Keywords

Summary



Keywords

1. State aid – Concept – Compensation granted for expropriation of assets – Not included

(Art. 87(1) EC)

2. State aid – Examination by the Commission – Administrative procedure – Obligation on the Commission to put the parties concerned on notice to submit their observations – Right of the recipient of the aid to be involved in the procedure to the extent appropriate – Limits

(Art. 88(2) EC)

3. European Union law – Principles – Rights of the defence – Whether applicable to administrative procedures initiated by the Commission – Examination of plans to grant aid – Scope

(Art. 88(2) EC)

4. State aid – Planned aid – Notification to the Commission – Scope of the obligation – Need to notify aid measures at the planning stage

(Art. 88(3) EC; Council Regulation No 659/1999, Arts 2 and 3)

5. State aid – Commission decision declaring aid unlawful and ordering its recovery – Aid not yet paid out

(Art. 88(3) EC; Council Regulation No 659/1999, Art. 14(1))

6. State aid – Recovery of unlawful aid – Aid granted in breach of the procedural rules of Article 88 EC – Possible legitimate expectation on the part of the beneficiaries – Protection – Conditions and limits

(Art. 88 EC; Council Regulation No 659/1999, Art. 14(1))

7. State aid – Commission decision not to raise objections in respect of a national measure – Legitimate expectation on the part of the recipient as to the lawfulness of an extension of that measure – None

(Art. 88 EC; Council Regulation No 659/1999, Art. 14(1))

Summary

1. Measures which, in various forms, mitigate the burdens normally included in the budget of an undertaking and which, in that way, are similar to subsidies constitute benefits for the purposes of Article 87(1) EC, such as, among others, the supply of goods or services on favourable terms. By contrast, damages which national authorities may be ordered to pay to individuals as compensation for the damage they have caused to those individuals are fundamentally different in their legal nature and do not constitute aid for the purposes of Articles 87 EC and 88 EC.

On the other hand, the temporal extension of a measure granting an undertaking a preferential tariff in respect of the supply of electricity, by way of compensation for expropriation in the context of nationalisation of the electricity sector, where the preferential tariff was granted for a very specific period, without possibility of extension, must be categorised as State aid. A measure which is merely one of the favourable tariff conditions the extension of which has as its purpose to ‘enable the development and restructuring of the production of the undertakings concerned’ cannot be regarded as the statutory continuation of the compensation granted to the undertaking following nationalisation.

(see paras 57, 60, 63, 72, 74, 99, 101)

2. The procedure for reviewing State aid is, in view of its general scheme, a procedure initiated in respect of the Member State responsible, in the light of its Community obligations, for granting the aid. In that procedure, interested parties other than the Member State responsible for granting the aid therefore cannot themselves claim a right to debate the issues with the Commission in the same way as may that Member State. Therefore, they essentially play the role of a source of information for the Commission. In that regard, none of the provisions on the procedure for reviewing State aid reserves a special role, among the interested parties, to the recipient of aid. Moreover, the procedure for reviewing State aid is not a procedure initiated ‘against’ the recipient of the aid that entails rights on which it may rely and which are as extensive as the rights of the defence as such. The sole addressees of decisions adopted by the Commission in the field of State aid are the Member States concerned.

The Community Court cannot, on the basis of general legal principles, such as those of the right to be heard or sound administration, extend the procedural rights which the Treaty and secondary legislation confer on interested parties in procedures for reviewing State aid. Nor can this be permitted on the ground that an applicant has legal standing to bring an action against the contested decision.

There is nothing in the legislation on State aid or in the case-law to suggest that the Commission is required to hear the views of the recipient of State resources on the Commission’s legal assessment of the measure in question or to inform the Member State concerned – or, a fortiori, the recipient of the aid – of its position before adopting its decision, where the interested parties and the Member State concerned have been given notice to submit their comments.

(see paras 161-163, 166-168)

3. In the area of review of State aid, the principle of observance of the rights of the defence requires that the Member State concerned be placed in a position in which it may effectively make known its views on the observations submitted by interested third parties under Article 88(2) EC and on which the Commission proposes to base its decision and that, in so far as the Member State has not been afforded the opportunity to comment on such observations, the Commission may not incorporate them in its decision against that State. However, if such an infringement of the right to be heard is to result in an annulment, it must be established that, had it not been for such an irregularity, the outcome of the procedure might have been different.

(see para. 189)

4. As regards proposed new grants of aid by the Member States, a procedure for prior scrutiny has been established which must be followed before any aid can be regarded as lawfully granted. Under Article 88(3) EC and Articles 2 and 3 of Regulation No 659/1999 on the application of Article 88 EC, any plans to grant new aid are to be notified to the Commission and should not be put into effect before the Commission has authorised it, implicitly or explicitly.

The Member States must thus comply with two unseverable obligations: that of prior notification of plans to grant aid and that consisting in postponing putting those plans into effect until the Commission has ruled on the compatibility of the measure with the common market.

An aid measure may be considered granted, even if it has not yet been paid out to the recipient.

Aid measures must moreover be notified to the Commission while they are still at the draft stage, that is to say, before they are implemented and while they are still capable of being adjusted in the light of any observations the Commission may have. It is necessary to provide the Commission with the opportunity to review, in sufficient time and in the general interest, any plan to grant or alter aid and thus to carry out a prior assessment. It would be contrary to the logic of the system of prior scrutiny of State aid to consider that the Commission may find an infringement of Article 88(3) EC only after having checked that each recipient actually benefits from the advantages conferred by the measure in question.

(see paras 228-230, 234-236)

5. The wording of Article 14 of Regulation No 659/1999 on the application of Article 88 EC, to the effect that where negative decisions are taken in cases of unlawful aid, the Commission is to decide that the Member State concerned is to take all necessary measures to recover the aid, indicates that recovery is to be the rule.

The step of informing the Commission during the administrative procedure that the contested aid had not yet been paid to the recipients in no way guarantees that such payments were not made subsequently, particularly between the time when the Commission was so informed and the time when the final decision was notified. In any event, the Commission cannot be criticised for clearly setting out the practical consequences of its decision with the intention of creating greater legal certainty.

The fact that aid has not yet been paid to its recipient cannot affect the validity of the Commission’s decision, but only the detailed rules for recovering the aid. In principle, the recovery of aid unlawfully paid must take place in accordance with the relevant procedural provisions of national law, subject however to the proviso that those provisions are to be applied in such a way that the recovery required by Community law is not rendered practically impossible and it is for the national court alone to assess the material circumstances of the case.

The obligation on a Member State to calculate the exact amount of aid to be recovered – particularly where that calculation is dependent on information which that Member State has not provided to the Commission – forms part of the more general reciprocal obligation to cooperate in good faith in the implementation of Treaty rules concerning State aids imposed on the Commission and the Member States. It cannot be complained that the Commission failed to take into account matters of fact or law which could have been submitted to it during the administrative procedure but which were not, as the Commission is under no obligation to consider, of its own motion and on the basis of prediction, what elements might have been submitted to it.

(see paras 239, 241, 250-251)

6. In view of the mandatory nature of the review of State aid by the Commission under Article 88 EC, undertakings to which aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure provided for therein. A diligent business operator must normally be in a position to confirm that that procedure has been followed. In particular, where aid is implemented without prior notification to the Commission, with the result that it is unlawful under Article 88(3) EC, the recipient of the aid cannot have at that time a legitimate expectation that its grant is lawful.

However, a recipient of aid which is granted unlawfully is not precluded from relying on exceptional circumstances on the basis of which it legitimately assumed the aid to be lawful, in order to oppose repayment of the aid.

Additionally, the adoption of Regulation No 659/1999 on the application of Article 88 EC created a new situation for the recovery of incompatible aid, all the legal consequences of which must be observed. Article 14(1) of that regulation confirms recovery as the rule (first sentence), whilst providing for an exception (second sentence) when recovery runs counter to a general principle of Union law. There is, accordingly, a provision of secondary law which the Commission must take into account in adopting its decisions and which may lead it to reverse a decision to require recovery of incompatible aid. It is undeniable that infringement of such a provision may be relied on in support of a claim for annulment of the part of the decision requiring recovery.

(see paras 269-271, 275-276)

7. The mere fact that the classification of a State aid measure may have appeared doubtful to the recipients is clearly insufficient to justify any legitimate expectation on their part as to the lawfulness of the aid or the fact that the disputed measure did not constitute State aid.

Thus, the Commission’s decision not to raise objections to a measure consisting in the grant of a preferential tariff for the supply of electricity cannot give rise to legitimate expectations concerning the lawfulness of the subsequent extension of that measure or the fact that that preferential tariff did not constitute aid.

(see paras 283-284, 288)