JUDGMENT OF THE GENERAL COURT (Third Chamber, Extended Composition)

7 December 2018 ( *1 )

(State aid – Aid implemented by Belgium in favour of the ARCO Group financial cooperatives – Guarantee scheme protecting the shares of individual members of those cooperatives – Decision declaring the aid incompatible with the internal market and prohibiting the payment of the amounts guaranteed to the members – Subject matter of the dispute – Recovery – Proportionality)

In Case T‑664/14,

Kingdom of Belgium, represented by C. Pochet and J.-C. Halleux, acting as Agents, and by J. Meyers, lawyer,

applicant,

v

European Commission, represented by L. Flynn and B. Stromsky, acting as Agents,

defendant,

APPLICATION based on Article 263 TFEU and seeking annulment of Article 2(4) of Commission Decision 2014/686/EU of 3 July 2014 on State aid SA.33927 (12/C) (ex 11/NN) implemented by Belgium – Guarantee scheme protecting the shares of individual members of financial cooperatives (OJ 2014 L 284, p. 53),

THE GENERAL COURT (Third Chamber, Extended Composition),

composed of S. Frimodt Nielsen (Rapporteur), President, V. Kreuschitz, I.S. Forrester, N. Półtorak and E. Perillo, Judges,

Registrar: G. Predonzani, Administrator,

having regard to the written procedure and further to the hearing on 22 November 2017,

gives the following

Judgment

Background to the dispute

ARCO companies

1 Arcofin SCRL, Arcopar SCRL and Arcoplus (‘the ARCO companies’) are recognised, limited liability financial cooperatives (‘the financial cooperatives’) governed by Belgian law. Those cooperatives, all three of which are in the process of being liquidated, were established in the 1930s with a view to coordinating the cooperative activities of the Mouvement ouvrier chrétien and of the Algemeen Christelijk Werknemersverbond and to providing financial support to those activities, by investing in particular in tasks of a social nature.

2 The ARCO companies have more than 800000 members, 99 % of whom are natural persons (‘the cooperative members’). According to the Kingdom of Belgium, the average share held by the cooperative members is in the region of EUR 2000.

3 In 2001, Arcofin became the principal shareholder of Dexia SA, in which it held 15 % of the capital. On 3 October 2008, it participated in the bailout of Dexia by subscribing, in the amount of EUR 350000000, to a capital increase totalling EUR 6000000000. The ARCO companies have not issued new shares since 2008. Between 2008 and 2011 they lost 7 % of their cooperative members.

4 On 8 December 2011, the voluntary liquidation of the ARCO companies was approved at the companies’ general meetings.

Measure at issue

5 On 10 October 2008, the Belgian Government announced, by way of a press release from the secretariat of the Minister for Finance, its intention to extend to insurance companies and to financial cooperatives the existing guarantee scheme for depositors in credit institutions and to increase the amount of that guarantee to EUR 100000. Provision was thus made that the participation of those new undertakings in a guarantee fund would be on a voluntary basis. That intention was submitted to the Belgian Parliament in a draft law presented on 14 October 2008, which was adopted as a matter of urgency the following day (loi du 15 octobre 2008 portant des mesures visant à promouvoir la stabilité financière et instituant en particulier une garantie d’État relative aux crédits octroyés et aux autres opérations effectuées dans le cadre de la stabilité financière (Law of 15 October 2008 on measures to promote financial stability and introducing in particular a State guarantee on credits granted and other operations conducted in the context of financial stability) (Moniteur belge, 17 October 2008, p. 55634).

6 In a joint press release of 21 January 2009, the Belgian Prime Minister and Minister for Finance confirmed the commitment which had been given by the previous government to offer a guarantee scheme to the non-institutional members of financial cooperatives. That scheme was to include, inter alia, the following elements: – the payment by the companies concerned of a guarantee premium; – the commitment of the institutional members to retain their shareholding throughout the guarantee period; – a limitation of the ‘annual compensation’ for members, both individual (cooperative members) and institutional; – an additional financial contribution paid by the companies concerned where the dividends received exceed a minimum threshold; – detailed rules to be drawn up allowing the authorities to receive a share of the capital gains if the guarantee scheme is withdrawn.

7 The Belgian Parliament subsequently adopted the loi du 14 avril 2009 modifiant la loi du 2 août 2002 relative à la surveillance du secteur financier et aux services financiers (Law of 14 April 2009 amending the Law of 2 August 2002 on supervision of the financial sector and financial services) (Moniteur belge, 21 April 2009, p. 32106) to allow the government to establish a guarantee system for the benefit, inter alia, of the members of recognised cooperatives which are either under the prudential supervision of the National Bank of Belgium or have invested at least half of their assets in an institution subject to such supervision, which is the case as regards financial cooperatives such as the ARCO companies.

8 Those legislative provisions were reproduced in point 3 of Article 36/24(1) of the loi du 22 février 1998 fixant le statut organique de la Banque nationale de Belgique (Law of 22 February 1998 establishing the organic statute of the National Bank of Belgium), as amended. Adopted on the basis of that article, the arrêté royal du 10 octobre 2011 modifiant l’arrêté royal du 14 novembre 2008 portant exécution de la loi du 15 octobre 2008 et modifiant la loi du 2 août 2002 (Royal Decree of 14 November 2008 implementing the Law of 15 October 2008 and amending the Law of 2 August 2002) (Moniteur belge, 12 October 2011, p. 62641) allowed those financial cooperatives which wished to do so to seek to join the guarantee scheme envisaged by the preceding measures. The companies opting to join that scheme were required to pay, into a special fund for the protection of deposits, life insurance and the capital of recognised cooperatives (‘the special fund’), established by the arrêté royal du 14 novembre 2008 portant exécution de la loi du 15 octobre 2008 et modifiant la loi du 2 août 2002 relative à la surveillance du secteur financier et aux services financiers (Royal Decree of 14 November 2008 implementing the Law of 15 October 2008 and amending the Law of 2 August 2002 on supervision of the financial sector and financial services) (Moniteur belge, 17 November 2008, p. 4088), an annual contribution corresponding to 0.15 % of the total amount guaranteed and an entry fee equating to 0.1 % of that amount. The guarantee was to apply only if the company were to go insolvent or in the event of default established by the Belgian financial supervisory authority. Only the paid-up capital subscribed by natural persons prior to the entry into force of the Royal Decree of 10 October 2011 was covered by the guarantee, up to an amount of EUR 100000 for each natural person. The guarantee would be paid by the special fund or, if the financial resources of that fund are exhausted, by the Caisse des dépôts et consignations (Deposit and Consignment Office, Belgium).

9 On 13 October 2011, the ARCO companies applied to join the guarantee scheme. That application was approved by the Belgian Council of Ministers on 15 October 2011, and the approval was made public on that same day. The ARCO companies’ application to join the scheme was officially accepted by the arrêté royal du 7 novembre 2011 octroyant une garantie afin de protéger le capital de sociétés coopératives agréées (Royal Decree of 7 November 2011 granting a guarantee to protect the capital of recognised cooperatives) (Moniteur belge, 18 November 2011, p. 68640), which entered into force on 14 October 2011 pursuant to Article 3 of that royal decree (‘the guarantee’ or ‘the measure at issue’). No other financial cooperative applied to join the guarantee scheme.

10 The ARCO companies therefore paid the prescribed sums into the special fund. Their membership of the guarantee scheme was subject to several conditions, inter alia that there would be no new public offering of new shares to natural persons, that the rate of interest on the funds invested would be limited and that institutional members would commit not to withdraw the capital which they had invested. The Royal Decree of 7 November 2011 also specified that the special fund would be required to compensate cooperative members only after the issuance of the final order of the liquidation, as (potentially) approved by the general meeting of the ARCO companies.

11 As stated in paragraph 4 above, the ARCO companies entered into voluntary liquidation on 8 December 2011.

Administrative procedure

12 On 7 November 2011, the Kingdom of Belgium notified the European Commission of the guarantee.

13 By letter of 6 December 2011, the Commission informed the Kingdom of Belgium that it was of the view that the guarantee could constitute unlawful State aid incompatible with the internal market and asked the Kingdom of Belgium to refrain from taking any further steps to implement the guarantee. The Belgian authorities responded to that correspondence by a letter of 22 December 2011.

14 By decision of 3 April 2012, the Commission decided to open the formal examination procedure laid down in Article 108(2) TFEU in relation to the guarantee (‘the opening decision’). On 19 July 2012, the opening decision, entitled ‘State aid SA.33927 (2012/C) (ex 2011/NN) – Guarantee scheme protecting the shares of individual members of financial cooperatives – Invitation to submit comments pursuant to Article 108(2) TFEU’, was published in the Official Journal of the European Union (OJ 2012 C 213, p. 64). Furthermore, in that decision, the Commission enjoined the Kingdom of Belgium, pursuant to Article 11(1) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1), to continue to refrain from implementing the measure at issue until its decision on the compatibility of that measure with the internal market.

15 The Kingdom of Belgium submitted comments on the opening decision on 18 June 2012. By letters of 5 December 2012 and 20 September 2013, it responded to questions which had been put to it by the Commission.

16 On 17 August 2012, the ARCO companies also submitted their observations to the Commission. Those observations were communicated by the Commission to the Kingdom of Belgium, which informed the Commission by letter of 16 October 2012 that those observations did not call for any comments on its part.

Contested decision

17 On 3 July 2014, the Commission adopted Decision 2014/686/EU on State aid SA.33927 (12/C) (ex 11/NN) implemented by Belgium – Guarantee scheme protecting the shares of individual members of financial cooperatives (OJ 2014 L 284, p. 53, ‘the contested decision’). In that decision, it found that the guarantee constituted State aid granted to the ARCO companies and that that aid, unlawfully implemented by the Kingdom of Belgium, was incompatible with the internal market (Article 1 of the contested decision).

18 In the contested decision, the Commission found that the ARCO companies were the real beneficiaries of the aid at issue and that that aid was comprised of a series of measures consisting in the announcement of 10 October 2008 (see paragraph 5 above), the press release of 21 January 2009 (see paragraph 6 above) and the ARCO companies’ membership of the guarantee scheme (recitals 80 to 90 of the contested decision).

19 In that regard, the Commission took the view that the guarantee had afforded the ARCO companies a selective advantage in that it had enabled them to attract or preserve funds. Furthermore, the selectivity of that advantage is established since only financial cooperatives were eligible for it. In any event, the Commission found the guarantee granted to investors who had acquired shares in the ARCO companies, a guarantee which, given the amounts involved, covered all the sums invested, to be disproportionate, thus precluding any justification of the measure at issue in the light of the criteria defined to assess whether advantages may be justified by the general scheme of the tax system, even assuming those criteria are applicable in the present case (recitals 100 to 107 of the contested decision). Having examined the other criteria laid down in Article 107(1) TFEU, the Commission thus came to the conclusion that the guarantee constituted State aid within the meaning of that provision (recital 110 of the contested decision).

20 In addition, with regard to the compatibility of the aid at issue with the internal market, the Commission found that the only legal basis which could be applied in the present case was Article 107(3) TFEU. However, it took the view that the measure at issue was neither appropriate, nor necessary, nor proportionate to the objective of remedying a serious disturbance in the Belgian economy and that, therefore, it could not be considered compatible with the internal market (recitals 111 to 129 of the contested decision).

21 Finally, the Commission determined a method for the calculation of the amount of the advantage to be recovered from the ARCO companies and asked the Kingdom of Belgium to provide it with the necessary information. It also stated that, pursuant to Article 108(3) TFEU, it considered it to be justified to require that Member State to continue to refrain from making any payment to the cooperative members under the guarantee (recitals 130 to 142 of the contested decision).

22 Accordingly, in the contested decision, the Commission ordered the Kingdom of Belgium to recover from the ARCO companies the undue advantage from which, in the Commission’s opinion, they had benefited (Article 2(1) of the contested decision). In addition, the Commission required the Kingdom of Belgium to withdraw the legislation and the regulations underlying the guarantee (recital 143 of the contested decision) and prohibited it from implementing the guarantee in favour of the cooperative members (Article 2(4) of the contested decision). That prohibition forms the subject matter of the present action.

National proceedings and request for a preliminary ruling to assess the validity of the contested decision

Challenge to the guarantee before the national court

23 In December 2011 and January 2012, three actions were brought by natural persons, by the Organisme voor de financiering van pensioenen Ogeo Fund (Ogeo Fund pension fund body) and by the Gemeente Schaarbeek (Commune of Schaerbeek, Belgium) before the Conseil d’État (Council of State, Belgium). Those actions sought the annulment of the Royal Decrees of 10 October (see paragraph 8 above) and 7 November 2011 (see paragraph 9 above). To that end, the applicants claimed, in essence, that those royal decrees infringed the principle of equality enshrined in the Belgian Constitution, in so far as they created a difference in treatment between cooperative members, who are able to benefit from the guarantee scheme established in particular by those royal decrees, and shareholders, being natural persons, of other companies close to the financial sector, who are excluded from that scheme.

24 Taking the view that the Royal Decrees of 10 October and 7 November 2011 had their basis in Article 36/24 of the Law of 22 February 1998 (see paragraph 8 above), that, therefore, they were part of the limitations which the Belgian legislature had itself established and that the difference in treatment invoked resulted from a legislative norm, the Conseil d’État (Council of State) referred several questions to the Cour constitutionnelle (Constitutional Court, Belgium) for a preliminary ruling on the compatibility of that article with the Belgian Constitution.

25 In order to give a ruling on those questions, the Cour constitutionnelle (Constitutional Court) considered it necessary first to settle the question of the compatibility of Article 36/24 of the Law of 22 February 1998 with EU law. To that end, it referred six questions to the Court of Justice for a preliminary ruling in Case C‑76/15, five of which concerned the validity of the contested decision and the obligations arising in the present case for the Kingdom of Belgium from Article 108(3) TFEU.

Judgment of 21 December 2016, Vervloet and Others (C‑76/15)

26 The purpose of the first question referred to the Court for a preliminary ruling was to assess the compatibility of the guarantee in the light of Articles 2 and 3 of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (OJ 1994 L 135, p. 5), as amended by Directive 2005/1/EC of the European Parliament and of the Council of 9 March 2005 amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 92/49/EEC and 93/6/EEC and Directives 94/19, 98/78/EC, 2000/12/EC, 2001/34/EC, 2002/83/EC and 2002/87/EC in order to establish a new organisational structure for financial services committees (OJ 2005 L 79, p. 9). The second question referred for a preliminary ruling concerned the validity of the contested decision. The four remaining questions related to the compatibility of the guarantee with the obligations arising for the Member States from Article 108(3) TFEU.

27 In response to the questions put by the Cour constitutionnelle (Constitutional Court), the Court of Justice gave the judgment of 21 December 2016, Vervloet and Others (C‑76/15, EU:C:2016:975), the operative part of which reads as follows: ‘1. Articles 2 and 3 of Directive [94/19] must be interpreted as not requiring Member States to adopt a scheme to guarantee shares in [financial cooperatives], such as that at issue in the main proceedings, and as not precluding Member States from adopting such a scheme, in so far as that scheme does not undermine the practical effectiveness of the deposit-guarantee scheme that the directive requires Member States to establish, which is a matter to be determined by the referring court, and provided that it complies with the FEU Treaty, in particular with Articles 107 and 108 TFEU. 2. The examination of the questions referred for a preliminary ruling … has disclosed nothing capable of affecting the validity of [the contested decision]. 3. Article 108(3) TFEU must be interpreted as precluding a guarantee scheme such as that at issue in the main proceedings, in so far as the latter was put into effect in infringement of the obligations arising from that provision.’

Subsequent developments in national law

28 By judgment of 15 June 2017, the Cour constitutionnelle (Constitutional Court) found Article 36/42 of the Law of 22 February 1998 to be unconstitutional. The Cour constitutionnelle (Constitutional Court) based its decision inter alia on the finding by the Court of Justice that the measure at issue constituted unlawful State aid.

29 By judgment of 6 March 2018, the Conseil d’État (Council of State) annulled the Royal Decrees of 10 October (see paragraph 8 above) and 7 November 2011 (see paragraph 9 above).

Case T‑711/14

30 By application lodged at the Registry of the Court on 7 October 2014 (Case T‑711/14), the ARCO companies brought an action for annulment of the contested decision. In their action, the ARCO companies contested, inter alia, both the assessment by the Commission that the measure at issue constituted State aid of which they were beneficiaries and the assessment that the aid at issue could not be declared compatible with the internal market. The ARCO companies also challenged the prohibition imposed on the Kingdom of Belgium from paying the amounts guaranteed to the cooperative members; that prohibition forms the subject matter of these proceedings.

31 By order of 9 February 2018, Arcofin and Others v Commission (T‑711/14, not published, EU:T:2018:80), the Court dismissed that action as being in part manifestly inadmissible and in part lacking any foundation in law. In particular, the action brought by the ARCO companies, in so far as it sought to challenge the prohibition imposed on the Kingdom of Belgium from paying the amounts guaranteed to the cooperative members on completion of the liquidation, was dismissed as manifestly inadmissible, since those companies had no interest in bringing proceedings against the provision contested by the Kingdom of Belgium in the present action.

Procedure and forms of order sought by the parties

Written part of the procedure

32 By application lodged at the Registry of the Court on 15 September 2014, the Kingdom of Belgium brought the present action.

33 By decision of 12 October 2015, adopted pursuant to Article 69(a) of the Rules of Procedure of the General Court, finding, firstly, that the question referred for a preliminary ruling by the Cour constitutionnelle (Constitutional Court) in Case C‑76/15 (see paragraphs 23 to 26 above) concerned the validity of the contested decision and asked the Court to assess a substantial proportion of the arguments advanced by the ARCO companies in Case T‑711/14 and taking the view, secondly, that the resolution of the present dispute was liable to depend on the outcome of the action brought by those companies, after the parties were heard in accordance with Article 70(1) of the Rules of Procedure, the President of the Sixth Chamber of the General Court stayed the proceedings in the present case until the Court of Justice had delivered its judgment.

34 That stay of the proceedings ended on the delivery, on 21 December 2016, of the judgment in Vervloet and Others (C‑76/15, EU:C:2016:975) (see paragraph 27 above).

35 Following a change in the composition of the Chambers of the Court, the Judge-Rapporteur was assigned to the Third Chamber, to which the present case was therefore assigned.

36 On the same day, pursuant to Article 89(3)(a) of the Rules of Procedure, the Court (Third Chamber) asked the parties to state the conclusions which, in their view, should be drawn for the present case from the delivery of the judgment of 21 December 2016, Vervloet and Others (C‑76/15, EU:C:2016:975).

37 The parties complied with that measure of organisation of procedure within the time limit which they had been set.

38 By measure of organisation of procedure of 26 June 2017, adopted pursuant to Article 89(3)(a) of the Rules of Procedure, the Court (Third Chamber) asked the parties to state inter alia: – which conclusions under national law should, in their view, be drawn from the declaration of the invalidity of Article 36/24 of the Law of 22 February 1998 by the Cour constitutionnelle (Constitutional Court); – which effects annulment of the contested decision by the Court would be likely to entail, taking into account the answer given to the previous question.

39 The parties answered those questions within the time limits which they had been set.

40 By measure of organisation of procedure of 12 September 2017, adopted pursuant to Article 89(3)(a) of the Rules of Procedure, the Court (Third Chamber) inter alia: – asked the Kingdom of Belgium to set out its view on certain elements of the answers given by the Commission to the questions referred to in paragraph 38 above; – asked the Kingdom of Belgium once more about the legal consequences of and the benefit which would be provided by any annulment by the Court of Article 2(4) of the contested decision, in the light of the declaration of the invalidity of Article 36/24 of the Law of 22 February 1998 by the Cour constitutionnelle (Constitutional Court).

41 The Kingdom of Belgium answered those questions within the time limits which it had been set and the Commission was given the opportunity to submit observations on those responses.

42 On a proposal from its Third Chamber, the Court decided, pursuant to Article 28 of the Rules of Procedure, to refer the case to a chamber sitting in extended composition.

Oral part of the procedure

43 Acting on a proposal from the Judge-Rapporteur, the Court (Third Chamber, Extended Composition) decided to open the oral part of the procedure.

44 The parties presented oral argument and answered the questions put by the Court at the hearing on 22 November 2017.

45 By letter of 13 March 2018, the Kingdom of Belgium informed the Court of the delivery by the Conseil d’État (Council of State) of the judgment of 6 March 2018 referred to in paragraph 29 above.

46 By document lodged on 14 March 2018, the Commission applied for a declaration that there is no need to adjudicate.

47 By order of the Third Chamber, Extended Composition, of the Court of 23 March 2018, the oral part of the procedure was reopened. As a result, the documents referred to in paragraphs 45 and 46 above were placed in the case file and the parties were asked to submit any observations they might have on those documents. By measure of organisation of procedure adopted pursuant to Article 89(3)(b) of the Rules of Procedure, the Commission was asked to set out its view on certain arguments advanced by the Kingdom of Belgium in the letter of 13 March 2018 (see paragraph 45 above).

48 The parties submitted their observations and answered the questions within the prescribed periods.

49 By measure of organisation of procedure of 20 April 2018, adopted pursuant to Article 89(3)(b) of the Rules of Procedure, the Commission was asked to set out its view on certain arguments advanced by the Kingdom of Belgium in the observations which the latter had submitted on the application for a declaration that there is no need to adjudicate made by the Commission (see paragraph 46 above).

50 The Commission complied with that measure of organisation of procedure within the prescribed periods.

51 Observations submitted spontaneously by the Kingdom of Belgium on the Commission’s responses were placed in the case file.

52 The oral part of the procedure was closed on 15 May 2018.

Forms of order sought by the parties

53 The Kingdom of Belgium claims that the Court should: – annul Article 2(4) of the contested decision; – order the Commission to pay the costs.

54 The Commission contends, in essence, that the Court should: – find that, since the dispute has become devoid of purpose, there is no longer any need to adjudicate on the action; – in the alternative, dismiss the action; – in any event, order the Kingdom of Belgium to pay the costs.

Law

The subject matter of the dispute

55 According to the Commission, the annulment by the Conseil d’État (Council of State), in the judgment of 6 March 2018 referred to in paragraph 29 above, of the Royal Decrees of 10 October (see paragraph 8 above) and 7 November 2011 (see paragraph 9 above) deprives any annulment of Article 2(4) of the contested decision of any legal effect. In the Commission’s view, the Kingdom of Belgium’s inability to pay the amounts guaranteed to the cooperative members is no longer the result of the prohibition contained in the contested provision but rather of the retroactive disappearance, within the Belgian national legal order, of the acts which formed the legal basis of such payment. The Commission infers from the foregoing that the present dispute has become devoid of purpose and asks the Court to find that there is therefore no longer any need to adjudicate.

56 The Kingdom of Belgium opposes that request.

57 The circumstances in which the European Union judicature is led to declare that an action brought before it is devoid of purpose and, therefore, to find that there is no need to adjudicate were clarified in the judgment of 7 June 2007, Wunenburger v Commission (C‑362/05 P, EU:C:2007:322, paragraphs 41 to 45 and 47 to 53). In that regard, it should be recalled that the objective of the dispute must continue until the final decision, failing which there will be no need to adjudicate, which presupposes that the action must be liable, if successful, to procure an advantage to the party bringing it (see judgment of 7 June 2007, Wunenburger v Commission, C‑362/05 P, EU:C:2007:322, paragraph 42 and the case-law cited). Accordingly, although the Kingdom of Belgium is justified in maintaining that the Member States are not required to demonstrate that they have an interest in bringing proceedings against the provisions the annulment of which is sought by them, the fact remains that, even when proceedings are brought before it by a Member State, the European Union judicature must find that there is no need to adjudicate on the action where the annulment sought is incapable of producing legal effects (see, to that effect, judgment of 24 November 2005, Italy v Commission, C‑138/03, C‑324/03 and C‑431/03, EU:C:2005:714, paragraph 25).

58 In that regard, on the one hand, the Court of Justice has clarified that an action brought against an act withdrawn by the body which adopted it in the course of proceedings became devoid of purpose (see, to that effect, judgment of 7 June 2007, Wunenburger v Commission, C‑362/05 P, EU:C:2007:322, paragraphs 47 and 48). However, on the other hand, the Court has also explained that an action brought against an act vitiated by unlawfulness which is liable to recur in the future in circumstances independent from the case in question still had a purpose (judgment of 7 June 2007, Wunenburger v Commission, C‑362/05 P, EU:C:2007:322, paragraph 52).

59 In the first place, it must be stated that Article 2(4) of the contested decision has not been withdrawn and, therefore, has not disappeared with retroactive effect. It follows that, if the Court were to find that the dispute had become devoid of purpose and that there is no longer any need to adjudicate on the action because the annulment of that provision would have no legal effects, Article 2(4) of the contested decision would nevertheless remain part of the EU legal order.

60 In the second place, as the Commission rightly argues without being contradicted on this point by the Kingdom of Belgium, the annulment by the Conseil d’État (Council of State) of the Royal Decrees of 10 October and 7 November 2011 made it impossible to implement the guarantee which was provided for by those legal acts, irrespective of the prohibition laid down in Article 2(4) of the contested decision. It follows that the Commission is justified in asserting that the annulment of Article 2(4) of the contested decision would not allow the Kingdom of Belgium to implement the guarantee as provided for in the Royal Decrees of 10 October and 7 November 2011, which formed the legal basis of that guarantee.

61 In the third place, however, the Kingdom of Belgium is, for its part, justified in submitting that maintaining in force Article 2(4) of the contested decision within the EU legal order is not without significance. Accordingly, the possible annulment of that provision would certainly not be devoid of any legal effect.

62 It is clear from the exchanges between the parties after the hearing that the Kingdom of Belgium is considering, in conjunction with the Commission, measures of equivalent effect to the contested guarantee which seek to mitigate, for the cooperative members, the consequences of the liquidation of those companies. However, although the Commission states, first, that it is not opposed in principle to any mechanism for the compensation of the cooperative members and, secondly, that there are other grounds for its opposition to the measures submitted to it and in relation to which informal negotiations have begun, the fact remains that, in its response of 7 May 2018, it mentioned a risk of ‘the contested decision being circumvented’. It follows that it cannot be ruled out that the contested decision may continue to produce legal effects.

63 In addition, it should be recalled that the implementation in good faith by the Member States of the decisions adopted by the Commission in relation to State aid constitutes application of the principle of sincere cooperation laid down in Article 4(3) TEU and assumes that the Member States will make the necessary efforts to overcome any difficulties whilst fully observing the Treaty provisions, in particular the provisions on aid (see, to that effect, judgment of 11 May 2005, Saxonia Edelmetalle and ZEMAG v Commission, T‑111/01 and T‑133/01, EU:T:2005:166, paragraph 124 and the case-law cited). Thus, notwithstanding the risk of infringement proceedings faced by the Kingdom of Belgium if the Commission were to take the view that the measures put in place by it for the benefit of the former cooperative members of the ARCO companies constitute a circumvention of the prohibition laid down in Article 2(4) of the contested decision, it follows from the principle of sincere cooperation that that Member State should itself refrain from any conduct which may constitute such circumvention in the event that the contested provision were to remain in force. It follows that the annulment of that provision, if the present action were to prove to be well-founded, would not be devoid of legal effects.

64 Finally, it should be noted that, in recital 140 of the contested decision and in the arguments advanced by it on the merits to justify the legality of Article 2(4) of the contested decision, the Commission contends that the mere finding that an aid measure is incompatible with the internal market is sufficient to justify the Member State being ordered to take steps to abolish the measure at issue. Accordingly, on that issue, the Commission adopted a general and abstract position, the justifications for which are independent from the circumstances of the case. It follows that, if the Court were to come to the conclusion that such a requirement is unlawful, there would be a need to adjudicate on the present dispute to prevent similar unlawfulness from recurring in the future (see, to that effect, judgment of 7 June 2007, Wunenburger v Commission, C‑362/05 P, EU:C:2007:322, paragraphs 50 to 52).

65 It is apparent from the foregoing that it is by no means established that the annulment of Article 2(4) of the contested decision would be devoid of any legal effect and that, therefore, the Commission is unjustified in asserting that the present action has become devoid of purpose. It follows that the Commission’s application that the Court find that there is no longer any need to adjudicate must be rejected.

The lawfulness of Article 2(4) of the contested decision

66 Under Article 2(4) of the contested decision, the Kingdom of Belgium is required to continue to refrain, with effect from the date of notification of that decision, from making any payments under the guarantee scheme. That definitive prohibition must be understood in the context of the letter of 6 December 2011 (see paragraph 13 above) and the opening decision (see paragraph 14 above), which both contained a provisional prohibition of similar scope pending the adoption of the contested decision. Furthermore, in recital 143 of the contested decision, the Commission found that the recovery of the aid at issue required the withdrawal by the Kingdom of Belgium of the legislation and the regulations which formed the legal basis of the guarantee.

67 According to the Kingdom of Belgium, a prohibition on making payments such as that decided on by the Commission in Article 2(4) of the contested decision is conceivable in two situations only. In the first situation, the beneficiaries of the payments made under the guarantee, that is to say the cooperative members, must have been identified as the beneficiaries of the State aid declared incompatible with the internal market, which is not the case here. Failing that, in order to be justified, the prohibition on the payment of the amounts guaranteed must be necessary in order to achieve the objective of abolishing the effects of the State aid found to be incompatible with the internal market.

68 The Kingdom of Belgium submits that, by prohibiting as a matter of principle the payment of the guarantee to the cooperative members without establishing whether that prohibition was a necessary measure in order to reverse the effects of the aid from which the ARCO companies benefited, the Commission confused the abolition of the selective advantage granted, for which provision is made in Article 108(2) TFEU, with the abolition of the legal act on the basis of which the advantage at issue was granted. In addition, the abolition of the act on the basis of which the undue advantage is granted is justified only in cases in which such abolition is necessary in order to eliminate the distortions of competition caused by the unlawful or incompatible aid. The obligation laid down by the Commission is thus disproportionate.

69 The Commission disputes those claims.

70 Under Article 108(2) TFEU, if, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the internal market having regard to Article 107 TFEU or that such aid is being misused, it is to decide that the State concerned is to abolish or alter such aid within a period of time to be determined by the Commission.

71 Thus, according to settled case-law, the logical consequence of a finding that aid is unlawful is to remove it by means of recovery in order to restore the situation previously obtaining (see judgment of 8 December 2011, Residex Capital IV, C‑275/10, EU:C:2011:814, paragraph 33 and the case-law cited).

72 The main objective pursued in recovering unlawfully paid State aid is to eliminate the distortion of competition caused by the competitive advantage which such aid affords. In this way, by repaying the aid, the beneficiary forfeits the advantage which it had over its competitors on the market, and the situation prior to the payment of the aid is restored (see judgment of 8 December 2011, Residex Capital IV, C‑275/10, EU:C:2011:814, paragraph 34 and the case-law cited).

73 In the present case, the parties are in disagreement as to whether or not the recovery of the advantage from which the ARCO companies unduly benefited entails the abolition of the guarantee, that is to say the prohibition on making any payment to the cooperative members, in the event that the liquidation proceedings, opened prior to the adoption of the contested decision, were to result in the loss for those members of the value of their shares in full or in part.

74 It is therefore necessary, first of all, to recall the characteristics of the unlawful State aid identified by the Commission in the contested decision, and then the measures prescribed by the Commission to ensure its recovery. Secondly, it will be necessary to assess the merits both of the arguments by which the Kingdom of Belgium takes the view that the prohibition on paying the amounts guaranteed to the cooperative members is disproportionate and of the justifications advanced by the Commission to defend the validity of that prohibition.

The State aid identified in the contested decision

75 As a preliminary point, it should be recalled that the measure examined in the contested decision consists in a guarantee covering the amounts invested by individuals in shares in the capital of the ARCO companies. Since those companies had joined the mechanism established by the Belgian Government (see paragraph 9 above), the amounts invested in their capital by their members, being natural persons, were therefore guaranteed up to EUR 100000 (see paragraph 8 above). According to the mechanism established, a guarantee fund had to provide assistance, following completion of the liquidation operations, if the capital remaining would not enable each cooperative member to recover the funds invested up to a limit of EUR 100000.

76 It should also be recalled that the ARCO companies entered into voluntary liquidation on 8 December 2011, that is to say at the beginning of the administrative procedure which led to the adoption of the contested decision.

77 In the contested decision, the Commission found that the measure at issue contained an element of State aid in favour of the ARCO companies. According to the Commission, guaranteeing their shares encouraged the cooperative members not to withdraw their investments in the capital of those companies. In those circumstances, the companies benefited from a selective advantage financed by public funds. The Commission found that the measure at issue met all the State aid criteria and that that aid could not be justified by the objective of remedying a serious disturbance in the Belgian economy since that measure was neither appropriate, nor necessary, nor proportionate to such an objective.

78 In addition, the Commission, having found that that aid had been implemented before it decided on the aid’s classification and on its possible compatibility with the internal market, took the view that the aid was therefore unlawful. That analysis was confirmed by the Court in the judgment of 21 December 2016, Vervloet and Others (C‑76/15, EU:C:2016:975) (see paragraph 27 above).

79 The action brought against the contested decision by the ARCO companies having been dismissed by the order of 9 February 2018, Arcofin and Others v Commission (T‑711/14, not published, EU:T:2018:80) (see paragraphs 30 and 31 above), and since an appeal was not lodged against that order, the assessments made in the contested decision and reproduced in paragraphs 77 and 78 above must be regarded as having become final.

80 Accordingly, having held, first, that the measure at issue contained an element of State aid of which the ARCO companies were the beneficiaries and, secondly, that that aid was incompatible with the internal market and had been implemented before it was able to conduct its preliminary examination, the Commission was justified in ordering the Kingdom of Belgium to effect recovery of that aid.

81 It is therefore necessary to recall the measures prescribed by the Commission in the contested decision, it being understood that the only contested measure is the prohibition on making payment of the amounts guaranteed to the cooperative members, namely the individual members of the ARCO companies (see paragraph 2 above).

The measures prescribed for the recovery of the aid at issue

82 It should be recalled, as has been set out in paragraph 22 above, that, in order to ensure the recovery of the unlawful aid found to be incompatible with the internal market, as identified in the contested decision, the Commission laid down two measures.

83 First, the Commission ordered the Kingdom of Belgium, using a formula the principles of which were determined by the Commission, to assess the amount of the advantage from which the ARCO companies had benefited and to enter a claim in that amount in the liabilities of the liquidation account of those companies. Those arrangements for the recovery of the aid at issue are not contested by the Kingdom of Belgium, which considers that that measure is sufficient to ensure that competition is restored.

84 Secondly, the Commission also ordered the Kingdom of Belgium to refrain from paying the amounts guaranteed to the cooperative members. In that regard, the parties are in disagreement as to whether the Commission was justified in issuing that injunction against the Kingdom of Belgium.

85 It follows from the case-law referred to in paragraphs 71 and 72 above that the answer to that question turns on whether that injunction was proportionate to the objective of recovering the unlawful aid found to be incompatible with the internal market. In other words, the task now is to determine whether that injunction was appropriate and necessary to restore the competitive situation previously obtaining, that is to say to neutralise, as far as concerns the beneficiaries identified by the Commission in the contested decision, the competitive advantage as assessed in that decision.

The proportionality of the prohibition on paying the amounts guaranteed to the cooperative members

86 In the first place, it should be recalled that only the ARCO companies were identified as beneficiaries of the aid at issue in the contested decision. The competitive advantage from which those companies benefited was assessed to be aid to maintain their existing capital. According to the contested decision, that advantage took the form of a means of encouragement, by virtue of the very existence of the guarantee, which had the effect of deterring the cooperative members from withdrawing the shares invested in the capital of the companies. It is, however, established that the cooperative members themselves were not deemed to be beneficiaries of State aid in the contested decision.

87 In those circumstances, the Kingdom of Belgium is justified in maintaining that the entry in the liabilities of the liquidation account of the ARCO companies of a claim of an amount corresponding to the value of the sole advantage identified by the Commission in the contested decision, in accordance with Article 2(1) of that decision, was sufficient to neutralise that advantage and, accordingly, to restore the competitive situation which the grant of the aid at issue had distorted (see, to that effect, judgment of 2 July 2002, Commission v Spain, C‑499/99, EU:C:2002:408, paragraphs 37 and 38).

88 In the second place, as has just been recalled, it should be observed that the only element of State aid identified by the Commission in the contested decision is the competitive advantage which the guarantee afforded the ARCO companies. However, the Commission did not find that the cooperative members were themselves the beneficiaries of State aid and did not classify as such the guarantee in so far as that guarantee conferred an advantage on the cooperative members. It follows that the prohibition imposed on the Kingdom of Belgium from making the payments provided for by the guarantee cannot be regarded, as such, as directly pursuing the objective of recovering State aid from its beneficiaries.

89 In the third place, it must be observed that, since the opening of the liquidation proceedings, the guarantee no longer acts as an incentive for the members of the ARCO companies, with the result that, since that time, they have ceased to benefit from the advantage identified in the contested decision on account of the existence of the guarantee. As the parties confirmed at the hearing, the opening of the liquidation proceedings prevents the cooperative members from withdrawing their shares. Furthermore, in that regard, the Commission itself, in determining the formula intended to value the advantage afforded to the ARCO companies, calculated that advantage only up until the opening of the liquidation proceedings, which, moreover, results in those companies’ exit from the market. It follows that the abolition of the guarantee which the Commission requested that the Kingdom of Belgium undertake was destined to have no effect on the competitive situation of the companies identified as the beneficiaries of the aid at issue and could not contribute to restoring the situation previously obtaining.

90 It thus follows from the foregoing that the prohibition on paying the amounts guaranteed to the cooperative members is not an appropriate measure to achieve the objective of restoring the competitive situation distorted by the grant of the State aid identified in the present case in the contested decision.

91 None of the justifications advanced by the Commission, either in the contested decision or in the course of the proceedings before the Court, is capable of calling that assessment into question.

The justifications advanced by the Commission

92 In the first place, in recitals 137 to 142 of the contested decision, the Commission justified the prohibition on paying the amounts guaranteed by the need, stemming in its view from Article 108(2) TFEU, to abolish any measure containing an element of State aid incompatible with the internal market. In addition, in its pleadings, the Commission advanced systemic considerations, which would entail not treating a Member State which, as in the present case, failed to notify the contested measure prior to its implementation less severely than a Member State which had complied with the obligation to give prior notification of any measure which may include an element of State aid.

93 In that regard, it should be observed from the outset that the view taken by the Commission appears to stem from a confusion between the concept of State aid, which is not formal in nature but is rather defined by the satisfaction of the criteria laid down in Article 107(1) TFEU, and the legal provision forming the basis for it and giving expression to it. It is settled case-law that Article 107 TFEU defines State aid in relation to its effects (see judgment of 13 February 2003, Spain v Commission, C‑409/00, EU:C:2003:92, paragraph 46 and the case-law cited).

94 In addition, it should be observed, as Advocate General Kokott noted in point 28 of the Opinion delivered by her in the case which gave rise to the judgment of 8 December 2011, Residex Capital IV (C‑275/10, EU:C:2011:814), that, in contrast to the position under EU antitrust law as laid down in Article 101(2) TFEU, the provisions of the Treaties of the European Union on State aid do not expressly state what legal consequences, affecting the validity of acts, are to follow from a breach of the duty to notify and of the prohibition on putting aid measures into effect laid down in the third sentence of Article 108(3) TFEU. It is true that it cannot be ruled out that the disappearance of the measure by which State aid is granted may constitute, as a general rule, the most appropriate means of neutralising the competitive advantage granted. However, in those cases in which, as in the present case, the competitive advantage identified as State aid benefits a third party (the ARCO companies) as compared with the direct beneficiaries of the contested measure (the cooperative members), the disappearance of the measure itself can be justified only where that appears to be necessary in order to restore the competitive situation which would have prevailed if the State aid from which that third party benefited had not been granted (see, to that effect, judgment of 8 December 2011, Residex Capital IV, C‑275/10, EU:C:2011:814, paragraphs 44 and 45). However, in the present case, as stated in paragraph 90 above, the prohibition on paying the amounts guaranteed to the cooperative members is not an appropriate measure to achieve the objective of restoring the competitive situation distorted by the grant of the State aid identified in the present case in the contested decision.

95 In the second place, the Commission argues that the cooperative members cannot be regarded as third parties as compared with the ARCO companies. However, such an argument is unconvincing.

96 First, it should be recalled that, in the contested decision, the Commission at no point regarded the cooperative members as benefiting from the aid at issue. For example, it is clear from Section 4.1 of the contested decision that the only ‘real beneficiaries’ are the ARCO companies and that the State aid identified in Section 4.3 of that decision consists exclusively in the competitive advantage from which those companies benefited.

97 Secondly, it is established that the ARCO companies are limited liability companies and that, therefore, neither their assets nor their object can be confused with the interests of their members. Furthermore, in the order of 9 February 2018, Arcofin and Others v Commission (T‑711/14, not published, EU:T:2018:80), the Court upheld the plea of inadmissibility raised by the Commission in relation to the fifth plea in law of the action, taking the view that the ARCO companies’ interest in bringing proceedings and that of the cooperative members were separate. It follows that the Commission is not justified in asserting that their mere status as members of the companies benefiting from the aid at issue was sufficient to justify the advantage from which those companies benefited, the recovery of which was guaranteed, in accordance with Article 2(1) of the contested decision, by the entry of a claim by the State in the liabilities of the liquidation account, being recovered, in addition, from the cooperative members.

98 In the third place, nor can the Commission rely on the judgment of 10 November 2011, Elliniki Nafpigokataskevastiki and Others v Commission (T‑384/08, not published, EU:T:2011:650), which is not a comparable precedent for the present case. First, in the case in question, the Commission had merely ordered the abolition of the contested guarantee without taking steps, as it has done in the present case, to value the advantage and order its recovery (judgment of 10 November 2011, Elliniki Nafpigokataskevastiki and Others v Commission, T‑384/08, not published, EU:T:2011:650, paragraphs 133 and 135). Secondly, the guarantee at issue in that other case was intended to protect its beneficiary from the risk of having to repay State aid unlawfully granted to a company which the beneficiary of that guarantee planned to acquire. The direct objective of that guarantee was therefore to preclude the recovery of State aid by providing for the reimbursement to the purchaser of any aid potentially recovered. On the contrary, in the present case, as is clear inter alia from paragraph 89 above, the prohibition on paying the amounts guaranteed to the cooperative members continues to have no effect on the recovery of the advantage identified in the contested decision, which was effected by the entry of a claim by the Belgian State in the liabilities of the liquidation account of the ARCO companies.

99 It follows from all the foregoing that, by ordering the Kingdom of Belgium to refrain from making any payments to the cooperative members under the guarantee, even though it had, moreover, ordered the recovery of the advantage identified in the contested decision by means of the entry of a claim in the liabilities of the liquidation account of the ARCO companies, which are regarded as the beneficiaries of the aid at issue, the Commission imposed a disproportionate objective on the Kingdom of Belgium in the present case and exceeded the powers conferred on it by Article 108(2) TFEU.

100 It follows that the Kingdom of Belgium is justified in maintaining that Article 2(4) of the contested decision is unlawful and must, therefore, be annulled.

Costs

101 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Kingdom of Belgium.

On those grounds, THE GENERAL COURT (Third Chamber, Extended Composition) hereby:

1. Annuls Article 2(4) of Commission Decision 2014/686/EU of 3 July 2014 on State aid SA.33927 (12/C) (ex 11/NN) implemented by Belgium – Guarantee scheme protecting the shares of individual members of financial cooperatives;

2. Orders the European Commission to pay the costs.

Frimodt Nielsen Kreuschitz Forrester Półtorak Perillo Delivered in open court in Luxembourg on 7 December 2018. [Signature]

( *1 ) Language of the case: French.