2.

If we turn now to an examination of the actual questions, it must first be recollected that all of them relate to Article 93 (3) of the EEC Treaty. It is also clear that the questions — as the court making the reference noted — “qualify and overlap one another”. For that reason I think it relevant not to proceed forthwith to a separate examination of each one, but first to place the provision requiring interpretation — as the Commission has done — in its factual context and to start with a basic, systematic survey of the provisions in the Treaty relating to aids. Article 92, which has already been discussed in a number of previous cases, states in paragraph 1 that any aid granted throught State resources favouring undertakings or the production of goods is in certain circumstances (distortion of competition, damage to trade between Member States) incompatible in principle with the common market. Certain kinds of aid are then stated, in paragraph 2 of Article 92, to be compatible with the common market; besides these, certain aids may, in accordance with Article 92 (3), be regarded as compatible with the common market. It has already been made clear, with regard to these provisions that they are not directly applicable within the meaning of the case law on that subject, that they do not contain any absolute prohibition which could be relied upon by private parties in the national courts. On this point, I refer the Court to the judgment in Case No 77/72, a fairly recent decision. Of special significance in the scheme, then, are the provisions as to procedure contained in Article 93, which serve to give effect to Article 92. They distinguish between two situations: on the one hand, existing aid, i.e. State aid legislation already in being when the common market was established or introduced later in accordance with Article 93 (3), and on the other hand, proposals for legislation on State aid, i.e. aid introduced after the Treaty came into force or legislation to modify or prolong existing aid. Article 93 (1) provides, as to existing aid, that it shall be kept under constant review by the Commission in cooperation with Member States. In so doing, the Commission may propose to the Member States any “appropriate measures”. Should it come to the conclusion that some incompatibility with the common market exists, then it shall introduce the procedure provided for by Article 93 (2) and, if necessary, reach a decision setting a time limit for abolishing or altering such aid. If the Member State concerned fails to comply with the decision, the Commission or any other Member State affected may, by way of exception to Articles 169 or 170, bring a direct action before the Court of Justice. In this connexion it is important to note, further, that in exceptional circumstances the Council may decide unanimously that a particular aid scheme is incompatible with the common market. For these reasons, the view has been correctly followed — and is invoked in the present proceedings, with emphasis on the fundamental principle of legal certainty — that decisions of the Commission concerning existing aid can have effect only for the future. Different principles apply, however, in the case of proposals for granting aid, i.e. new aid legislation. Thus, recognizing that distortion of trade resulting from aid schemes can be remedied after the event only with difficulty, or perhaps not at all, provision is made for preventive control by the Commission, that is, aid is subject to examination before it is introduced. To that end Member States are obliged to inform the Commission of plans for granting or altering aid in sufficient time to enable the Commission to make an inquiry and give its comments. If after a summary inquiry the Commission finds itself of the opinion that the proposals are not compatible with the common market, then it shall initiate, without delay, the procedure provided for in paragraph 2 of Article 93. In this context it can, moreover, be regarded as sufficient — contrary to the view of the British Government — that the Commission has genuine doubts as to the compatibility of a provision; that, viewed in the light of Article 92, a provision appears to it to be suspect, for were it otherwise, i.e. if the Commission were in fact certain that a scheme for aid was incompatible, then a final decision could be taken immediately and there would be no need to initiate any further procedure of inquiry. Paragraph 3 third sentence, goes on to say: “the Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision”. It is vital here — for only thus can effective preventive measures be guaranteed — that Member States are bound to take no further action. Admittedly, such an obligation is clearly specified only in the event of the procedure in the final sentence (just quoted) of paragraph 3 being initiated. But from the purpose of the provision and the manner of its expression, “informed, in sufficient time to enable it to submit its comments”, the prohibition against taking further action is clearly meant to come into being earlier than that, indeed from the time the Commission is informed, or even if it is not. Any other meaning, for instance to the effect that it is open to Member States right up to the initiation of a procedure to bring the aid legislation into effect, would make little sense in the light of the general scheme of Article 93. So one can perfectly well — as did the Commission — speak of a general prohibition, applicable to all Member States alike, against taking action, on the one hand, and of a particular prohibition of extended duration on the other, and limit the latter to cases where the Commission initiates a procedure. While all this seems reasonably clear from the context and wording of the provisions described, a number of particular problems still remain, and it is to these in particular that the questions referred by the court relate. (a) The principal difficulty concerns the duration of the prohibition after the Commission has been notified. As to this difficulty, the argument put forward by one side is that the prohibition applies only for a period sufficient to allow the Commission to compile a reliable report on the aid legislation and to complete an examination of it. If a reasonable period for the purpose has elapsed without any procedure under Article 93 (3) having been initiated, then the prohibition ceases to apply, with the result that the aid legislation may be implemented and become “existing” aid within the meaning of Article 93 (1). Against that, it is argued that a Member State which proposes to introduce an aid scheme must in every instance wait until the Commission has given a decision, and indeed, (since the extended prohibition arises automatically when there is a decision initiating a procedure), until a decision to the effect that the aid legislation is compatible with the common market. The majority opinion appears to coincide with the first argument, and is the one hitherto followed by the Commission in practice. Some of the plaintiffs in the main action, and the Governments of the Federal Republic of Germany and the United Kingdom also support such an interpretation of Article 93 (3). The court making the reference, however, seems to incline towards the second-mentioned view. Clearly, it must be conceded that there is something to be said for the argument that the Commission is obliged to express an opinion even when the legislation notified is unobjectionable, precisely because notification of aid legislation sets in motion a procedure for examination provided for by law. Similarly there is good reason for saying that it is in the interests of legal certainty to require Member States to take no action until such a decision has been given. Ultimately, however, the problem must be decided on the basis of the wording of the relevant provisions in the Treaty and the general scheme of which they form part. Now, I think it is significant that nowhere is it laid down that the Commission has a duty to give a decision even when the result of the summary examination which it has to perform is positive. Rather, a final decision — as is apparent from the French, Italian and English versions of the third sentence of Article 93 (3) — is only prescribed when the Commission has initiated a procedure following a preliminary summary inquiry. I quote the French text: “avant que cette procédure ait abouti à une decision finale”. It is obvious that here “cette procédure” refers to the procedure under the second sentence. In my opinion there are sound reasons for this. It does not only serve as a reminder that exaggerated formalism has no place in the relationships between Community institutions and Member States (as Mr Advocate-General Lagrange noted in his opinion in case 6/64, Recueil 1964, p. 1141). The consideration that Article 92 — as we have seen — does not confer direct rights on private parties, and that if a positive decision were given, which created the impression that the aid was approved, the Commission's right nevertheless to examine the aid legislation later under Article 93 (1) and (2) might be impaired or even negatived, may also have played a part therein. Consequently the most that can be required of the Commission at this juncture, i.e. after a purely summary investigation, (the British Government speaks of a desirable practice, whilst the Commission does not exclude even a legal duty to this effect), is an informal statement to the effect that no objections to the proposed aid legislation are apparent. Another point which should not be forgotton concerning the obligation on Member States not to take action, which some would like to extend until the Commission makes an informal statement such as the above, is that State aid is not prohibited outright under the scheme of the Treaty, nor is it made subject to prior authorization from the Commission. The sole purpose of Article 93 (3) is precisely to ensure a balance between the interest of Member States in the speedy enactment of aid legislation, and the interest of the Community in securing competition free from distortion. According to the clear meaning of this provision, the measures adopted by States should not be such as to present the Commission with a fait accompli, but must allow sufficient time for it to complete its examination. If the matter is seen thus, however, it scarcely seems justifiable to prolong the waiting time to the detriment of Member States because the Commission happens to protract the inquiry and fails to fulfil its duty to comment within the appropriate time. Nor — as the British Government has rightly emphasized — can it seriously be suggested here, with regard to the periods which must elapse, that in view of the provision for actions under Article 175 of the EEC Treaty, the Member State affected should initiate such proceedings for establishing an infringement, in order to obtain an opinion from the Commission. The only rational view, and one which avoids any unacceptable encroachment on the liberty of Member States, is that the general obligation on Member States not to take action, contained in Article 93 (3) ceases on expiry of a reasonable period for examination. Admittedly this has the disadvantage of introducing an element of uncertainty, since the period for examination may vary in length from case to case, depending on the particular features of the legislation in question (urgency of the State's proposals; information requirements of the Commission). However, doubts as to whether it has in fact expired should — as is correctly maintained by the British Government — arise only seldom in practice. In borderline cases, moreover, — the present proceedings are an example — the requisite clarification can be obtained by means of a reference for a preliminary ruling under Article 177, so long as the Council has not — as seems desirable — provided for such a clarification by making a regulation under Article 94 of the Treaty and determining precise time limits. If this interpretation is adopted — and for myself, I have no doubt of its correctness — it instantly supplies the answers to the first three questions asked by the court making the reference. Accordingly, as to Question 1, it must be confirmed that Article 93 (3) is not to be interpreted as meaning that the Commission has in all cases to reach a formal and final decision, i.e. even when it is of the opinion that a national law is compatible with Article 92 of the EEC Treaty. At most it has a duty to make an informal statement on conclusion of its summary examination. The statement may — if it has been decided not to initiate a procedure — be limited to the information that no objections to the national law are apparent, and naturally it does not, any more than does the Commission's failure to act, preclude the latter from reexamining the provision in the context of Article 93 (2), even when the factual circumstances remain unchanged. As to the second question, it may be answered that failure by the Commission to initiate a procedure without delay, after being informed by a Member State and when a reasonable period for examination has passed, has the consequence that the prohibition under Article 93 (3) lapses, and the Member State concerned may therefore introduce the aid legislation, which thus becomes existing aid within the meaning of Article 93 (1). No specific question as to the duration of the prohibition in this instance has been asked. But perhaps it may be remarked that a provisional statement by the Commission could be of some significance if it states that the examination is still in progress and will not be completed until after a certain period of time. For the proceedings with which we are concerned at present, it is revealing that the Commission has not claimed that the period mentioned had not expired when the procedure was initiated in January 1970, and that it regards the aid in question rather as existing aid, i.e. legally introduced. Finally, the third question — as the Commission rightly emphasizes — must be decided according to whether the general duty to refrain from action was or was not still continuing when the procedure was initiated. If the duty was still continuing, then initiation of the procedure — as I have said — brings into effect the extended prohibition under the third sentence of Article 93 (3), which then continues in force until a final decision is given. If, however, the appropriate period of examination has already elapsed when the State's law comes into force, then aid legislation has been introduced in accordance with the law and can be prohibited, by proceedings which are introduced later, only with future effect. (b) In view of these conclusions as to the first three questions, there is no need to go into the fourth question referred by the court. Hence it remains only to decide the last question, in which the court asks whether Article 93 (3) is to be interpreted as meaning that failure to observe this provision infringes the direct rights of private parties. This does not call for any lengthy observations. The third sentence of Article 93 (3) is dealt with in fact by the precedents of Cases 6/64 and 77/72. From these judgments it may be concluded that even the national court is bound by the abovementioned provision, i.e. it does create for private parties the right to enforcement of the prohibition effect thereby provided. But if this is true of the so-called extended obligation of Member States not to take action, then it must be so also of the obligation (called by the Commission the general obligation), in the first sentence of Article 93 (3). That seems obvious, since otherwise there would be an inducement to Member States to disregard the obligation of informing the Commission and to bring aid legislation into force quickly. Moreover, the objection made by the British Government that the requisite clarity is lacking in this respect, cannot be upheld, for the same objection could be made when the extended duty not to take action began. Consequently one cannot draw a distinction between the general and the extended duties not to take action, but must adopt the same view in relation to the first, namely that breach of it can be asserted by private parties in the national courts. It is also relevant here to add that breach of the duty not to act does not necessarily invalidate the national law concerned. Important information to that effect can also be gleaned from past cases, namely Case 34/67 (Recueil 1968, p. 359) in particular from the conclusion as to the applicability of an internal measure adopted by a State, which is incompatible with the law of the Treaty, that it is a matter for the “national courts to select from several paths open to them under the internal legal order those which seem appropriate for safeguarding the rights conferred on private parties by Community law”. This can in fact be applied to the difficulties which have arisen here, firstly in the knowledge that the Treaty contains no general prohibition against the introduction of new aid legislation, and secondly, bearing in mind the special powers vested in the Council under Article 93 (2). It must therefore, be kept firmly in mind that it is sufficient for the purposes of the provision in Article 93 (3) if a national regulation which contravenes this Article is temporarily not applied. This may perhaps cover all that is required for the purposes of the national proceedings, even for the last question.