Opinion of Mr Advocate General Lenz delivered on 7 January 1997. - Kingdom of Spain v Commission of the European Communities. - Action for annulment - Framework on State aid to the motor vehicle industry - Retroactive prorogation - Article 93(1) of the EC Treaty. - Case C-292/95.



European Court reports 1997 Page I-01931



Opinion of the Advocate-General

A - Facts

1 In instituting these proceedings, Spain is challenging a decision of the Commission concerning the 1988 Community framework on state aid to the motor vehicle industry. (1) This provides, amongst other things, for the prior notification of all significant aid irrespective of its objective. The Community framework introduced by the Commission has already been the subject of an action brought against the Commission by Spain. (2) In that action Spain contested an extension of the Community framework for an indeterminate period. The original 1988 Community framework provided for a period of validity of two years. The first extension decided upon after that period was instead formulated in the following terms:

`After two years the framework shall be reviewed by the Commission. If modifications appear necessary (or the possible repeal of the framework) these shall be decided upon by the Commission following consultation with the Member States.' (3)

After a meeting of the Member States in December 1992 the Commission resolved to make no modifications to the Community framework. The second extension which was decided upon as a result provided that in future the rule would be that the Community framework would remain valid until a next review to be organized by the Commission. (4)

2 According to Spain, the Commission had thereby extended the Community framework for an indeterminate period. As a result, it instituted proceedings against that decision on the grounds that the Commission was not entitled to extend the Community framework for an indeterminate period.

3 According to the Court, the contested formulation in the last decision to extend the Community framework was open to more than one interpretation. The Court therefore referred to settled case-law according to which, where in such a case a provision of secondary Community law is open to more than one interpretation, preference should be given to the interpretation which renders the provision consistent with the Treaty rather than the interpretation which leads to its being found incompatible with the Treaty. The Court went on, in its judgment, to explain that the obligation of regular periodic cooperation under Article 93(1) of the Treaty precludes existing systems of aid from being examined according to rules established or agreed for an indefinite period depending on the unilateral will of either the Commission or the Member States. For that reason, the Court concluded that the Commission's decision of December 1992 must be interpreted as having extended the Community framework only until its next review which, like the previous ones, had to take place at the end of a further period of application of two years. That means that the decision of December 1992 merely extended the Community framework for a further period of two years. In its judgment of 29 June 1995 the Court accordingly held that since 1 January 1995 the Community framework had ceased to be in force. (5)

4 Just one day after the judgment, namely on 30 June 1995, the Commission sent a letter in French to the Member States in which it declared its intention to introduce a set of measures at the multilateral meeting scheduled for 4 July, first of all, to provide once again a framework on future aid to the motor vehicle industry, and secondly, to resolve temporarily the situation prevailing since the Court's judgment. The Spanish translation of that letter was received by the Spanish Permanent Representation on 3 July. At midday on the same day the Permanent Representative received the English version of a communication which was to be the subject of the discussions on the following day, at the multilateral meeting. The Spanish translation of that communication was only handed out at the beginning of the meeting, on the following day.

5 In the first part of that communication the Commission discussed the judgment and its serious consequences, both political and legal. It therefore proposed to reintroduce the Community framework.

6 But it is the Commission's second proposal which is crucial to this action, namely the adoption of temporary measures designed to assure the effective and uninterrupted application of the controls introduced by the Community framework. According to the Commission's proposal, these transitional arrangements consist in extending the Community framework with retroactive effect from 1 January 1995. The arrangements were only to remain in force until the Community framework was reintroduced, by 31 December 1995 at the latest.

7 The Commission's justification for this measure was the protection of fundamental Community interests. It was, according to the Commission, a question of maintaining undistorted competition in the motor industry, which would be threatened if the controls could not continue to be enforced by the Commission. Such a measure was the only way of preventing the detrimental effects which would be caused as a result. As a mere extension, for a limited period, of the original framework agreed by the Member States, that measure was to be based on Article 93(1) of the EC Treaty.

8 Such retroactive application did, the Commission admitted, contravene the principle of legal certainty but was justified in this case by the concurrence of exceptional circumstances. According to the Commission, these are the fact that the judgment was not delivered until after the date on which the Community framework should have been reviewed and possibly extended as well as the impossibility of maintaining undistorted competition and the irreversible effects which could result from such distortions in competition. Finally, the Commission refers to the fact that it assumed that its decision of December 1992 was valid and had extended the Community framework for an indefinite period.

9 According to the applicant, several delegations pointed out during the multilateral meeting that, right up to the beginning of the meeting, they had not been aware either of the judgment or of the Commission's communication relating to it. As the applicant further points out, eight delegations expressed themselves to be opposed to the Commission's proposal; four others reserved their decision.

10 However, the Commission has clarified this, explaining that the delegations were reserving their positions on the measures to reintroduce the Community framework, because a further meeting had been planned in that respect. In relation to the transitional measures the majority were in favour. Apart from the Spanish delegation, no one had spoken out against the Commission's view.

11 Furthermore, according to the Commission, the Member States had already been informed, by letter dated 30 June 1995, that the agenda for the meeting on 4 July was to be expanded to include an item relating to the Community framework.

12 On 6 July 1995 the Commission finally decided to extend its decision of December 1992 with retroactive effect from 1 January 1995. The grounds it gives do not diverge from the arguments put forward in its communication of 3 July. The measure is to be based on fundamental Community interests and in particular on the necessity of maintaining undistorted competition in the motor vehicle industry. Only in this way could irreversible damage be avoided.

13 The decision is seen as a simple extension, pursuant to Article 93(1), for a limited period. Reference is also made to Article 5 of the Treaty.

14 As far as retroactivity is concerned, the Commission considers that this is justified by the exceptional circumstances mentioned above.

15 The applicant contests this decision and claims that the Court should:

(1) annul the Commission's decision of 6 July 1995 extending the decision of 23 December 1992 with retroactive effect from 1 January 1995;

(2) order the Commission to pay the costs.

16 The Commission contends that the Court should:

(1) dismiss the action for annulment brought by the Kingdom of Spain;

(2) order the Kingdom of Spain to pay the costs.

B - Opinion

17 According to the applicant, the decisive factor in determining whether the application for annulment is well founded is how the Commission's legal measure of July 1995 is to be characterized in law, whether as a retroactive extension or a retroactive reintroduction of the Community framework. The Commission, on the other hand, is of the view that it is not necessary to characterize the decision in such a way. It accepts that, in this exceptional case, it did not adhere to the procedure required under Article 93(1) of the Treaty. In its view, it ought to have made an appropriate proposal to the Member States which would have been discussed at a meeting with the representatives of the Member States. Afterwards it would have been necessary for the Member States formally to accept that proposal. The aim of the July 1995 decision, however, was simply to close, quickly and for a transitional period, the gap in the law resulting from the Court's judgment. For that reason it would have been neither reasonable nor, in view of the exceptional circumstances, necessary, to adhere to the normal, lengthy procedure.

18 Consequently, in the Commission's view, the question arises, irrespective of how the its decision is characterized in law, as to whether the Commission was entitled, under such exceptional circumstances, to depart from the procedure laid down in Article 93(1), in other words, to take a decision without the formal agreement of the Member States.

19 The exceptional circumstances, according to the Commission, are to be found in the fact that it was necessary to fill the gap in the law resulting from the Court's judgment and, consequently, from the invalidity of the Community framework, before the Member States could grant aid under general schemes which had already been approved by the Commission, for example in the area of regional aids.

20 It is only in the alternative that the Commission submits that the agreement of the Member States was not necessary for the decision to be valid. The Commission merely extended, without modification and for a limited period, a Community framework which had already been in force for six years. The judgment of 29 June 1995 is not an obstacle to that. On the contrary, the Commission is entitled to confine itself to consulting the Member States, in accordance with the obligation of cooperation under Article 93(1), in order to bring into force an extension which is limited in time. The judgment merely prohibits the extension of the Community framework for an indeterminate period.

21 In conclusion, the Commission makes it clear however, that, in its view, what is concerned is a reintroduction of the Community framework with retroactive effect, the practical consequence of which is the retroactive extension of the Community framework. In the alternative, it submits that if what is concerned is an extension of the Community framework, it has still not exceeded its powers, on the one hand, because, as it has already stated, it did not act contrary to the judgment of June 1995 and, on the other hand, because the exceptional circumstances it has put forward justify both a retroactive reintroduction and a retroactive extension.

22 Contrary to the Commission's view, I consider it necessary to examine very closely the legal characterization of the decision. Only in this way is it possible to ascertain what were the procedural requirements with which the Commission ought to have complied. Only in this way, incidentally, is it possible to examine the Commission's alternative submission that the agreement of the Member States was not required for the decision to be valid.

23 The Commission's alternative argument seems to me to be very important because, should the view it puts forward be correct, a decision, such as that of July 1995, could be taken according to the procedure chosen by the Commission. In that case, the decision would have to satisfy not only the requirements of that procedure but also the conditions for retroactive application. As will be explained in more detail below, those conditions are satisfied where the objective to be attained so demands and where the legitimate expectations of those concerned are duly respected. I would like to begin with the issues of procedure.

24 As regards the procedure to be applied, it is necessary to look not only at the rules of the Treaty but also at those laid down in the Community framework itself. The second extension of the Community framework, challenged by the applicant, settled the question of the framework's validity to the effect that it would remain valid until a next review to be organized by the Commission. For the rest, it was decided not to modify the Community framework. Since that second extension contains no rules as to what is to be done if a modification to the Community framework is regarded as necessary, recourse must be had, in that respect, to the wording of the first extension, which, as we have just seen, was not changed. In that first extension decision it was provided: `After two years the framework shall be reviewed by the Commission. If modifications appear necessary, ... these shall be decided upon by the Commission following consultation with the Member States'. The procedure laid down by the Community framework is therefore as follows: the Commission reviews the Community framework and only where a modification appears necessary are the Member States to be consulted. After that, it is for the Commission to decide whether to modify the Community framework.

25 The second extension was challenged by the applicant at the time because it extended the Community framework for an indeterminate period and thereby modified it. It considered that this was only possible after the consultation and subsequent agreement of the Member States. The Court, in its judgment of June 1995, did not deal with the question whether the agreement of the Member States was necessary. It based itself, instead, on the obligation of regular periodic cooperation between the Commission and the Member States, from which neither the Commission nor a Member State can release itself for an indefinite period depending on the unilateral will of either of them. The Court thereby ruled against the possibility for one of the parties to introduce rules for reviewing aid which apply for an indefinite period. In other words, the unilateral decision to extend the validity of the Community framework for an indefinite period was the determining factor for the Court's judgment, because this prevented regular periodic cooperation between the Commission and the Member States. The Court decided, as a result, that the Community framework could be valid only until the next review, at the end of a period of two years.

26 That means, however, that, after the second extension, the Community framework was valid for a further period of two years. In normal circumstances the Commission should have conducted a review and, should a modification have appeared necessary, it should have adopted an appropriate decision after first consulting the Member States. The question which now arises is whether those conditions were satisfied by the Commission's decision of July 1995. In that case, the decision would have to be seen as a retroactive extension of the Community framework.

27 The applicant is, however, of the view that the Community framework can no longer be extended because it had ceased to be in force since the beginning of 1995. It is not possible, it maintains, to resurrect, through a retroactive extension, something which is legally `dead'. However, the Court has already decided, for example, that an export licence, the validity of which has already expired, can, provided certain conditions are satisfied, be extended a posteriori (in other words after the expiry of the period of validity) with retroactive effect. (6)

28 Therefore it is not impossible, in principle, to extend retroactively a legal act which is no longer valid and thereby to restore its validity. Such a retroactive extension, however, would at least have to satisfy the conditions mentioned above, which are set out in the Community framework. The first requirement would therefore be for a review of the Community framework. In the applicant's opinion, such a review would have to include a comprehensive assessment of the results, an analysis of the function of the Community framework compared with other sectors as well as an analysis of its criteria and methods of application. To be able to take such a measure unilaterally, it is not enough to stress, on a purely formal level at a meeting of the Member States, the importance of such a measure in preventing distortions in competition. In doing so, the procedural requirements prescribed in Article 93(1) would simply be circumvented.

29 However, a review of the Community framework and its validity is not possible without considering the circumstances prevailing at the time. On the basis of such an approach, and examining the matter in this way, it will first of all be found that in a situation such as that arising after the Court's judgment the most important thing is for the Community framework to remain in force.

30 As the Commission rightly maintains, it was important to fill the gap in the law arising after the judgment and to prevent the Member States from paying aid to their motor vehicle companies in the meantime on the basis of existing aid schemes already approved by the Commission and thereby distorting competition.

31 In this context, it should not be forgotten that the Community framework is an appropriate measure within the meaning of Article 93(1) of the Treaty. Given the situation, however, the Community framework was the most appropriate if it continued to remain in force, without interruption, despite any modifications which might be necessary.

32 In my view, an extensive review, like that demanded by the applicant, cannot be required in every case. The scope and the orientation of the review must, to the contrary, be geared to the given situation.

33 Furthermore, consultation of the Member States is required for a decision to be taken on extending the Community framework. Although this is expressly prescribed in the text of the Community framework (in this case it is the first extension which is decisive) only in the event of a modification of the Community framework, the Court's judgment of June 1995, however, gave rise to a corresponding necessity to consult the Member States. The judgment emphasizes the obligation of regular periodic cooperation on the part of the Member States and the Commission, which may not be unilaterally suspended for an indeterminate period. Consequently, it is necessary to consult the Member States in order to extend the Community framework even without modification.

34 The discussions which took place on 4 July 1995 could be regarded as such a consultation. In its submission, however, the applicant points to what, in its view, are the unacceptable circumstances in which the meeting of 4 July 1995 took place. The Member States had been neither sufficiently nor punctually informed about the Commission's plans. This was in breach of both Article 93(1) of the Treaty and the obligation of cooperation on the part of the Member States and the Commission.

35 In this respect, it should be pointed out that it is not the general conditions laid down in Article 93 which are decisive in this case, but the special conditions laid down in the Community framework itself. Under Article 93(1) it would have been necessary for the Member States formally to consent to the decision in order for it to be valid. As already explained above, that is not necessary for an unmodified extension of the Community framework. Nor did the Member States agree to the second extension of the Community framework. (7) None of the parties complained about that, not even Spain. Nor was the Court's judgment based on nullity of the decision for want of consent by the Member States. For that reason only a consultation of the Member States was required for the decision to be valid.

36 According to the Commission, the meeting of 4 July 1995 satisfied that requirement. According to the applicant, however, information provided at such short notice is insufficient to meet the requirements for regular cooperation (it maintains that some of the working papers had only been produced at the beginning of the meeting).

37 In this respect, however, it should be noted that what was concerned was the unmodified extension of a Community framework which had already been in force for six years. Information about the substance of the Community framework was therefore no longer required. The situation which arose as a result of the judgment was also easy to explain and to understand. It was simply a question of communicating to the Member States the fact that, as a result of the Court's judgment, the Community framework had ceased to be in force for almost six months. Accordingly, no extensive information was needed in advance for it to be possible to take part in a discussion about the measures to be taken. For that reason the consultation in the context of the meeting on 4 July 1995 was sufficient, as I see it, to satisfy the requirements of regular periodic cooperation between the Commission and the Member States. This is so a fortiori because, in parallel to the transitional measures in dispute in this case, negotiations were taking place between the Commission and the Member States about the reintroduction of a Community framework. (8)

38 In this context, the applicant also asserts that, in its decision, the Commission has unilaterally laid down a period for which the aid scheme is to apply. But this, it states, is precisely what the Court's judgment prohibits. The Court, however, decided that an indefinite period of validity may not be laid down for the schemes unilaterally. This is to be seen against the background of the fact that one party (either the Commission or the Member States) could thereby evade the obligation of regular cooperation. In addition, the Court itself took into account the two-year period originally mentioned in the Community framework. That is why no objection can be made on this account to the Commission's proposal of July 1995 that the Community framework should be valid until the end of the year at the latest.

39 It should therefore be held that the Commission's decision of July 1995 satisfies the requirements of the Community framework and of cooperation between the Member States and the Commission for an unmodified extension of the Community framework.

40 Since, in principle, it is possible for a legislative act to be extended with retroactive effect even after the expiry of its validity, the Commission's decision does not, as the applicant claims, amount to the introduction of a new scheme. It is not in dispute that this would be impossible without the consent of the Member States.

41 In case the Court does not follow my opinion and considers that greater involvement of the Member States, followed by their formal consent to the decision, is necessary, I would like to deal with the possibility for the Commission, in exceptional circumstances, not to apply this lengthy procedure. In this respect, I would like first of all to refer to the fact that, in parallel to the consultation of the Member States on the retroactive extension of the Community framework, discussions began on reintroducing the Community framework. In relation to this second measure, the Commission is using the more wide-ranging procedure. In any event, it may be inferred from this that the Commission did not seek to evade its obligation of cooperation with the Member States by using the shortened procedure. The sole intention was to close the existing gap in the law as quickly as possible, thereby restoring the normal situation. It can be assumed that discussions about extending or modifying the Community framework would usually begin while the Community framework itself is still valid. The measure taken by the Commission merely aims to maintain the Community framework in being while negotiations take place about a possible extension or modification. Since the Member States assumed anyway, up to the date of the Court's judgment, that the Community framework continued to be valid, the Commission's measure has no radical consequences for those involved. On the contrary, it relieves the discussions of the pressure to devise a new scheme with the greatest possible haste and thereby enables the framework to be reviewed thoroughly. In view of the Commission's duty, as guardian of Community interests, to guarantee undistorted competition, (9) and having regard to the short, limited period of validity of the measure and to the concomitant opportunity for the Member States to state in detail their point of view in the context of the negotiations concerning the reintroduction of the Community framework, I consider it justifiable, in this case, to allow the Commission to dispense with a more extensive consultation and subsequent agreement by the Member States.

42 As a further ground for its contention that the decision is void, the applicant submits that it is disproportionate, no doubt on the basis that, in terms of procedure, the measure taken by the Commission infringes Community law. Such an abnormal measure, it maintains, is not necessary because other `normal' measures were also available. As one such measure Spain mentions the correct application of the procedure under Article 93(1), followed, should the need arise, by a procedure under Article 93(2). In addition, to cover over the gap in the law which it feared, the Commission had the possibility of reintroducing the Community framework with the agreement of the Member States and, at the same time, of endowing it with retroactive effect, also with the Member States' agreement.

43 Apart from the fact that, in my view, the Commission's manner of proceeding was in conformity with Community law, the following points should be added as regards the necessity of the measure taken. As the Commission rightly maintains, it was a matter of urgency to fill quickly, for a limited period of time and for a limited purpose, the gap in the law. The procedures proposed by the applicant would have been too lengthy for this. The result would have been a period without rules, in which the Member States could have granted aid on the basis of existing aid schemes which had already been approved. This could have led to distortions in competition. If the validity of the Commission's decision had been made dependent upon the agreement of all Member States, the continuation of the Community framework would have been a matter left entirely to each individual Member State. It would no longer have been possible to act with all necessary speed, since it would have been necessary to await the decision of each individual Member State. What is more, according to the Commission's own statements, it had obtained the approval of the other Member States.

44 The applicant further submits that for practical reasons also the measure was not necessary. Up to the date on which judgment was delivered none of the Member States had granted aid which contravened the Community framework. In other words, the Community framework had been respected by the Member States even during the time in which it was no longer in force.

45 On this point it should be observed that, at that time, none of the parties involved could assume that the Community framework was no longer valid. On the contrary, the principle that acts of the Community institutions are presumed to be lawful (10) provided grounds for assuming that the Community framework remained in force. For that reason it cannot be inferred from the fact that the Member States respected the Community framework before the judgment that they would have continued to do so once judgment had been given. This is also questionable on the ground that, as the Commission maintains, Spain did not at first accept the Community framework which had been reintroduced in the meantime.

46 However, the Commission itself refers to the fact that, during the transitional period, the Member States were probably also obliged to respect the Community framework on the basis of Article 5 of the EC Treaty. However, even if such a duty were to be inferred from Article 5, that cannot alter the need to define that duty more precisely and to close the existing gap in the law as quickly as possible. For that reason it must be found that the measure taken by the Commission was necessary.

47 Nor can there be any doubt that, in order to close the existing gap in the law, retroactive extension of the Community framework was an appropriate measure for the purpose.

48 Nor, since what is concerned is, as explained above, a procedure which is in conformity with Community law, can the measure be regarded as disproportionate in the narrower sense. In my opinion, it even follows from the above that a measure which does not comply with the normal procedure would be proportionate, since the normal procedures proved to be too cumbersome and therefore inappropriate.

49 Finally, it remains to be considered whether the Commission could confer retroactive effect on its decision. In this respect, the applicant relies on Article 93(2). It states that the Commission itself said in its Guide de procédure, that in the context of this provision measures could not be taken retroactively but had to be provided with a time-limit so as to give the Member State time to comply with them.

50 On this point it should be observed that in this case it is not a question of abolishing or altering aid which has already been granted. In such a case - and Article 93(2) expressly provides for this - an appropriate period of time must be prescribed. In the present case, to the contrary, what is concerned is the extension a posteriori, in other words for the period during which the presumption of validity applied, of a Community framework which had been in existence for six years and which had benefitted from that presumption almost up to the time of the Commission's decision. Such a case is fundamentally different from that under Article 93(2).

51 In addition the applicant maintains that such a retroactive extension is incompatible with the obligation of regular cooperation between the Member States and the Commission and could not be justified even by exceptional circumstances.

52 The Commission had contended that such exceptional circumstances did exist. On the one hand it pointed out that the Court did not deliver its judgment until after the date, specified in the judgment itself, of the fresh review and the expiry of the validity of the Community framework. On the other hand, the applicant maintains that the Commission had undertaken no review of the Community framework before the Court delivered its judgment, in other words, six months after its expiry. It could not therefore put forward its own neglect as an exceptional circumstance in order to justify a retroactive measure.

53 That argument must be rejected because it was only once the judgment had been given that a review of the Community framework was established as having been necessary at the end of 1994. Before the judgment, however, all parties concerned could assume, on the basis of the presumption of validity, that no fixed date had been prescribed for a review. The Commission's interpretation of the second extension to the Community framework as an extension for an indeterminate period cannot be regarded as manifestly wrong. For that reason the Commission cannot be criticized for assuming, until the judgment was delivered, that no fresh review was necessary after two years.

54 According to the Commission, the criteria for retroactive effect laid down by the case-law of the Court are also fulfilled in this case.

55 The Court has consistently held that, as a general rule, the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication. It may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected. (11) According to the Commission, it was only by making the measure retroactive that serious distortions in competition in the motor vehicle industry could be prevented. At first glance, this is not readily comprehensible in relation to the period between January 1995 and the delivery of the judgment, in June 1995. The Commission itself maintains that all Member States respected the Community framework during that period. The Commission says nothing about the situation following the delivery of the judgment. In any case, it was at that time, once all the parties concerned had been informed that the Community framework was no longer valid, that it was necessary to create a posteriori rules for a transitional period.

56 However, the Commission cannot be prevented from prolonging the Community framework retroactively to the period between January and the delivery of the judgment, as it could not be sure that all the Member States really had respected the Community framework. Had it subsequently come to light that, during that period, aid had been granted which was incompatible with the third Community framework, no action could have been taken to remedy this because no rules existed during that time. If that aid had come under a general aid scheme which had already been approved by the Commission, it would automatically have been compatible with the common market. (12) As the Commission maintains, retroactive validity was therefore the only way of preventing the irreversible effects which could have been caused by granting aid without taking account of its sectoral impact in an industry as sensitive as the motor vehicle industry, in which there is a major need for investment despite overcapacity.

57 It is questionable, however, whether the legitimate expectations of the parties concerned were duly respected. According to what the Commission has stated, there can be no question of any legitimate expectation on the part of the parties concerned, subjective or objective. As far as the objective conditions for such an expectation are concerned, there is in this case no discernible legal rule or act adopted by the Commission which could have created a legitimate expectation that the Community framework would expire at the end of 1994. On the contrary, the Community framework itself set no deadline for the expiry of its validity. I agree with this analysis. Until the Court issued its differing interpretation, all the parties concerned must have assumed that, in accordance with its own rules, the Community framework had been extended for an indeterminate period.

58 The Commission goes on to say that none of the Member States, in particular none of the Member States which made no complaint about the extension, could profess to have understood the 1992 decision as meaning that it was only valid for two years. The Commission rightly refers to the fact that Spain had already complained about the 1992 decision, precisely because it regarded it as an extension for an indeterminate period. In addition, all the Member States could rightly assume the Community framework to be valid in accordance with the principle that acts of Community institutions are presumed to be lawful. Furthermore, the fact that all Member States had respected the Community framework prior to the Court's decision argues against any legitimate expectation that the Community framework was invalid.

59 For that reason, it cannot be considered that in this case the parties concerned had a legitimate expectation.

60 Another point in favour of the legitimacy of the retroactivity in this case is to be found in the judgment in Fedesa. That case concerned a directive which had been annulled because of a procedural defect and replaced by a new directive which was to apply with retroactive effect. The Court took into account the fact that the period of time between the annulment of the first directive and the notification or publication of the second was very short. This is also the case here. Not as much as four weeks elapsed between the Court's judgment and the decision to extend the Community framework.

61 In Fedesa the Court also took into account the fact that the earlier directive had been annulled because of a procedural defect and the persons concerned could not therefore expect the Council to change its attitude on the substance of the matter. (13) The situation in the present case is similar. The Community framework had not been annulled or declared invalid because of its content, but only because it was supposed to have been extended for an indeterminate period, which was not possible and, in the meantime, no other extension could have been made. Those concerned could not therefore expect a change in the substance of the Community framework on the basis of the judgment. For that reason, it is impossible to find any breach of their legitimate expectations. The Commission's measure could therefore be made retroactive.

62 In conclusion, therefore, it must be held that the measure taken by the Commission did not infringe rules of procedure, that it was proportionate and that, notwithstanding its retroactive effect, it did not contravene the principle of the protection of legitimate expectations.

Costs

63 Under Article 69(2) of the Rules of Procedure, if costs have been applied for, the unsuccessful party - in this case the Kingdom of Spain - is to be ordered to pay the costs.

C - Conclusion

64 I therefore propose that the Court should,

(1) dismiss the application;

(2) order the Kingdom of Spain to pay the costs.

(1) - 89/C 123/03 (OJ 1989 C 123, p. 3).

(2) - Case C-135/93.

(3) - Paragraph 5 of the first extension to the Community framework, 91/C 81/05 (OJ 1991 C 81, p. 4).

(4) - 93/C 36/06 (OJ 1993 C 36, p. 17).

(5) - Case C-135/93 Spain v Commission [1995] ECR I-1651.

(6) - Case 71/82 Balm v Brüggen [1982] ECR 4647.

(7) - Opinion in Case C-135/93 Spain v Commission [1995] ECR I-1653, paragraph 54.

(8) - See paragraph 10.

(9) - For the exceptional significance of the term `competition' for the architecture of the Treaty see Articles 3(g) and 3(a) of the Treaty under `Part One' of the Treaty headed `Principles'.

(10) - Case C-137/92 P Commission v BASF and Others [1994] ECR I-2555, paragraph 48.

(11) - Case 98/78 Racke [1979] ECR 69; Case 99/78 Decker [1979] ECR 101; Case 224/82 Meiko-Konservenfabrik [1983] ECR 2539, paragraph 12; Case C-337/88 SAFA [1990] ECR I-1, paragraph 13; Case C-331/88 Fedesa [1990] ECR I-4023, paragraph 45.

(12) - Then it would have been those who respected the rules who would have been the fools.

(13) - Fedesa, paragraph 47 (see footnote 11).