Case T-137/02

Pollmeier Malchow GmbH & Co. KG

v

Commission of the European Communities

(State aid – Action for annulment – Recommendation 96/280/EC – Meaning of small and medium-sized enterprises (SMEs))

Judgment of the Court of First Instance (Fourth Chamber, Extended Composition), 14 October 2004

Summary of the Judgment

1. State aid – Prohibition – Exceptions – Aid which may be considered compatible with the common market – Discretion of the Commission – Judicial review – Limits

(Arts 87(3) EC and 88 EC)

2. State aid – Prohibition – Exceptions – Commission Notice laying down Community guidelines on State aid for Small and Medium-sized Enterprises – Definition of ‘small and medium-sized enterprises’ – Interpretation of the independence test

(Commission Recommendation 96/280 concerning the definition of small and medium-sized enterprises; Commission Notice laying down Community guidelines on State aid for small and medium-sized enterprises)

1. Where legally distinct natural or legal persons constitute an economic unit, they should be treated as a single undertaking for the purposes of Community competition law.

In the field of State aid, the question whether there is an economic unit arises primarily in relation to the question whether there is an aid beneficiary. It has been held in that regard that the Commission has a broad discretion in determining whether companies which form part of a group should be regarded as an economic unit or rather as legally and financially independent for the purpose of applying the rules governing State aid. That discretion on the part of the Commission involves the consideration and appraisal of complex facts and circumstances. Since it is not for the Court to substitute its own assessment of the facts, particularly the economic circumstances, for that of the author of the decision, the Court must, in such a context, confine its review to determining whether the Commission complied with the rules governing procedure and the provision of the statement of reasons, whether the facts are accurately stated and whether there has been any manifest error of assessment or misuse of powers. Moreover, it is clear from the express wording of Article 87(3) EC and Article 88 EC that the Commission ‘may’ consider aid covered by the first of those two provisions to be compatible with the common market. Accordingly, whilst the Commission must always determine whether State aid subject to review by it is compatible with the common market, even if that aid has not been notified to it, it is not bound to declare such aid compatible with the common market.

(see paras 50-53)

2. The Commission is bound by the guidelines and notices that it issues in the area of supervision of State aid where they do not depart from the rules in the Treaty and are accepted by the Member States.

In that respect, it is clear from point 1.2 of the Commission Notice laying down Community guidelines on State aid for small and medium-sized enterprises (SMEs), published in 1996, that the Commission’s favourable approach towards State aid for SMEs is justified by the imperfections in the market which mean that those enterprises face a number of handicaps and which thus limit the socially and economically desirable development of them, and from point 3.2 of that notice that, in order to qualify as an SME under those guidelines, an enterprise must satisfy three tests: the number of persons employed, the financial test and the independence test. In relation to that last test, Article 1(3) of the annex to Commission Recommendation 96/280 concerning the definition of SMEs provides that independent enterprises are those which are not owned as to 25% or more of the capital or the voting rights by one enterprise, or jointly by several enterprises falling outside the definition of an SME. Article 1(4) of that annex further provides that in calculating the thresholds referred to in paragraph 1 it is necessary to cumulate the relevant figures for the beneficiary enterprise and for all the enterprises which it directly or indirectly controls through possession of 25% or more of the capital or of the voting rights.

The operative part of an act is indissociably linked to the statement of reasons for it, so that, when it has to be interpreted, account must be taken of the reasons which led to its adoption.

In the present case, it is clear in particular from the 18th, 19th and 22nd recitals in the preamble to that recommendation and from point 3.2 of the SME guidelines that the purpose of the independence test is to ensure that the measures intended for SMEs genuinely benefit enterprises for which size represents a handicap and not those which belong to a large group and which therefore have access to funds and assistance not available to competitors of equal size but which do not belong to a large group. It is also apparent from those provisions that, in order to apply only to enterprises which in fact constitute independent SMEs, it is necessary to eliminate legal arrangements in which SMEs form an economic group stronger than such an undertaking and it is necessary to ensure that the definition of SMEs is not circumvented for purely formal reasons.

Accordingly, Article 1(3) and (4) of the annex to Recommendation 96/280 must be interpreted in the light of that purpose, so that the data for an enterprise, even one which is owned as to less than 25% by another enterprise, must be taken into consideration in calculating the thresholds mentioned in paragraph 1 of the same article where those enterprises, even though formally distinct, constitute an economic unit.

(see paras 54, 56-63)