Opinion of the Advocate-General



Opinion of the Advocate-General

1. This appeal has been brought by the Commission against the judgment of the Court of First Instance of 12 September 2007 in Case T‑196/02 MTU Friedrichshafen v Commission [2007] ECR II‑2889 (‘the judgment under appeal’), which annulled in part Commission Decision 2002/898/EC of 9 April 2002 on the State aid implemented by Germany for SKL Motoren- und Systembautechnik GmbH (‘SKL‑M’) (‘the contested decision’).

2. In the contested decision the Commission first ordered the recovery of State aid in the amount of EUR 34.26 million granted to SKL‑M. The partial annulment concerns Article 3(2) of the contested decision, in which the Commission had ordered that a portion amounting to EUR 2.71 million of the aid granted to SKL‑M be recovered jointly and severally from MTU Friedrichshafen GmbH (‘the respondent’).

3. The present appeal centres around the interpretation and application of the third sentence of Article 13(1) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (now Article 86 EC). (2) That provision states that if, in aid proceedings, a Member State fails to comply with a request to provide information, the Commission is to take a decision on the basis of the information available.

I – Legal framework

4. Under Article 87(1) EC, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is, in so far as it affects trade between Member States, incompatible with the common market.

5. Regulation No 659/1999 organizes the procedure relating to State aid. Articles 10 to 15 of that regulation govern the procedure in cases of unlawful aid. Under Article 10, the Commission is required to examine, without delay, information concerning allegedly unlawful aid (3) and, if necessary, request information from the Member State concerned. (4) Where, despite a reminder, the Member State concerned does not provide the information requested within the period prescribed by the Commission, or where it provides incomplete information, the Commission must, by decision, require the information to be provided, (5) specifying what information is required and prescribing an appropriate period within which it is to be supplied. (6)

6. Under the first sentence of Article 13(1), in conjunction with Article 4(4), of Regulation No 659/1999, the Commission is required to initiate the formal investigation procedure after a preliminary examination as to whether there are doubts concerning the compatibility with the common market of a notified measure. Pursuant to the second sentence of Article 13(1), in conjunction with Article 7(5), of that regulation, where the Commission finds, in the formal investigation procedure, that the aid is not compatible with the common market, it must take a negative decision. Under the third sentence of Article 13(1), if a Member State fails to comply with an information injunction, the decision must be taken on the basis of the information available.

7. Under Article 14(1) of Regulation No 659/1999, where negative decisions are taken in cases of unlawful aid, the Commission must decide that the Member State concerned is required to take all necessary measures to recover the aid from the beneficiary. The Commission need not require recovery of the aid if this would be contrary to a general principle of Community law.

II – The facts, the contested decision and the judgment under appeal

8. SKL‑M is an undertaking which designs and manufactures engines for ships and the energy sector. It belonged to a group of East German undertakings which were privatised in 1994. After the original restructuring plan came to nothing, the Bundesanstalt für vereinigungsbedingte Sonderaufgaben (the federal body responsible for special tasks connected with German reunification) (‘BvS’) decided to continue with the restructuring of SKL‑M with a view to a future sale.

9. The respondent is an undertaking which manufactures, among other things, high-performance diesel engines. As a consequence of the efforts of BvS, SKL‑M and the respondent concluded the following agreements on 5 November 1997 against the background of a planned takeover of SKL‑M by the respondent.

10. The first agreement granted the respondent an option to purchase all the shares of SKL‑M, with the possibility of acquiring them for a token price of DEM 1 before 1 December 1999 or, subsequently, for a ‘reasonable price’ before 31 December 2001.

11. The second agreement between SKL‑M and the respondent was a reciprocal licensing and cooperation agreement (‘WLKV’) for the formation of a joint venture. This agreement set out the terms governing the joint use of the existing know-how of the two companies and the development, manufacture and sale of two new types of engine.

12. An agreement for the payment of restructuring aid to SKL‑M was likewise concluded on 5 November 1997 between the BvS, the Land of Saxony‑Anhalt and SKL‑M.

13. By letter of 9 April 1998, the German authorities notified the Commission of the support measures granted by the BvS in favour of SKL‑M. As some of these support measures had already been implemented, the procedure was recorded under Number NN 56/98 as non-registered aid. Because of legal uncertainty surrounding the status of the support measures in favour of SKL-M, the respondent decided not to take over SKL‑M. However, the two companies continued their cooperation within the framework of the WLKV.

14. On 15 June 2000, the respondent exercised its right under Article 5 of the WLKV entitling it, in return for a one‑off payment, to the exclusive use, vis-à-vis third parties, of the know‑how covered by the WLKV. The one‑off payment was in consideration of the development costs incurred by SKL‑M. The amount of the payment, which was approximately EUR 3.43 million, was determined according to the budget agreed upon in Annex I to the WLKV. In July 2000, an inventory was taken of the know‑how covered by Article 5 of the WLKV and that know‑how was made available to the respondent. In return, the respondent made the agreed one‑off payment to SKL‑M.

15. Following a preliminary examination of the information provided by the German authorities, the Commission took the view that the measures in dispute gave rise to serious doubts as to their compatibility with the common market. By letter of 8 August 2000, the Commission informed the German authorities of its decision to initiate the formal investigation procedure. It published this decision in the Official Journal of the European Communities (7) and invited comments from interested parties. At the same time, the Commission also asked the German authorities whether the respondent profited or could have profited from the aid granted to SKL‑M. (8)

16. Insolvency proceedings were opened in respect of SKL‑M on 1 September 2000.

17. On 16 October 2000, 6 April 2001 and 17 October 2001, the Federal Republic of Germany submitted its observations on the decision to open the formal investigation procedure. No observations from third parties were received by the Commission.

18. By letter of 19 September 2001, the Commission invited the German authorities to provide the information necessary to assess the support measures in favour of SKL‑M, pursuant to Article 10 of Regulation No 659/1999. In its letter, the Commission asked once again whether a part of the aid granted to SKL‑M had been used in the respondent’s interests rather than in those of SKL‑M. The Commission stated that it was unable to determine this on the basis of the information available to it. In particular, it asked whether the price paid by the respondent for the know‑how reflected its actual or expected market value. The Commission stated that, if this information were not provided, it would take a decision on the basis of the information in its possession. It asked the German authorities to send the injunction letter also to the respondent.

19. On 9 November 2001, the Commission reminded the German authorities that, if they did not comply with the request and failed to provide the information, it would take the decision on the basis of the information available to it, in accordance with Article 13 of Regulation No 659/1999.

20. The German authorities responded to the request for information by letters of 23 January, 26 February and 11 March 2002. By letter of 5 March 2002, they also sent to the Commission the respondent’s observations on the decision to initiate the formal investigation procedure, in particular with regard to the use of the know‑how and the one‑off payment made by the respondent to SKL‑M.

A – The contested decision

21. On 9 April 2002, the Commission adopted the contested decision, in which it found that, despite the information request, Germany had not provided sufficient information to enable the Commission to rule out the possibility that the respondent had benefited indirectly, by way of the WLKV, from the aid to SKL‑M. Consequently, the Commission had to take a decision on the basis of the information available. (9)

22. The price paid by the respondent for the transfer of the know‑how was EUR 2.71 million less than SKL‑M’s actual development costs. (10)

23. In point 85 of the contested decision the Commission found that the aid to SKL‑M which was used to cover the losses resulting from the development of the know-how might have been used in the interests of the respondent rather than in those of SKL‑M.

24. In point 86 of the contested decision the Commission found that the cost risk borne by the State-controlled company SKL‑M was not in line with the market economy investor principle and that the respondent’s involvement was not based on a procedure comparable to an open bid. The Commission concluded from this that the transfer of the know-how could rank as a transfer to the respondent of State resources amounting to EUR 2.71 million.

25. The Commission first found, in its conclusion in points 87 and 88, that Germany had unlawfully granted aid in breach of Article 88(3) EC. (11) Consequently, an amount of EUR 34.26 million was to be recovered from SKL‑M. Since, on the basis of the available information, it could not be ruled out that the respondent had benefited from the transfer of know-how, an amount of EUR 2.71 million had to be recovered jointly and severally from SKL‑M and the respondent. On the basis of these conclusions, in Article 3(2) of the contested decision the Commission ordered the German authorities, out of the total of EUR 34.26 million which they had to recover from SKL‑M, to recover EUR 2.71 million jointly and severally from SKL‑M and the respondent.

B – The judgment under appeal

26. On 28 June 2002, the present respondent brought an action under Article 230 EC against the contested decision. In its application, it claimed that Article 3(2) of the contested decision should be annulled in so far as that provision ordered the recovery of EUR 2.71 million from it, as being jointly and severally liable for the aid granted to SKL‑M. In particular, the respondent based its claim on the ground that the Commission had erroneously applied Article 13(1) of Regulation No 659/1999.

27. In the judgment under appeal the Court of First Instance granted the application, essentially on the ground that Article 13(1) of Regulation No 659/1999 does not allow the Commission to impose on a particular undertaking an obligation to repay in the case where the transfer of State resources to that undertaking is hypothetical. (12)

III – Procedure before the Court and forms of order sought by the parties

28. The Commission’s appeal of 21 November 2007 was received by the Court on 23 November 2007. In the written procedure the respondent and the Commission lodged written submissions. No hearing was held.

29. The Commission claims that the Court should:

– set aside in its entirety the judgment under appeal;

– give a final decision in the case and dismiss the application as unfounded;

– order the respondent to meet the costs of the appeal proceedings and also those of the proceedings at first instance in Case T‑196/02.

30. The respondent contends that the Court should:

– dismiss in its entirety the Commission’s appeal against the judgment of 12 September 2007 of the Court of First Instance in Case T‑196/02;

– order the Commission to pay the costs of the proceedings.

For the rest, the respondent stands by, in its entirety, the form of order which it sought at first instance.

IV – Arguments of the parties

31. The Commission’s appeal is directed against the reasoning of the Court of First Instance in paragraph 46 et seq. of the judgment under appeal. In paragraph 46 of that judgment the Court of First Instance found, first of all, that Article 13(1) of Regulation No 659/1999 does not allow the Commission to impose on a particular undertaking an obligation to repay, even jointly and severally, a fixed part of aid declared to be incompatible, where the transfer of State resources to that undertaking is based on a presumption.

32. In the first place, the Commission merely found that, on the basis of the information available, it could not be ruled out that the respondent had benefited from a transfer of resources by the State-aided company SKL‑M, when the know-how was acquired on conditions deemed to be favourable. This showed that the obligation, imposed by the contested decision, to make repayment on a joint and several basis was based on presumptions that the information available to the Commission allowed it neither to confirm nor rebut (paragraphs 47 and 48 of the judgment under appeal).

33. In the second place, the contested decision required the national authorities to recover from the respondent the part of the aid which could not be repaid by SKL‑M, but the national authorities were not entitled to review the finding of joint and several liability. Such a situation was not a logical consequence of the implementation of the procedure laid down by the EC Treaty in relation to State aid, since the State providing the aid which was ordered to be recovered was, in any event, under an obligation to recover it from the actual beneficiaries under the Commission’s supervision. For that purpose it was not necessary to name those beneficiaries expressly in the recovery decision or, a fortiori , to specify the sums which had to be repaid by each beneficiary (paragraphs 49 and 50 of the judgment under appeal).

A – First ground of appeal

34. The first ground of the Commission’s appeal is, in essence, that in paragraphs 49 and 50 of the judgment under appeal the Court of First Instance erred in law in taking the view that the beneficiary of aid could not, under the third sentence of Article 13(1) of Regulation No 659/1999, be identified on the basis of the information available. Such a restrictive interpretation cannot be inferred from the wording of that provision. In order for Community aid supervision to be effective, it is absolutely necessary for the recipient of aid to be identified on the basis of the information available. The fact that the Commission need not in every case name the recipient of aid in a negative decision does not mean that it is prevented from doing so as a result of the non‑cooperation of a Member State.

35. The respondent regards the first ground of appeal as serving no purpose. The respondent argues that the Court of First Instance did not make the finding of which the Commission complains. The judgment under appeal merely found that the Commission based its finding concerning the benefit to the respondent on a presumption. In so far as the Court of First Instance pointed out that the actual recipient of the aid need not necessarily be named in the Commission’s decision, it did so only for the sake of clarification.

36. Furthermore, the first ground of appeal is irrelevant. The contested decision had already been annulled on the ground that the Commission based the decision concerning recovery from the respondent on a presumption.

37. The first ground of appeal, the respondent submits, is also unfounded. The Commission cannot base decisions for recovery on presumptions. It must either go on to establish the facts in the formal investigation procedure or identify the beneficiary in the recovery procedure with the cooperation of the Member States.

B – Second ground of appeal

38. The Commission’s second ground of appeal is, first, that in paragraph 46 et seq. of the judgment the Court of First Instance misconstrued the requirements of Article 13(1) of Regulation No 659/1999 in respect of a decision on the basis of the information available. Where a request for information has been unsuccessful, the Commission may make its decision on the basis of the available facts. For that purpose, absolute certainty cannot be required, as otherwise the third sentence of Article 13(1) of Regulation No 659/1999 would be meaningless.

39. Secondly, the finding of the Court of First Instance that the Commission relied on a presumption is not, in the latter’s view, correct. This complaint is admissible as it concerns a legal characterisation of facts, which may be reviewed on appeal. It is also well founded because the Commission provided a detailed account of the available information, particularly that provided by the SKL‑M insolvency administrator, and assessed that information in detail. The only uncertainty remaining concerned the market value of the know‑how acquired by the respondent.

40. The respondent considers that the second ground of appeal is inadmissible because, in substance, the Commission is challenging an issue of fact. The Commission’s further arguments are of a general nature and irrelevant to the present case. In addition, the ground of appeal is unfounded. The Commission cannot base an unfavourable decision on a presumption. However, that is what the Commission did in relation to the question of benefit to the respondent and also with regard to the quantum of that benefit.

V – Legal assessment

41. I propose to consider the second ground of appeal first (A) and then the first ground of appeal (B). This is in line with the structure of the judgment under appeal as the second ground addresses paragraphs 46 to 48 of that judgment and the first ground of appeal is directed against paragraphs 49 and 50. It seems to be appropriate also because the reasoning of the Court of First Instance in paragraphs 49 and 50 is, in my view, merely an ancillary consideration.

A – Second ground of appeal

42. The second ground of appeal comprises two heads of complaint. The first concerns the interpretation of Article 13(1) of Regulation No 659/1999 (1), the second the finding by the Court of First Instance that the Commission relied only on a presumption (2). In my view, both heads of complaint should be dismissed.

1. Interpretation of Article 13(1) of Regulation No 659/1999

43. I am unable to identify any error of law in the interpretation by the Court of First Instance of Article 13(1). That Court correctly pointed out that a decision to effect recovery from a particular undertaking cannot be based solely on a presumption that the undertaking in question has been favoured, even where the third sentence of Article 13(1) of Regulation No 659/1999 applies and the conditions of that provision are satisfied.

44. First of all, it is necessary to point out that the third sentence of Article 13(1) is to be construed having regard to the requirements laid down by primary law concerning Commission decisions in aid proceedings. Under Article 87(1) EC, for a recovery decision to be adopted against a particular undertaking, that undertaking must have been granted aid by a Member State or through State resources which distorts or threatens to distort competition by favouring the undertaking concerned and which affects trade between Member States. Taking into account the conditions of Article 87(1) EC as a whole, it is clear that there must be a positive finding that the undertaking in question has been favoured, whereas, so far as distortion of competition is concerned, it is sufficient to find that such distortion is threatened.

45. Consequently, it seems to me that primary law requires the Commission, at least in its legal conclusions, to make a positive finding that an undertaking has been favoured if the Commission wishes to adopt a recovery decision against that undertaking. The fact that Regulation No 659/1999 is an implementing regulation for the purposes of Article 89 EC is alone sufficient, in my view, to demonstrate that the third sentence of Article 13(1) of Regulation No 659/1999 does not call into question the abovementioned requirement of primary law.

46. In addition, the third sentence of Article 13(1) of Regulation No 659/1999 itself in no way indicates that, if a Member State fails to cooperate, the Commission may rely on a presumption that the undertaking concerned has been favoured.

47. With the third sentence of Article 13(1) of Regulation No 659/1999 the Community legislature gave effect to the settled case-law which states that, if a Member State, notwithstanding the Commission’s order, fails to provide the information requested, the Commission is empowered to make its decision on the basis of the information available to it. (13) This provision is an additional device enabling the Commission to obtain the necessary information in relation to decisions concerning unlawful aid where a Member State refuses to cooperate in order to prevent a decision or make it more difficult. (14)

48. As I understand it, this provision first of all regulates the extent to which the Commission must establish the facts. It establishes a balance between the principle of the right to be heard and the Commission’s interest in being able to take action as quickly as possible against aid which is incompatible with the Community. In aid proceedings the Commission must, in principle, in accordance with the right to be heard, request the Member State concerned to provide it with all necessary information. (15) However, if an information request from the Commission is unsuccessful, the Commission may take its decision on the basis of the information available.

49. This provision affects the judicial review of the Commission’s decision. If, despite being enjoined to provide the relevant information, the Member State concerned does not refute the Commission’s factual grounds for believing that aid was granted, it cannot complain that the Commission relied on those facts, even if they are fragmentary or incomplete. (16) Consequently, the third sentence of Article 13(1) of Regulation No 659/1999 regulates the conditions under which the Commission may regard a circumstance as proven on the basis of the information available to it. (17)

50. On the other hand, I am unable to infer, either from the wording of the third sentence of Article 13(1) (‘that decision shall be taken on the basis of the information available’) or from the case-law adopted on the basis thereof, (18) that, if a Member State fails to comply with an information request, the Commission may presume that the conditions of Article 87(1) EC are fulfilled. Consequently, the third sentence of Article 13(1) of Regulation No 659/1999 does not release the Commission from the obligations to make a positive finding that an undertaking has been favoured, to base that legal assessment on factual circumstances, and to establish that the factual circumstances in question are present. That provision merely reduces the degree of proof from which the Commission may proceed on the basis that the circumstances which it has assumed obtain. (19) This interpretation of the third sentence of Article 13(1) of Regulation No 659/1999 also appears to me to be necessary in view of the rights of defence of the Member State and/or of other persons affected by the decision, who must be aware of the presumptions on which the Commission bases its decision.

51. Contrary to the Commission’s argument, this interpretation of the third sentence of Article 13(1) of Regulation No 659/1999 also does not unreasonably restrict the enforcement of the prohibition of aid. As shown above, the Commission does not require ‘hundred per cent certainty’ as the degree of proof when assessing the facts. Where a decision is made on the basis of the information available, it is accepted, rather, that the Commission may not have all the information which may be relevant for appraising the State measures concerned.

52. However, if the Commission is not in a position, on the basis of the information available to it, to find that an undertaking has been favoured, it cannot base a recovery decision against that undertaking on a mere presumption. As the Court of First Instance correctly states in its ancillary consideration in paragraph 49 of the judgment under appeal, the authorities of the Member States are bound by the recovery decision. Consequently, they must recover the amount ordered from the (insolvent) SKL‑M and the respondent as jointly and severally liable and the national authorities cannot take into account the fact that the Commission merely presumed that the respondent had been favoured. (20)

53. As the Court of First Instance correctly observed, the Commission may instead, at least in a case such as the present, determine the actual beneficiary and the amount of aid to be recovered from it within the framework of the recovery procedure in collaboration with the Member State, which is under an obligation to cooperate. (21)

54. In conclusion, I maintain that, for the reasons given above, the Commission cannot base a recovery decision on a mere presumption, even in the situation referred to in the third sentence of Article 13(1) of Regulation No 659/1999. That provision was therefore correctly interpreted by the Court of First Instance in the judgment under appeal.

2. The finding by the Court of First Instance that the Commission relied only on a presumption

55. The Commission complains that the Court of First Instance wrongly found that the Commission relied on a presumption in the contested decision. The Commission contends that it found that the transfer of know‑how took place under conditions which were not in line with the market and constituted a benefit to the respondent.

56. In my opinion, this head of complaint is admissible. It is true that the findings of fact made by the Court of First Instance cannot in principle be reviewed on appeal. However, errors of law include errors as to the interpretation of a rule of law as well as errors concerning the legal appraisal of facts in relation to a rule of law. (22) Consequently, it seems to me that the head of complaint is admissible in so far as the Commission contends that the Court of First Instance incorrectly categorised, for legal purposes, the (undisputed) terms of the contested decision as constituting a presumption.

57. This head of complaint is, however, unfounded. The Court of First Instance correctly found that the Commission had merely presumed, and did not positively establish, that State resources had been transferred to the respondent.

58. In point 85 of the contested decision the Commission took the view that the aid in question might have been used in the interests of the respondent rather than in the inte rests of SKL‑M. In point 86 the Commission found that the transfer of the know‑how could rank as a transfer to the respondent of State resources amounting to EUR 2.71 million. In so far as, in point 87, the Commission came to the conclusion that Germany had unlawfully implemented the aid in question in breach of Article 88(3) EC, that conclusion likewise cannot be taken to imply a finding that the respondent had benefited. In point 88 the Commission once again found that the transfer of State resources could not be ruled out , thereby making it clear that there was only a presumption that the respondent had benefited.

59. Consequently, there is no foundation in the contested decision for the Commission’s argument in the appeal proceedings that it did not rely on a presumption, or that it did so only in relation to the level of the benefit to the respondent. Rather, the Commission made only a presumption that State resources had been transferred and consequently left open the question of whether there was a benefit.

60. The Court of First Instance was therefore correct in finding that the Commission had relied only on a presumption with regard to the benefit to the respondent.

61. In so far as the Commission puts forward arguments as to why in the present case it made a positive finding of a benefit to the respondent and the respondent puts forward reasons as to why the Commission did not make any such finding, these are not relevant to the present appeal. As the Court of First Instance is not authorised to substitute its own reasoning for that of the Commission, (23) only the actual reasoning given by the Commission in its decision is relevant, but not the reasoning which it could have given.

3. Interim conclusion

62. The second ground of appeal must accordingly be dismissed as being unfounded.

B – First ground of appeal

63. The Commission’s first ground of appeal is that the Court of First Instance erred in law in paragraphs 49 and 50 of the judgment under appeal in finding that the beneficiary of aid cannot, under the third sentence of Article 13(1) of Regulation No 659/1999, be identified on the basis of the information available.

64. This ground of appeal serves no purpose. The judgment under appeal must be upheld if only because the Court of First Instance has, correctly, annulled the contested decision in part for the reasons set out above. The Commission was not entitled to base its decision against the respondent on a presumption. (24)

65. In addition, this ground of appeal must, in my view, also be dismissed because it challenges a finding which the Court of First Instance did not make. Contrary to the Commission’s argument, in paragraphs 49 and 50 of the judgment under appeal the Court of First Instance did not find that identification of the recipient of aid on the basis of the information available is in principle ruled out.

66. In paragraph 46 of the judgment under appeal the Court of First Instance found that Article 13(1) of Regulation No 659/1999 does not allow the Commission to base a recovery decision against a particular undertaking on a presumption of a transfer of State resources to that undertaking. In its ancillary consideration in paragraphs 49 and 50 of the judgment under appeal, the Court of First Instance found that, even if a recovery decision is based only on a presumption, it cannot be called into question by the national authorities and therefore, if SKL‑M is insolvent, they must recover the part of the aid in question from the respondent. The Court of First Instance added that the primary-law rules concerning aid do not necessarily in every case require the beneficiary or the amount of aid to be specified in the recovery decision.

67. I am unable to infer from any of those points the finding, with which the Commission takes issue, that the possibility of a decision on the basis of the information available is in principle not, in accordance with the third sentence of Article 13(1) of Regulation No 659/1999, applicable to the identification of the recipient of the aid or the party required to make repayment.

68. Against that background the question arises as to the procedural approach to a ground of appeal that challenges, as being erroneous in law, a finding that was not made by the Court of First Instance.

69. The respondent seeks the dismissal of the first ground of appeal on the basis that it serves no purpose. This could be supported in the present case by the fact that the second ground of appeal is directed against arguments on which the judgment under appeal is not in fact based. However, I think that a ground of appeal should be dismissed as serving no purpose only if there is no legitimate interest in considering it because, even if it were allowed, it could not result in the judgment under appeal being set aside. If an appellant proceeds on the basis of a false premise, that does not affect his interest in having the ground of appeal examined in itself. In fact, the question whether, in the judgment under appeal, the Court of First Instance did or did not make the finding of which the appellant complains is a question which goes to the merits of the ground of appeal. (25)

70. Consequently, the first ground of appeal must be dismissed as serving no purpose for the reasons set out in point 64 of this Opinion and must also be dismissed as being unfounded for the reasons set out in points 65 to 69 of this Opinion.

C – Interim conclusion

71. The appeal must therefore be dismissed in its entirety.

VI – Costs

72. Under Article 69(2) of the Rules of Procedure which, pursuant to Article 118 of those Rules, applies to appeal proceedings, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the Commission has been unsuccessful in its submissions and the respondent has applied for costs, the Commission should be ordered to pay the costs.

VII – Conclusion

73. Having regard to the foregoing considerations, I propose that the Court:

– dismiss the appeal;

– order the Commission to pay the costs of the appeal proceedings.

(1) .

(2) – OJ 1999 L 83, p. 1.

(3) – Article 10(1) of Regulation No 659/1999.

(4) – First sentence of Article 10(2) of Regulation No 659/1999.

(5) – First sentence of Article 10(3) of Regulation No 659/1999.

(6) – Second sentence of Article 10(3) of Regulation No 659/1999.

(7) – OJ 2001 C 27, p. 5.

(8) – Paragraph 103 of the decision to initiate the formal investigation procedure.

(9) – Points 77 and 78 of the contested decision.

(10) – Point 81 of the contested decision.

(11) – The Commission found that the aid to SKL‑M was not compatible with the guidelines in force at that time for the appraisal of State aid for rescuing and restructuring firms in difficulty (OJ 1994 C 368, p. 12).

(12) – Paragraph 46 of the judgment under appeal.

(13) – See, in particular, Case C‑301/87 France v Commission [1990] ECR I‑307, paragraph 22; Case C‑303/88 Italy v Commission [1991] ECR I‑1433, paragraph 47; Joined Cases C‑324/90 and C‑342/90 Germany and Pleuger Worthington v Commission [1994] ECR I‑1173, paragraph 29.

(14) – Sinnaeve, A., in, Heidenhain, M., Handbuch des Europäischen Beihilfenrechts , Beck, 2003, paragraph 34, point 6.

(15) – Germany and Pleuger Worthington v Commission (cited in footnote 13, paragraph 29).

(16) – Case C‑241/94 France v Commission [1996] ECR I‑4551, paragraphs 36 and 37; Case C‑382/99 Netherlands v Commission [2002] ECR I‑5163, paragraph 76; and Case T‑318/00 Freistaat Thüringen v Commission [2005] ECR II‑4179, paragraph 88.

(17) – Consequently, the abovementioned provision affects the degree of proof. According to Sinnaeve, A., cited in footnote 14, paragraph 34, point 6, the taking of evidence is facilitated. See, however, Keppenne, J.-P., ‘Une vue d’ensemble des règles de procédure de l’article 88 CE et commentaires sur leur application depuis l’entrée en vigueur du règlement 659/1999’, European Competition Law , 2001, p. 205 et seq., 234, who considers that the provision has the effect of reversing the burden of proof.

(18) – See, in particular, France v Commission (cited in footnote 16, paragraph 22); Italy v Commission (cited in footnote 16, paragraph 47), and Germany and Pleuger Worthington v Commission (cited in footnote 13, paragraph 29).

(19) – See, to that effect, presumably also Sinnaeve, A., cited in footnote 14, paragraph 34, footnote 15 to point 6, who points out that, even in that case, the Commission must set out reasons for its decision but is subject to less stringent requirements in that regard.

(20) – Paragraph 49 of the judgment under appeal.

(21) – Paragraph 50 of the judgment under appeal.

(22) – Case C‑136/92 P Commission v Brazzelli Lualdi and Others [1994] ECR I‑1981, paragraph 49. See also point 3 of the Opinion of Advocate General Van Gerven in Case C‑145/90 P Costacurta v Commission [1991] ECR I‑5449.

(23) – Case C‑164/98 P DIR International Film and Others v Commission [2000] ECR I‑447, paragraphs 44 to 48.

(24) – See Joined Cases C‑302/99 P and C‑308/99 P Commission and France v TF1 [2001] ECR I‑5603, paragraphs 26 to 29.

(25) – See also, to that effect, the order in Case C‑150/96 P Galtieri v Parliament [1997] ECR I‑1229, paragraphs 15 and 16.