Case T‑57/11

Castelnou Energía, SL

v

European Commission

‛State aid — Electricity — Compensation for additional production costs — Public service obligation to produce certain volumes of electricity from indigenous coal — Preferential dispatch mechanism — Decision not to raise objections — Decision declaring the aid compatible with the internal market — Action for annulment — Individual concern — Significant effect on a competitive position — Admissibility — Failure to initiate formal investigation procedure — Serious difficulties — Service of general economic interest — Security of electricity supply — Article 11(4) of Directive 2003/54/EC — Free movement of goods — Protection of the environment — Directive 2003/87/EC’

Summary — Judgment of the General Court (Second Chamber), 3 December 2014

Environment — Atmospheric pollution — Directive 2003/87 — National allocation plan for greenhouse gas emission allowances (NAP) — Powers of the Member States — Allocation of quotas — Aid measure favouring indigenous coal power stations, intended to safeguard security of electricity supply — No disregard of the spirit and purpose of Directive 2003/87

State aid — Examination by the Commission — Compatibility of aid with the internal market — Discretion — Compliance with the coherence between the provisions governing State aid and other provisions of the Treaty — Obligation imposed only in relation to aspects of the aid inextricably linked to its purpose — Compliance with environmental protection provisions — Obligation imposed only in relation to aid pursuing an environmental objective

Competition — Undertakings entrusted with the operation of services of general economic interest — Compensation for the costs generated by the public service mission — Aid measure intended to safeguard security of electricity supply — Measure favouring indigenous coal power plants — Criteria for assessing compatibility of that measure with the internal market — Observance of the principle of proportionality — Measure appropriate and not excessive — Substantial and manifestly disproportionate effect on trade and competition — Concept — Threat to the viability of other electricity producing sectors jeopardising the security of electricity supply of the Member State

Competition — Undertakings entrusted with the operation of services of general economic interest — Compensation for the costs generated by the public service mission — Member States’ discretion — Limits — Duty to comply with the principle of proportionality — Control by the Commission — Judicial review — Limits

Judicial proceedings — Introduction of new pleas during the proceedings — Plea raised for the first time at the reply stage — Inadmissibility — Analogous requirements with regard to grounds in support of a plea — Inadmissibility extending to interveners

Competition — Undertakings entrusted with the operation of services of general economic interest — Definition of services of general economic interest — Member States’ discretion — Limits — Control by the Commission and by the EU judicature limited to cases of obvious error

Judicial proceedings — Intervention — Application designed to support the arguments of one of the parties but developing another line of argument — Admissibility

Actions for annulment — Natural or legal persons — Measures of direct and individual concern to them — Commission decision declaring State aid to be compatible with the common market without initiating the formal investigation procedure — Action brought by the parties concerned within the meaning of Article 108(2) TFEU — Identification of the subject-matter of the action — Action designed to safeguard the procedural rights of the persons concerned — Pleas capable of being invoked — Burden of proof

State aid — Planned aid — Examination by the Commission — Preliminary review and main review — Obligation of the Commission to open the main procedure where there are serious difficulties — Request for additional information — Modification of the aid measure — Circumstances not in themselves revealing the existence of serious difficulties

State aid — Planned aid — Examination by the Commission — Preliminary phase — Duration — Maximum period of two months — Calculation of the duration of the preliminary examination as from receipt of full notification — Concept of full notification

State aid — Planned aid — Examination by the Commission — Preliminary review and main review — Compatibility of aid with the internal market — Difficulties of assessment — Commission’s duty to initiate the main review procedure — Serious difficulties — Concept — Objective nature — Burden of proof — Circumstances enabling the existence of such difficulties to be determined — Commission’s examination in the preliminary examination procedure insufficient in duration or incomplete

Actions for annulment — Natural or legal persons — Measures of direct and individual concern to them — Commission decision declaring State aid to be compatible with the common market without initiating the formal investigation procedure — Action brought by the parties concerned within the meaning of Article 108(2) TFEU — Admissibility — Conditions

See the text of the decision. (see paras 22-37, 43)

See the text of the decision. (see paras 47, 48, 50-54, 58, 82, 83, 88)

See the text of the decision. (see paras 59-61)

See the text of the decision. (see paras 70, 72, 75)

See the text of the decision. (see paras 106-108)

See the text of the decision. (see paras 111, 112)

See the text of the decision. (see paras 132-134, 136)

See the text of the decision. (see paras 145, 209, 215, 216)

See the text of the decision. (see paras 147, 149, 150, 152)

Article 11(4) of Directive 2003/54 concerning common rules for the internal market in electricity provides, in essence, that Member States may, for reasons of security of supply, give power plants using indigenous fuel sources priority access to the market. Furthermore, Regulation No 1407/2002 on State aid to the coal industry acknowledges the importance of coal production, as concerns energy security, for electricity generation. Accordingly, in order to render implausible the recognition that a measure benefiting indigenous coal power plants in order to safeguard security of supply in a Member State is appropriate, the arguments and evidence put forward by an interested party challenging a decision not to open the formal investigation procedure in respect of such a measure must be particularly detailed and based on specific features of the case in question. Moreover, possible distortions created by such a measure are a consequence of regarding it as State aid which, by definition, distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods and, in particular, of the implementation of Article 11(4) of Directive 2003/54, which permits Member States to favour installations which generate electricity from indigenous energy sources to the detriment of those using other energy sources. Accordingly, such a measure cannot be regarded as excessive unless it gives rise to distortion which is substantial and manifestly disproportionate in relation to the objective pursued. In order to for there to be a finding that such a distortion has been created, it must be established that the measure threatens the viability of other electricity generation sectors, even going so far as to jeopardise security of electricity supply in the Member State concerned. (see paras 155, 156, 163, 164)

See the text of the decision. (see para. 175)

When the Commission applies the State aid procedure, it is required, in accordance with the general scheme of the Treaty, to ensure that provisions governing State aid are applied consistently with specific provisions other than those relating to State aid and, therefore, to assess the compatibility of the aid in question with those specific provisions. However, such an obligation is imposed on the Commission only where the aspects of aid are so inextricably linked to the object of the aid that it is impossible to evaluate them separately. Accordingly, although the aspect of aid at issue is inextricably linked to the object of that aid, the Commission must assess its compatibility with provisions other than those relating to State aid in the context of the procedure provided for in Article 108 TFEU and that assessment may result in a finding that the aid concerned is incompatible with the internal market. However, when assessing an aid measure which does not pursue an environmental objective, the Commission is not required to take account of environmental rules in its assessment of the aid and of the aspects which are inextricably linked to it. If aid for the protection of the environment can be declared compatible with the internal market under Article 107(3)(b) or (c) TFEU, aid which has harmful effects on the environment does not, by that fact alone, adversely affect the establishment of the internal market. Although it must be integrated into the definition and implementation of EU policies, particularly those which have the aim of establishing the internal market, protection of the environment does not constitute, per se, one of the components of that internal market, defined as an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured (Article 26(2) TFEU). The rules other than those relating to State aid compliance with which must be verified are limited to those capable of having a negative impact on the internal market. In that regard, if an aid intended to safeguard security of electricity supply were to be declared incompatible with the internal market for infringement of provisions of EU environment law, even if it fulfilled the conditions for the application of Article 106(2) TFEU, that would result in an encroachment on national authorities’ discretion in connection with the establishment of a service in the general economic interest and a corresponding extension of the Commission’s remit in the exercise of the powers conferred on it by Articles 106 TFEU, 107 TFEU and 108 TFEU. However, the powers exercised by the Commission in that context and the specific procedure for assessing the compatibility of aid cannot replace infringement proceedings, which the Commission uses to ensure that Member States are complying with all provisions of EU law. (see paras 181, 182, 184, 189, 190)

See the text of the decision. (see para. 197)