Judgment of the Court of First Instance (Second Chamber, extended composition) of 12 July 2001. - UK Coal plc v Commission of the European Communities. - ECSC Treaty - Decision No 3632/93/ECSC - Operating aid and aid for the reduction of activity - Authorisation ex post facto of aid already paid - Improvement of the viability of recipient undertakings - Degression of aid - Bonus paid to underground mineworkers (Bergmannsprämie) - Amendment of a modernisation, rationalisation and restructuring plan - Taking account of a concentration between undertakings - Statement of reasons. - Joined cases T-12/99 and T-63/99.



European Court reports 2001 Page II-02153



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

1. Actions for annulment - Action brought by an undertaking against an individual ECSC decision not addressed to it - Decision authorising the grant of aid to a competitor - Undertakings in competition - Concept - Criteria

(ECSC Treaty, Arts 4(c) and 33, second para.; General Decision No 3632/93)

2. ECSC - Aid to the coal industry - Authorisation by the Commission - Authorisation after payment of the aid - Whether permissible

(ECSC Treaty, Art. 4(c); General Decision No 3632/93, Art. 9(5))

3. ECSC - Aid to the coal industry - Prohibition - Authorisation by the Commission - Conditions - Improvement in economic viability

(ECSC Treaty, Art. 4(c); General Decision No 3632/93, Arts 2(1) and 3)

4. ECSC - Aid to the coal industry - Prohibition - Authorisation by the Commission - Conditions - Degression of aid

(ECSC Treaty, Art. 4(c); General Decision No 3632/93, Arts 2(1) and 3(1) and (2))

5. Actions for annulment - Action brought under the first paragraph of Article 33 of the ECSC Treaty - Pleas in law - Manifest failure by the Commission to observe the provisions of the Treaty or any rule of law relating to its application - Meaning - Limits on the Court's power of assessment

(ECSC Treaty, Art. 33, first para.)

6. ECSC - Aid to the coal industry - Operating aid and aid for the reduction of activity - Prohibition - Authorisation by the Commission - Conditions - Covering of the difference between production costs and the selling price on the world market - Scrutiny by the Commission in advance and after the event - Scope of the scrutiny

(ECSC Treaty, Arts 4(c), 35 and 88; General Decision No 3632/93, Arts 3(1) and 9(1), (2), (4) and (6))

7. Acts of the institutions - Statement of reasons - Obligation - Scope - ECSC Decision

(ECSC Treaty, Arts 15, first para., and 33, second para.)

Summary

1. In deciding when an undertaking is concerned because it is in competition with another undertaking, it should be noted, first, that the conditions governing admissibility laid down by the second paragraph of Article 33 of the ECSC Treaty are less strict than those for an action for annulment brought under the second paragraph of Article 173 of the EC Treaty (now, after amendment, the second paragraph of Article 230 EC). Also, the provisions of the ECSC Treaty concerning the right of individuals to bring an action must be interpreted widely in order to safeguard their legal protection.

Second, with regard specifically to the State aid rules in the ECSC Treaty, Article 4(c) of the Treaty lays down such a general, strict and unconditional prohibition on aid that it is unnecessary to examine whether, in point of fact, there is interference or potential interference with the conditions of competition in order to be able to declare aid incompatible with the common market. That prohibition does not presuppose that the aid is such as to distort or threaten to distort competition by favouring certain undertakings or the production of certain goods.

Moreover, Article 4(c) of the ECSC Treaty does not contain a de minimis rule under which aid entailing only a slight distortion of competition would escape from the prohibition laid down. Nor does Decision No 3632/93 establishing Community rules for State aid to the coal industry contain a de minimis rule, such as that laid down for the regime governing State aid falling within the EC Treaty.

It follows that the admissibility of an action brought under the second paragraph of Article 33 of the ECSC Treaty by a Community coalmining undertaking, complaining of an infringement of Article 4(c) of that Treaty and directed against a decision by the Commission authorising the grant of State aid to another Community coalmining undertaking, cannot depend on actual or potential competition being proved. Having regard to the specific features of the ECSC regime which are mentioned above, it is sufficient to establish that there is a body of evidence supporting the conclusion that competition between the undertakings in question is not an unrealistic possibility.

( see paras 53-56 )

2. No provision of Decision No 3632/93 establishing Community rules for State aid to the coal industry prohibits the Commission from examining the compatibility of planned aid with the common market solely because the Member State which notified that aid has already paid it without waiting for prior authorisation. On the contrary, in so far as Article 9(5) of that decision makes the repayment of aid paid in anticipation expressly subject to the condition that the Commission must have refused authorisation, it necessarily implies that the Commission has the power to grant authorisation in such a situation. Finally, at a more general level, the substantive and procedural provisions in that decision and the system established by Articles 92 and 93 of the EC Treaty (now, after amendment, Articles 87 and 88 EC) do not differ on points of principle, so that it would not be justified to interpret the provisions of the decision, in relation to Article 4(c) of the ECSC Treaty, more restrictively than paragraphs 2 and 3 of Article 92 of the EC Treaty in relation to paragraph 1 thereof, and the Commission is obliged, under Article 92 of the EC Treaty, to make an ex post facto assessment of aid already paid.

( see para. 68 )

3. No provision of Decision No 3632/93 establishing Community rules for State aid to the coal industry states expressly that operating aid must be strictly reserved for undertakings with reasonable chances of achieving economic viability in the long term, in the sense that they must be capable of meeting competition on the world market on their own merits. The relevant provisions of the decision do not require that the undertaking in receipt of operating aid achieve viability by the end of a fixed period. They require only that economic viability improve, the reason for that open-ended formulation being the structural uncompetitiveness faced by the Community coal industry because most of its undertakings remain uncompetitive in relation to imports from non-member countries. It follows that improvement in the economic viability of a given undertaking necessarily means no more than a reduction in the level of its non-profitability and its non-competitiveness.

( see para. 81 )

4. As provided in Article 3(1) of Decision No 3632/93 establishing Community rules for State aid to the coal industry, operating aid is intended solely to cover the difference between production costs and the selling price on the world market. By virtue of Article 3(2) of the decision, that aid may be authorised only if there is at least a trend towards a reduction in the production costs of the undertakings receiving it. In that context, the first indent of Article 2(1) of the decision sets as one of the objectives to be attained that of achieving degression of aids, an aim to be achieved in the light of coal prices on international markets. In this connection, the economic realities - namely the structural unprofitability of the Community coal industry - in the light of which the decision was adopted must be taken into account when interpreting Article 2(1) of the decision.

As the Community institutions, the Member States and the undertakings concerned do not have a significant influence on the world market price, the Commission cannot be reproached for having attached overriding importance, in terms of a degression of aid to the coal industry, to reducing production costs, since any reduction necessarily means that the volume of aid is smaller than if the reduction had not occurred, irrespective of movements in world market prices.

( see paras 117, 119-121 )

5. Where the Court conducts a review under the first and second paragraphs of Article 33 of the ECSC Treaty, it must, as regards the assessment of complex economic facts or circumstances carried out by the Commission which supports a decision contested before it, confine itself to ascertaining whether the institution which took that decision manifestly failed to observe the provisions of the ECSC Treaty or any rule of law relating to its application, the term manifestly in Article 33 presupposing a breach of the legal provisions so serious that it appears to derive from a manifest error in the assessment, having regard to the provisions of the ECSC Treaty, of the situation in respect of which the decision was taken.

( see para. 159 )

6. By virtue of Article 3(1) of Decision No 3632/93 establishing Community rules for State aid to the coal industry, operating aid and aid for the reduction of activity are intended to cover the difference between production costs and the selling price freely agreed between the contracting parties in the light of the conditions prevailing on the world market. It follows that any matter of a financial nature which - by reducing costs or increasing revenue - causes the aid notified to exceed that difference, results in the corresponding fraction of aid being no longer covered by that basic rule and therefore incapable of authorisation, as operating aid or aid for the reduction of activity, under that decision. Accordingly, such aid not covered by the decision is, in principle, caught by the absolute prohibition laid down by Article 4(c) of the ECSC Treaty.

Compliance with the basic rule set out above is ensured by two levels of scrutiny. First, Article 9(1), (4) and (6) of Decision No 3632/93 has established a system of advance scrutiny of the proposed financial support. This system is designed to ensure compliance with the first indent of Article 3(1) of that decision, according to which the aid notified per tonne is not to exceed for each undertaking or production unit the difference between production costs and foreseeable revenue in the following coal production year. Second, Article 9(2) of the decision has established a system of scrutiny after the event of the amount of aid actually paid, since the Member States are required to send notification, by 30 September each year at the latest, of the amount of aid actually paid in the preceding coal production year and to declare any corrections made to the amounts originally notified. This system is designed to ensure compliance with the second indent of Article 3(1) of the decision, according to which the aid actually paid is to be subject to annual correction, based on the actual costs and revenue, at the latest by the end of the coal production year following the year for which the aid was granted.

When the Commission conducts its advance scrutiny designed to ensure compliance with the basic rule referred to above, it must, if it is not to exceed its wide power of assessment, take into consideration any matter brought to its attention which in all probability has a direct influence on production costs and/or revenue within the meaning of the first indent of Article 3(1) of Decision No 3632/93, in so far as it results in manifestly improper State aid of a precise and not insignificant amount. While the Commission is also obliged to check any reliable information brought to its attention as to the possible existence of such aid, it is, on the other hand, required to consider such information within the procedural framework of Articles 8 and 9 of that decision only in so far as that consideration does not risk undermining, because of its complexity or duration, the operation of the system involving notification of annual aid falling within a multiannual plan and subsequent decisions of authorisation or refusal.

Financial support granted by the State to the coal industry outside the framework marked out by Decision No 3632/93 which has not been authorised by a Commission decision founded directly on the first paragraph of Article 95 of the ECSC Treaty, remains subject exclusively to Article 4(c) of the ECSC Treaty. The Commission, which, in accordance with Article 8 and the first paragraph of Article 14 of the ECSC Treaty, has the duty of ensuring that the objectives of the Treaty are attained and of carrying out the tasks assigned to it, takes the measures that are necessary in relation to such aid paid in breach of that provision. It may, in particular, adopt a decision under Article 88 of the ECSC Treaty recording a failure by a Member State to fulfil its obligations, and any failure by the Commission to adopt such a decision may be challenged by an action for failure to act under Article 35 of that treaty.

In addition, in the absence of more specific rules, the absolute prohibition in Article 4(c) of the ECSC Treaty applies alone. That provision is, moreover, capable of having direct effect. It follows that, as long as the Commission has not adopted a decision on such support prohibited by Article 4(c), individuals who consider themselves prejudiced by the support may bring proceedings before the national courts. The possibility for individuals to assert the rights which they derive from Community law before the national courts, which have the power to grant interim relief and, where appropriate, to make a reference for a preliminary ruling, constitutes the very essence of the Community system of judicial protection.

( see paras 160-163, 167 )

7. The first paragraph of Article 15 of the ECSC Treaty provides that decisions of the Commission are to state the reasons on which they are based. The statement of reasons must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure so as to defend their rights and to enable the Community judicature to carry out its review. It is not necessary for the reasoning to go into all the relevant facts and points of law, however, inasmuch as it must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question.

Also, in accordance with case-law developed in the context of the EC Treaty, where the Commission finds that State aid alleged by a complainant does not exist or is compatible, it must explain to the complainant, in the statement of reasons for the decision in question, the reasons why the matters put forward by it have not been sufficient for its complaint to be allowed, but the Commission need respond only to contentions which are fundamental to an assessment of the aid plan in issue and is not obliged to define its position on matters which are manifestly irrelevant or meaningless or plainly of secondary importance.

It is true that neither the ECSC Treaty nor Decision No 3632/93 establishing Community rules for State aid to the coal industry contains a provision comparable to Article 93(2) of the EC Treaty (now Article 88(2) EC), in relation to which the foregoing case-law has been developed and which obliges the Commission to give notice to the parties concerned to submit their comments. However, that case-law has established the right of the complainant to be sent an express reply to its complaint, not as an interested party, but as a person directly and individually concerned by the decision in which its complaint has not been upheld. Where the applicant is concerned within the meaning of the second paragraph of Article 33 of the ECSC Treaty, that case-law in principle applies by analogy.

Finally, an absence of reasons or an inadequacy in the reasons stated goes to an issue of infringement of essential procedural requirements and, involving a matter of public policy, must be raised by the Community judicature of its own motion.

( see paras 196-199 )

Parties

In Joined Cases T-12/99 and T-63/99,

UK Coal plc, formerly RJB Mining plc, whose registered office is in Harworth (United Kingdom), represented by M. Brealey, Barrister, and J. Lawrence, Solicitor, with an address for service in Luxembourg,

applicant,

v

Commission of the European Communities, represented by V. Kreuschitz and K.-D. Borchardt, acting as Agents, and N. Khan, Barrister, with an address for service in Luxembourg,

defendant,

supported by

Federal Republic of Germany, represented by W.-D. Plessing and T. Jürgensen, acting as Agents, and M. Maier, lawyer,

and by

RAG Aktiengesellschaft, established in Essen (Germany), represented by M. Hansen and S. Völcker, lawyers, with an address for service in Luxembourg,

interveners,

APPLICATIONS for annulment of Commission Decisions 1999/270/EC and 1999/299/ECSC of 2 and 22 December 1998 on German aid to the coal industry for 1998 and 1999 (OJ 1999 L 109, p. 14 and L 117, p. 44),

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (Second Chamber, Extended Composition),

composed of: A.W.H. Meij, President, K. Lenaerts, A. Potocki, M. Jaeger and J. Pirrung, Judges,

Registrar: D. Christensen, Administrator,

having regard to the written procedure and further to the hearing on 14 February 2001,

gives the following

Judgment

Grounds

Legal context

Relevant legislation

ECSC Treaty

1 The Treaty establishing the European Coal and Steel Community prohibits, in principle, State aid granted to coalmining undertakings. Article 4 provides that the following are incompatible with the common market for coal and steel and are accordingly to be prohibited within the Community, as provided in [the ECSC] Treaty: ... (c) subsidies or aids granted by States ... in any form whatsoever ....

2 By virtue of the first paragraph of Article 15 of the ECSC Treaty, all decisions of the Commission must state the reasons on which they are based.

3 The first paragraph of Article 95 of the ECSC Treaty states:

In all cases not provided for in this Treaty where it becomes apparent that a decision ... of the Commission is necessary to attain, within the common market in coal and steel and in accordance with Article 5, one of the objectives of the Community set out in Articles 2, 3 and 4, the decision may be taken ... with the unanimous assent of the Council and after the Consultative Committee has been consulted.

General Decision No 3632/93/ECSC

4 It was pursuant to the first paragraph of Article 95 of the ECSC Treaty that the Commission adopted the general Decision No 3632/93/ECSC of 28 December 1993 establishing Community rules for State aid to the coal industry (OJ 1993 L 329, p. 12, hereinafter the Code).

5 Under Article 1(1) of the Code, all aid to the coal industry ... granted by Member States ... may be considered Community aid and hence compatible with the proper functioning of the common market only if it complies with Articles 2 to 9.

6 Article 2(1) of the Code provides that aid granted to the coal industry may be considered compatible with the proper functioning of the common market provided it helps to achieve at least one of the following objectives:

- to make, in the light of coal prices on international markets, further progress towards economic viability with the aim of achieving degression of aids,

....

7 Article 3(1) of the Code states that operating aid to cover the difference between production costs and the selling price resulting from the situation on the world market may be considered compatible with the common market on certain conditions. In accordance with the first indent of Article 3(1), the aid notified per tonne is not to exceed for each undertaking or production unit the difference between production costs and foreseeable revenue in the following coal production year; under the second indent, the aid actually paid is to be subject to annual correction, based on the actual costs and revenue, at the latest by the end of the coal production year following the year for which the aid was granted.

8 The first subparagraph of Article 3(2) of the Code provides that Member States which intend to grant operating aid for the 1994 to 2002 coal production years to coal undertakings are required to submit to the Commission in advance a modernisation, rationalisation and restructuring plan [designed] to improve the economic viability of the undertakings concerned by reducing production costs. According to the second subparagraph of Article 3(2), the plan must provide for appropriate measures and efforts to generate a trend towards a reduction in production costs at 1992 prices, during the period 1994 to 2002.

9 Under Article 4 of the Code, aid for the reduction of activity, that is to say aid to cover the production costs of undertakings or production units which will be unable to attain the conditions laid down by Article 3(2), may be authorised provided that it satisfies the conditions laid down in Article 3(1) and is the subject of a closure plan.

10 Section III of the Code, entitled Notification, appraisal and authorisation procedures, contains Articles 8 and 9. Article 8 reads as follows:

1. Member States which intend to grant operating aid as referred to in Article 3(2) ... for the 1994 to 2002 coal production years shall submit to the Commission, by 31 March 1994 at the latest, a modernisation, rationalisation and restructuring plan for the industry in accordance with Article 3(2) ...

2. The Commission shall consider whether the plan or plans are in conformity with the general objectives set by Article 2(1) and with the specific objectives and criteria set by [Article] 3 ...

3. Within three months of notification of the plans, the Commission shall give its opinion on whether they are in conformity with the general and specific objectives, without prejudging the ability of the measures planned to attain these objectives. ...

4. If a Member State decides to make amendments to the plan which alter its general tendency in respect of the objectives pursued by this Decision, it must inform the Commission so that the latter may rule on the amendments in accordance with the procedures set out in this Article.

11 Article 9 of the Code provides:

1. By 30 September each year (or three months before the measures enter into force) at the latest, Member States shall send notification of all the financial support which they intend to grant to the coal industry in the following year, specifying the nature of the support with reference to the general objectives and criteria set out in Article 2 and the various forms of aid provided for in Articles 3 to 7 and its relationship to the plans submitted to the Commission in accordance with Article 8.

2. By 30 September each year at the latest, Member States shall send notification of the amount of aid actually paid in the preceding coal production year and shall declare any corrections made to the amounts originally notified.

...

4. Member States may not put into effect planned aid until it has been approved by the Commission on the basis, in particular, of the general criteria and objectives laid down in Article 2 and of the specific criteria established by Articles 3 to 7 ...

5. In the event of refusal, any payment made in anticipation of authorisation from the Commission shall be repaid in full by the undertaking that received it ...

6. In its assessment of the measures notified, the Commission shall check whether the measures proposed are in conformity with the plans submitted in accordance with Article 8 and with the objectives set out in Article 2 ....

12 According to Article 12, the Code is to expire on 23 July 2002.

The contested individual decisions

Decision relating to 1998

13 By letter of 28 October 1997, the Federal Republic of Germany notified to the Commission, pursuant to Article 9(1) of the Code, aid which it intended to grant to the coal industry for 1998. That aid included, in particular, operating aid, within the meaning of Article 3 of the Code, of DEM 5 171 000 000 and DEM 81 000 000, the latter sum relating to the scheme for maintaining an underground labour force by means of extra payments to miners (known as the Bergmannsprämie, hereinafter the bonus), and aid for the reduction of activity within the meaning of Article 4 of the Code totalling DEM 3 164 000 000. Following requests from the Commission, the German Government supplied additional information by letters of 26 March, 28 April, 27 August, 23 October and 4 November 1998.

14 By its letter of 26 March 1998, the German Government in addition gave notice, in accordance with Article 8(4) of the Code, of the new general direction of its coal policy for the period ending in 2002, amending the former German plan for modernisation, rationalisation, restructuring and reduction of activity in the German coal industry in respect of which the Commission had given a favourable opinion in Decision 94/1070/ECSC of 13 December 1994 (OJ 1994 L 385, p. 18, hereinafter the original plan).

15 Commission Decision 1999/270/ECSC of 2 December 1998 on German aid to the coal industry for 1998 (OJ 1999 L 109, p. 14, hereinafter the decision contested in Case T-12/99, the contested decision or the decision relating to 1998) authorises, in Article 1(a), (b) and (c) of its operative part, the operating aid and aid for the reduction of activity which are referred to above. In the final paragraph of Part III of the preamble to the decision, the Commission takes the view that the new plan submitted by Germany (hereinafter the amended plan) is compatible with the objectives and criteria of the Code.

Decision relating to 1999

16 By letters of 25 September, 2 December and 14 December 1998, the Federal Republic of Germany notified to the Commission aid which it intended to grant to the coal industry for 1999. That aid included, in particular, operating aid of DEM 5 141 000 000, operating aid of DEM 73 000 000 for the bonus and aid for the reduction of activity totalling DEM 3 220 000 000.

17 Commission Decision 1999/299/ECSC of 22 December 1998 on German aid to the coal industry for 1999 (OJ 1999 L 117, p. 44, hereinafter the contested decision or the decision relating to 1999) authorised the abovementioned aid on the ground, inter alia, that it was consistent with the amended plan which the Commission had approved in its decision relating to 1998 (contested in Case T-12/99).

Facts and procedure

18 The applicant is a privately-owned mining company established in the United Kingdom, which took over the principal mining operations of British Coal. Since the appearance of substitute energy sources and the increase in imports of coal from outside the Community have caused a large reduction in demand for coal in the United Kingdom - the applicant's traditional market - since 1990, the applicant has attempted to find a market for some of its surplus production, in particular in Germany.

19 By letter of 13 November 1997, Ruhrkohle AG, now RAG Aktiengesellschaft (hereinafter RAG), notified the Commission of its intention to acquire the entire share capital of Saarbergwerke AG (owned by the Federal Republic of Germany and the Saarland) and of Preussag Anthrazit GmbH (owned by Preussag AG). The transaction was to lead to the merger of the three German coal producers (hereinafter the merger) and constitute a concentration between undertakings within the meaning of Article 66(1) of the ECSC Treaty.

20 The merger forms part of an agreement, the Kohlekompromiß (settlement concerning coal), concluded on 13 March 1997 between those three companies, the Federal Republic of Germany, the Land of North-Rhine Westphalia, the Saarland and the German mining and power station workers' union. The Kohlekompromiß, which includes the merger and the promise of the grant of State aid, is designed to provide a socially acceptable framework for the adjustment of the German coal industry to a competitive environment by 2005.

21 Pursuant to Article 67(1) of the ECSC Treaty, the merger and the conditions relating thereto were notified to the Commission by the German Government on 9 March 1998. In that notification, the German Government explained that the sale of Saarbergwerke to RAG, for the token sum of DEM 1, was part of the policy for privatisation of the German coal industry.

22 By letter of 16 March 1998, the applicant submitted to the Commission its observations on the planned merger, which it clarified in a complaint of 1 May 1998.

23 By letter of 5 May 1998, the applicant lodged a formal complaint with the Commission relating to various State aid measures in favour of the German coal industry proposed for 1997, 1998 and beyond and to the alleged aid inherent in the planned merger, in particular the sale of Saarbergwerke for DEM 1 since that sale for less than the real value was liable to involve State aid. The complaint was registered by the Commission under No 98/4448.

24 The Commission authorised the merger by decision of 29 July 1998 (Case No IV/ECSC 1252 - RAG/Saarbergwerke AG/Preussag Anthrazit). It is stated in paragraph 54 of that decision, under the heading State aid, that the decision concerns only the application of Article 66 of the ECSC Treaty and does not prejudge any decision of the Commission relating to the application of other provisions of the EC Treaty or of the ECSC Treaty and of corresponding secondary law, in particular the application of provisions relating to State aid.

25 Following that decision, the applicant, by letter of 9 September 1998, again wrote to the Commission to inform it of its concerns regarding, in particular, alleged aid inherent in the merger.

26 On 29 September 1998, the applicant brought an action before the Court of First Instance for annulment of the decision by which the Commission had authorised the merger. By judgment of 31 January 2001 in Case T-156/98 RJB Mining v Commission [2001] ECR II-337, the Court annulled that decision. On 12 and 19 April 2001, the Federal Republic of Germany and RAG, who had intervened in support of the Commission in that case, brought appeals against the judgment (Cases C-157/01 P and C-169/01 P).

27 On 3 March 1999, the applicant additionally brought an action before the Court of First Instance for a declaration that the Commission had unlawfully failed to examine the alleged aid linked to the merger. By order of 25 July 2000 in Case T-64/99 RJB v Commission, not published in the ECR, the Court decided that there was no need to proceed to judgment in that case.

28 Finally, by applications lodged at the Registry of the Court of First Instance on 18 January and 3 March 1999, the applicant brought the present actions.

29 By orders of 3 September 1999, the President of the First Chamber (Extended Composition) of the Court of First Instance granted the Federal Republic of Germany and RAG leave to intervene in Case T-12/99 in support of the Commission.

30 The composition of the Chambers of the Court of First Instance was altered from the beginning of the new judicial year and the Judge-Rapporteur was assigned to the Second Chamber (Extended Composition), to which the present cases were therefore allocated.

31 By orders of 19 October 1999, the President of the Second Chamber (Extended Composition) of the Court of First Instance granted the Kingdom of Spain, the Federal Republic of Germany and RAG leave to intervene in Case T-63/99 in support of the Commission. By order of 21 January 2000, the President of the Second Chamber (Extended Composition) of the Court of First Instance took formal note of the withdrawal of the Kingdom of Spain and ordered each party to bear its own costs in relation to the latter's intervention.

32 By pleadings of 19 November 1999 in Case T-12/99 and 28 January 2000 in Case T-63/99, the interveners submitted their observations.

33 By pleadings of 24 March 2000 in Case T-12/99 and 7 April 2000 in Case T-63/99 the applicant expressed its views on those observations. The Commission waived its right to respond to the observations.

34 By order of 10 April 2000, the President of the Second Chamber (Extended Composition) of the Court of First Instance, after hearing the parties in this connection, joined the two cases for the purposes of the oral procedure and judgment, in accordance with Article 50 of the Rules of Procedure of the Court of First Instance.

35 With regard to the merger, it became apparent in the course of the present proceedings that, by letter of 4 February 2000, the Commission had initiated a formal procedure with a view to obtaining information from the German Government on aid which may have been linked to the merger.

36 In that letter, published in the Official Journal of the European Communities on 8 April 2000 in the form of a notice pursuant to Article 88 of the ECSC Treaty (OJ 2000 C 101, p. 3), the Commission recalled that the German Government had provided it with information concerning the intended privatisation of Saarbergwerke, in particular the executive summary of a report completed in January 1996, an evaluation carried out in March 1996 and a short report of 9 July 1998, all of which were drawn up by the consultancy Roland Berger and Partner GmbH, and that the March 1996 assessment had indicated that the synergies achieved by merging the coal activities of Saarbergwerke and RAG could be worth roughly DEM 25 000 000 to DEM 40 000 000 per year in the medium to long term.

37 In the letter, the Commission also observed that the information presented to it by the German Government did not specify a value for Saarbergwerke's white sector (its non-coal activities, that is to say all activities other than those related to indigenous coal). It pointed out, however, that in an action brought before the Court of First Instance on 25 January 1999 (Case T-29/99), the applicant in that case, the company VASA Energy, had included a part of the report by Roland Berger and Partner GmbH of January 1996 on a restructuring concept for Saarbergwerke; in that part, which had been presented to the German authorities but not passed on by the latter to the Commission, the value of the white sector was estimated at around DEM 1 000 000 000.

38 The Commission concluded that there was reason to believe that the privatisation of Saarbergwerke might have involved non-notified aid in favour of RAG totalling up to DEM 1 000 000 000. It therefore called on the Federal Republic of Germany to produce several documents and invited the other Member States and interested parties to send their comments on the matter.

39 Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Second Chamber, Extended Composition) decided to open the oral procedure and, by way of measures of organisation of procedure under Article 64 of the Rules of Procedure, requested the parties to reply in writing to certain questions before the date of the hearing. The parties met those requests.

Forms of order sought

40 The applicant claims that the Court should:

- annul the contested decisions;

- order the Commission to pay the costs;

- order RAG and the Federal Republic of Germany to pay the costs incurred by the applicant by reason of their intervention.

41 The Commission contends that the Court should:

- dismiss the actions;

- order the applicant to pay the costs.

42 RAG contends that the Court should:

- dismiss the actions as inadmissible or, in the alternative, as unfounded;

- order the applicant to pay the costs, including those incurred by RAG.

43 The Federal Republic of Germany requests the Court to dismiss the actions and order the applicant to bear the costs.

Admissibility of the actions

Arguments of the parties

44 RAG and the German Government contend that the actions are inadmissible, since the applicant has not established any proper interest in challenging the aid approved by the contested decisions. The applicant is not an actual, or even potential, competitor of RAG. Its costs for delivering coal to destinations outside the United Kingdom consistently entail a final cost vastly exceeding market prices, since producers outside the Community have much lower production costs than the applicant. Consequently, the applicant has no realistic prospect of exporting coal from the United Kingdom, whether to Germany or elsewhere.

45 The interveners add that the applicant's difficulties in finding buyers for its coal are unrelated to any aid to the German industry. The ending of German aid and the subsequent reduction of the German supply of coal would not enable the applicant to attain the objective sought, namely the sale of its coal in Germany, given its lack of competitiveness.

46 The Commission states that it is for the Court to assess whether the actions are admissible. It points out that, even if the German subsidy system were abolished, the applicant would still face another insuperable barrier in the form of a glut of coal available at world market prices. Referring to figures provided by Eurostat, the Commission also notes that the German market is far from closed to foreign coal at competitive prices. Following an 84% increase in its imports between 1993 and 1998, Germany has become the Community's major coal importer.

47 The applicant counters that there can be no serious doubt that it is concerned by the contested decisions within the meaning of the second paragraph of Article 33 of the ECSC Treaty. It is regularly engaged in the production of coal and its sale to industrial consumers. Thus, it is a competitor of the recipients of the aid at issue, particularly as the grant and approval of that aid affects its ability to sell coal in Germany and in its traditional market, the United Kingdom.

48 According to the applicant, it is not a requirement of the second paragraph of Article 33 of the ECSC Treaty that, in order for an undertaking to be concerned by a decision authorising aid, it must be in direct and actual competition with the undertaking receiving the aid. While it is true that, in Joined Cases 24/58 and 34/58 Chambre syndicale de la sidérurgie and Others v High Authority [1960] ECR 281, at p. 292, and in Case 30/59 Steenkolenmijnen v High Authority [1961] ECR 1, at p. 16, the Court of Justice in fact found such competition, it simply confined its analysis to the facts in issue in those two cases.

49 The applicant acknowledges that the recent drop in world market prices, particularly since 1998, makes it more difficult for it to compete on the international market, while pointing out that it continues progressively to reduce its costs - and significantly so. However, in October 2000 the price of coal had increased by some 48% compared with the low which it reached in 1999. In addition, the applicant's coal is produced from various sources with different production costs. Thus, part of its coal production is actually competitive in the international market.

50 The applicant adds that, by submitting complaints to the Commission on 1 and 5 May 1998, it participated in the administrative procedure which culminated in authorisation of the disputed aid. Furthermore, the applicant is expressly referred to in the final paragraph of Part I of the preamble to the decision relating to 1998.

Findings of the Court

51 The fact that the interveners alone have contested the admissibility of the actions, while the defendant has left the matter for the Court to decide, does not prevent the Court from considering of its own motion, pursuant to Article 113 of the Rules of Procedure, the question of admissibility raised (Case C-313/90 CIRFS and Others v Commission [1993] ECR I-1125, paragraphs 19 to 23, and Case T-11/95 BP Chemicals v Commission [1998] ECR II-3235, paragraphs 86 and 87).

52 Under the second paragraph of Article 33 of the ECSC Treaty, undertakings may institute proceedings for the annulment of decisions concerning them which are individual in character. As the Court of Justice has acknowledged, in particular in Chambre syndicale de la sidérurgie, cited above, p. 292, in Joined Cases 172/83 and 226/83 Hoogovens Groep v Commission [1985] ECR 2831, paragraphs 14 and 15, and in Case 236/86 Dillinger Hüttenwerke v Commission [1988] ECR 3761, paragraph 8, an undertaking is concerned, for the purposes of that provision, by a Commission decision which permits benefits to be granted to another undertaking where they are in competition with one another.

53 In deciding when an undertaking is concerned because it is in competition with another undertaking, it should be noted, first, that the conditions governing admissibility laid down by the second paragraph of Article 33 of the ECSC Treaty are less strict than those for an action for annulment brought under the second paragraph of Article 173 of the EC Treaty (now, after amendment, the second paragraph of Article 230 EC). Also, it is well-established case-law that the provisions of the ECSC Treaty concerning the right of individuals to bring an action must be interpreted widely in order to safeguard their legal protection (judgment in Case 66/76 CFDT v Council [1977] ECR 305, paragraph 8, and order in Case C-399/95 R Germany v Commission [1996] ECR I-2441, paragraph 45).

54 Second, with regard specifically to the State aid rules in the ECSC Treaty, it is settled case-law that Article 4(c) of the Treaty lays down such a general, strict and unconditional prohibition on aid that it is unnecessary to examine whether, in point of fact, there is interference or potential interference with the conditions of competition in order to be able to declare aid incompatible with the common market. That prohibition does not presuppose that the aid is such as to distort or threaten to distort competition by favouring certain undertakings or the production of certain goods (order in Case C-111/99 P Lech-Stahlwerke v Commission [2001] ECR I-727, paragraph 41, and judgment in Joined Cases T-129/95, T-2/96 and T-97/96 Neue Maxhütte Stahlwerke and Lech-Stahlwerke v Commission [1999] ECR II-17, paragraphs 98 and 99).

55 Moreover, Article 4(c) of the ECSC Treaty does not contain a de minimis rule under which aid entailing only a slight distortion of competition would escape from the prohibition laid down (Lech-Stahlwerke, cited above, paragraph 41, and Neue Maxhütte Stahlwerke and Lech-Stahlwerke, cited above, paragraph 147). Nor does the Code, on whose basis the decisions contested in the present case were adopted in the field governed by the ECSC Treaty, contain a de minimis rule, such as that laid down for the regime governing State aid falling within the EC Treaty in Commission notice 96/C 68/06 (OJ 1996 C 68, p. 9).

56 It follows that the admissibility of an action brought under the second paragraph of Article 33 of the ECSC Treaty by a Community coalmining undertaking, complaining of an infringement of Article 4(c) of that Treaty and directed against a decision by the Commission authorising the grant of State aid to another Community coalmining undertaking, cannot depend on actual or potential competition being proved. Having regard to the specific features of the ECSC regime which are mentioned above, it is sufficient to establish that there is a body of evidence supporting the conclusion that competition between the undertakings in question is not an unrealistic possibility.

57 The Commission has acknowledged that there is a degree of competition between the German and United Kingdom coal industries. In the contested decisions, it required Germany to take care to ensure that the aid at issue does not distort competition or produce discrimination between coal producers ... in the Community (second paragraph of Part VIII of the preamble to the decision relating to 1998 and second paragraph of Part VI of the preamble to the decision relating to 1999).

58 Furthermore, Commission Decision 1999/184/ECSC of 29 July 1998 on aid granted by Germany to the companies Sophia Jacoba GmbH and Preussag Anthrazit GmbH for 1996 and 1997 (OJ 1999 L 60, p. 74) shows that such intra-Community trade may actually take place, since two German coalmining undertakings used State aid to reduce their prices and sell coal on the United Kingdom market. While the Commission and the interveners stated, in reply to a question from the Court, that that decision relates to a particular type of coal, sized anthracite, which the applicant has never produced, and that, at the material time, RAG had decided to cease all exports of German coal to the United Kingdom, it need merely be observed that that is a question of commercial choices freely made on the basis of short-term economic and financial interests which are liable to be changed when the underlying data also change. There is thus nothing to prevent intra-Community trade concerning the applicant from recurring.

59 Finally, it is not in dispute that, in the present case, the applicant lodged a complaint with the Commission on 5 May 1998 relating to various State aid measures in favour of the German coal industry proposed for 1997, 1998 and beyond, that is to say for the period covered by the contested decisions, and in particular to the alleged aid inherent in the merger. The applicant thus played an active part in the administrative procedure before the Commission with regard to both the contested decisions. However, neither decision upheld the claims formulated by the applicant in that complaint.

60 It follows from the considerations set out above that the applicant is concerned, within the meaning of the second paragraph of Article 33 of the ECSC Treaty, by the contested decisions.

61 The actions must therefore be declared admissible.

Admissibility of the claims allegedly directed against approval of the amended plan

62 According to RAG, it is not open to the applicant to challenge the contested decisions in so far as they approve the amendment of the original plan. Under the second paragraph of Article 33 of the ECSC Treaty, an action for annulment can be brought only against decisions or recommendations, while opinions given by the Commission under Article 8(3) and (4) of the Code on plans submitted to it by Member States have no binding force but are measures of purely preparatory character with regard to aid in the proper sense. Purely preparatory measures cannot be challenged by an action for annulment. Finally, the applicant has no legitimate interest in challenging the amendment of the plan. The amended plan provides for deeper cuts in overall production than the original plan. Therefore, the amended plan could only improve whatever prospects the applicant has to sell coal in Germany.

63 In that regard, suffice it to state that the claims for annulment made by the applicant are directed at the contested decisions and not at the Commission's positive opinion on the amended plan, which appears only in the preamble to the decision relating to 1998. The plea of inadmissibility raised by RAG must therefore be rejected.

64 In so far as RAG disputes the applicant's legitimate interest to put forward a submission challenging that positive opinion, on the ground that the amended plan is in actual fact favourable to the applicant, the Court observes that, by virtue of Article 9(6) of the Code, the aid contested in the present actions must be in conformity with the plan upon which the Commission has given a positive opinion satisfying the criteria of Article 8 of the Code. Accordingly, the applicant is entitled to put forward, in the form of a plea of illegality (Case 9/56 Meroni v High Authority [1958] ECR 133, at pp. 139, 140), a submission which seeks to cast doubt on the approval of the amended plan.

Substance

65 In support of its actions, the applicant puts forward a series of pleas in law, of which several overlap in the two cases and some have already been put forward in Case T-110/98 between the same parties, disposed of by the interlocutory judgment of the Court of First Instance of 9 September 1999 in Case T-110/98 RJB Mining v Commission [1999] ECR II-2585 (hereinafter the interlocutory judgment) and the subsequent order of the Court of 25 July 2000 in Case T-110/98 RJB Mining v Commission [2000] ECR II-2971 (hereinafter the order of 25 July 2000). It appears appropriate to consider those latter pleas first.

The plea alleging that the Commission lacked competence to approve, in the decision relating to 1998, aid already paid

66 The applicant points out that the aid approved by the Commission on 2 December 1998 had already been granted to the recipient undertakings and maintains that the Code does not allow aid already granted to be authorised ex post facto. The system for approval of aid to the Community coal industry is a system of prior authorisation. Accordingly, the Commission lacked competence to adopt the contested decision.

67 The Court notes that a similar plea, put forward with regard to the aid in favour of the German coal industry for 1997 approved by the Commission, was rejected by the interlocutory judgment (paragraphs 65 to 83). For the reasons set out in that judgment, the present pleas should also be rejected.

68 No provision of the Code prohibits the Commission from examining the compatibility of planned aid with the common market solely because the Member State which notified that aid has already paid it without waiting for prior authorisation. On the contrary, in so far as Article 9(5) of the Code makes the repayment of aid paid in anticipation expressly subject to the condition that the Commission must have refused authorisation, it necessarily implies that the Commission has the power to grant authorisation in such a situation. Finally, at a more general level, the substantive and procedural provisions in the Code and the system established by Articles 92 and 93 of the EC Treaty (now, after amendment, Articles 87 and 88 EC) do not differ on points of principle, so that it would not be justified to interpret the provisions of the Code, in relation to Article 4(c) of the ECSC Treaty, more restrictively than paragraphs 2 and 3 of Article 92 of the EC Treaty in relation to paragraph 1 thereof, and the Court of Justice has consistently held that the Commission is obliged, under Article 92 of the EC Treaty, to make an ex post facto assessment of aid already paid (see the case-law cited in paragraph 77 of the interlocutory judgment).

69 Consequently, the Commission had the power in the present case to approve ex post facto aid paid before it had been authorised.

70 In the same context, the applicant has also contended, for the first time at the hearing, that the aid planned for 1998 was not notified by the German Government to the Commission until 28 October 1997 whereas, under Article 9(1) of the Code, that notification should have taken place by 30 September 1997 at the latest. Referring to the judgment in Case C-210/98 P Salzgitter v Commission [2000] ECR I-5843, at paragraphs 49 to 56, which concerns Decision No 3855/91/ECSC of 27 November 1991 establishing Community rules for aid to the steel industry (OJ 1991 L 362, p. 57, hereinafter the Fifth Steel Code), it has submitted that that time-limit for notification operated as a time-bar such as to preclude the approval by the Commission of aid proposals notified subsequent to it.

71 As was stated in Salzgitter, cited above, at paragraph 56, the Community judicature must raise of its own motion any lack of Commission competence. Accordingly, the applicant cannot be barred from raising this new complaint.

72 However, the judgment in Salzgitter concerned regional investment aid, whose approval under the Fifth Steel Code is entirely by way of exception and which is to be phased out quickly within three years, while important investment aid projects are subject to prior consultation with other Member States (Opinion of Advocate General Jacobs in Salzgitter, paragraphs 86, 87 and 88). Specific features of that kind requiring the time-limit for notification to be interpreted strictly under the Fifth Steel Code are absent from the coal code.

73 Furthermore, in Salzgitter the planned aid had been notified approximately five months after the final date set by the Fifth Steel Code and approximately five weeks before the expiry of the period within which it could be authorised; thereafter the absolute prohibition on State aid laid down by Article 4(c) of the ECSC Treaty again applied. In the present case, by contrast, the time-limit for notification was exceeded by only four weeks and the subsequent period during which aid may be authorised extends to 2002.

74 It should be noted that the Commission's power to authorise ex post facto aid already paid was justified, in the interlocutory judgment, by the wording, the general logic and the specific nature of the Code. Thus, it was held at paragraph 80 of that judgment that the coal sector has been marked, since 1965, by the need of the Community's industry to obtain constant financial support and by the structural uncompetitiveness of that industry, whereas the State aid regime in the steel sector - a sector particularly sensitive to interference in its competitive operation - is stricter, for which reason the case-law concerning the Fifth Steel Code cannot simply be transposed to the coal sector.

75 The Fifth Steel Code established a regime for the authorisation of State aid which is more restrictive than that established by the code governing the authorisation of State aid in the coal sector. In contrast to the former, the latter is marked by the repetitive, annual nature of the State aid; the aid must, furthermore, fall within multiannual plans covering the period from 1994 to 2002.

76 In this light, having regard to the structural uncompetitiveness of the German coal industry and to the German plan covering the period to 2002, it was objectively foreseeable that the German Government would, in 1997, notify State aid for 1998 of roughly the same amount as the previous year. Such a situation, inherent in the coal sector, is comparable to that declared lawful by the Court of Justice in Case 214/83 Germany v Commission [1985] ECR 3053, paragraphs 50 and 51, relating to programmes of aid to the steel industry the precise amount of which to be authorised had been notified out of time.

77 In those circumstances, the time-limit for notification prescribed by Article 9(1) of the Code - which, moreover, does not merely set the time-limit at 30 September of each year but allows the more flexible alternative of sending notification of financial support three months before the measures enter into force - must be regarded as being a purely procedural time-limit of an indicative nature, the exceeding of which cannot as such deny the Commission the power to authorise planned aid notified late.

78 Consequently, the complaint founded on the judgment in Salzgitter must be rejected.

The pleas alleging misapplication by the Commission of the criterion of economic viability of the undertaking receiving the aid and breach of the obligation to state reasons in this regard

79 The applicant alleges that the Commission failed to comply with Article 2(1) of the Code in conjunction with Article 3 thereof, requiring it to assess whether undertakings in receipt of operating aid have a reasonable prospect of becoming economically viable. Notwithstanding that obligation, the Commission failed to consider whether the amended plan requires the relevant undertakings to be capable of becoming economically viable within the foreseeable future. In the applicant's submission, none of those undertakings can ever become viable. Consequently, the Commission manifestly erred in its assessment in that regard. Finally, the Commission failed to comply with its obligation to state reasons, since the contested decisions are silent on the question.

80 The Court notes that similar pleas, put forward with regard to the aid to the German coal industry for 1997 approved by the Commission, have already been rejected by the interlocutory order (paragraphs 97 to 116) and by the order of 25 July 2000 (paragraph 45). For the reasons set out in that judgment and that order, the corresponding arguments advanced here must likewise be rejected.

81 No provision in the Code states expressly that operating aid must be strictly reserved for undertakings with reasonable chances of achieving economic viability in the long term, in the sense that they must be capable of meeting competition on the world market on their own merits. The relevant provisions of the Code do not require that the undertaking in receipt of operating aid achieve viability by the end of a fixed period. They require only that economic viability improve, the reason for that open-ended formulation being the structural uncompetitiveness faced by the Community coal industry because most of its undertakings remain uncompetitive in relation to imports from non-member countries. It follows that improvement in the economic viability of a given undertaking necessarily means no more than a reduction in the level of its non-profitability and its non-competitiveness.

82 Finally, given that the plea alleging infringement of Articles 2(1) and 3 of the Code, founded on the lack of prospects of viability for the undertakings in receipt of the aid at issue, must be rejected, the Commission was not required to include in the contested decisions specific reasoning concerning the prospects of a return to financial stability for the undertakings in receipt of the aid. The plea alleging breach of the obligation to state reasons must therefore also be rejected.

The pleas alleging misapplication by the Commission of the criterion of a reduction in production costs in the decision relating to 1999 and breach of the obligation to state reasons in this regard

Arguments of the applicant

83 In the reply lodged in Case T-63/99, the applicant contends that, in the light of the interlocutory judgment, it is apparent that the Commission erred in law, so that the decision relating to 1999 must be annulled. First, the Commission approved the operating aid solely on the basis that there had been a reduction in production costs. However, the test of a simple reduction in production costs was rejected in the interlocutory judgment (paragraph 108). Second, the Commission failed in particular to consider the significance of any reduction in production costs. It also referred to the average production costs for the mining industry as a whole, without examining specifically the position of each undertaking or mine, as required by the interlocutory judgment (paragraph 111). Furthermore, it failed to assess whether the test set out in paragraph 107 of the interlocutory judgment was satisfied, namely whether the recipient undertakings were effecting reductions in production costs which were commensurately more sustained when the undertakings had not effected such reductions previously, and it appears that it did not check the figures put forward by Germany. Finally, the Commission took account of an irrelevant consideration, namely the alleged need to mitigate the social and regional consequences of the restructuring of the German coal industry. The Court confirmed in the interlocutory judgment (paragraph 109) that operating aid could not be justified on that basis.

84 In any event, the historic reduction in production costs noted by the Commission (8.2% in real terms, at 1992 prices, over a four-year period, that is to say 2.05% per year) was not, on any view, significant. It is not clear from the decision relating to 1999 how that figure of 8.2% is derived and it is not explained precisely how the figures relating to the average cost of a tonne of coal of DEM 264 and DEM 268, put forward by the Commission in support of the abovementioned rate of reduction, were calculated, since the Commission gave no inflation figures. In all events, even a reduction of DEM 18 over four years - assuming that amount to be correct - represents a mere DEM 4.5 per year. With German domestic coal costing DEM 246 and world prices of around DEM 60 in 1999, it would take at least 40 years for the German coal industry to become competitive, by which time the mines will be exhausted. Such a reduction cannot therefore be regarded as more than symbolic within the meaning of the interlocutory judgment (paragraph 106).

85 The applicant adds that, in the light of the criteria established by the interlocutory judgment, the Commission should have indicated in the decision relating to 1999 the reasons why it appeared that a significant reduction in production costs had been and would continue to be achieved in each undertaking concerned. However, the Commission merely concluded that there had been a reduction in production costs of 2.05% per year at constant 1992 prices and it used that conclusion alone to justify its approval of the operating aid in question (paragraph 4 of Part II of the preamble to the decision relating to 1999). Furthermore, the Commission took the average production costs of the undertakings in question, without indicating how each mine taken individually had significantly reduced its production costs. It would be entirely impermissible for the Commission to authorise aid to ten mines where only one of them achieves a significant costs reduction and the other nine do not reduce their costs at all, with the result that the mean average may show a reduction. In addition, the Commission should have indicated, first, the basis for the inflation-related adjustments in production costs and, second, the level of inflation taken into account.

Findings of the Court

86 By submitting, in its reply, that the Commission misapplied the test of a reduction in production costs in the decision relating to 1999, the applicant acts as it did in Case T-110/98 where it put forward for the first time in its pleading of 1 March 2000 arguments which had not been relied on either directly or by implication in the application. Thus, those arguments, supposed to expand on paragraph 4.2.14 of the application in Case T-63/99 - which is indeed similar to paragraph 4.3.24 of the application in Case T-12/99 and is drafted in essentially the same terms as paragraph 4.5.7 of the application lodged in Case T-110/98 - and put forward in the reply, are to be characterised as new pleas in law within the meaning of the first subparagraph of Article 48(2) of the Rules of Procedure for the reasons already set out in paragraphs 23 to 40 of the order of 25 July 2000 in Case T-110/98.

87 On reading the application in Case T-63/99, in particular paragraphs 3.2.17 to 3.2.19, 4.1.1(b) and 4.2.14 to 4.2.16, it becomes apparent that the only argument displaying the requisite clarity and precision which is raised in support of the plea put forward in those paragraphs is that relating to the absence of prospects of viability for the undertakings in receipt of the aid at issue. That plea has been rejected as unfounded (see paragraphs 80 and 81 above).

88 The sentence at paragraph 4.2.14 of the application according to which a mere reduction in production costs is not sufficient to justify the authorisation of operating aid cannot be interpreted, in the light of its context, as constituting an argument which is distinct and separate from that relating to the lack of a prospect of viability. The criticism levelled in that sentence at the test of a reduction in production costs serves merely to illustrate the allegedly essential nature of an assessment of the recipient undertaking's chance of achieving viability. The content of paragraph 4.2.14 of the application does not therefore constitute an argument which is separate from that rejected in paragraphs 80 and 81 above.

89 Consequently, the arguments raised by the applicant in its reply (see paragraphs 84 and 85 above) constitute pleas which were not relied on either directly or by implication in the application, nor are they closely connected with the plea based on the lack of prospects of viability for the undertakings in receipt of the aid at issue. They cannot therefore be regarded as amplifying that plea. They are thus pleas which are to be characterised as new pleas in law within the meaning of the first subparagraph of Article 48(2) of the Rules of Procedure and which must be dismissed as inadmissible. There would have been nothing to prevent the applicant from raising them in its application. Accordingly, it cannot be allowed to put them forward for the first time in its reply.

90 With regard to the plea alleging breach of the duty to state reasons, it is again appropriate to recall the order of 25 July 2000, whose reasoning set out at paragraphs 44 to 51 also covers the present circumstances.

91 While it is true that the applicant cannot be barred from criticising an inadequate statement of reasons for the first time in its reply, the arguments raised in that context in fact merely repeat, in the context of the adequacy of the statement of reasons, the arguments put forward in support of the substantive pleas dismissed above as inadmissible. The arguments in question do not therefore relate to the issue whether the contested decision contains an adequate statement of reasons but to the issue whether that statement is accurate.

92 It should be added that the Commission provided a series of indications in the contested decision (Part II of the preamble) which would have enabled the applicant to contest, at the appropriate time, the legality of that decision on the points raised for the first time in the reply. Consequently, the plea alleging breach of the obligation to state reasons cannot be upheld either.

The pleas alleging mischaracterisation of the bonus scheme as operating aid and breach of the obligation to state reasons in this regard

Arguments of the parties

93 Noting that the bonus is intended to provide an incentive for qualified staff to work underground and that the Commission approved aid of that kind under Article 3 of the Code as operating aid, the applicant points out that the contested decisions expressly state that the bonus is not part of the production costs of the coalmining undertakings. Thus, the bonus is apparently funded in its entirety by the German State with no cost at all to the coalmining undertakings, circumstances which should increase the production of those undertakings. There is no evidence that an undertaking's costs would increase if Germany did not pay the bonus.

94 According to the applicant, the criterion applied by the Commission is wrong and makes a nonsense of the aid regime. The objective of operating aid is to reduce production costs in absolute terms and not to increase production in an oversupplied market. A direct hand-out cannot lead to an improvement in the undertaking's economic viability, nor can it reduce the real production costs. To accept the Commission's approach would mean that any form of cash payment could be characterised as operating aid.

95 The applicant adds that the Commission, in its assessment of the bonus, also relies on the second indent of Article 2(1) of the Code, which is concerned with minimising the social and regional impact of restructuring. However, that indent refers to the social and regional problems created by total or partial reductions in the activity of production units. Therefore, the Commission cannot rely on it as a basis for approving a measure which is aimed at increasing production.

96 In so far as the Commission relies on Steenkolenmijnen v High Authority, cited in paragraph 48 above, at p. 27, the applicant states that that judgment merely describes the effect of the bonus, without addressing the question whether a bonus of that kind may be approved under the Code. Furthermore, the judgment is concerned with a situation back in 1959, at which time miners would have sought more lucrative work elsewhere if the bonus had not been paid to them. The present situation is totally different.

97 In the reply lodged by it in Case T-63/99, the applicant submits that, even if the bonus were a payment in respect of a production cost of the relevant undertakings, the Commission has not applied Article 3 of the Code properly. In particular, the Commission does not examine whether the reduction in production costs resulting from its payment would be significant, nor its impact on the undertakings individually. The Commission merely states, in both contested decisions, that it helps to improve slightly the insufficient competitiveness of the undertakings concerned. There is no suggestion that it may produce a significant reduction in production costs.

98 Finally, the applicant alleges that the Commission failed to explain, in the statements of reasons for the contested decisions, how the bonus, described as not part of the production costs of the coalmining undertakings, meets the objective of Article 3(2) of the Code of reducing production costs.

99 The Commission claims that the quotation from the contested decisions stating that the bonus is not part of the production costs is taken out of context. As it is paid by the State as aid to underground mineworkers in the form of a tax deduction, the resulting higher net wage is not part of the wage costs, and thus the production costs, of the mining undertakings. However, if those undertakings were to increase wages to cover the amounts of the bonus currently paid as State aid, that expenditure would increase their production costs. They would have to pay those increased wages, as otherwise they would not be able to maintain the qualified workforce necessary in order for mines to operate as efficiently as possible.

100 In support of its argument, the Commission refers to Steenkolenmijnen v High Authority, cited above, where the Court of Justice held that the bonus relieved the undertakings of costs which they would otherwise inevitably have incurred.

101 RAG states that Article 3 of the Code is a valid basis for the bonus, which is approved separately from general operating aid only because it is paid in a different form, namely directly to miners through a tax reduction, rather than to the undertakings.

Findings of the Court

102 First of all, according to the details which the German Government has provided at the Court's request concerning the relevant legislation, the bonus, introduced in 1956 to improve miners' pay, is not to be regarded either as taxable income or as remuneration for the purpose of social security. It is paid together with wages; the employer deducts the amount of bonus payable from the sum which he withholds from his employees in respect of income tax and pays only the resulting reduced amount of income tax to the tax authorities. The bonus is therefore paid by the employer, financed by income tax revenue which must normally be paid over by him: if the total amount of the bonuses exceeds the revenue to be paid over, the tax authorities pay the difference directly to the employer.

103 Even though the bonus is not borne directly by the coalmining undertakings concerned and cannot, on that basis, be characterised as a production cost, in the strict sense, borne by them, it relates objectively to an element of the production costs, in the broad sense, of the undertakings concerned. The economic result obtained by its method of grant in fact corresponds to the result which would be achieved if the undertakings first paid their workers the corresponding sum and were then refunded that sum by means of operating aid in the strict sense, in conformity with the principle governing operating aid in the field under consideration, namely that of covering the difference between production costs and the selling price on the world market.

104 It follows that the bonus mechanism does not constitute an abuse of the operating aid regime established by the Code. Accordingly, the Commission cannot be considered to have manifestly erred in its assessment by taking the view that the mechanism corresponded in reality to the grant of operating aid.

105 Nor can the Commission be considered to have erred in its assessment by invoking, in the context of the bonus, the second indent of Article 2(1) of the Code. Since the bonus was not authorised solely on the basis of the regard had to social and regional problems, there was nothing to prevent the Commission from mentioning, among other considerations founded on the operating aid regime in the strict sense, the social and regional issue which it invoked.

106 In so far as the applicant further submits that the bonus as such does not contribute to a reduction in production costs, it must be stated that, as the Commission has correctly argued, while the eligibility of an undertaking to receive operating aid depends on a reduction in its production costs, it does not, however, follow that every component of that aid, such as for example the bonus, must contribute to that objective. Reducing production costs is a condition for receiving aid and not the aid's purpose.

107 The applicant pleads, finally, that there is no significant reduction in production costs: that argument, based on the interlocutory judgment and put forward for the first time in the reply, must be dismissed as inadmissible under Article 48(2) of the Rules of Procedure (see paragraphs 87, 88 and 89 above).

108 So far as concerns the plea alleging an inadequate statement of reasons, suffice it to state that each of the contested decisions contains six paragraphs setting out the amount of the bonus and explaining its operation and effects. Consequently, the statements of reasons for the contested decisions cannot be considered insufficient in that regard.

The pleas alleging failure by the Commission to assess the degression of aid and breach of the obligation to state reasons in this regard

Arguments of the parties

109 In Case T-63/99, the applicant contends that the Commission manifestly erred in failing to consider whether the reduction in production costs of the undertakings in receipt of the aid is likely to allow a degression of aid, as required by Article 2(1) of the Code. Article 9 of the Code, in conjunction with Article 2(1), requires the Commission to ensure that aid granted to each undertaking is decreasing year on year or to conclude, at least, that the continued payment of aid is likely to lead to such a degression. The degression of aid cannot be assessed by merely analysing whether production costs have decreased. As operating aid is intended to cover the difference between production costs and the price of coal on international markets, an annual reduction in production costs can result in increasing, and not decreasing, aid payments, at a time when international coal prices are falling, as is currently the case.

110 In the decision relating to 1999 (fourth paragraph of Part II of the preamble), the Commission cites information supplied by Germany according to which the average costs of the mines receiving operating aid should in real terms be 8.2% lower in 1999 than in 1995 at 1992 prices. By way of comparison, the import prices of coal entering Germany decreased by 38.9% over the period from 1995 to the third quarter of 1998. In that context, a minimal decrease of 2% per year in constant prices and about 1% per year in current prices has no impact whatsoever on the competitiveness of the Community coal industry and should therefore be disregarded. Any such reduction would not enable a real degression of aid to be achieved.

111 The applicant states that any decrease, in recent years, in operating aid paid to the German industry is irrelevant. Any proper assessment of a reduction in operating aid must involve consideration of the reduction in terms of costs per tonne of coal produced and whether that is leading to a degression of aid. The figures relating to a degression of aid cannot be manipulated by having regard to total aid figures which ignore the downward trend in the quantities of coal produced.

112 In its reply, the applicant refers to the interlocutory judgment. As is apparent from paragraph 111 thereof, the Commission must assess any significant reduction in production costs independently of price movements. It must also determine, on the basis of an assessment of the relationship between the reduction in production costs and world prices, whether that significant reduction is likely to achieve a degression of aid. The degression must occur in terms of current prices and not in relation to 1992 prices. That being so, the actual costs of production of German coal must be analysed in the light of the actual price of coal on the world markets in order to assess the degression of aid.

113 The applicant adds that the Code does not in any way allow degression of aid to be constituted by an increase in aid if world market prices fall. If they fall, particularly significant reductions in production costs are required in order that those reductions might result in a degression of aid. The contrary conclusion would provide the German Government with the opportunity of increasing aid where the competitiveness of the undertakings concerned is decreasing by reference to the world market.

114 Finally, the applicant submits that it was incumbent on the Commission to set out, in the reasoning for the decision relating to 1999, its conclusions concerning the achievement of a degression of aid following an assessment of the reduction in production costs in relation to world market prices. The Commission does not in fact even address the issue of a degression of aid. The contested decision contains no attempt at all to analyse the reductions in production costs in relation to movements in the price of coal on world markets, nor any conclusion that the amount of aid granted is likely to comply with the condition relating to the degression of aid.

115 According to the Commission, there is no need to achieve a real degression of aid if world coal prices are falling. The whole system of the Code is built upon the degression of costs as a means of reducing State aid whatever the short-term trends in import prices. Since the Code recognises the uncompetitiveness of Community coal mines in the world market, there is nothing to support the assertion that it was intended under the Code that cost reductions should be regarded as satisfactory only if they matched the fluctuations of world market prices.

116 The Commission maintains that the interlocutory judgment is not to be interpreted as making the authorisation of operating aid conditional upon cost reductions outstripping any fall in world market prices. The judgment recognises the structural uncompetitiveness of the Community coal industry vis-à-vis world markets and the difficulty of setting a competitiveness target (paragraphs 101 and 103). Therefore, the phrase in the light of coal prices on international markets in Article 2(1) of the Code is to be construed as recognition of the fact that any progress towards long-term viability through cost reductions is dependent on movements on world markets and that, despite the reductions, the aim of degression of aid may not be achieved, due to a greater fall in world market prices.

Findings of the Court

117 It should be remembered first of all that, as provided in Article 3(1) of the Code, operating aid is intended solely to cover the difference between production costs and the selling price on the world market. By virtue of Article 3(2), that aid may be authorised only if there is at least a trend towards a reduction in the production costs of the undertakings receiving it. In that context, the first indent of Article 2(1) sets as one of the ... objectives to be attained that of achieving degression of aids, an aim to be achieved in the light of coal prices on international markets.

118 It is in the light of those provisions of the Code that the applicant contends, in its application, that the degression of operating aid must be achieved in absolute terms and in a continuous fashion from 1994 to 2002, irrespective of prevailing market conditions. In the applicant's submission, it is absurd to be willing to accept that there was both a reduction in production costs of 8.2% over four years and a related degression of aid, when world prices decreased by 38.9% over the same period. The result, in the applicant's submission, is not a degression of aid but an increase. While the applicant mentions, in this context, a small annual reduction in production costs (paragraph 4.2.18 of the application) when referring to the reduction in production costs of 8.2% accepted in the contested decision (paragraph 4.2.19 of the contested decision), no criticism based on concrete evidence is, however, levelled at that figure as such. The applicant's argument essentially comes down to the complaint that the Commission accepted a degression below 38.9%.

119 However, the rigidity of that argument ignores the economic realities - namely the structural unprofitability of the Community coal industry - in the light of which the Code was laid down and which must be taken into account when interpreting Article 2(1) of the Code.

120 Since operating aid is intended to cover the difference between production costs and selling prices at world level, the amount of that difference, which thus determines the amount of aid, does not depend solely on the volume of the reduction in production costs but also on the world market price.

121 As neither the Community institutions, the Member States or the undertakings concerned have a significant influence on that last factor, the Commission cannot be reproached for having attached overriding importance, in terms of a degression of aid to the coal industry, to reducing production costs, since any reduction necessarily means that the volume of aid is smaller than if the reduction had not occurred, irrespective of movements in world market prices. It should be added that, in the present case, the overall amount of operating aid authorised in fact decreased from 1997 to 1998 and from 1998 to 1999. Therefore, the applicant's argument cannot be upheld.

122 The same is true of the argument that the degression must occur in terms of current prices. Under Article 3(2) of the Code, the plans of the Member States are to provide for measures to generate a trend towards a reduction in production costs at 1992 prices and Article 9(6) of the Code requires the Commission to check whether the measures proposed are in accordance with the plans submitted before authorising aid. It follows that the degression of aid must be calculated by reference to 1992 prices.

123 Nor does any provision of the Code support the applicant's proposition that the degression of aid must necessarily be measured solely on the basis of an amount of aid per tonne and per undertaking. As RAG has pointed out, undertakings in receipt of operating aid must be able at any time to close individual mines or reduce their mining activity, with a corresponding decrease in coal production eligible for aid. Such reductions in the production of structurally unprofitable undertakings are compatible with the objectives of the Code and offset sufficiently any increase in aid per tonne.

124 Finally, the applicant pleads that the lack of a significant reduction in production costs necessarily resulted in an insufficient degression of aid. That argument, based on the interlocutory judgment and put forward for the first time in the reply, must be declared inadmissible under Article 48(2) of the Rules of Procedure (see paragraphs 87, 88 and 89 above). In this argument, the applicant is no longer complaining that the degression was insufficient in relation to the huge decrease in world prices, but contests, for the first time, the figures related to the German coal industry and therefore to the factual, economic and financial data connected with that industry. A new plea vis-à-vis the plea raised in the application is therefore involved. Furthermore, there would have been nothing to prevent the applicant from developing such a factual argument in its application.

125 The plea alleging a lack of degression of aid and the abovementioned new plea must therefore be rejected.

126 It follows that, so far as concerns the statement of reasons, the Commission was not required to include in the contested decision the detail demanded by the applicant, given that it was not required by the Code and had not been invoked by the applicant in the course of the administrative procedure. Therefore, the plea alleging a breach of the obligation to state reasons cannot be upheld either.

The plea alleging that the Commission infringed its obligations with regard to the amendments made to the original plan

127 The plea alleging that the Commission infringed its obligations with regard to the amendments made to the original plan has been raised in Case T-12/99 and repeated in Case T-63/99. The applicant states, however, that the fate of the latter case is linked, as regards this plea, to the outcome of the former. The plea is subdivided into two parts.

First part of the plea: infringement of Article 8(4) of the Code

- Arguments of the parties

128 Recalling that the Commission approved amendments to the original plan (see paragraphs 14 and 15 above), the applicant submits that, by ruling on an amendment of the plan, pursuant to Article 8(4) of the Code, the Commission affects the rights of every competitor of the undertakings in receipt of the aid at issue. As a result of a favourable ruling from the Commission, aid which would otherwise have been unlawful under the original plan may lawfully be paid. Therefore, the principle of legal certainty requires that any decision concerning such amendments must appear in the operative part of the measure in question. The Commission cannot rule on the amendments to the plan by simply referring to them in the statement of grounds. In this instance, the Commission adopted no formal administrative measure under Article 14 of the ECSC Treaty in relation to the amendment of the original plan. The comments of the Commission in the preamble to the decision relating to 1998 are not an administrative act at all. The preamble is neither a decision nor an opinion.

129 In that regard, the applicant relies on Decision No 22/60 of the High Authority of 7 September 1960 on the implementation of Article 15 of the Treaty (OJ, English Special Edition, Second Series VIII, p. 13) which lays down in a binding manner the form of decisions and provides in Article 3 that decisions and recommendations shall be set out in Articles. One of the principal purposes of Decision No 22/60 is to require the Commission to act clearly and unequivocally in providing a statement of reasons for each act and to set out the binding provisions in the operative part of the decision. The Commission did not rule on the amendments to the plan by devoting to them one of the articles in the operative part of the decision relating to 1998.

130 According to the applicant, the Commission's argument that the amended plan was implicitly approved by the approval of the sum of aid for 1998 is misconceived. Article 1 of the decision relating to 1998 makes no reference whatsoever to the amended plan, but merely authorises certain aid for 1998 pursuant to Article 9 of the Code. Furthermore, the obligation on the Commission to rule, pursuant to Article 8(4) of the Code, on any amendments to the plan is distinct from approval of the annual grant of aid under Article 9.

131 The applicant points out that the amended plan deals with restructuring of the undertakings concerned until 2002. It must therefore be considered separately and beforehand, since it constitutes the general framework within which each annual grant of aid will be examined. The mere approval of amounts of aid for 1998 gives no indication that the Commission ruled on a plan which also extends to 1999, 2000 and 2001. Furthermore, an applicant wishing to challenge the amended plan but not the specific aid granted for 1998 could not have done so by challenging Article 1 of the decision relating to 1998. This shows that the ruling on the amended plan and the decision relating to the State aid for 1998 must be two entirely separate matters.

132 The Commission counters that it ruled on the amendments to the plan, pursuant to Article 8(4) of the Code. Following a very detailed analysis of the German coal industry, the decision relating to 1998 clearly states, at the end of Part III of the preamble, that in the light of the above, the Commission takes the view that the [amended plan] is compatible with the objectives and criteria of [the Code]. Given that unequivocal formulation, the authorisation of the aid in Article 1 of the contested decision necessarily implies endorsement of the amended plan, in implementation of which aid was granted for 1998.

133 Contrary to the applicant's affirmations, Decision No 22/60 does not require the decision itself to be set out in articles. It is not mandatory for a matter determined by a decision to be in an article; it may be elsewhere in the pertinent measure. Furthermore, Article 9(6) of the Code merely requires the Commission to check whether the measures proposed are in conformity with the plans submitted in accordance with Article 8 and with the objectives set out in Article 2, which the Commission did here.

134 The Commission adds that Article 8(3) of the Code, which governs the initial approval of plans, merely provides for the Commission to give its opinion on the plans. It would be surprising if the formalities laid down for the amendment of a plan were more stringent than those for its initial approval.

- Findings of the Court

135 It should be noted first of all that the amended plan forms an integral part of the legal framework for the annual grant of State aid to the coal industry and that the positive opinion given by the Commission on that plan constitutes a basis for the authorisation by it of State aid which Germany proposes to pay in the sector in question, in each of the years covered by the plan. Within that framework, the applicant seeks to challenge the legality of the contested decisions in that the amendment of the original plan was approved in a formally incorrect manner.

136 In that regard, nothing in Articles 8 and 9 of the Code requires the Commission to adopt, first, a general decision approving the plan and, next, an individual decision authorising, on the basis of that general decision, the State aid proposed for a year covered by the plan. On the contrary, Article 9(4) and (5) uses the formal terms approved, authorisation and refusal only with regard to the annual aid itself. As regards the plans constituting the framework for the aid, Article 8 requires the Commission to give its opinion as to conformity (Article 8(3)) and, where a plan is amended, to rule on that amendment (Article 8(4)).

137 Since an amended plan is at issue here, it should be made clear that the term rule on used in the English version of Article 8(4) of the Code cannot be interpreted as requiring the Commission to adopt a formal decision. The French version (se prononcer) and the German (Stellung nehmen), Italian (si pronunci) and Dutch (zich uitspreken) versions show that the English text does not have such a strict meaning. In addition, even the English version of Article 8(3) of the Code - relating to the Commission's assessment of the original plan - uses the words give its opinion, which certainly does not mean adopt a formal decision. It would be inconsistent if the formalities laid down for the amendment of a plan were stricter than those prescribed for its initial approval.

138 Here, the decision contested in Case T-12/99 sets out the amended plan in Part II of its preamble, analysing mine by mine the amendments made. Then, in Part III of the preamble, the Commission proceeds to assess the reduction in production costs envisaged by the amended plan, comparing the reduction with the original plan. The same exercise is carried out with regard to the level of production and the number of employees. At the end of Part III, it is stated that in the light of the above, the Commission takes the view that the plan submitted by Germany is compatible with the objectives and criteria of [the Code]. The Commission thus validly ruled, within the meaning of Article 8(4) of the Code, on the amendment of the plan.

139 In so far as the applicant further submits that an economic operator wishing to challenge solely the amended plan, approved in the preamble to a decision, and not the aid authorised in the operative part of that decision, could not do so by challenging the operative part, it should be stated that, even if the opinion by which the Commission rules on a plan appears only in the preamble to a decision, it does not necessarily follow that it is devoid of binding legal effects capable of affecting the interests of a given economic operator. To determine whether a measure produces such effects, it is necessary to look to its substance (see Joined Cases T-125/97 and T-127/97 Coca-Cola v Commission [2000] ECR II-1733, paragraphs 77, 78 and 79). In the present case, however, there is no need to determine whether the approval of the amended plan, given in the preamble to the decision relating to 1998, constitutes a measure which is open to challenge in a separate action, given that the applicant has not formulated claims to that effect.

140 It follows that the first part of the plea must be declared unfounded.

Second part of the plea: assessment of the amendments to the plan founded on an incomplete basis

141 In this part of the plea, presented in both actions in a similar form, the applicant essentially alleges that the Commission failed to have regard to the impact of the merger which took place in the German coal industry (see paragraphs 19 to 27 above). It is appropriate to consider it together with part of a separate plea put forward in Case T-12/99 alleging that Article 3 of the Code was infringed, the part in question concerning the Commission's failure to have regard to the merger in the German coal industry.

- Arguments of the parties

142 According to the applicant, the amendments to the plan, as set out, were incomplete since they made no reference to the merger, which constitutes one of the most fundamental restructurings in the history of the German coal industry. The contested decisions continue to treat each of the merged undertakings separately, as if each received State aid independently. However, the Commission was well aware of the merger as it approved it by decision of 29 July 1998. It was also aware of the considerable sums of State aid inherent in the merger, in the light of the notification which was sent to it by the German Government under Article 67 of the ECSC Treaty (see paragraph 21 above).

143 It points out that the Commission was required, under Article 3(1) of the Code, to limit the approval of aid to an amount not exceeding the difference between production costs and foreseeable revenue in the following coal production year. Those costs and that revenue were assessed without reference to the merger or the inevitable economies which would arise from pooling the cost base of the independent undertakings. The Commission simply approved the amounts already paid by the German Government. Accordingly, the Commission erred in its assessment.

144 The applicant submitted, in its applications, that the notification from the German Government set out the following elements of aid as linked to the merger:

- the cancellation of DEM 4 000 000 000 of debt owed by RAG and Saarbergwerke to the German Government and the Saarland;

- the guarantee by the German Government of an annual DEM 200 000 000 cross-subsidy from RAG's white sector to its coal business;

- the payment of DEM 2 500 000 000 of aid as a condition of the merger taking place;

- the sale of Saarbergwerke to RAG for DEM 1, a price which represented a gift of substantial assets.

In the course of the proceedings, the applicant has abandoned the claims challenging the contested decisions as to their substance with regard to the cancellation of DEM 4 000 000 000 of debt and the payment of DEM 2 500 000 000, while maintaining the claims founded on inadequate reasoning in that regard.

145 In reply to the questions put by the Court, the applicant stated that the legality of the elements of aid complained of is immaterial in the present proceedings. However, their existence is relevant to an analysis of the production costs of German mines.

146 Since the Commission failed to refer to the merger or the abovementioned aid, the applicant considers that the contested decisions were, to the Commission's knowledge, not based on the actual position. Its economic analysis of the aid authorised in the contested decisions was thereby necessarily flawed.

147 The Commission's attempt to rule, in December 1998, on the amended plan without making the slightest reference to the fundamental restructuring of the German coal industry which took place in the course of 1998 highlights the absurdity of its attempt to grant ex post facto approval. Since the aid for 1998 had already been paid on the date of the decision relating to that year, the Commission could not lawfully step back in time to when the aid was notified and ignore the significant changes which would necessarily have an impact on the lawfulness of the aid proposed in the amended plan and on its own economic analysis.

148 The applicant submits that, in those circumstances, the Commission misused its powers. The Commission deliberately chose not to address the aid element of the merger because of internal departmental squabbles as to competence for the matter - infighting which inevitably favoured the German coal industry given that the aid was granted to the new merged entity to the detriment of other participants in the coal industry. It thus seriously infringed the principle of good administration, a breach which should be regarded as a misuse of powers.

149 It was all the more necessary to take account of the merger because the German Government itself maintains, in the statement in intervention lodged by it in Case T-12/99, that the amended plan was drawn up on the basis of the merger and that possible synergies and other economic effects were already incorporated into the proposals of each of the undertakings.

150 The applicant adds that a fundamental objective of any merger is to reduce costs through economies of scale. The German Government itself recognised in its notification under Article 67 of the Treaty that the future joint management of the mines of the Ruhr and the Saarland would allow supra-regional rationalisation. The reduction in production costs through joint management and rationalisation causes the gap between such production costs and the world market price to shrink. That reduction in costs will benefit each mine individually and collectively. Consequently, the Commission approved too much aid on the basis of incorrect production cost figures for the individual mines. In any event, in admitting that it ignored all synergies, the Commission failed to carry out the analysis required by the Code.