Joined Cases T-415/05, T-416/05 and T-423/05

Hellenic Republic and Others

v

European Commission

(State aid – Aviation sector – Aid linked to the restructuring and privatisation of the Greek national airline – Decision declaring the aid incompatible with the common market and requiring its recovery – Economic continuity between two companies – Identification of the effective recipient of aid for the purposes of its recovery – Private operator test – Compatibility of the aid with the common market – Duty to state reasons)

Summary of the Judgment

1. Procedure – Intervention – Conditions for admissibility – Interest in the result of the case – Concept

(Statute of the Court of Justice, Art. 40, second para.)

2. State aid – Recovery of unlawful aid – Determination of liability in the event of a transfer of assets – Economic continuity test

(Art. 88(2) EC)

3. State aid – Recovery of unlawful aid – Calculation of the amount of aid to be recovered and determination of the addressees of the orders for recovery – Member State experiencing difficulties – Duty of cooperation between the Commission and the Member State

(Arts 10 EC and 88(2) EC)

4. State aid – Concept – Assessment according to the private investor test – Assessment of all factors relevant to the transaction at issue and its context

(Art. 87(1) EC)

5. State aid – Concept – Advantage granted to beneficiaries of State Aid – Need to take into account the effects of a measure to determine the advantage to the beneficiary

(Art. 87(1) EC)

6. State aid – Concept – Application of the private investor test – Aid consisting of the payment of rents for the sub-leasing of aircraft lower than those paid under the main contracts

(Art. 87(1) EC)

7. State aid – Examination by the Commission – New aid – Burden of proof – Apportionment between the Commission and the Member State – Condition – Compliance with respective procedural obligations

(Arts 10 EC, 87(1) EC and 88(2) and (3) EC)

8. State aid – Examination by the Commission – Diligent and impartial examination – Possibility of adopting a decision on the basis of the information available – Conditions

(Arts 10 EC, 87(1) EC and 88 EC)

9. State aid – Adverse effect on competition – Effect on trade between Member States – Liberalisation of an economic sector at Community level

(Art. 87(1) EC)

10. State aid – Recovery of unlawful aid – Possible legitimate expectation on the part of interested third parties – Protection – Conditions and limits

(Arts 88(2) and (3) EC)

11. State aid – Commission decision finding aid incompatible with the common market and ordering its repayment – Duty to state reasons as regards the means of calculating the amount to be repaid

12. Community law – Principles – Rights of the defence – Application to administrative procedures initiated by the Commission – Scope

1. In the context of State aid, when an intervener was recognised as having a direct and present interest in the result of the case, for the purposes of the second paragraph of Article 40 of the Statute of the Court of Justice, on the ground, first, that it was in competition with the recipients of the aid, and, second, that it had actively participated in the formal investigation procedure which led to the adoption of the decision declaring the aid incompatible with the common market, which is favourable to it, it retains such a direct and present interest as long as the recipients of the aid are recognised as having a legal interest in seeking the annulment of that decision. The intervener retains a corresponding interest in intervening in support of the Commission to argue for the legality of that decision, be it only for the purposes of making claims for compensation, followed by possible actions, based on the unlawful grant of aid which caused it injury.

(see para. 64)

2. In the circumstance where aid was paid to a company in difficulty which transferred certain assets to a new company created from the hiving-off of its operations, that new company could be regarded as the effective recipient of the aid if there is financial continuity between those two companies. By contrast, in the absence of financial unity between the two companies, the aid at issue granted to the original company after the hiving-off cannot be recovered from the new company on the sole ground that it obtained an indirect benefit from it.

In order to determine whether the obligation to recover aid paid to a company in difficulty can be extended to a new company to which the former company has transferred certain assets, where that transfer gives rise to the conclusion that there was financial continuity between the two companies, the following elements may be taken into consideration: the purpose of the transfer (assets and liabilities, continuity of the workforce, bundled assets), the transfer price, the identity of the shareholders or owners of the acquiring firm and of the original firm, the moment at which the transfer was carried out (after the start of the investigation, the initiation of the procedure or the final decision) and, lastly, the economic logic of the transaction. Moreover, the criteria laid down in the case-law for identifying the effective recipient of aid are objective.

The purpose of the obligation to recover aid is to restore the competitive situation in the economic sector concerned, and not to enable the public administration to recover its debts. In this regard, the economic logic of an asset transfer transaction must therefore be examined from the point of view of restoring the competitive situation in the sector concerned.

(see paras 104-106, 135, 146, 148)

3. In a decision finding that aid was incompatible with the common market and requiring its recovery, the Commission is not required to state to what extent each recipient undertaking has benefited from the amount of the aid in question. It is for the Member State concerned to determine the amount which must be repaid by each of those undertakings in its recovery of the aid. It is sufficient for the Commission’s decision to include information enabling the recipient to work out himself, without overmuch difficulty, that amount. If it encounters unforeseen difficulties, it may submit its problems for consideration by the Commission, and the Commission and State must work together in good faith, in accordance with the duty of genuine cooperation enshrined particularly in Article 10 EC, with a view to overcoming those difficulties whilst fully observing the Treaty provisions, and in particular the provisions on State aid.

(see paras 126, 315-318)

4. In the light of the provisions of Article 87 EC the Commission must always examine all the relevant features of the transaction at issue and its context, particularly in applying the private investor test. The Commission is required to ascertain, in the light of all the relevant information, whether the conditions for the application of Article 87(1) EC are satisfied.

Whilst the Commission is entitled to take account of the context of the measures at issue, for example the fact that the aid was granted in the context of restructuring and privatisation, it is none the less required to examine whether, in the light of the private investor test, the measures at issue corresponded to normal commercial transactions in a market economy.

Even where a measure follows measures of the same nature classed as State aid, that fact does not rule out, a priori, that the said measure satisfies the market economy private investor test. It is in any case for the Courts of the European Union to ascertain whether, having regard to the relevant features, that measure can reasonably be severed from the earlier aid measures and be regarded, for the purposes of applying the private investor test, as an independent measure.

(see paras 172-177)

5. It follows from Article 87(1) EC that the concept of aid is objective, the test being whether a State measure confers an advantage on one or more particular undertakings. In particular, in order to determine whether a measure in question can constitute State aid, regard must primarily be had to the effects of the aid on the undertakings favoured and not the status of the public or private institutions which grant it.

(see paras 211-212)

6. For the purposes of the application of the private investor test, it is necessary to determine whether the measures in question confer on the recipient undertaking an economic advantage which it would not have obtained under normal market conditions. The fact that the transaction is reasonable for the public authorities or public undertaking granting the aid is not sufficient to render that conduct compliant with the private investor test.

As regards an aid granted in the form of rents for the sub-leasing of aircraft lower than the rentals paid under the head-leases, for the purposes of the application of the private investor test, it is necessary to compare the rents at issue with those of the market. The Commission is required to ascertain, in accordance with the private investor test, whether the rents were lower than those which the sub-leasing undertaking would have paid under normal market conditions.

(see paras 213-214)

7. It is for the Commission to put forward the evidence relating to the grant of new aid. In fact, it follows from the provisions of Article 88(2) and (3) EC that, in the absence of such a demonstration, the new measures in question cannot be regarded as State aid for the purposes of Article 87(1) EC.

However, the application of that rule on the burden of proof is subject to compliance by the Commission and the Member State concerned with their respective procedural obligations in the course of the exercise by that institution of its powers to cause the Member State to provide it with all the necessary information.

On the other hand, the burden of proof of the compatibility of aid with the common market, by way of derogation from Article 87(1) EC, rests, generally, on the Member State concerned, which must show that the conditions for that derogation are satisfied.

(see paras 224-225, 329)

8. The Commission is empowered to adopt a decision on the basis of the information available when it is faced with a Member State which fails to comply with its obligation of cooperation towards that institution under Article 10 EC to provide information requested from it either for the purpose of assessing the compatibility of new or modified aid with the common market or of verifying whether aid previously approved has been properly applied. Before taking such a decision, however, the Commission must order the Member State to provide it, within the time-limit it lays down, with all the documentation, information and data necessary to carry out its review. It is only if the Member State, notwithstanding the Commission’s order, fails to provide the information requested that the Commission is empowered to terminate the procedure and make a decision on the basis of the information available to it. Those procedural obligations are binding both on the Member State concerned and on the Commission in order to permit the latter to carry out its review on the basis of sufficiently clear and precise information while ensuring respect for the right of the Member State concerned to be heard. It should be pointed out that observance of the rights of the defence is, in all procedures initiated against a person which are liable to culminate in a measure adversely affecting that person, a fundamental principle of European Union law which must be guaranteed even in the absence of any specific rules.

The Member State cannot be accused of not having provided sufficient information to the Commission when the decision to initiate the formal investigation procedure contains no preliminary assessment of the contested measures, with a view to determining whether they contain any element of aid, and, in default, in the administrative procedure, of, first, any express putting in issue of those measures and, second, any request for information relating to the compliance of those measures with market conditions.

In such a case, it is for the Commission, in accordance with its duty of careful impartial examination in the interest of sound administration of the fundamental rules of the Treaty on State aid, to pursue its investigations and to deepen its inquiry in order to establish, amongst other things, whether the measures at issue were consistent with the private operator test. To that end, it is for the Commission to serve on the Member State an order to provide additional information stating the nature of the information required, be it to commission an additional expert report.

(see paras 226, 229, 240, 246, 248-249)

9. In order to justify the classification of a measure as State aid, the Commission is required, under Article 87(1) EC, to establish a threat of distortion of competition, which is the case when that measure strengthens the recipient undertaking’s position compared to other undertakings, which are in competition with it in a sector that has been liberalised at Community level.

(see para. 312)

10. The grant of State aid even in the form of guarantees cannot give rise to third parties’ legitimate expectation that those guarantees were proper, if they were given in breach of Article 88(3) EC. It is, in fact, for the third parties concerned to display the required prudence and diligence and to satisfy themselves that the rules of European Union law have been complied with.

(see para. 354)

11. A decision finding that aid was incompatible with the common market, which does not contain a detailed schedule of the aid measures at issue, but which nevertheless permits, on the basis of the sufficiently precise information in the grounds of the judgment, which cannot be severed from its enacting terms, quantification of the aid in question, cannot be regarded as not properly reasoned. Quantification is, in any event, for the authorities of the Member States to undertake as part of the execution of the decision finding the aid incompatible, cooperating in good faith with the Commission.

(see para. 388)

12. Observance of the rights of the defence is, in all procedures initiated against a person which are liable to culminate in a measure adversely affecting that person, a fundamental principle of European Union law which must be guaranteed even in the absence of any specific rules. In State aid matters, the Commission may, for the purposes of assessing a measure in the light of Article 87 EC, rely on evidence collected from a third party, only after having put the Member State concerned in a position to submit its comments on that evidence.

Failure to communicate to the Member State a report which is based exclusively on the information collected from the recipients of the aid during the inspection on site by the Commission’s experts and which contains no factual evidence of which the undertakings, which were recipients of the measures in question and owned entirely by the Member State, would have been unaware is not as such capable of adversely affecting that Member State’s rights of defence.

(see paras 399-401)

JUDGMENT OF THE GENERAL COURT (Sixth Chamber)

13 September 2010 ( )

(State aid – Aviation sector – Aid linked to the restructuring and privatisation of the Greek national airline – Decision declaring the aid incompatible with the common market and requiring its recovery – Financial continuity between two companies – Identification of the effective recipient of aid for the purposes of its recovery – Private operator test – Compatibility of the aid with the common market – Obligation to state the reasons on which the decision is based)

In Joined Cases T‑415/05, T‑416/05 and T‑423/05,

Hellenic Republic, represented by A. Samoni-Rantou and P. Mylonopoulos, acting as Agents,

applicant in Case T‑415/05,

Olympiakes Aerogrammes AE, established in Kallithéa (Greece), represented by V. Christianos, lawyer,

applicant in Case T‑416/05,

Olympiaki Aeroporia Ypiresies AE, established in Athens (Greece), represented by P. Anestis, S. Mavroghenis, lawyers, S. Jordan and T. Soames, Solicitors, and D. Geradin, lawyer,

applicant in Case T‑423/05,

v

European Commission, represented by D. Triantafyllou and T. Scharf, acting as Agents,

defendant,

supported by

Aeroporia Aigaiou Aeroporiki AE, established in Athens, represented by N. Keramidas and, in Case T‑416/05, also by N. Korogiannakis, I. Dryllerakis and E. Dryllerakis, lawyers,

intervener in Cases T‑416/05 and T‑423/05,

APPLICATIONS for annulment of Commission Decision C(2005) 2706 final of 14 September 2005 on State aid for Olympiaki Aeroporia Ypiresies AE (C 11/2004 (ex NN 4/2003) – Olympic Airways – Restructuring and privatisation),

THE GENERAL COURT (Sixth Chamber),

composed of M. Jaeger, President, A.W.H. Meij (Rapporteur) and L. Truchot, Judges,

Registrar: K. Pocheć, Administrator,

having regard to the written procedure and further to the hearing on 14 June 2010,

gives the following

Judgment

Facts

1 On 14 September 2005, the Commission adopted Decision C(2005) 2706 final on State aid for Olympiaki Aeroporia Ypiresies AE (C 11/2004 (ex NN 4/2003) – Olympic Airways – Restructuring and privatisation) (‘the contested decision’).

2 In order to facilitate the privatisation of the airline Olympiaki Aeroporia AE (Olympic Airways), which was wholly owned by the State and became, in December 2003, Olympiaki Aeroporia Ypiresies (Olympic Airways Services; ‘OA’), Article 27 of Greek Law No 3185/2003 of 9 September 2003 amending Law No 2668/1998, harmonisation with Directive 2002/39/EC, resolving questions relating to the Greek Post Office and other matters (FEK A’ 229/26.9.2003; ‘Law No 3185/2003’), entitled ‘Conversion of the Olympic Airways Group’, had, in particular, provided that ‘the companies in the Olympic Airways Group [shall be] converted by the hiving-off of their branches, divisions and services relating to their air transport activities and by merger with an existing company in the Group or by absorption by one of those companies’.

3 Under Article 27 of Law No 3185/2003, the flight operations of OA and its subsidiary Olympiaki Aeroploïa AE (Olympic Aviation) were hived off and regrouped ‘by merger’ within another of OA’s subsidiaries, Makedonikes Aerogrammes AE (Macedonian Airways), which received the name Olympiakes Aerogrammes AE (Olympic Airlines; ‘NOA’). It is apparent from the documents in the case-file and was confirmed by the parties, at the hearing, that the new airline, NOA, was formed on 11 December 2003 and commenced its operations on 12 December 2003. On that date, OA ceased all flight operations but retained its ground-handling, maintenance and training services. The entire capital of the new airline, NOA, was vested directly in the Hellenic Republic.

4 OA’s financial situation and the public financial support to it and NOA have been the subject of several Commission decisions.

Decision 2003/372/EC

5 On 11 December 2002, the Commission adopted Decision 2003/372/EC on aid granted by Greece to Olympic Airways (OJ 2003 L 132, p. 1; ‘the Decision of 11 December 2002’), in which it declared incompatible with the common market the restructuring aid to OA which had been approved during 1994, 1998 and 2000 and certain new unlawful aid. As regards the restructuring aid, that decision was based, in particular, on the finding that most of the objectives of the 1998 plan for restructuring OA to restore its viability in the medium and long terms had not been achieved and the conditions accompanying the decisions of approval had not been fully complied with. Under Article 3 of the Decision of 11 December 2002, the Hellenic Republic was required to recover part of the restructuring aid paid, in a sum of EUR 41 million, as well as the new unlawful aid declared incompatible with the common market.

6 Subparagraph (b) of the first paragraph of Article 1 of the Decision of 11 December 2002 stated that the restructuring aid granted by the Hellenic Republic to OA in the form of new loan guarantees totalling USD 378 million for loans for the purchase of new aircraft and for investment necessary for its relocation to the new airport in Spata (Greece) was considered to be incompatible with the common market.

7 By its judgment in Case C‑415/03 Commission v Greece [2005] ECR I‑3875 (‘the judgment of 12 May 2005’), the Court of Justice declared that, by failing to take within the prescribed period all the measures necessary for repayment, in accordance with Article 3 of the Decision of 11 December 2002, of the aid found to be incompatible, except that relating to the contributions to the national social security institution (‘the IKA’), the Hellenic Republic had failed to fulfil its obligations under that article.

8 In that judgment (paragraphs 32 to 34), the Court particularly took into consideration the fact that, as was clear from the information given by the Commission which was not disputed by the Greek authorities, the Hellenic Republic had transferred OA’s most profitable assets, free of all debts, to NOA, which also belonged to that Member State and was entitled to special protection from its creditors, in derogation from the provisions of the general law and commercial law obligations. The Court particularly held that that legal structure made it impossible, under national law, to recover the aid granted and was an obstacle to the effective implementation of the Decision of 11 December 2002 and to the recovery of the aid.

9 Following an action brought by OA for annulment of the Decision of 11 December 2002, the Court of First Instance (now ‘the General Court’), by its judgment in Case T‑68/03 Olympiaki Aeroporia Ypiresies v Commission [2007] ECR II‑2911, annulled that decision in part, in so far as it concerned tolerance of persistent non-payment of airport charges owed by OA to Athens International Airport (‘AIA’) and of value added tax owed by OA on fuel and spare parts. The action was dismissed as regards the other new unlawful aid and the restructuring aid.

10 Since it considered that the Hellenic Republic had not adopted measures to comply with the judgment of 12 May 2005, the Commission brought an action under Article 228 EC for failure to fulfil obligations. By its judgment in Case C‑369/07 Commission v Greece [2009] ECR I-5703, paragraphs 68, 72, 109, 143 and 145, the Court of Justice accepted that, in principle, so long as it is provided for under the national legal system as a mechanism for extinguishing debts, a set-off operation could constitute an appropriate means by which State aid might be recovered. Furthermore, it ruled that, without prejudice to the application of the Community rules on State aid, it must be held that, for the purposes of those proceedings, the Hellenic Republic had demonstrated that there was a debt payable to OA of EUR 601 289 003, under an arbitration award of 6 December 2006 by which the Hellenic Republic had been ordered to pay certain amounts of damages to OA. Whilst it pointed out that that sum was considerably greater than the total amount of aid to be recovered under the Decision of 11 December 2002, the Court decided that the Hellenic Republic had failed to demonstrate to the requisite legal standard, as regards part of the new unlawful aid referred to in that decision, that such aid had been repaid. Consequently, the Court ordered, in that regard, the payment of a daily penalty and a lump sum.

The contested decision

11 By letter of 3 March 2003, the Greek authorities informed the Commission of the state of affairs in the privatisation of OA. During 2003, exchanges of correspondence took place between them concerning the restructuring of the airline OA with a view to its privatisation.

12 In the absence of formal notification of possible State aid, the Commission adopted, on 8 September 2003, a decision requiring the Hellenic Republic to provide it with all the information necessary for the purposes of its examination, in the light of Article 87 EC, of the measures connected with the restructuring and privatisation of the airline OA, which might include elements of State aid.

13 On 25 September 2003, a competing airline, Aeroporia Aigaiou Aeroporiki AE (Aegean Airlines; ‘Aegean Airlines’ or ‘the intervener’), lodged a complaint with the Commission concerning OA’s privatisation.

14 By letter of 29 September 2003, the Greek authorities sent the Commission Law No 3185/2003 as well as the reply to the order to provide information. By letter of 31 October 2003, the Commission informed the Greek authorities that certain data was still lacking.

15 By letter of 15 December 2003, the Commission repeated its demand for information. The Hellenic Republic provided that information by letters dated 18 and 19 December 2003. By letter of 15 January 2004, the Commission requested some additional information from the Greek authorities, which replied by two letters dated 15 and 16 January 2004.

16 By decision of 16 March 2004, the Commission initiated the formal investigation procedure under Article 88(2) EC concerning measures connected with the restructuring and privatisation of the Olympic Airways Group adopted as regards OA and NOA by the Hellenic Republic after the adoption of the Decision of 11 December 2002 (OJ 2004 C 192, p. 2).

17 In that decision, the Commission noted, among other things, that OA had, following the hiving-off of its flight operations and their regrouping in the new company, NOA, ceased aviation activities, but continued to supply ground‑handling, maintenance and training services. The Commission stated that the Greek authorities did not envisage, at that stage, putting OA into liquidation, despite a negative level of its own funds for the second consecutive year. Indeed, according to the Greek authorities, the process of restructuring started in December 2003 was to last for four to five years and enable a significant part of OA’s debts to be absorbed, and OA would be put into liquidation when all its divisions, and its other assets such as buildings, machinery, aircraft no longer flying and all other equipment had been sold.

18 The Commission considered, in the decision of 16 March 2004, that certain advantages for the benefit of OA seemed to constitute State aid incompatible with the common market. It also pointed out that the new airline, NOA, had benefited from the transfer of assets from the flight operations sector of the Olympic Airways Group, leaving OA with its significant liabilities and that none of OA’s creditors could have recourse to NOA. Finally, the Commission stated that, in the context of the investigation procedure thus initiated, it started ‘from the principle that all the companies which belonged to the [G]roup – including [NOA] – [were] only a single undertaking’.

19 By letter of 11 June 2004, the Hellenic Republic sent the Commission its comments relating to the decision of 16 March 2004.

20 Following the publication of the abovementioned decision in the Official Journal of the European Union, Aegean Airways submitted its comments within the period laid down for that purpose for interested third parties.

21 By letter of 11 October 2004, the Commission notified the Hellenic Republic, in accordance with Article 11(1) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88 EC] (OJ 1999 L 83, p. 1), of its intention to adopt a decision requiring that Member State to suspend any aid until a decision could be taken on its compatibility with the Treaty. The Hellenic Republic replied by letter dated 26 October 2004.

22 Following that reply, the Greek authorities regularly informed the Commission, by letters or at meetings, of the evolution of the privatisation of NOA and OA.

23 From 9 to 26 May 2005, the consultancy firm, Moore Stephens, carried out, at the Commission’s request, an investigation at OA’s and NOA’s premises. Its report, dated 19 July 2005, is entitled ‘Investigation into the restructuring and privatisation of Olympic Airways Group/Olympic Airlines’. It is apparent from that report that the investigation was intended to answer, in particular, the questions whether the restructuring of the Olympic Airways Group and the creation of NOA were merely a legal arrangement to transfer the assets and operations to a new legal entity but to maintain the debts in the old legal entity, and whether OA or NOA had received direct or indirect State aid since that restructuring.

24 On 14 September 2005, the Commission adopted the contested decision, finding that State aid had been granted to NOA, in the form of rentals for the sub-leasing of aircraft by that company from OA or the Hellenic Republic lower than those paid by them under the head-leases (Article 1(1) of the contested decision). In addition, the Commission found, in that decision, that three categories of State aid had been granted to OA. The first related to the early payment to OA of an alleged overvaluation of its assets, relating to the flight operations sector, transferred to NOA at the time of the hiving-off (Article 1(2) of the contested decision). The second category of aid consisted in the payment to OA of a sum of EUR 8.2 million and the payment of certain State guarantees referred to in the Decision of 11 December 2002 which were varied (Article 1(3) of the contested decision). Lastly, the third category concerned the Greek authorities’ forbearance with regard to OA’s non-payment of tax debts and social security contributions (Article 1(4) of the contested decision).

25 The contested decision’s enacting terms are worded as follows:

‘Article 1

1. The acceptance by [OA] and by [the Hellenic Republic] of aircraft sub‑lease payments from [NOA] which are lower than the amounts paid by way of head‑leases, with the resulting losses borne by [OA] in the order of EUR 37 million in 2004 and by the State up to May 2005 in the order of EUR 2.75 million constitutes illegal State aid to [NOA] which is incompatible with the Treaty.

2. [The Hellenic Republic] has granted illegal and incompatible State aid to [OA] in the amount by which it overvalued the assets of [NOA] at the time when [NOA] was created; this amount is provisionally estimated by the Commission to be approximately EUR 91.5 million.

3. The grant by the [Hellenic Republic] to [OA] of sums totalling approximately EUR 8 million, and the additional payment by the [Hellenic Republic] of certain bank loan and finance lease instalments in place of [OA], to the extent that the latter do not constitute the mere execution of the guarantees referred to in [subparagraph (b) of the first paragraph of] Article 1 of [the Decision of 11 December 2002], and of the related conditions, between May 2004 and March 2005 constitutes illegal State aid to [OA] which is incompatible with the Treaty.

4. The continued forbearance of the [Hellenic Republic] towards [OA] in relation to its tax and social security debts to the State of some EUR 354 million between December 2002 and December 2004 constitutes illegal State aid to [OA] which is incompatible with the Treaty.

Article 2

1. [The Hellenic Republic] shall recover from the beneficiaries thereof the aid referred to in Article 1.

2. Recovery shall be effected without delay and in accordance with the procedures of national law provided they allow the immediate and effective execution of the Decision. The [amounts] to be recovered shall include interest from the date on which [they were] at the disposal of the beneficiary until the date of [their] recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant-equivalent of regional aid.

Article 3

[The Hellenic Republic] shall immediately suspend all further payments of aid to [OA] and [NOA].

Article 4

[The Hellenic Republic] shall inform the Commission within a period of two months from the date of notification of the present Decision of the measures to be taken to comply with Articles 2 and 3.’

26 The contested decision was notified to the Hellenic Republic on 15 September 2005.

27 In its judgment of 14 February 2008 in Case C‑419/06 Commission v Greece, not published in the ECR, the Court of Justice, in proceedings brought by the Commission under Article 88(2) EC declared that, by not taking, within the prescribed period, all measures necessary to put an end to aid declared unlawful and incompatible with the common market by the contested decision and to recover that aid from the recipients, the Hellenic Republic had failed to fulfil its obligations under Articles 2 to 4 of that decision.

Procedure and forms of order sought by the parties

28 The applicants, the Hellenic Republic, NOA and OA, brought the present actions by applications lodged at the Registry of the General Court on 25 November 2005.

29 In Case T-416/05, by separate document lodged at the Court Registry on 4 February 2006, the applicant submitted an application for suspension of the operation of Article 2 of the contested decision, as regards the aid referred to in Article 1(1) of that decision. By order of 26 June 2006 in Case T‑416/05 R Olympiakes Aerogrammes v Commission, not published in the ECR, the President of the General Court dismissed the application.

30 In Case T-423/05, by separate document lodged at the Court Registry on 19 June 2006, the applicant submitted an application for suspension of the operation of Article 2 of the contested decision, as regards the aid referred to in Article 1(2) to (4) of that decision. By order of 29 January 2007 in Case T‑423/05 R Olympiaki Aeroporia Ypiresies v Commission, not published in the ECR, the President of the General Court dismissed the application.

31 As the composition of the Court’s Chambers had been altered, the Judge‑Rapporteur was assigned to the Sixth Chamber, to which the present cases were therefore assigned.

32 In Case T-416/05, by application lodged at the Court Registry on 16 August 2006, the applicant, in reliance on the first and second subparagraphs of Article 48(2) of the General Court’s Rules of Procedure, pleaded the inadmissibility of alleged new pleas in law raised by the Commission in the rejoinder. The applicant claimed that the Court should declare those pleas in law inadmissible or, in the alternative, should allow the applicant additional time to reply to them. The Commission submitted its written observations on that application.

33 In Case T-416/05, by document lodged at the Court Registry on 2 May 2006, Aegean Airways applied for leave to intervene in support of the form of order sought by the Commission.

34 By document of 14 July 2006, NOA contended that the Court should dismiss that application for leave to intervene. By separate document lodged the same day, it applied for confidential treatment with regard to Aegean Airways as regards the entirety of the contested decision, for as long as a non-confidential version of that decision was not published in the Official Journal of the European Union, and as regards certain data contained in the application and the reply and the annexes thereto.

35 By order of 6 June 2008, the President of the Sixth Chamber granted Aegean Airways leave to intervene in support of the form of order sought by the Commission. That order provided for the communication to the intervener, pursuant to the provisions of Article 116(2) of the Rules of Procedure, of the non‑confidential versions of the procedural documents, and prescribed a period for the submission of a statement in intervention, without prejudice to the right to supplement it later if need be, following a decision on the validity of the application for confidential treatment.

36 By document lodged at the Court Registry on 25 June 2008, the intervener opposed NOA’s application for confidential treatment. Whilst contending that all the procedural documents should be fully disclosed to it, the intervener stated its intention to submit a statement in intervention on the basis of the non-confidential versions of the documents which had been sent to it. The statement in intervention was lodged on 22 July 2008.

37 In Case T-416/05, by letter lodged at the Court Registry on 8 March 2010, in reply to certain questions raised by the Court in relation to its application for confidential treatment, the applicant withdrew it, after being placed in a scheme of special liquidation and the cessation of all commercial activity, at the conclusion of the privatisation procedure. The intervener was invited to submit its additional observations.

38 In Case T-423/05, by document lodged at the Court Registry on 17 May 2006, Aegean Airways applied for leave to intervene in support of the form of order sought by the Commission. By document of 28 July 2006, the applicant contended that the application for leave to intervene should be dismissed. By separate document lodged the same day, it lodged an application for confidential treatment with regard to Aegean Airways.

39 By order of 6 June 2008, the President of the Sixth Chamber granted Aegean Airways leave to intervene in support of the form of order sought by the Commission in Case T-423/05. That order provided for the communication in due course to the intervener, pursuant to Article 116(6) of the Rules of Procedure, of the Report for the Hearing, for the purposes of the submission of any observations it might wish to make at the hearing.

40 In Case T-423/05, by letter lodged at the Court Registry on 10 May 2010, in reply to questions raised by the Court relating, in particular, to its application for confidential treatment, the applicant withdrew that application, after being placed in a scheme of special liquidation, at the conclusion of the privatisation procedure.

41 By order of 18 May 2010, the President of the Sixth Chamber, having heard all the parties, ordered that Cases T-415/05, T‑416/05 and T‑423/05 be joined for the purposes of the oral procedure and judgment.

42 Since Judge Tchipev was prevented from attending, the President of the General Court decided, pursuant to Article 32(3) of the Rules of Procedure, to sit in the present cases to complete the Chamber.

43 In Case T-415/05, the applicant claims that the General Court should:

– annul the contested decision in whole or in part;

– order the Commission to pay the costs.

44 In Case T-416/05, the applicant claims that the General Court should:

– annul Article 1(1) and (4) and Article 2 of the contested decision, in so far as it concerns the applicant;

– order the Commission to pay the costs.

45 In Case T-423/05, the applicant claims that the General Court should:

– annul all or part of the contested decision, in so far as it covers aid granted to it;

– order the Commission to pay the costs.

46 The Commission, supported by Aegean Airways in Cases T‑416/05 and T‑423/05, contends that the General Court should:

– dismiss the actions;

– order the applicants to pay the costs.

47 Upon hearing the report of the Judge-Rapporteur, the Court (Sixth Chamber) decided to open the oral procedure without any prior measures of inquiry. As part of the measures of organisation of the procedure, the parties were requested to reply to written questions by the Court and to produce certain documents. They complied with those requests.

48 The parties presented oral argument and answered the questions put by the Court at the hearing on 14 June 2010.

49 In Case T-415/05, the Hellenic Republic, which had applied for the case to be referred to the Grand Chamber, confirmed, at the hearing, the withdrawal of that application.

Law

A – No longer any legal interest of the applicants in bringing proceedings

1. Arguments of the parties

50 In its written observations in reply to a request from the Court, the Commission contended that the applicants in Cases T-416/05 and T‑423/05, NOA and OA, after being put into liquidation at the conclusion of the privatisation, had no legal interest in bringing the proceedings.

51 The Commission also contended that, in Case T-415/05, following repayment of the aid referred to in the contested decision, the Hellenic Republic no longer had a legal interest in bringing the proceedings.

52 In that regard, the Commission argues that the interests of the Hellenic Republic, which is the sole shareholder in, and, if not the only, by far the principal creditor of NOA and OA, had been fully satisfied by the recovery of the aid at issue. The annulment of the contested decision would not therefore achieve anything more. In particular, there is no evidence that, after payment by those companies of the Hellenic Republic’s preferred debts, any debts of other creditors could still be paid.

53 The Hellenic Republic, at the hearing, as well as NOA and OA, both in their written replies to questions put by the Court and at the hearing, disputed that argument of the Commission. They particularly emphasised, at the hearing, that the debts owed to the staff and secured debts ranked prior to those of the State.

54 Finally, in Cases T-416/05 and T-423/05, the intervener maintained, in its reply to a written question put by the Court in Case T-416/05, and at the hearing in the two abovementioned cases, that, following the applicant companies being put into liquidation, it still had a legal interest in intervening in support of the form of order sought by the Commission.

55 NOA, in its reply to a written question put by the Court and at the hearing, and OA, at the hearing, denied that Aegean Airways had such an interest in pursuing its intervention.

2. Findings of the Court

56 The conditions of admissibility concern an absolute bar to proceedings, which the Courts of the European Union may at any time of their own motion consider (see order in Joined Cases T‑228/00, T‑229/00, T‑242/00, T‑243/00, T‑245/00 to T‑248/00, T‑250/00, T‑252/00, T‑256/00 to T‑259/00, T‑265/00, T‑267/00, T‑268/00, T‑271/00, T‑274/00 to T‑276/00, T‑281/00, T‑287/00 and T‑296/00 Gruppo ormeggiatori del porto di Venezia and Others v Commission [2005] ECR II‑787, paragraph 22 and the case-law cited). In this case, having regard to the parties’ arguments, it must be established whether the applicants can pursue their actions, following NOA and OA being placed in liquidation and the repayment relied upon of the aid at issue.

57 First, as regards the alleged inadmissibility of the Hellenic Republic’s action (Case T-415/05), according to settled case-law, Article 230 EC does draw a clear distinction between the right of Community institutions and Member States to bring an action for annulment and that of legal persons and individuals, in that the second paragraph of Article 230 EC gives all Member States the right to contest the legality of decisions of the Commission by means of an action for annulment without having to establish any legal interest in bringing proceedings. A Member State need not therefore prove that an act of the Commission which it is contesting produces legal effects with regard to that Member State in order for its action to be admissible. However, in order for an act of the Commission to be the subject of an action for annulment, it must be intended to have legal effects (order in Case C‑208/99 Portugal v Commission [2001] ECR I-9183, paragraphs 22 to 24; see also, to that effect, Joined Cases T‑425/04, T‑444/04, T‑450/04 and T‑456/04 France and Others v Commission [2010] ECR II-2099, paragraphs 118 to 120).

58 In this case, in the contested decision, the Commission characterises the measures in question in favour of NOA and OA as State aid and declares them incompatible with the common market.

59 It follows that the contested decision has binding legal effects and therefore constitutes a challengeable act.

60 Consequently, the Hellenic Republic, which challenges, in particular, the characterisation of the measures in question as State aid is, solely by virtue of its status as a Member State, entitled to bring an action for annulment of the contested decision and may, therefore, by virtue of that status alone, pursue that action.

61 Second, as regards NOA’s alleged lack of any legal interest in bringing proceedings (Case T-416/05) and OA’s (Case T-423/05), it is appropriate to recall that, according to the case-law, the applicant’s interest in bringing proceedings must continue until the final decision. Indeed, there is no longer any need to adjudicate on the action if the applicant has lost all personal interest in having the contested act annulled on account of an event occurring in the course of the proceedings, the effect of which is that the annulment of that act is no longer capable, by itself, of having legal consequences to the advantage of the applicant (Case T‑301/01 Alitalia v Commission [2008] ECR II‑1753, paragraph 37, and Case T‑42/06 Gollnisch v Parliament [2010] ECR II-1135, paragraph 61).

62 Here, it is sufficient to state that the applicant companies, which have made clear, in their replies to the written questions put by the Court, that they had completely repaid the alleged aid, in compliance with the contested decision, maintain, correctly, that they retain a current personal interest in pursuing their actions, since, if the contested decision is annulled, the Hellenic Republic will be liable to repay them the sums they repaid, which will be entered as assets in their respective liquidation balance sheets.

63 It follows that the present actions are admissible.

64 Moreover, in Cases T‑416/05 and T-423/05, as regards the question whether Aegean Airways still has a direct and present interest in the results of the cases, for the purposes of the second paragraph of Article 40 of the Statute of the Court of Justice, it is sufficient to note that, in the order in Olympiakes Aerogrammes v Commission, paragraph 28, and in the order in Olympiaki Aeroporia Ypiresies v Commission, paragraph 23, granting Aegean Airways leave to intervene in support of the forms of order sought by the Commission, such a direct and present interest was recognised on the ground that the intervener, first, was in competition with OA and NOA, the recipients of the aid covered by the contested decision, and, second, had actively participated in the formal investigation procedure which led to the adoption of the contested decision, which is favourable to it. However, as long as NOA and OA are recognised as having, even after being placed in liquidation, a legal interest in seeking the annulment of the contested decision, Aegean Airways retains a corresponding interest in intervening in support of the Commission to argue for the legality of that decision, be it only for the purposes of making claims for compensation, followed by possible actions, based on the unlawful grant, during the abovementioned period of competition, of aid which caused it injury.

65 It must therefore be accepted that Aegean Airways, as an intervener, still has a legal interest in the results of the present cases.

B – Substance

66 The applicants challenge the Commission’s findings relating, first, to the existence of financial continuity between OA and NOA for the purposes of recovery of the aid (Cases T‑415/05 and T‑416/05), second, to the grant of State aid to NOA (Cases T‑415/05 and T‑416/05) and, third, to the grant of State aid to OA (Cases T‑415/05, T‑416/05 and T‑423/05). In addition, they plead, fourth, breach of the right of the Member State concerned to be heard (Cases T-415/05 and T‑423/05), fifth, breach of the principle of proportionality (Cases T‑415/05 and T-416/05) and, sixth, breach of the principle of no double jeopardy (Cases T‑415/05 and T‑423/05).

67 Prior to addressing those various complaints in turn, it is appropriate to point out, at the outset, that, in Case T-416/05, the applicant, NOA, submits that the Commission’s alleged new pleas in law are inadmissible (see paragraph 32 above). The admissibility of those pleas will be determined in the examination of the pleas in law to which they relate (see paragraphs 116, 117, 129 to 131, 208 and 409 below).

1. The financial continuity between OA and NOA being taken into account for the purposes of recovery of the aid (Cases T-415/05 and T‑416/05)





(a) Arguments of the parties

68 As regards the identification of the recipients of the aid at issue for the purposes of its recovery, the Hellenic Republic and NOA challenge the Commission’s finding that there was financial continuity between OA and NOA, since that finding could be interpreted, in relation to Article 1(4), read with Article 2 of the contested decision, as requiring recovery from NOA of aid granted to OA after the adoption of the Decision of 11 December 2002 and before the hiving-off.

69 First, the applicants submit that, in the absence of a clear and precise order for recovery to that effect, in the contested decision’s enacting terms, in accordance with Article 88 EC and Article 14 of Regulation No 659/1999, no obligation to recover such aid from NOA arose from that decision.

70 The Hellenic Republic submits that the Commission’s lack of precision, both in the contested decision and in its pleadings, which reinforce certain contradictions, leads it to question the reasons for and effect of the inclusion, in the contested decision (points 178 to 183), of the abovementioned finding relating to NOA’s succession to OA for the purposes of recovery of the aid, whereas the Commission admits, in its defence, that that finding concerns the Decision of 11 December 2002 exclusively and has no legal effect as regards the contested decision and that it is relying on the Hellenic Republic’s lack of a legal interest in bringing the proceedings on that point.

71 It is therefore necessary to clarify, in accordance with the principle of legal certainty, whether the contested decision provides that NOA can be held liable to repay, particularly, the aid referred to in Article 1(4) of the contested decision, so that the question of NOA’s succession to OA for the purposes of recovery of the aid might be subject in due course to review by the General Court as part of the present action.

72 Second, the Hellenic Republic and NOA maintain that the Commission’s statement, in the contested decision (point 183), that NOA must be regarded, at least for the purposes of recovery of the aid prior to the hiving-off of the flight operations sector, as OA’s successor, is vitiated by manifest error of assessment and lack of a proper statement of reasons.

73 The applicants accept that, according to settled case-law, the Commission may be obliged to require that the recovery is not restricted to the initial recipient of the aid but is extended to the undertaking which continues the activity of the original undertaking, using the transferred means of production, in cases where economic continuity exists between the two undertakings (Joined Cases C‑328/99 and C‑399/00 Italy and SIM 2 Multimedia v Commission [2003] ECR I‑4035, paragraph 78). However, it follows from that case-law that, first, recovery of the aid from a third party is merely a possibility and second, there must be an element of economic continuity.

74 In particular, the possibility of a company in economic difficulties taking measures to rehabilitate the business cannot be ruled out a priori because of requirements relating to recovery of the aid which is incompatible with the common market (Italy and SIM 2 Multimedia v Commission, paragraph 76). Contrary to the Commission’s allegations, intention to evade the repayment obligation is taken into account in the examination of the economic logic of the transaction of transfer and conversion (Italy and SIM 2 Multimedia v Commission, paragraph 78, and Case T-324/00 CDA Datenträger Albrechts v Commission [2005] ECR II‑4309, paragraphs 102 to 104).

75 In that regard, the applicants note that the transfer, by the company which received the aid, of part of its assets to a third legal person, in order to afford it an opportunity to develop free from the legal and economic uncertainties which threaten the continued exploitation of that part of its activity, does not demonstrate, as such, the existence of an intention to evade the effects of the recovery (CDA Datenträger Albrechts v Commission, paragraph 98).

76 In this case, according to the abovementioned case-law, the decisive test is therefore, in the applicants’ submission, whether the conversion was required by the economic logic of a more effective recovery or was intended to evade the effects of the recovery order.

77 The hiving-off of the flight operations, as part of the wider programme of restructuring and privatisation of the Olympic Airways Group was intended to sell that sector at the greatest possible profit. In particular, the value of the new airline, NOA, far exceeded the simple sum of the assets transferred. It was increased by the fact that there were, among other things, a fleet of reliable and flexible aircraft, very well trained staff, knowledge and experience of the national market, commercial reputation and reliability, a network of cooperators, contracts of cooperation and the availability of take-off and landing slots.

78 The applicants submit therefore that, applying the private investor test, the conversion provided for by Law No 3185/2003 was required by the economic logic of the privatisation of the Olympic Airways Group, with a view to the more effective recovery of the aid, and was not carried out with the aim of evading the effects of the recovery order. Indeed, after some fruitless attempts at privatising OA, the Hellenic Republic chose to hive-off the various activities of the Group in order to privatise them separately with the maximum profit. In that regard, NOA challenges, in particular, the Commission’s statement, in the contested decision (point 178), that the Hellenic Republic’s intention, in the conversion of that group, was to enable its flight operations to be continued.

79 The Hellenic Republic and NOA allege that, in this case, as in the case which gave rise to the judgment in CDA Datenträger Albrechts v Commission, the value of the company which has been deprived of part of its assets, in this case OA, has not been diminished, because an equivalent part of its liabilities has been transferred. The Commission has, moreover, accepted that liabilities amounting to EUR 145 million were transferred to NOA (point 117 of the contested decision).

80 In addition, contrary to the Commission’s allegations in the contested decision (point 179), the transfer of some of OA’s assets to NOA has not deprived OA of their revenue. Indeed, OA continues to operate in the sectors of ground-handling, maintenance and repairs, catering, data processing and fuel supply. OA receives very significant revenue from NOA on the basis of commercial contractual terms.

81 In those circumstances, the Commission’s assertion, that the creation of NOA constituted an artificial reorganisation within the same group, is erroneous. Under Law No 3185/2003, the Hellenic Republic holds NOA’s shares solely for the purposes of its privatisation. In addition, since NOA received no advantage as the company which acquired some of OA’s assets and OA continued to operate, there was no economic continuity between the two companies justifying recovery from NOA of the aid of which OA was the recipient (Case C‑277/00 Germany v Commission [2004] ECR I‑3925, paragraph 81).

82 Contrary to the Commission’s allegations, the Hellenic Republic did not accept, in its letter of 2 June 2005, that NOA had succeeded OA. It only admitted that, if complete recovery could not be obtained from OA after the surplus of its liquidation was exhausted, the recovery obligation could be executed on companies which succeeded OA, if the conditions set forth in the Community case-law concerning succession to the obligation to recover State aid were satisfied. However, such is not the case. As the conclusion of the privatisation of NOA was imminent, the Greek authorities referred expressly, in that letter, to the condition relating to sale at a reasonable market price.

83 By contending, in the defence (paragraph 76), that the conversion in itself was not the subject of the contested decision and did not necessitate therefore any detailed analysis for the purposes of deciding whether NOA had succeeded OA, the Commission admitted that it had not taken into consideration the fundamental criterion relating to the economic logic of that conversion.

84 Consequently, the reasoning on which the finding is based, in the contested decision, that NOA succeeded OA for the purposes of recovery of the aid, is insufficient, since the Commission failed to examine the economic logic of the process of establishing NOA as part of the restructuring and privatisation of OA, with the aim of enabling the recovery of the highest possible amount of the unlawfully paid aid.

85 Finally, the Hellenic Republic and NOA dispute the Commission’s interpretation of the judgment of 12 May 2005. They point out that the Court of Justice ruled only on the legal and financial consequences of Law No 3185/2003 on the execution of the Decision of 11 December 2002. The Court did not adjudicate either on the intentions which had dictated the choice of hiving-off the flight operations sector or on the compatibility of that restructuring with the provisions of Article 87 EC, or on the question of whether NOA could be regarded as OA’s successor for the purposes of recovery of the aid covered by the Decision of 11 December 2002. The Court of Justice could not have examined, as part of that action for failure to fulfil obligations, whether NOA had succeeded OA, for the purposes of recovery of the aid, because, at the time that action was brought, on 2 October 2003, NOA had not yet been formed.

86 In the judgment of 12 May 2005, the Court of Justice held only that the transfer of some of OA’s assets to NOA rendered it impossible, under national law, to recover the aid granted to OA. However, it came to that conclusion by deciding that ‘all the assets’ of OA had been transferred ‘free of all debts’ (paragraph 33 of the judgment). However, that is not the case, the Commission having since admitted that OA had retained significant parts of its assets and transferred a significant part of its liabilities to NOA. The Commission thus distorted the reasoning of the Court of Justice in the judgment of 12 May 2005 and fundamentally misread it, in maintaining that the Court had held that the most profitable assets were transferred to NOA.

87 For all those reasons, the Commission’s conclusions relating to the finding of the alleged financial continuity between OA and NOA are, in the submission of the Hellenic Republic and NOA, erroneous and unsubstantiated by reasoning.

88 The Commission sets outs, in the first place, its interpretation of the contested decision. In the defences in Cases T‑415/05 and T-416/05, it suggests first of all that, in contrast to the judgment of 12 May 2005, the contested decision does not address the question relating to the recovery, from NOA, of aid granted to OA. The Commission concludes therefrom that the Hellenic Republic and NOA have no current legal interest in bringing the proceedings against the grounds of that decision relating to the treatment of NOA as OA’s successor.

89 However, in the rejoinders, the Commission advocates the position that it is clear from Article 2 of the contested decision, interpreted by reference to the grounds of that decision, that the aid at issue granted to OA at least prior to the hiving-off had to be recovered not only from that company but also from NOA. It therefore admits the Hellenic Republic’s and NOA’s legal interest in challenging the obligation to recover, from NOA, aid granted to OA.

90 The Commission explains that change of position by the fact that it was informed of the precise date of NOA’s formation only by the reference, in the reply in Case T-416/05, to 13 December 2003 as the date of that company’s formation and commencement of activity.

91 The proof of that precise date ‘activates the reservation’ stated on several occasions by the Commission as regards the identification of the effective recipient of the aid prior to the hiving-off.

92 As regards the aid at issue paid to OA after the hiving-off, it could and should be recovered also from NOA, were it to be established, in the execution of the contested decision, that the benefit from it had been transferred to NOA. The Commission contends, in that regard, that OA transferred to NOA the benefit arising from the aid which the Hellenic Republic granted it, by sub-leasing aircraft to NOA for rentals lower than those it itself paid to the head-lessors.

93 The Commission states that the apportionment of the repayment obligation between OA and NOA will have to be determined in the execution of the contested decision.

94 In the second place, in Cases T-415/05 and T-416/05, the Commission disputes the applicants’ argument intended to demonstrate that NOA did not succeed OA for the purposes of recovery of the aid at issue. It alleges that the recovery of the aid from the entity carrying on the economic activity which benefited from it is intended to restore the conditions of fair competition.

95 Aegean Airways, intervening in support of the form of order sought by the Commission in Case T-416/05, observes that the issue relating to the existence of financial continuity between OA and NOA was decided by the judgment of 12 May 2005.

(b) Findings of the Court

96 At the outset, it is appropriate to point out that, in reply to a question put by the Court at the hearing, the Commission did not confirm OA’s statement, in its reply to a written question from the Court and again at the hearing, that it had fully repaid, in compliance with Article 2 of the contested decision, the amount, including interest, of the aid at issue which had been paid to it. In fact, the Commission expressed certain reservations as regards the full repayment of that aid, whilst indicating that, having regard to the putting into liquidation of OA and NOA, it would not require the Hellenic Republic to recover from NOA the aid at issue granted to OA.

97 The Hellenic Republic and NOA, for their parts, stated at the hearing that they maintained their complaints against the characterisation of NOA as OA’s successor for the purposes of recovery of the aid paid to OA.

98 In that context, after determining, first, the measures in favour of OA which may be made the proper subject of an obligation to recover them from NOA, it will be necessary, second, to define the legal effect of the contested decision as regards the finding relating to NOA’s succession to OA for the purposes of recovery of the aid, before deciding, third, on the validity of the extension of the recovery obligation to NOA.

The determination of the measures in favour of OA which may be made the proper subject of an obligation to recover them from NOA

99 At the outset, as the Court of Justice pointed out in paragraph 32 of the judgment of 12 May 2005, a distinction has to be drawn between the examination of the restructuring measures themselves, in the light of the conditions for applying Article 87 EC, from the question, which is entirely independent, of whether NOA could be regarded as OA’s successor, as regards flight operations, for the purposes of recovery of the aid granted to OA before the hiving-off. The only issue, in the context of the action for failure to fulfil obligations which gave rise to that judgment, was the determination of the legal and financial consequences of those restructuring measures on the implementation of the Decision of 11 December 2002.

100 It is clear from the order to provide information and from the decision of 16 March 2004 to initiate the procedure under Article 88(2) EC that the Commission’s investigations concerned, in this case, all the measures connected with the restructuring and privatisation of the Olympic Airways Group which might include elements of State aid (see paragraphs 12 and 16 to 18 above).

101 However, in the contested decision, the restructuring measures were not examined as such, from the point of view of their treatment in the light of the conditions for applying Article 87(1) EC. Their nature, and particularly the connection between OA and NOA, was only assessed by the Commission in order, first, to show that there was financial continuity between OA and NOA for the purposes of recovery of the aid at issue and, second, to treat the measures examined in their context (see, in particular, paragraphs 164 to 178 below).

102 As regards, more particularly, recovery of the aid, it was for the Commission alone to examine, in the contested decision, the issue of NOA’s succession to OA for the purposes of recovery of the new aid to OA referred to in that decision. Indeed, the determination as to the effective recipients of the aid referred to in the Decision of 11 December 2002, for the purposes of the implementation of the order for recovery contained in that decision, was governed by the judgment of 12 May 2005 (see paragraphs 7, 8 and 99 above).

103 Furthermore, the issue of NOA’s succession to OA for the purposes of recovery of the aid may, in these proceedings, be raised only as regards the aid granted to OA before the hiving-off of the flight operations and NOA’s formation.

104 In fact, if there was financial continuity between those two companies, NOA could be regarded as the effective recipient of the aid benefiting the flight operations sector which had been granted to the former airline OA before those operations were taken over by NOA.

105 By contrast, contrary to the Commission’s allegations in the rejoinders (see paragraph 92 above), the aid at issue granted to OA after the hiving-off cannot be recovered from NOA on the sole ground that it obtained an indirect benefit from it. Even on the assumption that, as the Commission submits, the State aid granted to OA after the hiving-off had put that company in a position to confer, in its turn, on the new company NOA certain benefits which it would not have obtained under normal market conditions, which has not been established, that fact cannot by itself lead to the conclusion that NOA was the effective recipient of the aid granted to OA.

106 In the absence, after the hiving-off, of economic unity between the two companies, OA and NOA, and as the Commission does not dispute, in the contested decision, they were legally and financially independent, it was, in any event, for the Commission to identify clearly the benefit allegedly conferred on NOA by OA and to determine it separately in the light of the conditions for applying Article 87(1) EC (see, to that effect, Case C-222/04 Cassa di Risparmio di Firenze and Others [2006] ECR I‑289, paragraphs 112 to 114, and Joined Cases T‑371/94 and T‑394/94 British Airways and Others v Commission [1998] ECR II‑2405, paragraphs 313 and 314). That was also the approach followed by the Commission in the contested decision, as regards the aid granted to NOA in the form of low rentals for the sub-leasing of aircraft (see paragraphs 154 to 253 below).

107 It follows that, in this case, as the applicants suggest, the issue of NOA’s succession to OA for the purposes of recovery of the aid at issue only arises as regards the aid allegedly conferred on OA in the form of forbearance in relation to its non-payment of taxes and social security contributions, referred to in Article 1(4) of the contested decision, to the extent that the aid preceded the hiving-off. In fact, the other aid to OA, referred to in Article 1(2) and (3) of that decision, was all granted after the hiving-off.

108 In that regard, it must be noted even at this stage that the pleas in law relied upon by the applicants, in Cases T-415/05 and T-423/05, to obtain the annulment of Article 1(4) of the contested decision, must be rejected as the Court will establish (see paragraphs 378 to 393 below).

109 In those circumstances, the Court must determine the legal effect of the contested decision as regards the finding that there was financial continuity between OA and NOA for the purposes of recovery of the aid referred to in Article 1(4) of that decision to the extent that it was granted prior to 11 December 2003.

The contested decision’s legal effect as regards the finding that NOA succeeded OA for the purposes of recovery of the aid at issue

110 It is appropriate to note at the outset that, since the contested decision was adopted on 14 September 2005, the Commission was in possession, at the time of its adoption, of all the information necessary for the purposes of identifying, in the decision itself, the recipients from which the aid concerned should be recovered. In that respect, the circumstances material to this case differ from those examined by the Commission in the Decision of 11 December 2002, prior to the restructuring of the Olympic Airways Group and the formation of NOA in December 2003.

111 However, in the contested decision’s enacting terms, the Commission does not expressly identify NOA as the effective recipient of part of the aid granted to OA and referred to in Article 1(4) of that decision.

112 The Commission confines itself, in fact, to requiring, in Article 2 of the contested decision, the Hellenic Republic to recover the aid referred to in Article 1 of the decision from the ‘beneficiaries’ of that aid. As regards Article 1(4) of the contested decision, it refers expressly to the illegal aid granted to OA in the form of the Hellenic Republic’s forbearance in relation to OA’s tax and social security debts to the State but does not refer to NOA as an effective recipient of part of that aid.

113 In Case C‑419/06 Commission v Greece declaring that the Hellenic Republic had failed to fulfil its obligations under the contested decision, the Court of Justice did not consider it necessary to examine, among other things, whether, in that decision, NOA was designated as OA’s successor for the purposes of recovery of the aid at issue referred to in Article 1(4). In fact, as regards that aid, the Court merely reviewed whether the contested decision contained information enabling the national authorities concerned to determine themselves, without excessive difficulty, the amounts to be recovered (paragraphs 42 to 44 of the judgment).

114 In that context, it is for the General Court, as the applicants submit, to interpret the contested decision’s content as regards any obligation to recover from NOA the aid referred to in Article 1(4) of the contested decision.

115 At the outset, it is appropriate to point out that the Commission, in the rejoinders in Cases T‑415/05 and T‑416/05, justified its adoption of contradictory positions as regards the contested decision’s interpretation by its uncertainty as to the precise date of NOA’s formation (see paragraph 90 above).

116 In Case T-416/05, NOA pleaded the novelty and therefore inadmissibility of that argument relating to the Commission’s alleged uncertainty as to the precise date of NOA’s formation (see paragraph 32 above).

117 In that regard, it is sufficient to note that the Commission’s argument is, in any event, irrelevant. Whatever the successive interpretations put forward in this case by the defendant institution might be, it is for the General Court to give the contested decision its definitive interpretation. Consequently, the Commission’s adoption of contradictory positions relating to the contested decision’s interpretation and its reliance on uncertainty relating to the precise date of NOA’s formation, in order to explain the changes in its position, are irrelevant and cannot adversely affect the applicants’ rights of defence (Case T‑228/97 Irish Sugar v Commission [1999] ECR II‑2969, paragraph 30). Moreover, the decision of 16 March 2004 to initiate the formal investigation procedure (in point 110) and the contested decision (in point 6) expressly state that NOA was formed on 12 December 2003. The applicants confirmed, at the hearing, that NOA commenced its activities on that date. In that context, even if the Commission was not informed in the course of the administrative procedure of the precise date of NOA’s formation, 11 December 2003, that fact could not have affected the content of the contested decision – or, therefore, its interpretation – as regards the possible designation of NOA as OA’s successor for the purposes of recovery of the aid at issue.

118 For the purposes of interpreting Article 2 of the contested decision, it should be recalled that, according to the case-law, the operative part of a decision on State aid is indissociably linked to the statement of reasons for it, so that, when it has to be interpreted, account must be taken of the reasons which led to its adoption (see Case C‑355/95 P TWD v Commission [1997] ECR I‑2549, paragraph 21, and the judgment of 12 May 2005, paragraph 41 and the case-law cited).

119 In this case, the Court must therefore determine whether Article 2 of the contested decision can be interpreted, in the light of the reasons for that decision, as referring, among ‘the beneficiaries [of] the aid referred to in Article 1’, to NOA as an effective recipient of the aid at issue granted to OA and referred to in Article 1(4) of that decision.

120 In its examination of the nature of the restructuring of the Olympic Airways Group (points 178 to 183 of the contested decision), in the context of its ‘appraisal of aid’ (Section 6 in the preamble to the contested decision), the Commission analysed more minutely the detailed rules of the restructuring, already taken into account by the Court of Justice in the judgment of 12 May 2005. The Commission relied on that judgment, to formulate the following conclusion, in point 183 of the contested decision:

‘It is therefore obvious that the restructuring of OA in 2003 whereby NOA was created, while it led to the creation of a separate legal entity, was done so as to avoid recovery [of aid] following the [Decision of 11 December 2002] and that NOA is a successor company to OA at least for the purposes of recovery of State aid arising prior to the [splitting].’

121 In order to show, for the purposes of recovery of the aid at issue granted to OA, that NOA succeeded to OA, the Commission thus confined itself to expounding the matters on which, in the judgment of 12 May 2005, the Court of Justice had based its conclusion that there was financial continuity between OA and NOA for the purposes of recovery of the aid covered by the Decision of 11 December 2002. On the basis of those matters, the Commission expressly concluded, in point 183 of the contested decision, that the recovery obligation extended to NOA as regards, in particular, the aid at issue to OA prior to the splitting.

122 In addition, in its consideration of the compatibility of the aid granted to NOA, the Commission noted, in the contested decision (points 216 and 217), that, since NOA was OA’s successor for the purposes of recovery of the aid, the new aid granted to NOA could not be declared compatible with the common market, as long as the aid prior to the hiving-off had not been recovered.

123 It is clear from that examination of the contested decision that – although it is regrettable that the Commission did not name, in the enacting terms of that decision, the recipients from which the aid referred to in Article 1(4) and granted prior to the hiving-off had to be recovered – the grounds for that decision render NOA readily identifiable as OA’s successor for the purposes of recovery of that aid.

124 In that context, it follows clearly from Article 2 of the contested decision, in conjunction with the abovementioned grounds for that decision, and particularly in the light of the judgment of 12 May 2005, that the Commission required the Hellenic Republic to recover the aid granted to OA, before the hiving-off, not only from that company, but also, if need be, from NOA.

125 Article 2 of the contested decision, requiring the recovery of the aid referred to in Article 1 of that decision, must therefore be interpreted as meaning that it contains an order for recovery of the aid granted prior to the hiving-off, from OA or from NOA, with the apportionment of that recovery obligation between those two companies having to be determined in the implementation of that decision.

126 Indeed, as regards apportionment of the recovery obligation between recipients of aid, it is appropriate to note that, in a decision finding that aid was incompatible and requiring its recovery, the Commission is not required to state to what extent each recipient undertaking has benefited from the amount of the aid in question. It is for the Member State concerned to determine the amount which must be repaid by each of those undertakings in its recovery of the aid. If it encounters unforeseen difficulties, it may submit its problems for consideration by the Commission, and the Commission and State must work together in good faith, in accordance with the duty of genuine cooperation enshrined particularly in Article 10 EC, with a view to overcoming those difficulties (see, to that effect, Joined Cases T‑111/01 and T‑133/01 Saxonia Edelmetalle and ZEMAG v Commission [2005] ECR II‑1579, paragraph 124).

127 That solution was confirmed by the judgment of 12 May 2005, in which the Court of Justice, whilst emphasising the purely economic test of restoring undistorted competition in the sector concerned, impliedly accepted the possibility of a merely ancillary recovery obligation in respect of NOA. Indeed, in that judgment, the Court confined itself to declaring the failure to fulfil obligations, leaving it to the competent national authorities and the Commission to determine, within the framework of their reciprocal duty of cooperation in good faith, the apportionment of the recovery obligation between OA and NOA, as regards the aid covered by the Decision of 11 December 2002.

128 In this case, having regard to the interpretation of the contested decision extracted in paragraphs 123 to 125 above, it is appropriate to examine the reasoning for, and validity of, the finding that there was financial continuity between OA and NOA for the purposes of recovery of the aid referred to in Article 1(4) of the contested decision and granted prior to the hiving-off.

Appraisal of the reasoning for, and validity of, the finding, in the contested decision, that NOA succeeded OA for the purposes of recovery of the aid at issue

129 Before examining the merits of the pleas in law alleging the insufficiency of the reasoning and manifest error of assessment put forward by the applicants in Cases T-415/05 and T-416/05, NOA’s assessment of the inadmissibility of the Commission’s alleged new pleas in law relating, first, to the Hellenic Republic’s alleged intention to evade the recovery obligation and, second, the alleged illegality of NOA’s existence (see paragraph 32 above) must be rejected.

130 In fact, it is clear from the rejoinder that the Commission is not invoking any new plea in law relating to the Hellenic Republic’s alleged intention to evade the recovery obligation through the restructuring of the Olympic Airways Group and the creation of NOA. It sets out, on the contrary, the argument, already invoked in the contested decision and the defence, that the lack of any intention on the part of the Hellenic Republic to evade that obligation, as alleged by the applicant, is irrelevant since the abovementioned restructuring is an obstacle to the recovery of the aid.

131 As regards the Commission’s argument that the judgment of 12 May 2005 concerns the very existence of NOA, by declaring it illegal, it forms part of the argument between the parties on the legal effect of that judgment as regards the identification of the effective recipient of the aid at issue.

132 On the substance, and at the outset, since, as part of its examination of the connection between OA and NOA, the Commission relied particularly on the matters taken into account by the Court of Justice in the judgment of 12 May 2005 to find that ‘NOA is a successor company to OA at least for the purposes of recovery of State aid arising prior to the [splitting]’ (point 183 of the contested decision), it is appropriate to make clear the legal effect of that judgment in this case.

133 Contrary to the Commission’s allegations before the General Court, that judgment can only be accepted as having the force of res judicata as regards recovery of the aid covered by the Decision of 11 December 2002, since the established failure to fulfil obligations related precisely to the failure to implement that decision.

134 In particular, as regards the finding that there was financial continuity between OA and NOA for the purposes of recovery of the aid at issue prior to the splitting, even if the relevant facts which could be taken into consideration are essentially the same, whether for the recovery of the aid required by the Decision of 11 December 2002 or for the recovery of the aid granted to OA prior to the splitting, as required by the contested decision, all the elements are not, however, strictly identical. The difference rests in the fact that the transfer of assets from OA to NOA, in the flight operations sector, by detailed arrangements which made recovery of the aid granted to OA impossible from NOA, took place after the adoption of the Decision of 11 December 2002, but prior to the initiation of the formal investigation procedure which led to the adoption, on 14 September 2005, of the contested decision.

135 However, the time of the transfer of the assets to the new company is among the criteria which may, to varying degrees according to the case, be taken into account. Indeed, it is clear from the case-law that, in order to determine whether the obligation to recover aid paid to a company in difficulty can be extended to a new company to which the former company has transferred certain assets, where that transfer gives rise to the conclusion that there was financial continuity between the two companies, the following elements may be taken into consideration: the purpose of the transfer (assets and liabilities, continuity of the workforce, bundled assets), the transfer price, the identity of the shareholders or owners of the acquiring firm and of the original firm, the moment at which the transfer was carried out (after the start of the investigation, the initiation of the procedure or the final decision) and, lastly, the economic logic of the transaction (Italy and SIM 2 Multimedia v Commission, paragraphs 78, 80 and 85).

136 In this case, it is therefore necessary to determine whether, taking account of the factual context specific to the present proceedings, the Commission could, without exceeding the limits of its discretion, transpose, in the contested decision, the reasoning followed by the Court of Justice in the judgment of 12 May 2005 to conclude that there was financial continuity between OA and NOA for the purposes of recovery of the aid at issue.

137 As regards, in particular, the criterion, the content and scope of which will be made clear later (see paragraph 146 below), relating to the time of the transfer of the assets, it is sufficient at this stage to recall that, in the case that gave rise to the judgment of 12 May 2005, the transfer of assets of the company OA, which was in difficulties, to the new company NOA, in such a way as to make recovery of the aid covered by the Decision of 11 December 2002 impossible from the former company, had taken place after the adoption of that decision (see paragraph 134 above). In Italy and SIM 2 Multimedia v Commission, paragraph 77, and Case C‑277/00 Germany v Commission, paragraph 71, on which the analysis expounded in the judgment of 12 May 2005 is impliedly based (see paragraphs 143 and 144 below), the transactions of ‘evasion’ alleged by the Commission had been carried out either during the formal investigation, or at a time when the competent national authorities were aware of the Commission’s intention to initiate an investigation.

138 In this case, it is appropriate to observe that the order to provide information, as regards all the measures connected with OA’s restructuring and privatisation, capable of involving evidence of aid, had been addressed to the Hellenic Republic on 8 September 2003. The Hellenic Republic and OA could therefore hardly be unaware, at the time of NOA’s formation, that the measures in favour of OA prior to the splitting could be the subject of a Commission investigation and that they were a continuation of certain earlier aid, referred to in the Decision of 11 December 2002, accorded to OA in the form of the Hellenic Republic’s forbearance in respect of the non-payment of tax and social security contributions.

139 In those circumstances, in view of the similarity of the factual context, the analysis accepted by the Court of Justice in the judgment of 12 May 2005 according to which, in order to restore a situation of undistorted competition in the economic sector concerned, the obligation to recover the aid paid to OA could be extended to NOA, to which OA’s most profitable activities had been transferred, applies also, for the same reasons, as regards the aid prior to the splitting at issue in this case.

140 In that regard, this Court cannot accept the interpretation of the judgment of 12 May 2005 advocated by the applicants, which submit that the Court of Justice did not find that NOA was OA’s successor for the purposes of recovery of the aid.

141 In fact, in the judgment of 12 May 2005, paragraphs 33 and 34, the Court of Justice accepted the Commission’s argument that the operation which consisted of the transfer to NOA of the assets of OA’s flight operations sector, free of all debts, by structuring that operation in such a way as to make it impossible, under national law, to recover debts of the former company OA from the new company NOA, had ‘created an obstacle to the effective implementation of [the] Decision [of 11 December 2002] and to the recovery of the aid by means of which the [Hellenic Republic] had supported the commercial activities of that company’ and ‘[t]he purpose of that decision, which aim[ed] to restore undistorted competition in the civil aviation sector, [had] thus [been] seriously compromised’.

142 By drawing attention to the necessity to restore the competitive situation in the civil aviation sector, the Court thus designated NOA, implicitly, as the effective recipient of the aid granted to OA and covered by the Decision of 11 December 2002, since that aid to the former airline OA had benefited the flight operations sector transferred to NOA.

143 Indeed, in the light of the Opinion of Advocate General Geelhoed ([2005] ECR I‑3878, points 28 to 36), the judgment of 12 May 2005 must be understood as finding that there was, for the purposes of recovery of the aid required by the Decision of 11 December 2002, financial continuity between OA and NOA as regards the flight operations sector. Consequently, the new airline NOA could, in principle, in its capacity as the undertaking enjoying the effective benefit of that aid, be the subject of a national procedure to recover the aid referred to in the abovementioned decision, in order to restore undistorted competition in the economic sector concerned.

144 In support of his analysis, Advocate General Geelhoed relied, in particular, on the judgment in Italy and SIM 2 Multimedia v Commission, in which the Court of Justice held that the fact of permitting an undertaking in difficulty to create, during the formal inquiry into the aid which it received, a subsidiary to which it then transferred its most profitable business activities would amount to accepting that any company may remove such assets from the parent undertaking when aid is recovered, which would risk depriving the recovery of the aid of its effect in whole or in part. To prevent the effectiveness of the decision from being frustrated and the market from continuing to be distorted, the Commission may be compelled to require that the recovery is not restricted to the original firm but is extended to the firm which continues the activity of the original firm, using the transferred means of production, in cases where certain elements of the transfer point to economic continuity between the two firms (point 33 of the Opinion).

145 In this case, the Hellenic Republic’s and NOA’s argument seeking, in essence, to challenge the fact that OA’s main assets – which related to the flight operations sector – were transferred to NOA, free of most of the liabilities, and by arrangements which made recovery of the aid from that company impossible, tend, in fact, to put in issue the analysis on which the Court of Justice relied in its judgment of 12 May 2005. Indeed, contrary to the applicants’ allegations, the principal relevant elements of fact and law already taken into consideration in that judgment have not changed in this case. In particular, whilst it is correct that, in that judgment, the Court noted that the assets of the flight operations sector had been transferred to NOA ‘free of all debts’, that finding – based on the information which had been provided to it by the parties – is explained by the fact that the Court was not called upon, as part of the action before it for failure to fulfil obligations, to examine in detail all the arrangements in the restructuring of the Olympic Airways Group, particularly as regards the transfer of a very small part of the liabilities to NOA, since all the long-term debts and 90% of the short-term debts remained with OA. In that context, the fact, relied upon in this case by the applicants, that OA retained the ground-handling, maintenance and training operations but 10% of its short-term debts, that is to say, debts payable in less than one month, were transferred to NOA, as stated in the Moore Stephens report, cannot change the analysis arising from the judgment of 12 May 2005.

146 Moreover, it is appropriate to point out that, contrary to the applicants’ allegations, the criteria laid down in the case-law for identifying the effective recipient of aid are objective. Indeed, it follows from the case-law that financial continuity can be established, for the purposes of the recovery of aid, on the basis of various objective elements such as the absence of any payment in consideration for the transferred assets, or of a price consistent with market conditions, or the objective fact that the effect of the transfer is to evade the obligation to repay the aid at issue (see, to that effect, Case C‑277/00 Germany v Commission, paragraph 86; the judgment of 12 May 2005, paragraphs 32 to 34; and Italy and SIM 2 Multimedia v Commission, paragraph 78). In that regard, contrary to the applicants’ allegations, it does not follow from the judgment in CDA Datenträger Albrechts v Commission that the presence of an intentional element is necessary to find that the obligation to repay aid has been evaded by the transfer of assets. Likewise, it is appropriate to observe that the criterion relating to the time of the transfer of the assets (see paragraphs 135 to 138 above) is also objective and does not imply the existence of an intention to evade. It must be understood as meaning that the time of the transfer is capable of constituting, according to the circumstances of the case, evidence of evasion.

147 In that context, the Court cannot accept the applicants’ argument that the restructuring of the Olympic Airways Group and the transfer of the flight operations to NOA were required by the economic logic of a more effective recovery of the aid granted to OA through the privatisation of NOA.

148 In that regard, the purpose of the obligation to recover aid is to restore the competitive situation in the economic sector concerned, and not to enable the public administration to recover its debts (see, to that effect, Case C‑277/00 Germany v Commission, paragraph 76). The economic logic of the asset transfer transaction must therefore be examined from the point of view of restoring the competitive situation in the sector concerned.

149 It follows therefrom that the subjective element relied upon by the applicants, consisting in the fact that the restructuring of the Olympic Airways Group and the formation of NOA, with a view to enabling the privatisation of NOA, among others, in the most favourable circumstances and with maximum profit, with the aim of ensuring the recovery of the aid through, in particular, the proceeds of the privatisation, is in any event irrelevant.

150 Finally, the present proceedings occur in particular circumstances, characterised by the fact that the restructuring of OA and the formation of NOA were not short-term transactions, intended to facilitate the privatisation. The transfer to NOA of the flight operations sector of the Olympic Airways Group was effected by legislation, derogating from the general law, and the entire capital of that new company was immediately vested in the Hellenic Republic. In those circumstances, in the absence of payment of any consideration, by a new acquirer, as long as the privatisation of the airline had not been concluded, there was no need to determine whether the amount of the aid granted to OA prior to the hiving-off could be regarded as included in a purchase price consistent with market conditions (see, to that effect, Case C‑390/98 Banks [2001] ECR I‑6117, paragraph 77, and Case C‑214/07 Commission v France [2008] ECR I‑8357, paragraphs 57 and 58).

151 For all those reasons, the Commission’s finding that there was financial continuity between OA and NOA for the purposes of recovery of the aid at issue granted to OA before the hiving-off cannot be held to be vitiated by manifest error of assessment.

152 Moreover, the contested decision contains a sufficient statement of reasons. The Commission clearly set out, in its examination of the connection between OA and NOA, in points 178 to 183 of that decision, the reasons for which it considered that there was, particularly in the light of the judgment of 12 May 2005, financial continuity between OA and NOA for the purposes of recovery of the aid at issue granted prior to the hiving-off. In that regard, it is appropriate to observe that, contrary to the applicants’ allegations, the appraisal of the economic logic of NOA’s formation, carried out in this case by the Commission in order to determine the effective recipients of the aid granted prior to the hiving-off, must be distinguished from the examination of the compatibility with the common market of the restructuring itself (see paragraph 99 above). The lack of such an examination by the Commission does not reveal therefore any insufficiency in the statement of reasons for the contested decision.

153 It follows therefore that the pleas in law alleging manifest error of assessment and breach of the duty to state reasons for the decision must be rejected as unfounded.

2. The aid granted to NOA (Article 1(1) of the contested decision) (Cases T‑415/05 and T-416/05)

154 The Hellenic Republic and NOA seek the annulment of the contested decision on the ground that the Commission found, in its Article 1(1), that unlawful aid was granted to NOA in the form of rentals, for the sub-leasing of aircraft, which were lower than those paid by OA and the Hellenic Republic under the head-leases. The applicants rely in that regard on two pleas in law alleging, respectively, breach of Article 87(1) EC and the insufficiency of, or defects in, the statement of reasons for the decision, as regards the examination of the conditions for applying Article 87(1) EC relating, first, to the conferment of an advantage in the light of the private investor test and, second, to the liability of the Hellenic Republic for the conduct in question of OA.

155 At the outset, the applicants challenge the taking into consideration, by the Commission, of the alleged financial continuity between OA and NOA for the purposes of the characterisation of the contested measures.

(a) The taking into consideration of the financial continuity between OA and NOA for the purposes of the characterisation of the contested measures

Arguments of the parties

156 The Hellenic Republic and NOA submit, as a preliminary point, that, in the contested decision, the Commission examined the measures in favour of OA and NOA separately. In relying, in its defences, on the alleged financial continuity between OA and NOA – which implies, according to the Commission, that the measures adopted as regards NOA could not be assessed independently for the purposes of their classification as State aid – the Commission, in their submission, is attempting to substitute a new statement of reasons for the insufficient and erroneous statement of reasons for the contested decision. That new statement of reasons is therefore inadmissible.

157 Furthermore, the contradictions between the contested decision and the Commission’s arguments before the General Court do not enable the statement of reasons for that decision to be understood. They thus adversely affect the rights of defence of the applicants which are forced to refute ambiguous and contradictory statements.

158 In any event, the Commission’s new argument is not, they submit, supported by any evidence which could lead to the conclusion that there was financial continuity between OA and NOA.

159 In that context, the Hellenic Republic and NOA submit that the contested measures must be examined separately by reference to their respective addressees, and not on the basis of any alleged financial continuity between OA and NOA.

160 The Commission, supported in Case T-416/05 by Aegean Airways which adopts the Commission’s arguments, makes clear that, in the contested decision, it examined the measures in question individually, whilst putting them in the general context of OA’s restructuring of which they form part.

161 The Commission contends that the financial continuity between OA and NOA was established by the Court of Justice in the judgment of 12 May 2005. The splitting of the flight operations sector freed that sector of the high rents which burdened it. NOA’s flight operations, were, according to the Commission, thus subsidised by OA, whose losses were definitively borne by the Hellenic Republic, through its forbearance as regards OA’s debts to the State and the crediting of the special account. The measures in question should therefore be assessed in that economic context.

162 In particular, the persistent financial difficulties of both OA and NOA, in spite of the formal conversion of the Group, and the chronological proximity of the Decision of 11 December 2002 lead, in the Commission’s submission, to the conclusion that the contested measures ensure the continuance in activity of their recipients and pursue the same aim as the earlier aid.

163 The intervener points out that the contested measures’ compliance with the private investor test must be assessed taking into account the lead time for a return on the investment. It is therefore, in its submission, necessary to take into consideration the complete history of the grant of State aid to the Olympic Airways Group.

Findings of the Court

164 It is appropriate to note, at the outset, that, in the contested decision, th