Case T‑793/14

Tempus Energy Ltd and Tempus Energy Technology Ltd

v

European Commission

(State aid — United Kingdom capacity market — Aid scheme — Article 108(2) and (3) TFEU — Concept of doubts within the meaning of Article 4(3) or (4) of Regulation (EC) No 659/1999 — Guidelines on State aid for environmental protection and energy 2014-2020 — Decision not to raise any objections — No initiation of the formal investigation procedure — Procedural rights of interested parties)

Summary — Judgment of the General Court (Third Chamber, Extended Composition), 15 November 2018

State aid — Prohibition — Exceptions — Aid capable of being regarded as compatible with the internal market — Aid granted in the energy sector — Guidelines on aid for environmental protection and energy — Aid promoting generation adequacy — Examination by the Commission — Assessment of the role of demand side response within the capacity market — Scope

State aid — Planned aid — Examination by the Commission — Preliminary review and main review — Compatibility of aid with the internal market — Difficulties of assessment — Commission’s duty to initiate the main review procedure — Doubts — Scale of the area of investigation and complexity of the matter under consideration capable of constituting an indication of the existence of doubts

State aid — Examination by the Commission — Preliminary review and main review — Compatibility of aid with the internal market — Serious difficulties capable of raising doubts — Commission’s duty to initiate the main review procedure — Burden and standard of proof in the case of an action for annulment of a decision not to raise any objections — Effect of the length and circumstances of the pre-notification phase

State aid — Planned aid — Examination by the Commission — Assessment of the validity of a Commission decision taken at the conclusion of the preliminary investigation phase by reference to information available at the time the decision adopted

See the text of the decision. (see paras 60, 61, 71)

With regard to the concept of ‘doubts’ as to the compatibility of the notified measure with the internal market, referred to in Article 4(3) and (4) of Regulation No 659/1999 laying down detailed rules for the application of Article 108 TFEU, three requirements have been established by case-law to act as a framework for the Commission’s assessment. First, that concept is exclusive. Thus, the Commission may not decline to initiate the formal investigation procedure in reliance on other circumstances, such as third-party interests, considerations of economy of procedure or any other ground of administrative or political convenience. Second, it follows, inter alia, from Article 4(4) of Regulation No 659/1999 that, when the Commission does not succeed in eliminating all doubt within the meaning of that provision, it is obliged to initiate the formal investigation procedure. It has no discretion in that regard. Third, that concept of doubts is an objective one. Whether or not such doubts exist requires investigation of both the circumstances under which the contested measure was adopted and its content. That investigation must be conducted objectively, comparing the grounds of the decision with the information available to the Commission when it took a decision on the compatibility of the disputed aid with the internal market. It follows that judicial review by the Court of the existence of serious doubts will, by nature, go beyond consideration of whether or not there has been a manifest error of assessment. (see paras 62-65)

In order to be in a position to carry out a sufficient examination for the purposes of the rules that apply to State aid, the Commission is not obliged to limit its analysis to the information contained in the notification of the measure at issue. It can and, where necessary, must seek relevant information so that, when it adopts the contested decision, it has at its disposal assessment factors that can reasonably be considered to be sufficient and clear for the purposes of its assessment. In order to establish the existence of doubts within the meaning of Article 4(4) of Regulation No 659/1999 laying down detailed rules for the application of Article 108 TFEU, it is sufficient that the interested party show that the Commission has not researched and examined, thoroughly and impartially, all of the relevant information for the purposes of that analysis or that it has failed duly to take them into account in such a way as to eliminate all doubt as to the compatibility of the notified measure with the internal market. The length and the circumstances of the pre-notification phase, which attest to the difficulties caused by the need to gather relevant information to allow the Commission to examine a significant, complex and novel measure, as well as by the multiplicity of observations submitted in respect of that notified measure by several different types of operator, are not such as to allow it to be concluded that the brevity of the preliminary examination procedure is an indication that there were no doubts as to the compatibility of that measure with the internal market, and are, on the contrary, likely to constitute an indication that such doubts did exist. That is particularly the case where, during the month-long period of the preliminary examination of the notification, the Commission does not carry out a specific investigation into the role of demand side response within the capacity market and where the Commission is not in a situation where it can simply rely on the information provided by the relevant Member State without carrying out its own investigation in order to examine and, if necessary, seek relevant information from, where appropriate, other interested parties for the purposes of its assessment. (see paras 69, 70, 85, 109, 110, 113, 188)

With regard to State aid, the scale of the area of investigation covered by the Commission during the preliminary examination and the complexity of the matter under consideration may indicate that the procedure at issue considerably exceeded what is normally required for an initial examination carried out pursuant to the provisions of Article 108(3) TFEU. That circumstance constitutes probative evidence of the existence of doubts within the meaning of Article 4(3) and (4) of Regulation No 659/1999 laying down detailed rules for the application of Article 108 TFEU. (see para. 78)

Pursuant to paragraph 232(a) of the Commission’s Guidelines on State aid for environmental protection and energy 2014-2020, it is for the Commission to satisfy itself that the aid scheme is designed to allow demand side response to participate alongside generation, because their respective capacities provide an effective solution to the capacity adequacy problem. As follows, inter alia, from paragraph 226 of the Guidelines, the aid measures should be open and provide adequate incentives to the relevant operators. Where the Commission is aware of the difficulties referred to by a group of technical experts regarding the appreciation of the potential of demand side response, the Commission cannot conclude that, for the purposes of assessing the actual appreciation of demand side response — and in order no longer to be in a situation where it could have doubts in that respect as to the compatibility of the aid scheme with the internal market — it is sufficient to accept the modalities envisaged by the Member State concerned in that regard. It is apparent from paragraphs 226 and 232(a) of the Guidelines that it is particularly important for the Commission to ensure that the capacity market at issue allows all solutions genuinely and effectively to participate in solving the generation adequacy problem, as each solution has its advantages and disadvantages. Thus, given the elements available and taking into account the role of demand side response, the Commission cannot be satisfied merely by the openness of the measure and conclude, consequently, that it is technology neutral, without examining in greater detail the reality and the effectiveness of the appreciation of that technological solution in the capacity market. (see paras 126, 127, 147, 149, 153, 154)

See the text of the decision. (see para. 164)