, the letter addressed on 24 June 1974 to the Belgian Permanent Representation by the Director General of the Commission constitutes the initiation ‘without delay’ of the procedure provided for in Article 93 (2), at least for the sums to be granted for the financial year 1975.