OPINION OF ADVOCATE GENERAL

JÄÄSKINEN

delivered on 23 September 2010 1( )

Case C‑194/09 P

Alcoa Trasformazioni Srl

(Appeals – Preferential tariff schemes for electricity for certain large energy‑intensive industries in Italy – Non‑aid – Extension of schemes by the Italian authorities – Decision to initiate the procedure under Article 88(2) EC)





1. The present appeal by Alcoa Trasformazioni Srl (‘Alcoa’) seeks the annulment of the judgment of the Court of First Instance of 25 March 2009 (now ‘the General Court’) in Case T-332/06 Alcoa Trasformazioni v Commission (‘the judgment under appeal’) ( ) and the partial annulment of Commission decision 2006/C 214/03 initiating the procedure laid down in Article 88(2) EC, concerning State aid C 36/06 (ex NN 38/06) – Preferential electricity tariff to energy-intensive industries in Italy, ( ) (‘the contested decision’) in so far as that decision relates to the electricity tariffs applicable to the two primary aluminium plants owned by Alcoa.

2. This case is unusual in that Alcoa’s appeal does not relate to a final decision pursuant to Article 88(2) EC, but to a Commission decision concerning the initiation of a formal investigation procedure against a measure extending an arrangement in favour of Alcoa consisting in a preferential tariff classified by the Commission as non‑aid in 1995.

3. In that context the Court is required to consider the legal effects of a Commission decision classifying a measure as not constituting State aid within the meaning of Article 87(1) EC and the applicability of the principle of legitimate expectations.

I – The legal context

4. Article 1 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88 EC] (OJ 1999 L 83, p. 1), which came into force on 16 April 1999, sets out the following definitions:

‘(a) “aid” shall mean any measure fulfilling all the criteria laid down in Article [87(1) EC];

(b) “existing aid” shall mean:

(i) … all aid which existed prior to the entry into force of the Treaty in the respective Member States, that is to say, aid schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the Treaty;

(ii) authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council;

…

(v) aid which is deemed to be an existing aid because it can be established that at the time it was put into effect it did not constitute an aid, and subsequently became an aid due to the evolution of the common market and without having been altered by the Member State. Where certain measures become aid following the liberalisation of an activity by Community law, such measures shall not be considered as existing aid after the date fixed for liberalisation;

(c) “new aid” shall mean all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid;

…

(f) “unlawful aid” shall mean new aid put into effect in contravention of Article [88(3) EC];

…’

5. Under Article 2(1) of Regulation No 659/1999, ‘any plans to grant new aid shall be notified to the Commission in sufficient time by the Member State concerned’. Article 3 of the Regulation provides that new aid ‘shall not be put into effect before the Commission has taken, or is deemed to have taken, a decision authorising such aid.’

6. Article 4(4) provides as follows:

‘Where the Commission, after a preliminary examination, finds that doubts are raised as to the compatibility with the common market of a notified measure, it shall decide to initiate proceedings pursuant to Article [88(2) EC] (hereinafter referred to as a “decision to initiate the formal investigation procedure”).’

7. Article 6(1) of the same Regulation provides as follows:

‘The decision to initiate the formal investigation procedure shall summarise the relevant issues of fact and law, shall include a preliminary assessment of the Commission as to the aid character of the proposed measure and shall set out the doubts as to its compatibility with the common market. The decision shall call upon the Member State concerned and upon other interested parties to submit comments within a prescribed period which shall normally not exceed one month. In duly justified cases, the Commission may extend the prescribed period.’

8. With regard to measures which are not notified, Article 10(1) of Regulation No 659/1999 provides that ‘where the Commission has in its possession information from whatever source regarding alleged unlawful aid, it shall examine that information without delay’. Article 13(1) states that such examination is to result in a decision to initiate a formal investigation procedure, where appropriate.

9. The procedure in relation to existing aid schemes is laid down in Articles 17 to 19 of Regulation No 659/1999. Under Article 18, where the Commission ‘concludes that the existing aid scheme is not, or is no longer, compatible with the common market, it shall issue a recommendation proposing appropriate measures to the Member State concerned’. Where the Member State concerned does not accept the proposed measures, the Commission may, under Article 19(2), initiate a formal investigation procedure.

II – Facts, proceedings and the judgment under appeal

10. Alcoa is a company governed by Italian law which owns two plants producing primary aluminium, located at Portovesme, in Sardinia, and Fusina, in the Veneto region. Those plants were transferred to the applicant by Alumix SpA in the course of the latter’s privatisation.

11. By decision 96/C 288/04, which was notified to Italy and published on 1 October 1996, ( ) (‘the Alumix decision’), the Commission found that the preferential tariff for the supply of electricity charged by ENEL to the plants acquired by Alcoa did not constitute State aid within the meaning of Article 87(1) EC. The tariff had been set in 1992 by decision No 13 of 24 July 1992 of the Joint Ministerial Committee for Prices. Under Article 2 of the Decree-Law of 19 December 1995 ( ) (‘the 1995 Decree-Law’), the tariff was applicable until 31 December 2005. In that connection, the Commission found that ‘by charging a tariff for the production of primary aluminium [at the plants acquired by the applicant], that covers [its] marginal costs and makes a contribution to its fixed costs, ENEL [was] behaving [like an operator acting under normal market conditions] since these tariffs permit the supply of electricity to its biggest industrial consumers in regions where there is serious over-capacity in terms of electricity production’.

12. It appears from the file that, by decision No 148/04 of the Electricity and Gas Authority (‘the Authority’), the Cassa Conguaglio per il settore elettrico (Equalisation Fund for the Electricity Sector, ‘the Equalisation Fund’), a public body, was appointed to manage the preferential tariff. In that capacity it reimbursed Alcoa directly for the difference between the tariff charged to Alcoa by ENEL and the preferential tariff laid down by the 1995 Decree-Law, by means of a parafiscal levy on all electricity consumers in Italy.

13. In 2005 Decree-Law No 35 of 14 March 2005, converted into Law No 80 of 14 May 2005 (ordinary supplement to GURI 91, 14 May 2005, ‘the 2005 Decree-Law’), was adopted by the Italian authorities. Its Article 11(11) extended until 31 December 2010 the preferential tariff applying to the two Alcoa plants.

14. A decision of the electricity authority (Authority decision No 217/05, of 13 October 2005, pursuant to Article 11(11) and (13) of the 2005 Decree-Law) laid down the detailed provisions for the application of Article 11(11). The provisions stated that the 2004 tariff would continue in effect in 2005 and that the tariff granted to the Alcoa plants could be increased only by a maximum of 4% per year if the annual reference prices on the energy exchanges of Frankfurt am Main and Amsterdam rose.

15. Against that background, the Commission adopted the contested decision concerning the initiation of the procedure laid down in Article 88(2) EC for new aid.

16. By application of 29 November 2006, Alcoa brought an action before the General Court seeking the annulment of the contested decision concerning the initiation of the formal investigation procedure. First of all, it claimed that the Commission wrongly classified the electricity tariff applying to its plants as State aid when in fact the tariff, which was a market tariff, conferred no advantage on them. Second, Alcoa claimed that the Commission disregarded the principles of the protection of legitimate expectations and legal certainty on the ground that the contested decision contradicted the Alumix decision. Third, Alcoa claimed, in the alternative, that the Commission wrongly examined the measure in question under the procedure applicable to new aid rather than that for existing aid.

17. The General Court dismissed the action by judgment of 25 March 2009.

III – The appeal

18. In support of its appeal, Alcoa adduces two grounds, each divided into a number of specific complaints

19. The first ground is that the General Court erred in law in finding that the Commission could initiate a procedure without considering whether the findings of the Alumix decision had ceased to apply. Accordingly the General Court erred, first, in confining its review of the contested decision to manifest error; second, in not applying the case‑law and the fundamental principles of Union law which require the Commission to take account of its previous decisions in the same case; third, in finding, on the basis of insufficient evidence, that the Commission could justify the initiation of the formal investigation procedure; fourth, in finding that the Alumix decision was for a limited duration; fifth, in failing to consider whether, in the contested decision, the Commission disregarded the principles of sound administration and the right to be heard, and, sixth, in finding that the contested decision contained an insufficient statement of reasons.

20. Alcoa’s second ground of appeal is that the General Court erred in law in finding that the procedure applicable to new aid applied in the present case. In support, Alcoa complains that the General Court, first, relied on case-law concerning the extension of compatible aid for a further period; second, the General Court interpreted the Alumix decision as being for a limited duration; third, the General Court wrongly took as its basis the technical alterations in 1999 and 2004; fourth, the General Court disregarded the need to protect legal certainty and legitimate expectations in relation to the initiation of a formal procedure.

21. Alcoa claims that the judgment should be set aside and that Commission decision 2006/C 214/03, notified to Italy on 19 July 2006, should be annulled in so far as it relates to the electricity tariffs applicable to Alcoa’s aluminium plants. In the alternative, Alcoa claims that the case should be remitted to the General Court for reconsideration in accordance with the judgment of the Court of Justice. Alcoa asks that the Commission be ordered to pay the costs, including reimbursement of the sums paid to the Commission as costs in connection with the proceedings at first instance.

22. The Commission contends that the appeal should be dismissed and that the applicant should be ordered to pay the costs, including those at first instance.

IV – Introduction

23. First of all, I observe that the question arising in the present appeal is: in what circumstances can a measure which was found by the Commission not to constitute State aid within the meaning of Article 87(1) EC be regarded as a different measure when the national authorities make certain modifications to it and decide to extend its duration.

24. I find that the fundamental difference between Alcoa’s position and that of the Commission is that, for Alcoa, it is a matter of extending the measure which the Commission has already examined while, for the Commission, the case involves a separate measure which therefore can be examined only from the viewpoint of new aid.

25. In that connection, it must be observed at the outset that the reasoning of the General Court is based on a finding, at paragraph 132 of the judgment under appeal, that the measure in question cannot be regarded as existing aid, not only because the period it covers differs from that examined in the Alumix decision, but also because it consists, no longer in ENEL applying the tariff laid down in the 1995 Decree-Law, which was equivalent to a market tariff, but in the grant of a reimbursement by the Equalisation Fund in order to offset the difference between the tariff charged by ENEL and that laid down in the 1995 Decree-Law, as extended by the 2005 Decree-Law. According to the General Court, it is therefore a different measure.

V – General observations on measures which are not State aid and a possible change in their classification

26. Article 88 EC provided for and regulated the constant review and supervision of State aid by the Commission. Under Article 88(1) EC, the Commission is required to keep under constant review all systems of aid existing in the Member States. With regard to new aid which the Member States intend to grant, the Treaty sets up a preliminary procedure without which no aid can be regarded as duly granted. The first sentence of Article 88(3) EC requires the Commission to be informed of any plans to grant or alter aid before they are put into effect.

27. It is therefore necessary to distinguish between, on the one hand, the preliminary examination procedure laid down by Article 88(3) EC, which is intended only to allow the Commission to form a prima facie opinion on the partial or complete conformity of the aid in question and, on the other hand, the formal investigation procedure referred to in Article 88(2) EC. The latter procedure permits detailed examination of State measures and has a dual purpose. It aims to protect the right of third parties who may have an interest and to enable the Commission to be fully informed of all the facts of the case before making its decision. ( )

28. The Court has already had occasion to give a ruling, in Belgium and Forum 187 v Commission, on the consequences of a Commission decision which modifies the assessment in an earlier decision finding that a measure did not constitute State aid. ( )

29. Furthermore, in his opinion in that case, Advocate General Léger observed that the decision by which the Commission finds that a measure does not constitute State aid for the purposes of Article 87(1) EC does not create a legal situation which may be regularly altered by the institutions in the exercise of their discretionary power, as may be the case in an area such as that of the common organisation of the markets, the objective of which involves constant adjustment to reflect changes in economic circumstances. ( )

30. If follows, according to Advocate General Léger, that where a national measure has been notified to the Commission in accordance with Article 88(3) EC and the latter has given a decision that the measure does not constitute aid for the purposes of Article 87(1) EC, both the State which introduced the measure and the beneficiaries of it can, once the time-limit for bringing proceedings to challenge the decision has passed, be certain that the scheme does not contravene the Community rules on State aid. The parties concerned are thus entitled to believe that such a decision may generally be qualified only where there has been an evolution in the common market. ( )

31. While I concur with that reasoning, I find that the substantive differences between the present case and Belgium and Forum 187 v Commission do not allow the examination of the present case to be limited to that finding.

32. In Belgium and Forum 187 v Commission it was found that the measure in question had not been materially altered after notification. ( ) In the present appeal, the main issue is the consequences attaching to the modifications of a measure which had previously been considered to fall outside the scope of Article 87(1) EC.

33. The following cases offer useful guidance in that respect.

34. On the one hand, I observe that, as regards notified measures, the Court has held that the prohibition on the implementation of aid measures, which is laid down in the last sentence of Article 93(3) of the EC Treaty (now Article 88(3) EC), applies to the proposed aid programme in its entirety and in the final version adopted by the national authorities. If the plan initially notified has in the meantime undergone alterations of which the Commission has not been informed, the prohibition applies to the plan as altered, unless the alteration in question is in actual fact a separate aid measure which should be assessed separately and which is therefore not such as to influence the assessment which the Commission has already made of the initial plan; in that case, the prohibition applies only to the aid measure introduced by the alteration. ( )

35. On the other hand, according to the Court, it is clear from both the terms and purposes of Article 93 of the EC Treaty (now Article 88 EC) that measures to grant or alter aid, where the alterations may relate to existing aid or initial plans notified to the Commission, must be regarded as new aid subject to the obligation of notification laid down by that provision. ( )

36. Furthermore, I note that the General Court has tried in its case-law to circumscribe the nature of the alteration to existing aid. ( ) However, I consider that the nature of an extension or alteration and its consequences must be examined in each individual case which, in my view, precludes laying down a rule or general criteria relating to the nature of the alterations which are made.

37. It seems to me that a measure previously classified by the Commission as not constituting State aid may fall within the scope of Article 87(1) EC, particularly in the following situations.

38. First of all, by applying the concept of ‘evolution of the common market’ in Article 1(b)(v) of Regulation No 659/1999, which states that a measure which did not constitute an aid at the time it was put into effect may nevertheless be deemed to be an existing aid in so far as it ‘became an aid due to the evolution of the common market’. The measure then becomes an existing aid.

39. Next, should the Commission go back on its assessment of the measure, particularly as a result of more rigorous application of the Treaty rules on State aid, the measure may be subject to the procedure for existing aid. ( )

40. Finally, where the Member State alters the measure in such a way that it has the characteristics laid down in Article 87(1) EC and becomes a different measure from that previously examined, the measure then becomes a new aid.

41. I am inclined to think that it is the last mentioned situation which arises here.

42. It is true that, where a measure is found by the Commission not to constitute aid, merely extending that measure cannot lead the Commission to change its assessment. It goes without saying that an arrangement which remains essentially the same, that is to say, it still has none of the characteristics of State aid, is covered by the assurances concerning compatibility with Union law given by the Commission in the decision concerning the measure.

43. Where a scheme or measure is merely extended, it seems appropriate to apply Article 1(b)(v) and Articles 17 to 19 of Regulation No 659/1999 by analogy in the event of changes in the market.

44. However, any extension, coupled with a substantive change, after the decision classifying the measure as non-aid was made by the Commission, constitutes a substantive alteration of the measure and may lead to a review of the classification when the arrangement has been put into effect. The measure may be changed into one which may fall within the scope of Article 87(1) EC. Such a measure necessarily differs from the arrangement already in existence.

45. Consequently the Commission is required to make an analysis of the nature of the changes which have been made. Where the arrangement was found not to constitute State aid, the Commission would, by means of a sufficiently detailed examination and before initiating a preliminary procedure, have to ascertain whether it is a case of extension without alteration or of a substantive alteration.

46. In my view, that requirement is connected with the protection of legitimate expectations and legal certainty.

47. As Advocate General Léger pointed out, the question of whether a national measure falls within the scope of Article 87(1) EC does not depend on a discretionary assessment. The fact that the Commission has a broad discretion to determine whether a national provision falls within the ambit of that provision where the examination of the conditions required by that provision entails complex economic assessments does not mean that the Commission can, on a discretionary basis, alter at any time its finding as to the existence of aid. ( )

48. On that point I observe that a measure may be altered at different levels.

49. If the public authority which adopted the measure changes, that is to say, the authority originating a certain arrangement which was deemed not to constitute aid, the change in question may be purely formal. Therefore it is normally the economic effect of such a change that should be decisive in determining whether there was a change in substance.

50. A change may also be substantive where it relates to the manner in which the measure is put into effect, that is to say, the way in which the funds for financing the measure are channelled.

51. In the present case, I do not think the alteration is purely formal. The two changes, one relating to the matter giving rise to the presumed advantage, namely the change from a public undertaking with a long-standing monopoly to a public body, the other relating to the arrangements for financing it, reflected in the change from a preferential tariff to a parafiscal levy on all electricity consumers, is liable to support the description of the alteration in question as one of substance. That may lead to the conclusion that the measure in question is a different measure and may justify the Commission’s decision to initiate a formal investigation procedure.

52. In addition, the fact that the legal classification of a measure has already been examined should not prevent the competent authority from reconsidering the arrangement in question if the authority is uncertain, on the basis of new relevant information, whether it is compatible with the applicable rules. If a measure which was found not to be a State aid may be altered in such a way as to make it a different measure, the Commission must be able to use the abovementioned procedure in such a case.

53. At the end of the preliminary examination stage concerning a State measure, the Commission has three choices: it may decide that the State measure at issue does not constitute State aid, or that that measure, although constituting aid, does not give rise to doubt regarding compatibility with the common market, or it may decide to initiate the formal investigation procedure. ( )

54. In the present case, so far as the preferential tariff granted to Alcoa is concerned, it is clear from the file that the Commission adopted the contested decision on the initiation of the formal investigation procedure after it became doubtful at the preliminary stage. The final decision finding that the price subsidy scheme in Alcoa’s favour was incompatible was adopted on 19 November 2009. ( )

VI – Second ground of appeal, first complaint

55. As this complaint seems to me to reveal matters which are crucial for the outcome of the present dispute, I shall consider it first.

A – The parties’ observations

56. Alcoa complains that the General Court based its reasoning on the judgment in Diputación Foral de Alava and Others v Commission ( ) in order to argue that a time extension alone may convert a measure into new aid. However, that judgment concerns the extension of a measure which had been classified as compatible aid whereas, in the present case, the Commission described the measure as non-aid. According to Alcoa, the General Court erred in law in failing to take account of the relevant legal differences between a finding that aid is compatible and a finding that there is no aid.

57. According to Alcoa, if there is a finding of non-aid, a change in market conditions may convert the measure into aid, but an extension of the measure as such cannot have that effect. In that case, Article 1(b)(v) of Regulation No 659/1999, which requires the measure to be treated as existing aid rather than new aid, applies.

58. The Commission observes that the contested decision is not based only on the extension of the measure, but also on the change in the measure into a theoretical tariff. That change is sufficient to justify the provisional classification of Article 11(11) of the 2005 Decree-Law as new aid.

B – Assessment

59. By this fundamental complaint Alcoa submits that the General Court erred in law in basing its reasoning on case-law which, according to Alcoa, is not applicable to measures which do not constitute aid and concludes that the procedure relating to new aid was applicable in the present case.

60. On that point I observe that, at paragraph 128 of the judgment under appeal, the General Court correctly referred to the case-law relating to changes in existing aid in response to Alcoa’s argument that the Commission ought to have examined the measure at issue by means of the procedure for existing aid, rather than that for new aid, on the ground that the measure was not a substantive alteration to the measure referred to by the decision. The General Court also referred to the case-law relating to the extension of aid which is already in the course of implementation.

61. The General Court then went on, at paragraph 129 of the judgment, to apply that case-law to the present case and concluded that, as the extension or alteration of a measure does not constitute State aid, such extension or alteration must give rise to the use of the procedure applicable to new aid.

62. In support of that finding, at paragraphs 130 and 131 the General Court examined in detail the nature of the changes which had been made. At paragraph 134 it also rejected Alcoa’s argument that the changes in the present case were not substantive alterations.

63. On that point I find that it is clear from paragraph 129 of the judgment under appeal that, after an extension of a measure regarded by the Commission as not constituting State aid, the Commission is entitled to use only the procedure for new aid.

64. However, that finding in principle does not follow directly from the case-law cited by the General Court in the previous paragraph of the judgment, which relates to the alteration of existing aid. Furthermore, it seems to me to conflict with the reasoning set out above concerning the effects attaching to the decision by virtue of which the Commission considers that the measure is outside the scope of Article 87(1) EC.

65. That finding in principle also leaves out of account the considerations arising from the principle of legitimate expectations because, if there are no substantive changes in the measure or, exceptionally, no relevant new information which was not available when the Commission determined its position, the beneficiaries and entities concerned are justified in relying on the Commission’s assessment in the earlier decision, provided that Article 1(b)(v) of Regulation No 659/1999 is not applicable by analogy in relation to the effects of changes in the common market on a measure which has become State aid.

66. Consequently it seems to me that the General Court’s assessment at paragraph 129 of the judgment under appeal is erroneous in law. However, I do not think it would justify setting aside the judgment.

67. In actual fact, the General Court did not take that finding as a basis for confirming the use of the procedure for new aid. As appears from paragraph 130 of the judgment under appeal, the General Court’s reasoning does not rest on the extension of the measure concerned, but on the fact that it differs from that which the Commission had previously examined in the context of the Alumix decision.

68. As paragraphs 131 and 132 of the judgment under appeal make clear, the measure examined in the contested decision covers, according to the General Court, a different period and is based on a different administrative system.

69. Paragraphs 130 to 133 of the judgment thus show that the General Court considered all the circumstances which led the Commission to adopt the contested decision in the present case. Therefore the Court’s assessment regarding the substantive nature of the changes made by means of the measure at issue, leading to the conclusion that it was a different measure, constitutes a matter of factual assessment

70. However, it should not be forgotten that, on the basis of the general principle laid down in Article 58 of the Statute of the Court of Justice, an appeal against a judgment of the General Court is limited to points of law. Unless the facts and evidence have been distorted, the Court of Justice cannot review the facts as found by the General Court. ( )

71. As the General Court cannot be held to have distorted the facts, that complaint must be regarded as unfounded in that it seeks to call into question the Court’s assessment, which considered that the measure examined in the contested decision was a measure different from that previously examined by the Commission in the context of the Alumix decision.

72. It must also be borne mind that, when the General Court has found or assessed the facts, the Court of Justice has jurisdiction under Article 225 EC to review the legal characterisation of those facts by the General Court and the legal conclusions it has drawn from them. ( )

73. Therefore, with regard to the abovementioned factual findings, at paragraph 132 of the judgment under appeal, to justify the application of the procedure for new aid to the measure regarded as a different measure, the General Court made its finding, which is not subject to appeal, that the latter covered a different period and constituted the introduction of a new system.

74. Consequently, even if the first complaint of the second ground of appeal is well-founded in so far as it relates to an error of law on the General Court’s part in finding, in the reasoning of the judgment under appeal, that in principle the Commission may examine an extended measure only by means of the procedure applicable to new aid, that complaint cannot call into question the judgment under appeal.

VII – First ground of appeal

A – First ground of appeal, first complaint

1. The parties’ observations

75. In the first complaint of the first ground of appeal, Alcoa submits that the General Court erred in law in finding that Alcoa’s first ground of appeal related to provisional questions with regard to which the Court’s review had to be limited to manifest error.

76. After observing that the initiation of a formal procedure against measures which have specifically been found not to constitute aid differs from the initiation of a procedure against measures which have not been the subject of any such finding, Alcoa submits that, in order for the earlier findings of non-aid not to be deprived of relevance, the Commission must at least determine, in its preliminary examination before initiating a formal procedure, whether there are grounds for believing that the considerations on which its earlier findings are based have ceased to be relevant and must state the reasons for this in its decision to initiate the procedure.

77. The Commission replies that, so far as it is concerned, the General Court applied an adequate standard of review, that is to say, the standard applying to a provisional decision. ( )

2. Assessment

78. According to Alcoa, the General Court, in taking the view that the issue here is the extent of the review to be carried out of decisions to initiate a procedure, changed and restricted the subject of Alcoa’s complaint.

79. In that connection, I wish to point out that a general principle of administrative law, recognised by the legal systems of several Member States, supports the limitation of the right to challenge, by an action for annulment, decisions which are only of a provisional nature. ( ) I would point out that only preparatory acts that give rise to independent legal effects can be the subject of a separate judicial procedure. Decisions to initiate a preliminary examination may have specific and significant legal effects for the parties concerned and must therefore be open to challenge. However, in order to maintain the effectiveness of the necessary difference between the preliminary examination procedure and the substantive examination provided for by Article 88 EC, the former must not be subject to such onerous legal requirements as the latter.

80. In view of the provisional nature of the decision to open the formal investigation procedure, which includes a preliminary assessment of the proposed measure by the Commission in order to determine whether the measure has the characteristics of State aid, the Community court’s review of its legality must be limited because it is only by virtue of the final decision based on the information obtained at the examination stage that all the relevant aspects can be examined and put in issue by the interested parties

81. Consequently at paragraphs 60 and 61 of the judgment under appeal the General Court correctly found in law that the Court’s review of the legality of a decision to initiate a formal investigation procedure must be limited.

82. Therefore the first complaint of the first ground of appeal must be regarded as unfounded.

83. The remaining problem to be considered relates to the steps which the Commission is said to have had to take before the formal decision to open the procedure, and I shall examine that problem together with the second complaint of the first ground of appeal.

B – First ground of appeal, second complaint

1. The parties’ observations

84. By this complaint, Alcoa submits that, by not applying the case-law to the effect that the Commission must take account of its previous decisions in the same case, the General Court erred in law. ( ) The judgment was erroneous in that it found that the Commission was not required to ascertain whether the criteria on the basis of which it found that there was no advantage in the Alumix decision were still valid.

85. The Commission replies that Alcoa’s vague reference to ‘the measure’ is incorrect. Furthermore, the Commission points out the difference from the factual circumstances on which the Alumix decision is based, in which ENEL itself supplied Alcoa with electricity at the agreed tariff. The decision at issue is based on the fact that the State reimbursed Alcoa for part of the price paid to ENEL. The case-law in Italgrani II, cited above, is therefore not applicable and the General Court did not err in finding that Alcoa’s arguments that the tariff granted to it was a market price were not relevant.

2. Assessment

86. First of all, I observe that in ItalgraniI ( ) the Court found that if a general aid scheme exists, the Commission must take account of the earlier decision concerning that scheme when it examines individual aid which falls within the scope of the scheme in question. The Court added, in Italgrani II, ( ) that if the Commission could go back on its decisions at any time, that would lead to permanent uncertainty which could jeopardise the principles of the protection of legitimate expectations and legal certainty

87. It is true that those two judgments emphasise the need for the Commission to examine the findings of an earlier decision before initiating a formal investigation procedure. However, the two judgments refer to cases of existing aid and concern the relation between an aid scheme which has already been approved and individual aid putting it into effect. Individual aid is therefore a simple measure implementing a general aid scheme. That does not seem to me to be the case here because the measure in question was described by the General Court as a different measure.

88. Consequently, if the Commission must take its earlier decision into account when examining an alteration to existing aid, that should not restrict the scope of its assessment with regard to the examination of non-notified measures resulting from a substantive modification of the measure which previously escaped classification as State aid. Article 10(1) of Regulation No 659/1999 should be applied in that situation.

89. Furthermore, with regard to the conditions for adopting a formal decision, it has consistently been held that the procedure under Article 88(2) of the Treaty is obligatory if the Commission experiences serious difficulties in establishing whether or not aid is compatible with the common market. The Commission cannot therefore limit itself to the preliminary procedure under Article 88(3) EC and take a favourable decision on a State measure which has been notified unless it is in a position to reach the firm view, following an initial investigation, that the measure cannot be classified as aid within the meaning of Article 87(1) EC or that the measure, whilst constituting aid, is compatible with the common market. On the other hand, if the initial analysis results in the Commission taking the contrary view of the aid’s compatibility with the common market or does not enable all the difficulties raised by the assessment of the measure in question to be overcome, the Commission has a duty to gather all necessary views and to that end to initiate the procedure under Article 88(2) EC. ( )

90. Therefore the case-law clearly indicates that the Commission has no discretion with regard to initiating the formal investigation procedure where, on completion of the preliminary examination, it still has serious doubts as to the nature of the measure at issue or its compatibility with the common market.

91. The same principles must apply where the Commission is still uncertain as to the classification of the measure examined as aid within the meaning of Article 87(1) EC. Therefore the Commission cannot be criticised for initiating that procedure even where, in the decision taken for that purpose, it expresses doubt as to whether the measures which are the subject of that decision constitute aid within the meaning of Article 87(1) EC.

92. Finally, with regard to the General Court’s reasoning, it is clear from paragraph 70 of the judgment under appeal that the General Court, referring to the complex assessment which the Commission has to carry out as part of the formal investigation procedure, described as irrelevant Alcoa’s argument that the Commission ought to have ascertained whether the criteria on the basis of which it found that no advantage had been conferred in the Alumix decision remained valid.

93. In view of the provisional nature of the contested decision, which reflects the Commission’s doubts and does not relate to a detailed examination of the measure concerned, that response seems to me well-founded in law.

94. Consequently I propose that this complaint be dismissed as unfounded.

C – First ground of appeal, third complaint

1. The parties’ observations

95. Alcoa claims that the General Court’s finding that the Commission was entitled to initiate a formal investigation procedure against the tariffs granted to Alcoa was based only on two factors, namely, first, the finding that the resources funding the reduction in tariffs were State resources and, second, the fact that Alcoa obtained reimbursement through the Equalisation Fund led to a reduction in the generally applicable tariff for supplying electricity.

96. According to Alcoa, those two factors are not sufficient to justify the initiation of the procedure by the Commission because they were already present at the time of the Alumix decision.

97. The Commission contends that this complaint merely repeats other arguments. It points out that Alcoa’s argument concerning normal market conditions was dismissed by the General Court and that the dismissal was not disputed in the appeal.

2. Assessment

98. I find that the General Court’s reasoning disputed in the context of this complaint concerns the assessment of a possible manifest error on the Commission’s part.

99. In view of the reply to the first complaint of the second ground of appeal, I consider that this complaint should be dismissed as unfounded.

D – First ground of appeal, fourth complaint, and second ground of appeal, second complaint

100. As the fourth complaint of the first ground of appeal is very much the same as the second complaint of the second ground of appeal, they should be examined together.

1. The parties’ observations

101. In Alcoa’s opinion, the General Court erred in law in finding that the Commission’s assessment in the Alumix decision was for a limited period.

102. According to Alcoa, in the judgment under appeal the General Court took the view that the Alumix decision was for a limited period. However, according to Alcoa, the decision contains no express limitation as to time with regard to the duration of its validity. Contrary to what is said in the judgment under appeal, even if the 1995 Decree‑Law were for a limited period, it cannot logically be concluded that the Alumix decision was also subject to a time limitation.

103. Alcoa observes that the three factors on which the Commission based the Alumix decision, namely (i) the tariff itself, (ii) the conditions in the electricity market in the regions of Sardinia and the Veneto, characterised by excess capacity, and (iii) Alcoa as a customer, being one of the biggest consumers in Italy, have not changed. Furthermore, as long as the Commission did not indicate that, in its opinion, those conditions had changed, the Italian Republic and Alcoa had every reason to believe that they were entitled to maintain the tariff.

104. The Commission replies that, if the market conditions did not change, it is difficult to understand why ENEL could not simply continue to apply the tariff in question in the Alumix decision and why the cost of the tariff granted to Alcoa is described as ‘onere’ by the Italian legislation. The analysis of advantages in the Alumix decision was based on the principle of operating in a market economy and Alcoa never attempted to explain how the payments by the Equalisation Fund conformed with that principle.

105. The Commission also observes that a decision such as the Alumix decision is never adopted in a legal void. The 1995 Decree-Law preceded the Alumix decision and it is not denied that the electricity tariff was fixed by the Decree-Law for ten years.

2. Assessment

106. First of all, I observe that the General Court correctly found, at paragraph 106 of the judgment under appeal, that the Commission’s finding in the decision that the tariff that ENEL was charging the plants from 1996 to 2005 did not constitute State aid took into consideration the market conditions as foreseeable by the Commission for that period.

107. At paragraph 132 of the judgment, the General Court also pointed out that the measure referred to by the contested decision covered a period different from that examined in the Alumix decision, which Alcoa does not dispute in its appeal.

108. I think that finding alone is an effective reply to Alcoa’s complaint that the General Court was wrong in finding that the Alumix decision was of limited duration. It appears that Alcoa has misread the judgment under appeal on that point.

109. Moreover, at paragraphs 105 and 107 of the judgment, the General Court did not really examine the question whether the Alumix decision was for a limited period but, in considering whether the principle of the protection of legitimate expectations had been disregarded, cited the relevant passages of the contested decision showing that the Commission relied on such a finding.

110. As the citations from the contested decision are correct, there was no distortion by the General Court of an application or a contested act. ( )

111. Finally, it is true that the Court of Justice has jurisdiction to review the way in which the General Court reads and interprets a legal measure such as the Commission’s decision, as there may be an error in law. However, in the present case no error has been alleged, and none can be found, in the reading of paragraphs 44 and 47 of the grounds of the contested decision.

112. I observe that the operative period of the Alumix decision is limited to the circumstances examined at the date when the Commission adopted the decision. With regard to the finding that the preferential tariffs did not constitute State aid, I do not think that the Commission should have determined the operative period more exactly, but if it had done so it would have had to add the necessary qualifications arising from the general principle of law rebus sic stantibus, ( ) because any substantive change in the circumstances taken into account in the Commission’s position may have necessitated reclassification of the status of the measure.

113. On reading the Alumix decision and the judgment under appeal, and taking account of the submissions concerning, first, the connection with national law, which was clearly for a limited period, and, secondly, the different nature of the measure laid down by the 2005 Decree-Law, no reasonable and prudent businessman could expect the measure which is the subject of the contested decision to be covered by the Alumix decision. Alcoa’s allegations that the system was introduced in 1999-2004 cannot invalidate that conclusion. ( )

114. Consequently I propose that the fourth complaint of the first ground of appeal and the second complaint of the second ground of appeal be dismissed as unfounded.





E – First ground of appeal, fifth complaint

1. The parties’ observations

115. Alcoa submits that there are procedural errors in the contested decision owing to the Commission’s failure to adhere to the principles of sound administration and the right to be heard in the course of the procedure leading to the adoption of the contested decision, which the General Court ought to have taken into account. The Italian Republic had no opportunity to submit observations on the classification of the new aid measure during the preliminary examination stage.

116. The Commission replies that this complaint must be ruled inadmissible because Alcoa did not raise it in its action before the General Court. In any case, the complaint is unfounded. In its appeal, Alcoa admitted that the Italian Republic had an opportunity to submit observations on the classification of the aid. Furthermore, the Italian Republic used that opportunity, as stated at paragraph 40 of the judgment under appeal.

2. Assessment

117. It must be observed that in an appeal the jurisdiction of the Court of Justice is in principle confined to review of the findings of law on the pleas argued before the General Court. ( ) Therefore a party cannot in principle put forward for the first time before the Court of Justice a plea in law which it has not raised before the General Court because that would amount to allowing the Court of Justice to review the legality of the findings of the General Court, in the light of pleas of which the latter did not take cognisance.

118. From reading the judgment under appeal, it cannot be validly argued that that problem was considered by the General Court after a complaint was raised by Alcoa.

119. It is true that, at paragraphs 39 and 40 of the judgment, the General Court examined the evidence relating to the position taken by the Italian Republic. However, it considered the problem from the viewpoint of the admissibility of the action at first instance.

120. Consequently I propose that the fifth complaint of the first ground of appeal be ruled manifestly inadmissible.

F – First ground of appeal, sixth complaint

1. The parties’ observations

121. In view of the irreversible consequences of initiating a formal investigation procedure, Alcoa submits that the General Court failed to take into account the extent of the Commission’s duty to state reasons, which should be proportionate to the seriousness of the consequences of the initiation of the procedure laid down in Article 88(2) EC.

122. Thus, the General Court was wrong to state that it was unnecessary to give the reasons for the difference between the Alumix decision and the contested decision. Because of the uncertainty which had been created, the Commission should at least have explained in what way the two decisions differed so that the interested parties would be able to establish the basis and the extent of the consequences of the contested decision.

123. The Commission replies that there was no error on the part of the General Court in the judgment under appeal in finding that the reasons for the contested decision were sufficiently stated.

Assessment

124. Two observations are called for in response to this complaint.

125. Under Article 225(1) EC and the first paragraph of Article 58 of the Statute of the Court of Justice, an appeal is limited to points of law and must be based on grounds of lack of jurisdiction of the General Court, breach of procedure before it which adversely affects the interests of the applicant, or infringement of Community law by the General Court. ( ) It follows from those provisions and also from Article 112(1)(c) of the Rules of Procedure of the Court of Justice that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal. ( )

126. In the context of the response to both the third complaint of the first ground of appeal and the second ground of appeal, the General Court examined the problem of the relation between the Alumix decision and the contested decision. As Alcoa does not indicate precisely the points which may constitute an error on the part of the General Court, this complaint could be ruled manifestly inadmissible.

127. However, it seems that Alcoa’s complaint refers more particularly to paragraph 88 of the judgment under appeal, where the General Court dismissed the applicant’s argument that the Commission failed to fulfil its obligation to provide a statement of reasons in the contested decision.

128. While the obligation, laid down by Article 253 EC, to state reasons for a Community measure must be appropriate to the act at issue and 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 and to enable the competent court to exercise its power of review, the Commission is not required to state the reasons why it made a different assessment of the regime in question in its previous decisions. The concept of State aid must be applied to an objective situation, which falls to be appraised on the date on which the Commission takes its decision. ( )

129. Consequently the ground of appeal alleging an error in law on the part of the General Court in that it failed to have regard to the extent of the obligation to provide a statement of reasons in Commission decisions must be dismissed. It follows that the sixth complaint of the first ground of appeal is either manifestly inadmissible or, in any case, unfounded

VIII – Second ground of appeal

A - Second ground of appeal, third complaint

1. The parties’ observations

130. Alcoa complains that the General Court based its reasoning on technical alterations which were not the subject of the contested decision. According to Alcoa, a reimbursement was made by the Equalisation Fund in 1994 and in 2004 by means of various legal transactions which were not the subject of the contested decision. The General Court therefore unlawfully extended the ambit of the decision. Furthermore, the transfer of the administration of the ENEL preferential tariff to the Equalisation Fund did not entail any significant substantive legal alteration in the tariffs granted to Alcoa. Alcoa points out that the Commission raised no objection to the technical alterations of 1999 and 2004. In addition, the General Court was wrong to disregard, at paragraphs 112 and 113 of the judgment under appeal, Decision N/490/2000 of 1 December 2004 concerning State aid – Italy, stranded costs in the electricity sector. ( )

131. The Commission replies that the General Court correctly found that the change to a purely theoretical tariff constituted a substantive alteration of the measure approved by the Alumix decision. The system in question corrects the price charged by private suppliers by means of a direct compensatory payment. With regard to the 2004 decision on stranded costs, the Commission submits that it relates to the stranded costs borne by ENEL and does not contain an express finding on the administration of the Italian preferential tariff scheme with regard to the advantages conferred upon Alcoa which could have led it to entertain a legitimate expectation. Furthermore, the Commission initiated the formal investigation procedure concerning State aid C 38/2004 (ex NN 58/04) – Aid for Portovesme Srl ( ) and classified specifically as new aid the payments made by the Equalisation Fund in order to retain the tariff granted to Alcoa.

2. Assessment

132. First of all, I observe that, citing paragraph 132 of the judgment under appeal, Alcoa criticises the General Court’s reasoning at several other points in the judgment replying to a plea in the context of which the Court examined the issue of the possible breach of the principles of the protection of legitimate expectations and legal certainty.

133. If nevertheless that complaint had to be interpreted as alleging that the General Court misread the contested decision, the following observations would arise.

134. First, it is, in my opinion, sufficient to point out that at paragraph 131 of the judgment under appeal the General Court correctly set out the factors that led the Commission to entertain doubts as to the classification of the tariff charged by ENEL to the Alcoa plants from 2005 to 2010, but without extending its reasoning beyond the factors examined in the contested decision.

135. Second, with regard to the effects of the 2004 decision introducing a system of reimbursement by the Equalisation Fund, as the Commission points out, Article 11(11) of the 2005 Decree-Law is not an independent provision, but has its whole purpose in the context of other provisions, particularly those which govern the administration of the tariff by the Equalisation Fund.

136. In that connection, it appears from paragraphs 64 and 65 of the judgment under appeal that the General Court summarised the facts, which are not disputed by Alcoa, first by noting that Article 11(11) of the 2005 Decree-Law and the Authority decision No 217/05, which implemented the Decree-Law, extend until 31 December 2010 the grant to the applicant of the electricity tariff which it enjoyed in 2004 under the 1995 Decree-Law and, secondly, by pointing out that pursuant to decision No 148/04 the responsibility for administering the tariff was given to the Equalisation Fund, which entails a parafiscal tax on consumers.

137. With regard to the consequences of the alterations to the measure examined in the contested decision, in view of the reply proposed in relation to the examination of the first complaint of the second ground of appeal, that part of the present complaint must be dismissed.

138. Finally, as appears from the applicant’s claims set out at paragraph 28 of the judgment under appeal, the action at first instance concerned only the electricity tariff for Alcoa’s plants. That finding excludes any reference to the tariffs for other operators.

139. Consequently, and in view of the subject-matter of the decision relating to stranded costs, which refers to the costs borne by ENEL and not by Alcoa and which concerns a system substantially different from the tariff granted to Alcoa, the General Court correctly found at paragraph 112 of the judgment under appeal that the applicant’s argument was ineffective

140. I therefore propose that the present complaint be dismissed as unfounded.

B - Second ground of appeal, fourth complaint

1. The parties’ observations

141. Alcoa complains that the General Court erred in law in failing to have regard to the need for legal certainty and the protection of legitimate expectations in connection with the initiation of a formal procedure.

142. Alcoa contends that the principles enshrined in Article 88 EC and resulting from those principles required the Commission at least to regard Alcoa’s tariffs as existing aid.

143. The Commission replies that Alcoa’s arguments are based on the erroneous assumption that Article 11(11) of the 2005 Decree-Law is only an extension of the very measure approved in the Alumix decision. According to the Commission, the Alumix decision is irrelevant because the contested decision relates not only to the extension of the preferential tariff granted in 1995, which was the subject of the Alumix decision, but [also] to the radical alteration in the administration of the electricity tariff, which the General Court, according to the Commission, correctly took into account.

2. Assessment

144. Alcoa’s argument derives from a combination of the principles of legitimate expectations and legal certainty.

145. The principle of legal certainty, which is fundamental to Union law, ( ) requires, in particular, rules involving negative consequences for individuals to be clear and precise and their application predictable for those subject to them. ( ) In other words, individuals must be able to ascertain unequivocally what their rights and obligations are and take steps accordingly. ( )

146. The right to plead legitimate expectations presupposes that the institution concerned has given precise assurances such as to give rise to a legitimate expectation on the part of the person to whom they are given that the assurances comply with the applicable rules. ( )

147. In that connection I observe that the General Court considered the question whether the Commission disregarded those principles in relation to the second ground of appeal, in particular at paragraphs 104 to 109 of the judgment under appeal.

148. As shown at paragraphs 105 to 107, the General Court explained, first, the main elements of the Alumix decision in the light of the case-law correctly applied at paragraphs 102 and 103 and, secondly, the doubts which led the Commission to conclude that the extension until 2010 of the tariff granted to Alcoa’s plants by the 2005 Decree-Law might constitute State aid.

149. In the present case, it is common ground, as the General Court rightly stated, that the Commission adopted the Alumix decision in the light of the market conditions as foreseeable by the Commission for the period in question.

150. I also observe that the Court of Justice has already given a ruling concerning the application of the principle of protection of legitimate expectations and the need for transitional measures in relation to a decision altering the Commission’s earlier assessment. ( ) In particular, the Court took into account the considerable investments made under a tax regime by the beneficiaries of the existing authorisation who requested renewal of the authorisation and the long-term commitments they had made. ( ) In the present case, however, unlike the situation which gave rise to Belgium and Forum 187 v Commission, the earlier measure underwent substantive changes which led to the finding that it constituted new aid in the form of a different measure. Consequently Alcoa cannot plead legitimate expectations on the basis of the Alumix decision concerning an arrangement the object of which differs from that of the contested decision.

151. Having regard to those considerations, the General Court correctly found, at paragraphs 107 and 108 of the judgment under appeal, that the Commission did not question its assessment of the measure examined in the Alumix decision and that, consequently, it could not validly be alleged that the principle of the protection of legitimate expectations had been disregarded.

152. With regard to the principle of legal certainty, the submissions at paragraphs 105 and 107 of the judgment under appeal indicate that Alcoa was clearly in a position to foresee the legal classification of the tariff conditions allowed by virtue of the 2005 Decree-Law. As I have already explained at paragraph 112 of the present opinion, on reading the Alumix decision no reasonable and prudent businessman could expect the measure which is the subject of the contested decision to be covered by the Alumix decision.

153. Consequently I propose that this complaint be dismissed as unfounded.

IX – Conclusion

154. I propose that the Court should rule as follows:

– dismiss the appeal in its entirety and

– order Alcoa Trasformazioni Srl to pay the costs.