Opinion of Mr Advocate General Elmer delivered on 12 December 1996. - Siemens SA v Commission of the European Communities. - Appeal - State aid - General aid - Definition of aid. - Case C-278/95 P.



European Court reports 1997 Page I-02507



Opinion of the Advocate-General

1 By the present appeal Siemens SA asks the Court to set aside the judgment of the Court of First Instance of 8 June 1995 in Case T-459/93 Siemens SA v Commission, (1) in which the Court of First Instance upheld Commission Decision 92/483/EEC of 24 June 1992 concerning aid provided by the Brussels Regional Authorities (Belgium) in favour of the activities of Siemens SA in the data-processing and telecommunications sectors (2) (hereinafter `Decision 92/483') ordering the regional authorities to refrain from making a payment of BFR 28 694 000 and to recover from Siemens BFR 227 751 000 plus interest.

Relevant legal rules and the decisions of the Commission

2 Article 1(a) of the Law of 17 July 1959 introducing and coordinating measures to encourage economic expansion and the creation of new industries (hereinafter `the 1959 Law') established a system of general aid for operations `contributing directly to the creation, extension, conversion or modernization of industrial or craft undertakings, whether the said activities are carried on by those undertakings themselves or by other natural or legal persons under private or public law, provided that they are in the general economic interest'.

Article 3(a) provides that subsidies may be granted to credit institutions approved for that purpose in order to enable them to grant loans at a reduced rate of interest for the operations referred to in Article 1, on condition that those loans are used for one of the purposes therein set out, which include, in particular, the `direct financing of investments in immovable property, whether constructed or not, and in plant or machinery needed to carry out those operations' and the `direct financing of intangible investments, such as organization studies and research or development of prototypes, new products and new manufacturing processes'.

3 By Decision 75/397/EEC of 17 June 1975 on the aids granted by the Belgian Government pursuant to the Law of 17 July 1959 introducing and coordinating measures to encourage economic expansion and the creation of new industries (3) (hereinafter `Decision 75/397'), the Commission adopted a position on the compatibility of the aid scheme with the common market.

The first and second paragraphs of Recital I of the preamble to Decision 75/397 are worded as follows:

`Whereas the Belgian Law of 17 July 1959 introduces measures to encourage economic expansion and the creation of new industries and, for this purpose, provides for a number of aids to be granted to activities which help "to create, extend, convert or modernize large and small Belgian undertakings" in the general economic interest; whereas the Royal Order of 17 August 1959 implementing that Law treats the following, "inter alia", as being in the general interest: "the creation of jobs in connection with employment policies; the establishment of new industries and the manufacture of new products; the development of existing undertakings which adjust to the changed situation on the market; the improvement of the situation of depressed industries; the more rational utilization of the country's economic resources; the improvement of working conditions, of the conditions in which undertakings operate (by increasing productivity or profitability) and of the quality of production; the establishment or development of research facilities in enterprises;"

Whereas, under that Law, the Belgian Government may grant a number of types of aid in favour of investments which undertakings carry out for the various purposes, the main benefits being:

- interest rates on loans contracted in order to pay for such investments ...'.

It is apparent from Recital II that the Commission is of the view that the general aid scheme is incompatible with the common market. In that regard, the Commission refers to the extremely general nature of the scheme, which enables any industrial enterprise, wherever it may be and in whatever industry it may be operating, to come within its scope.

The Commission considered, however (see, in particular, the second indent of Article 1 and Article 2 of the Decision), that aids granted under the 1959 Law to an individual undertaking or to a restricted number of undertakings, provided that they were not `significant' as defined in the Decision, were compatible with the common market and therefore did not need to be notified to the Commission pursuant to Article 93(3) of the EC Treaty. (4) The thresholds above which aid is regarded as significant are laid down in Article 2 of Decision 75/397 and the Commission's letter of 14 September 1979 to the Member States on the notification of cases to which general investment aid schemes apply (5) (hereinafter `the letter to the Member States').

4 In the communication of 2 February 1977 from the Ministry of Economic Affairs on intangible investments, the Belgian Government expressed its views on the precise meaning of `intangible investments'. Paragraph 2 of the communication reads as follows:

`at the commercial level: market studies; studies designed to improve advertising; studies prior to launching products, opening points of sale; etc. ... surveys and exploratory studies'.

That communication was not notified to the Commission.

5 Article 176 of the Belgian Law of 22 December 1977 on budgetary proposals for 1977-1978 (`the 1977 Law'), in conjunction with the Royal Decree of 24 January 1978 (`the 1978 Royal Decree'), authorizes the grant of non-recoverable capital premiums equivalent to the interest-rate subsidies where the operations referred to in Article 1 of the 1959 Law are financed by the undertaking's equity capital.

6 By letter to the Belgian authorities of 25 May 1978 (`the 1978 letter') the Commission authorized the aid corresponding to the 1977 Law. The Commission stated in its letter that the arrangements in question `do not, therefore, establish an artificial aid scheme over and above the existing scheme but rather adapt an existing scheme to the economic circumstances described above'.

7 In its communication of 1979 on regional aid systems (6) (`the 1979 communication') the Commission published the principles which, in accordance with the powers vested in it by Article 92 et seq. of the Treaty, (7) it intended to apply to regional aid systems already in force or to be established in the regions of the Community.

Paragraph 4 of the 1979 communication stated that some regional aids in use in the Community were not conditional on initial investment or job creation and had the character of operating aids, and that the Commission had reservations in principle as to the compatibility of operating aids with the common market.

In paragraph 18(ii) of the annex to that communication, the concept of initial investment is defined as `investment in fixed assets in the creation of a new establishment, the extension of an existing establishment or in engaging in an activity involving a fundamental change in the product or production process of an existing establishment (by means of rationalization, restructuring or modernization) ...'.

8 In Decision 92/483 the Commission found that part of the aid granted by the Brussels regional authorities in favour of the activities of Siemens in the data-processing and telecommunications sectors was incompatible with the common market. In the decision the Commission identified seven categories of operations benefiting from that aid, namely the leasing of equipment to clients, the purchase of equipment for internal use, the development costs of software, training costs, the acquisition of a building, advertising campaigns and market surveys.

9 The Commission considered that the expenditure on equipment leased to clients did not meet the criteria laid down by Articles 1 and 3(a) of the 1959 Law and approved by the Commission because it did not contribute to the creation, extension, conversion or modernization of the structure of Siemens. Neither, in the Commission's view, did the grant of aid for the financing of those operations constitute aid to client undertakings, since those clients paid the full rental charges set by Siemens at its discretion. Consequently, that aid was in the nature of permanent operating aid granted to Siemens. The Commission further stated that even if the 1959 Law had covered the latter subsidies, they should have been notified pursuant to Article 93(3) of the Treaty, as they exceeded the thresholds established in the letter to the Member States. In that regard, the Commission observed that the expenditure programmes in question had been split into several applications for aid which related to a homogenous body of expenditure to be made at the same time and should therefore have been dealt with jointly as a single expenditure programme. Furthermore, without providing any logical explanation the regional authorities had taken into consideration only 75% of total expenditure of the same type.

10 The Commission likewise considered that the aid for market surveys and advertising campaigns was not covered by the 1959 Law, since it was not investment aid but operating aid. In the Commission's view such expenditure was purely a day-to-day operating cost of the kind that any undertaking must bear in the course of its normal activities.

11 Finally, the Commission considered that those forms of aid did not come within any of the exceptions provided for in Article 92 of the Treaty.

12 Consequently, the Commission found (Article 1(c) of the Decision) that the aid of BFR 256 445 000 towards expenditure on equipment to be leased to clients, advertising campaigns and market surveys had been illegally awarded in breach of Article 93(3) of the Treaty and did not come within the exceptions provided for in Article 92 of the Treaty. Accordingly, it stated in Article 2 of the Decision that the regional authorities should refrain from making payment of the unpaid amount of BFR 28 694 000 and ordered it to recover the amount of BFR 227 751 000 already paid.

13 In its judgment of 8 June 1995 the Court of First Instance dismissed the application for the annulment of Commission Decision 92/483 and ordered Siemens to pay the costs.

Forms of order sought and pleas in law

14 Siemens claims that the Court of Justice should set aside the judgment of 8 June 1995 and, consequently, annul Articles 1(c) and 2 of Decision 92/483. It also claims that the Court should order the Commission to pay the costs of the proceedings before both the Court of First Instance and the Court of Justice. In support of those claims, Siemens puts forward the following pleas in law:

(1) the Court of First Instance erred in law in holding that the statement of reasons for the contested decision was adequate and relevant;

(2) the Court of First Instance erred in law when it considered that if the aid granted by the Belgian authorities under the general scheme provided for by the 1959 Law was not intended for investment purposes within the meaning of Community law it could not be regarded as having been authorized by the contested decision and therefore had to be notified pursuant to Article 93(3) of the Treaty;

(3) the conclusions of the Court of First Instance regarding the nature of the operations in question are irrelevant in law, since the Court should have considered not whether they constituted investment operations within the meaning of Community law but whether they did in fact fall within the substantive scope of the 1959 Law;

(4) the Court of First Instance erred in law when it considered that the applicant's objections to the allegation that the notification thresholds had been exceeded were of no relevance, in view of the fact that the authorizations of aid in question were not covered by the Commission's approval, since this related to operating aid for the undertaking.

15 The Commission contends that the appeal should be dismissed and the appellant ordered to pay the costs.

First plea in law - inadequate statement of reasons

16 The Court of First Instance stated in paragraphs 31 to 34 of its judgment:

`... as is apparent from the relevant case-law, the obligation laid down in Article 190 of the Treaty, requiring the acts referred to in Article 189 to state the reasons on which they are based, is not a mere matter of form but is intended to give an opportunity to the parties of defending their rights, to the Community judicature of exercising its powers of review and to the Member States and to all interested parties of ascertaining the circumstances in which the Commission has applied the Treaty (see, in particular, the judgment of the Court of Justice in Case 24/62 Germany v Commission [1963] ECR 63). (8) However, it is equally apparent from the case-law of the Court of First Instance that, in stating the reasons for the decisions it has to take in order to ensure that the rules of competition are applied, the Commission is not obliged to adopt a position on all the arguments relied on by the parties concerned and it is sufficient if it sets out the facts and the legal considerations having decisive importance in the context of the decision [judgment in Case T-44/90 La Cinq v Commission (9)].

In the present case, the Court notes, with regard to the nature of the advertising campaigns and the market surveys, that the Commission stated in Part IV of the statement of reasons for the Decision (p. 29) that they "are not listed as items eligible for aid under the EEL". It goes on to explain (on p. 31 of the Decision) that they fall "under the category of operating aid as this expenditure is a typical general operating cost that a company must bear in its normal activities".

Similarly, as regards the alleged splitting-up of the applications for aid for the purchase of equipment to be leased, the Commission states, in Part IV of the statement of reasons for the Decision (p. 30), that "certain of the expenditure programmes in question were split into several applications for aid which related to a homogenous body of expenditure to be made at the same time and should therefore have been dealt with jointly by the Brussels Government as a single expenditure programme". It goes on to give examples of this. In that connection, the aid towards the purchase of equipment to be leased is regarded by the Commission as continued operating aid which falls, by its very nature, outside the general aid scheme established by the 1959 Law (see Part IV of the statement of reasons, p. 29 of the Decision).

It follows from the foregoing that, as regards the two points referred to by the applicant, the Commission has set out the facts and the legal considerations which are of decisive importance in the context of the Decision.'

Procedure before the Court of Justice

17 Siemens claims that Decision 92/483 did not meet the requirements of Community law according to which the statement of reasons must be clear and relevant in order to ensure that the trader concerned is in no doubt as to the basis of the legal measure in question. The Commission failed to explain, for instance, why the expenditure on advertising campaigns and market surveys was not eligible for the aid provided for by the 1959 Law. The mere finding that the aid in question was operating aid is not sufficient, since the Commission failed to explain the reasons for which the operating aid, in the sense applied to that term by Community law, fell outside the scope of the 1959 Law. Furthermore, the Commission failed to demonstrate that the applications for aid were split up for no reason and that the thresholds fixed by the Commission were in fact exceeded.

18 The Commission contends that the decision of the Court of First Instance is compatible with Community law. The obligation to state reasons is a procedural requirement. The material soundness of the statement of reasons is therefore irrelevant. Furthermore, the extent to which a decision meets the requirement to state the reasons on which it is based laid down in Article 190 of the Treaty must be assessed in the light of the decision in its entirety. It is quite apparent from Decision 92/483 that the aid for market studies and advertising campaigns was regarded as operating aid and that Siemens' expenditure in respect of those activities was not regarded as eligible for the aid provided for by the 1959 Law. It is also apparent that the Commission considered, first, that the expenditure programmes were artificially split up into separate applications and, secondly, that the regional authorities, for no reason, took into consideration only 75% of the expenditure budget and that in the light of these factors the Commission considered that the thresholds which it had fixed had been exceeded.

Evaluation

19 In its judgment in Remia v Commission (10) the Court stated that `although under Article 190 of the EEC Treaty the Commission is required to state the factual matters justifying the adoption of a decision, together with the legal considerations which have led to its adopting it, the article does not require the Commission to discuss all the matters of fact and of law which may have been dealt with during the administrative proceedings. The statement of the reasons on which a decision adversely affecting a person is based must allow the Court to exercise its power of review as to the legality of the decision and must provide the person concerned with the information necessary to enable him to decide whether or not the decision is well founded.' Paragraph 40 of the judgment indicates that the statement of reasons must be considered in the whole context of the contested decision. The Court has also stated, inter alia in Case C-122/94 Commission v Council, (11) that the question of the extent to which a statement of reasons for a decision satisfies the requirements of Article 190 of the Treaty must also be assessed with reference to the context of the decision and to the whole body of legal rules governing the matter in question.

20 Those principles are the same as the principles set out by the Court of First Instance in paragraph 31 of the judgment under appeal and to my mind there is no ground for finding that it erred in law in its application of those principles.

21 As stated in paragraph 32 of the judgment of the Court of First Instance, Decision 92/483 indicates that the Commission considered that the aid for the market surveys and the advertising campaigns was operating aid and that the expenditure associated with such operations could not be regarded as covered by the 1959 Law. That, in my view, was sufficient to allow Siemens to determine whether there were grounds to seek review of Decision 92/483 by the Community judicature. Moreover, the Commission had already expressly stated in its communication of 1979 that in principle operating aid was not compatible with the common market and the Court had expressed the same view in Case C-86/89 Italy v Commission. (12)

22 Nor do I see any reason to find that the Court of First Instance infringed the Community rules by concluding that the Commission had provided sufficient reasons for its opinion that the aid towards the purchase of equipment to be leased exceeded the thresholds fixed by the Commission. As the Commission contended, the requirement to state reasons is designed to ensure that the trader concerned is fully aware of the rationale of the decision. It is clearly stated in the contested decision that the Commission considers, first, that the expenditure programmes were illegally split into separate applications and, secondly, that the expenditure budget was reduced for no reason. To my mind, therefore, the reasons stated are sufficient to serve the purpose required of them. Furthermore, Siemens' argument also seems to be concerned, more specifically, with the question whether the Commission adduced sufficient evidence for the facts to which the decision refers. That is quite a different matter, however, and one on which the Court of Justice cannot rule, since, pursuant to Article 168a of the Treaty, the Court's jurisdiction on appeal is confined to points of law.

23 To summarize, therefore, I consider that the plea alleging an inadequate statement of reasons must be rejected.

Second plea in law - the forms of aid covered by the authorized aid scheme

24 In paragraphs 45 to 48 of the judgment, the Court of First Instance stated that:

`It is necessary to examine whether the provisions in question allowed the grant of aid for purposes other than investment. To that end, the national rules concerning the authorized general scheme need to be interpreted in the light of the Community rules in the matter. More specifically, the 1959 Law and Article 176 of the 1977 Law, as implemented by the 1978 Royal Decree, must be interpreted in accordance with the terms of Decision 75/397, the letter of 25 May 1978 and the wording of the relevant provisions of the Treaty.

The Court observes that in Article 1(a) the 1959 Law provides for "general aid for operations contributing directly to the creation, extension, conversion or modernization of industrial or craft undertakings ... provided that they are in the general economic interest" and in Article 3(a) for such aid to be granted in the form of interest-rate subsidies on loans contracted with approved credit institutions and to be restricted to the financing of investment operations. The Commission considered in Decision 75/397 that the scheme established by the 1959 Law was a system for granting "aid in favour of investments which the undertakings carry out for ... various purposes" (p. 13 of Decision 75/397). ... By its letter of 25 May 1978 concerning the 1978 Royal Decree, the Commission authorized the grant of such aid for "investment operations", subject to compliance with the "verification procedure" provided for in Decision 75/397 (p. 2 of the letter).

It follows from the foregoing that where aid granted by the Belgian authorities within the framework of the general scheme in question is not intended for use for investment purposes, it cannot qualify under the Commission's authorization decisions and must therefore be notified pursuant to Article 93(3) of the Treaty.

Furthermore, as the Commission rightly contends, operating aid, that is to say, aid intended to relieve an undertaking of the expenses which it would itself normally have had to bear in its day-to-day management or its usual activities, does not in principle fall within the scope of Article 92(3) ..., and cannot therefore be regarded as authorized by Decision 75/397 or by the letter of 25 May 1978. According to the relevant case-law, the effect of such aid is in principle to distort competition in the sectors in which it is granted, whilst nevertheless being incapable, by its very nature, of achieving any of the objectives of the aforesaid exceptions (see, in that regard, the judgments of the Court of Justice in Case C-86/89 Italy v Commission [1990] ECR I-3891 and in Case C-301/87 France v Commission [1990] ECR I-307).'

Procedure before the Court of Justice

25 Relying on the judgment of the Court of Justice in Italy v Commission (the Italgrani judgment), (13) Siemens claims that once the Commission has approved a general aid scheme the individual cases in which the scheme was applied should be assessed with reference to the approved scheme and not in the light of Article 92 of the Treaty. It considers that the Commission's approval of the 1959 Law is not limited to investments within the meaning of Community law. The approval covers any aid which does not exceed the thresholds, provided that it falls within the scope of the 1959 Law as interpreted under Belgian law (see, in that regard, the Government's communication of 2 February 1977). In any event, the Commission cannot subsequently put forward an interpretation different from the one which it expressed in Decision 75/397. Accordingly, the Court of First Instance infringed Community law by considering that the 1959 Law should be interpreted in the light of Community law, including the Treaty, whereas it should have defined the scope of the 1959 Law on the basis of an interpretation based on Belgian law and the Commission's decision approving the 1959 Law.

26 The Commission contends that, in accordance with Community law, the Court of First Instance has interpreted the 1959 Law in the light of the Commission's authorization, thus guaranteeing the requisite uniformity of the law. A definition based on national law, on the other hand, would lead to an application that was not consistent with Community law. The Commission further stated that, in this context, the Court of First Instance was entitled to take account of other relevant rules of Community law, including Article 92 of the Treaty, to interpret the precise scope of the approval. It was on this basis that the Court of First Instance found that the approved aid scheme applied to investment aid and not to operating aid.

Evaluation

27 As Siemens has pointed out, the Court of Justice has already ruled on the importance to be accorded to an approved general aid scheme when determining whether specific aid is compatible with Community law. In Italgrani the Court of Justice stated in paragraphs 24 and 25:

`... when the Commission has before it a specific grant of an aid alleged to be made in pursuance of a previously authorized scheme, it cannot at the outset examine it directly in relation to the Treaty. Prior to the initiation of any procedure, it must first examine whether the aid is covered by the general scheme and satisfies the conditions laid down in the decision approving it. If it did not do so, the Commission could, whenever it examined an individual aid, go back on its decision approving the aid scheme which already involved an examination in the light of Article 92 of the Treaty. (14) This would jeopardize the principles of the protection of legitimate expectations and legal certainty from the point of view of both the Member States and traders since individual aid in strict conformity with the decision approving the aid scheme could at any time be called in question by the Commission.

If following the examination thus circumscribed the Commission finds that the individual aid is in conformity with its decision approving the scheme it must be regarded as authorized aid, and thus as existing aid ...'

28 Where it is claimed that aid comes within an authorized general aid scheme the compatibility of that aid with the common market must therefore be assessed with reference to the decision of the Commission approving the aid scheme in question. However, it does not follow that national law is decisive in defining the scope of the authorized aid scheme.

29 The Commission's approval constitutes the basis of authorization for the general aid scheme in the 1959 Law. The criteria for granting the aid fixed in the Law therefore form an integral part of the conditions and criteria on which the Commission based its approval. The precise scope of that general measure of Community law must be determined on the basis of Community law and not on the basis of national law. In that regard, reference may be made, first, to the consistent case-law of the Court of Justice to the effect that secondary Community legislation must be interpreted in the light of the Treaty provisions, (15) and, secondly, to its judgment in Philip Morris Holland v Commission, (16) where the Court stated that the power of assessment conferred on the Commission by the rules on State aid must be exercised in the context of the Community and not of a single Member State. The precise scope of the Commission's decision of approval cannot therefore to my mind be determined without reference to other provisions of Community law, including, in particular, the Treaty rules. The decision approving the aid must be considered in the light of the powers conferred on the Commission in accordance with the Treaty, which, as I have said, requires assessment in the Community context.

30 Furthermore, the need to ensure the effectiveness of the rules on State aid argues decisively, in my view, against national law being taken into account for the purpose of interpreting a measure. An interpretation based on national law might lead to Community law not being uniformly applied in the Member States. The lawfulness of a measure might depend, for example, on the scope of the concept of `investments' in national law. Such a legal situation might in itself lead to distortion of competition.

31 In those circumstances, I consider that the Court of First Instance did not infringe Community law when it stated in paragraph 45 that the general scheme should be interpreted in accordance with the decision authorizing the aid, the 1978 letter and the relevant rules of the Treaty or when it concluded in paragraphs 46 to 48 that the decision authorizing the aid applied only to investment aid and not to operating aid. As the Court of First Instance pointed out, the Commission expressly stated in Decision 75/397 that the aid to which the decision referred was aid for investment purposes. The same applies to the 1978 letter. Furthermore, in its 1979 communication, the Commission expressly pointed out that it had reservations in principle as to the compatibility of operating aids with the common market. That view was also expressed by the Court of Justice in paragraph 18 of Case C-86/89 Italy v Commission, (17) where it stated that `the aid in question ... should be regarded as operating aid to the undertakings concerned and that, as such, it affected trading conditions to an extent contrary to the common interest'. Having regard to those factors, it is highly unlikely that Decision 75/397 covered anything other than investment aid within the meaning of Community law.

32 For all those reasons, I consider that this plea should not be upheld.

Third plea in law - classification of the aid for advertising campaigns and market surveys and towards the purchase of equipment to be leased

33 As regards the classification of the aid for advertising campaigns and market surveys, the Court of First Instance stated in paragraphs 53 and 55 of the judgment:

`Since the letter of 25 May 1978 authorizes the grant of aid in the form of capital premiums only for the financing of investments, it is necessary to examine whether the purpose of the aid in the present case is to finance investments. It should be borne in mind in that regard that such an examination entails assessments which must be made in a Community context (Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraph 24) and, consequently, that the applicant's arguments of an accounting and fiscal nature, based on national law, are not relevant in the circumstances.

It follows from the foregoing that the aid in question was intended for use in the marketing of Siemens' products, constituting one of its day-to-day activities. Consequently, it cannot be regarded as investment aid and qualify under the decision of the Commission of 25 May 1978 authorizing the grant of capital premiums for investment aid.'

34 As regards the aid towards the purchase of equipment to be leased, the Court of First Instance stated the following in paragraphs 57 and 58:

`The Court finds that that operation is not such as to involve any technical or structural change or to promote Siemens' development otherwise than in an exclusively commercial way. As the defendant has stated, the aid in question enabled it over a given period to offer its clients artificially favourable terms and to increase its profit margin without any justification.

Lastly, the applicant cannot claim that the aid in issue contributes to the creation, extension, conversion or modernization of the third party undertakings which leased the equipment, and that it thus falls within the authorized general aid scheme. Those undertakings pay a rental set by Siemens at its discretion, and Siemens therefore remains the sole recipient of that aid, which enables it to reduce the rental level applied and thereby to distort competition to the detriment of its rivals.'

Procedure before the Court of Justice

35 Siemens claims that the aid for advertising campaigns and market surveys falls within the scope of the 1959 Law, since it constitutes investments in intangible assets as referred to in Article 3(a) of the Law. That also follows from a communication of 2 February 1977 from the Ministry of Economic Affairs, where it is stated that the provisions referred to allow aid to be granted for `market studies, studies designed to improve advertising, studies prior to launching products, opening points of sale, etc. ... surveys and exploratory studies'.

As regards the aid towards the purchase of equipment to be leased, Siemens claims that this was also covered by Article 3(a) of the Law, which refers to `the direct financing of investments ... in plant or machinery needed to carry out those operations'. Furthermore, it also constitutes aid to the undertakings to which the equipment is leased, which is also covered by the 1959 Law.

Finally, Siemens criticizes the Court of First Instance for using the concept of investment aid, in the sense applied to that term by Community law, to define the scope of the 1959 Law and for taking the view that only the appellant benefited from the aid on the ground that it was the appellant that set the rental.

36 The Commission contends that the pleas in question cannot be examined as to their substance because this would involve an appraisal of facts, which cannot form the subject-matter of an appeal. The Commission also states that the Belgian Government's communication of 2 February 1977 was not notified to it and that the interpretation of the concept of `intangible investments' in the communication goes further than what is indicated in Article 3(a) of the 1959 Law.

Evaluation

37 As I have stated above, I consider it proper to interpret the 1959 Law in the light of the relevant Community rules and that it is correct to conclude that operating aid within the meaning of Community law is not covered by the authorized aid scheme. The Belgian Government's communication of 2 February 1977 is a good example of the adverse consequences which would follow if an aid scheme authorized by the Commission were interpreted with reference to national law. To my mind the interpretation provided in that communication of the concept of `intangible investments' goes much further than what appears to be indicated by the wording of Article 3(a) of the 1959 Law. The communication should therefore have been notified to the Commission so that the Commission could say whether it fell within the framework of the authorized aid scheme.

38 In paragraphs 54 and 56 of the judgment, the Court of First Instance described the precise content of the measures benefiting from aid in the following terms:

`As regards the aid for the advertising campaigns and the market surveys, the application made by the applicant to the Belgian authorities on 30 September 1985, entitled "Investment programme for Siemens, Brussels, in the sum of BFR 113 600 000", states that "intangible investments" are planned in the sum of BFR 37 600 000 for the marketing and promotion of new products, two examples of which are personal computers and the "HICOM" office communications system. Similarly, it appears from the commentary on the investment programme annexed to the aid application of 29 September 1986 that "the Belgian market in office technology, data processing and the automation of manufacturing processes is growing at a spectacular rate" and that "in order to maintain, and even increase, (its) market share in those sectors, (it planned to) intensify (its) marketing activities during the coming years".

As regards the aid towards the purchase of equipment to be leased, involving the purchase of equipment by Siemens from other companies within the group and its being placed on the market by means of a leasing agreement, it is apparent from the supporting documents annexed to the applications for aid of 19 July 1985, 30 June 1986, 15 July 1986 and 12 August 1987 that Siemens itself classified the operation in question as a "conventional sale", stating that, "thanks to this method of selling", it had "significantly increased (its) market share in the data-processing and office technology sector" (see, in particular, the supporting document annexed to the letter of 12 August 1987).'

39 As the Court of Justice declared in Hilti v Commission, (18) an appeal may rely only on grounds relating to the infringement of rules of law, to the exclusion of any appraisal of the facts. It follows, in my view, that the classification by the Court of First Instance of the measures which benefited from aid must be regarded as established. That does not mean, however, that the Court is prevented from making a legal appraisal of those facts, that is to say, that the Court cannot rule on whether those facts must be linked with one or other of the Community-law concepts of `investment aid' or `operating aid' and, where appropriate, find that the Court of First Instance failed to apply the rules correctly.

40 It is apparent from paragraphs 54 and 56 that the aid granted to Siemens was used, first, to purchase equipment from its parent company in order to lease it and, secondly, to market new products. In my opinion it is difficult to classify aid used for such purposes, which are closely linked with the marketing of the undertaking's products, as investment aid. Moreover, it is not aid for the development of new products or the preparation of market studies which may form the basis of the implementation or pursuit of development projects (see, on this point, the first and second paragraphs of Recital I of Decision 75/397). It is aid for the marketing of existing products. Consequently, I consider that there are no grounds for altering the Court of First Instance's classification of that aid as operating aid.

41 On the other hand, the question of the extent to which aid towards the purchase of products to be leased constitutes aid to the person to whom the equipment purchased is leased is in my opinion a question which relates to the facts and not to the law and therefore is not within the jurisdiction of the Court of Justice. Thus in paragraph 50 the Court of First Instance sought to establish precisely who was the actual beneficiary of the aid.

42 In any event, I find it hard to imagine that such indirect aid is covered by the authorized aid scheme, which refers to `operations contributing directly to the ... modernization of large ... undertakings' (see Article 1(a) of the 1959 Law), in the form of the `direct financing of investments ... in plant or machinery ...' (see Article 3(a) of the 1959 Law). Siemens does not make a direct investment for the benefit of the undertaking which leases the equipment which it has purchased. All it does is lease equipment to a series of undertakings chosen at random on conditions which are normal market conditions for those undertakings.

43 Furthermore, if the regional authorities had wished to contribute to the renewal of the data-processing equipment of certain specific undertakings they could have granted those undertakings direct aid, within the framework of Decision 75/397 and the 1978 letter, for the purchase of such equipment from a supplier of their choice. Where the aid is granted to a given supplier, in this case Siemens, this leads, as the Court of First Instance observed in paragraph 58 of the judgment, to distortion of competition between suppliers. Thus the aid produces manifestly negative effects at a marketing level distinct from that of the undertakings which allegedly benefit from it, that is to say, those to which the equipment is leased. The existence of that unnecessary distortion of competition reinforces the presumption that the aid does not fall within the scope of the authorized scheme. The scheme must be interpreted in accordance with the Community-law principle of proportionality, according to which the distortion of competition must be limited to what is necessary to achieve the aim pursued. (19) Moreover, the Treaty provisions on State aid cannot justify giving more favourable treatment to the products of certain national undertakings, contrary to Article 30 of the Treaty. (20)

44 In those circumstances, I consider that the Court of First Instance did not infringe Community law when it held that neither the aid for advertising campaigns and market surveys nor the aid for the purchase of equipment to be leased was covered by Decision 75/397 or the 1978 letter.

Fourth plea in law - should the Court of First Instance have examined the allegation that the thresholds had been exceeded?

45 In paragraph 62 of its judgment, the Court of First Instance held that `[s]ince the Court has held that the aid in issue was not covered by authorization [of] the general scheme approved by Decision 75/397 and the letter of 25 May 1978, by reason of its being in the nature of operating aid for the undertaking, there is no need to examine whether the conditions imposed by those decisions, such as that relating to notification thresholds, were fulfilled.'

46 As is evident from what I have already said, there is no need, in my opinion, to alter the view taken by the Court of First Instance that the aid for advertising campaigns, market surveys and the purchase of equipment to be leased was not, by its nature, covered by the aid scheme authorized by Decision 75/397 and the 1978 letter. Consequently, as the Court of First Instance held, there is no need to rule on whether the notification thresholds were exceeded.

47 This plea should therefore also be rejected.

Costs

48 The Commission submitted that Siemens should be ordered to pay the costs. Under Article 69(2) of the Rules of Procedure, the unsuccessful party must be ordered to pay the costs if they have been asked for.

Conclusion

49 Accordingly, I propose that the Court should:

(1) dismiss the appeal;

(2) order the appellant to pay the costs.

(1) - [1995] ECR II-1675.

(2) - OJ 1992 L 288, p. 25.

(3) - OJ 1975 L 177, p. 13.

(4) - Under Article 93(3) of the Treaty, the Commission is to be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid.

(5) - See letter SG(79) D 10478, published in Competition Law in the European Communities, Vol. II, p. 150, Office for Official Publications of the European Communities, 1990. The thresholds are set out on p. 27 of Decision 92/483.

(6) - OJ 1979 C 31, p. 9.

(7) - Article 92 of the Treaty includes the following provisions: `1. Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.

... 3. The following may be considered to be compatible with the common market: (a) aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment;

... (c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest ...'.

(8) - This footnote concerns only the Danish original text.

(9) - [1992] ECR II-1, paragraph 41.

(10) - Case 42/84 [1985] ECR 2545, paragraph 26.

(11) - [1996] ECR I-881, paragraph 29.

(12) - [1990] ECR I-3891, paragraph 18.

(13) - Case C-47/91 [1994] ECR I-4635.

(14) - According to Article 93(2) an existing aid scheme which the Commission considers to be incompatible with the common market can only be abolished or altered for the future.

(15) - See, for example, Joined Cases C-427/93, C-429/93 and C-436/93 Bristol Myers Squibb and Others [1996] ECR I-3457, paragraph 27, and Case C-100/90 Commission v Denmark [1991] ECR I-5089, paragraph 11.

(16) - Case 730/79 Philip Morris Holland v Commission [1980] ECR 2671, paragraphs 24 and 26.

(17) - [1990] ECR I-3891.

(18) - Case C-53/92 P Hilti v Commission [1994] ECR I-667, paragraph 10.

(19) - On this point, see Philip Morris Holland v Commission, cited above, paragraph 17, and the Twelfth Report of the Commission on Competition Policy, paragraph 160.

(20) - See Case C-21/88 Du Pont de Nemours Italiana [1990] ECR I-889 and Case 18/84 Commission v France [1985] ECR 1339.