JUDGMENT OF THE GENERAL COURT (First Chamber, Extended Composition)

22 April 2016 ( )

(State aid — Directive 92/81/EEC — Excise duties on mineral oils — Mineral oils used as fuel for alumina production — Exemption from excise — Selective nature of the measure — Aid which may be considered compatible with the common market — Community guidelines on State aid for environmental protection — Guidelines on national regional aid 1998 — Legitimate expectations — Legal certainty — Principle lex specialis derogat legi generali — Principles of presumption of legality and of the effet utile of acts of the institutions — Principle of sound administration — Obligation to state reasons)

In Joined Cases T‑60/06 RENV II and T‑62/06 RENV II,

Italian Republic, represented by G. Palmieri, acting as Agent, and G. Aiello, avvocato dello Stato,

Eurallumina SpA, established in Portoscuso (Italy), represented by L. Martin Alegi, R. Denton, A. Stratakis and L. Philippou, Solicitors,

applicants,

v

European Commission, represented by V. Di Bucci, N. Khan, G. Conte, D. Grespan and K. Walkerová, acting as Agents,

defendant,

APPLICATION for the annulment of Commission Decision 2006/323/EC of 7 December 2005 concerning the exemption from excise duty on mineral oils used as fuel for alumina production in Gardanne, in the Shannon region and in Sardinia respectively implemented by France, Ireland and Italy (OJ 2006 L 119, p. 12), to the extent that it concerns the existence of State aid granted by the Italian Republic, between 3 February 2002 and 31 December 2003, on the basis of the exemption from excise duty on mineral oils used as fuel for alumina production in Sardinia (Italy) and that it orders the Italian Republic to recover that aid,

THE GENERAL COURT (First Chamber, Extended Composition)

composed of H. Kanninen, President, I. Pelikánová (Rapporteur), E. Buttigieg, S. Gervasoni and L. Madise, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 6 May 2015,

gives the following

Judgment

Background to the dispute

The exemption at issue

1 Alumina (or aluminium oxide) is a white powder principally used in smelters to produce aluminium. It is extracted from bauxite by a refining process, the last stage of which is calcination. More than 90% of the calcinated alumina is used in the smelting of aluminium metal. The remainder is further processed and used in chemical applications. There are two separate product markets: smelter-grade alumina and chemical-grade alumina. Mineral oils may be used as fuel for alumina production.

2 There is only one producer of alumina in each of Ireland, Italy and France. In Italy, it is Eurallumina SpA, established in Sardinia. Alumina producers are also present in Germany, Spain, Greece, Hungary and the United Kingdom.

3 Since 1993, the Italian Republic has exempted from excise duty mineral oils used as fuel for the production of alumina in Sardinia (‘the exemption at issue’). The exemption at issue was introduced into Italian law by decreto legislativo 26 ottobre 1995, No 504, Testo unico delle disposizioni legislative concernenti le imposte sulla produzione e sui consumi e relative sanzioni penali e amministrative (Legislative Decree No 504 of 26 October 1995, Consolidated Text of Legislative Provisions relating to duties on production and consumption and related criminal and administrative penalties; Ordinary Supplement to GURI No 279 of 29 November 1995) (‘the 1995 legislative decree’).

4 The application of the exemption at issue to Sardinia was authorised until 31 December 1994 by Council Decision 93/697/EC of 13 December 1993 authorising certain Member States to apply or to continue to apply to certain mineral oils, when used for specific purposes, reduced rates of excise duty or exemptions from excise duty, in accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC (OJ 1993 L 321, p. 29). That authorisation was subsequently extended by the Council of the European Union until 31 December 1996 by Decision 96/273/EC of 22 April 1996 authorising certain Member States to apply or to continue to apply to certain mineral oils, when used for specific purposes, reduced rates of excise duty or exemptions from excise duty, in accordance with the procedure provided for in Article 8(4) of Directive 92/81 (OJ 1996 L 102, p. 40). It was further extended by the Council until 31 December 1998 by Decision 97/425/EC of 30 June 1997 authorising Member States to apply or to continue to apply to certain mineral oils, when used for specific purposes, existing reduced rates of excise duty or exemptions from excise duty, in accordance with the procedure provided for in Directive 92/81 (OJ 1997 L 182, p. 22). The authorisation was extended again by the Council, until 31 December 1999, by Decision 1999/255/EC of 30 March 1999 authorising, in accordance with Directive 92/81, certain Member States to apply and to continue to apply to certain mineral oils, reduced rates of excise duty or exemptions from excise duty, and amending Decision 97/425 (OJ 1999 L 99, p. 26). It was subsequently extended by the Council until 31 December 2000 by Decision 1999/880/EC of 17 December 1999 authorising Member States to apply and to continue to apply to certain mineral oils, when used for specific purposes, existing reduced rates of excise duty or exemptions from excise duty, in accordance with the procedure provided for in Directive 92/81 (OJ 1999 L 331, p. 73).

5 Council Decision 2001/224/EC of 12 March 2001 concerning reduced rates of excise duty and exemptions from such duty on certain mineral oils when used for specific purposes (OJ 2001 L 84, p. 23), which was the last decision concerning the exemption at issue, extends that exemption until 31 December 2006. According to recital 5 thereof, that decision ‘shall be without prejudice to the outcome of any procedures relating to distortions of the operation of the single market that may be undertaken, in particular under Articles 87 [EC] and 88 [EC]’ and ‘does not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 88 [EC]’.

Administrative procedure

6 By letter of 29 May 1998, the Commission of the European Communities requested information from the Italian authorities in order to verify whether the exemption at issue fell within the scope of Articles 87 EC and 88 EC. Following a reminder from the Commission on 16 June 1998, the Italian Republic replied on 20 July 1998.

7 By letter of 17 July 2000, the Commission requested the Italian Republic to notify it of the exemption at issue. The Commission reiterated its request to the Italian Republic, inviting it to provide additional information by letter of 27 September 2000. Following a reminder from the Commission of 20 November 2000, the Italian Republic replied on 7 December 2000.

8 By Decision C(2001) 3300 of 30 October 2001, the Commission opened the procedure laid down in Article 88(2) EC with regard to the exemption at issue (‘the formal investigation procedure’). That decision was notified to the Italian Republic, by letter of 5 November 2001, and was published, on 2 February 2002, in the Official Journal of the European Communities (OJ 2002 C 30, p. 17).

9 By letters of 26 and 28 February and 1 March 2002, the Commission received the respective comments of Aughinish Alumina Ltd, Eurallumina, Alcan Inc. and the European Aluminium Association. Those were communicated to the Italian Republic on 26 March 2002.

10 The Italian Republic submitted its comments by letter of 6 February 2002.

Alumina Decision I

11 On 7 December 2005, the Commission adopted Decision 2006/323/EC concerning the exemption from excise duty on mineral oils used as fuel for alumina production in Gardanne, in the Shannon region and in Sardinia respectively implemented by France, Ireland and Italy (OJ 2006 L 119, p. 12) (‘Alumina Decision I’).

12 Alumina Decision I relates to the period before 1 January 2004, the date on which Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ 2003 L 283, p. 51), repealing Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils (OJ 1992 L 316, p. 12) and Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils (OJ 1992 L 316, p. 19) with effect from 31 December 2003 (recital 57) became applicable. Nevertheless, it extends the formal investigation procedure to the period after 31 December 2003 (recital 92).

13 The operative part of Alumina Decision I states, inter alia:

‘Article 1

The exemptions from excise duty granted by France, Ireland and Italy in respect of heavy fuel oils used in the production of alumina until 31 December 2003 constitute State aid within the meaning of Article 87(1) [EC].

Article 2

Aid granted between 17 July 1990 and 2 February 2002, to the extent that it is incompatible with the common market, shall not be recovered as this would be contrary to the general principles of Community law.

Article 3

The aid referred to in Article 1 granted between 3 February 2002 and 31 December 2003 is compatible with the common market within the meaning of Article 87(3) [EC] in so far as the beneficiaries pay at least a rate of EUR 13.01 per 1 000 kg of heavy fuel oils.

Article 4

The aid … granted between 3 February 2002 and 31 December 2003 is incompatible with the common market within the meaning of Article 87(3) [EC] in so far as the beneficiaries did not pay a rate of EUR 13.01 per 1 000 kg of heavy fuel oils.

Article 5

1. France, Ireland and Italy shall take all necessary measures to recover from the beneficiaries the incompatible aid referred to in Article 4.

...

5. France, Ireland and Italy shall order, within two months of the date of notification of this Decision, the beneficiaries of the incompatible aid referred to in Article 4 to repay, the aid unlawfully granted plus interest.’

Procedure and forms of order sought by the parties

14 By applications lodged with the Registry of the General Court on 16 and 23 February 2006, respectively, the Italian Republic and Eurallumina brought the present actions, which were registered under reference numbers T‑60/06 and T‑62/06, respectively.

15 Pursuant to Article 14 of the Rules of Procedure of the General Court of 2 May 1991 and acting on a proposal from the Second Chamber, the Court decided, after hearing the parties in accordance with Article 51 of those rules, to refer the present cases to a Chamber sitting in extended composition.

16 By order of 24 May 2007, the President of the Second Chamber (Extended Composition) of the Court, after hearing the parties, joined Cases T‑60/06 and T‑62/06 and Cases T‑50/06, T‑56/06 and T‑69/06 (‘the Alumina I cases’) for the purposes of the oral procedure, in accordance with Article 50 of the Rules of Procedure of 2 May 1991.

17 By judgment of 12 December 2007 in Ireland and Others v Commission (T‑50/06, T‑56/06, T‑60/06, T‑62/06 and T‑69/06, EU:T:2007:383), the Court joined the Alumina I cases for the purposes of the judgment, annulled Alumina Decision I and, in Case T‑62/06, dismissed the remainder of the action.

18 By application filed on 26 February 2008, the Commission lodged an appeal against the judgment of the Court.

19 By judgment of 2 December 2009 in Commission v Ireland and Others (C‑89/08 P, ECR, EU:C:2009:742), the Court of Justice set aside the judgment in Ireland and Others v Commission, cited in paragraph 17 above (EU:T:2007:383), in so far as the General Court had annulled Alumina Decision I, referred the Alumina I cases back to the General Court and reserved the costs.

20 Following the judgment in Commission v Ireland and Others, cited in paragraph 19 above (EU:C:2009:742), and pursuant to Article 118(1) of the Rules of Procedure of 2 May 1991, the Alumina I cases were assigned to the Second Chamber (Extended Composition) by decision of the President of the General Court of 18 December 2009.

21 By order of the President of the Second Chamber (Extended Composition) of 1 March 2010, the Alumina I cases were joined for the purposes of the written procedure, the oral procedure and the judgment.

22 By decision of the President of the General Court of 20 September 2010, the Alumina I cases were reassigned to the Fourth Chamber (Extended Composition).

23 By judgment of 21 March 2012 in Ireland v Commission (T‑50/06 RENV, T‑56/06 RENV, T‑60/06 RENV, T‑62/06 RENV and T‑69/06 RENV, ECR, EU:T:2012:134), the Court annulled Alumina Decision I, in so far as it found, or was based on the finding, that the exemptions from excise duties on mineral oils used as fuel for the production of alumina granted by the French Republic, Ireland and the Italian Republic until 31 December 2003 (‘the exemptions from excise duty’) constituted State aid within the meaning of Article 87(1) EC and in so far as it ordered the French Republic, Ireland and the Italian Republic to take all measures necessary to recover those exemptions from their recipients to the extent that the latter did not pay excise duty at the rate of at least EUR 13.01 per 1 000 kg of heavy fuel oils.

24 By application filed on 1 June 2012, the Commission lodged an appeal against the judgment of the Court.

25 By judgment of 10 December 2013 in Commission v Ireland and Others (C‑272/12 P, ECR, EU:C:2013:812), the Court of Justice set aside the judgment in Ireland v Commission (cited in paragraph 23 above, EU:T:2012:134), referred the Alumina I cases back to the General Court and reserved the costs.

26 Further to the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), the Alumina I cases were assigned to the First Chamber by decisions of the President of the General Court of 21 January and 10 March 2014.

27 In accordance with Article 119(1) of the Rules of Procedure of 2 May 1991, Eurallumina and the Commission lodged their written observations on 28 January and 17 March 2014, respectively. In its written observations, Eurallumina stated that it did not wish to draw conclusions from the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), and requested the Court to rule on all the pleas relied on in support of the action in Case T‑62/06 RENV II. The Commission took note of that in its written observations. The Italian Republic did not lodge written observations.

28 By decision of the President of the Court of 30 September 2014, the Alumina I cases were reassigned to the First Chamber (Extended Composition), in accordance with Article 118(1) of the Rules of Procedure of 2 May 1991.

29 Acting upon a report of the Judge-Rapporteur, the Court decided to open the oral procedure and, by way of a measure of organisation of procedure adopted pursuant to Article 64(3)(b) of the Rules of Procedure of 2 May 1991, requested the parties, in Case T‑60/06 RENV II, to make submissions on an aspect of the proceedings. The parties complied with that request within the prescribed period.

30 By order of the President of the First Chamber (Extended Composition) of 26 January 2015, the present cases were joined for the purposes of the oral procedure and the judgment.

31 Eurallumina and the Commission presented oral argument and replied to oral questions put by the Court at the hearing on 6 March 2015. However, the Italian Republic was not represented during that hearing.

32 The Italian Republic claims, in essence, that the Court should:

– annul Alumina Decision I in so far as that decision finds the existence of State aid it allegedly granted, between 3 February 2002 and 31 December 2003, on the basis of the exemption at issue (‘the aid at issue’), and orders it to recover the aid at issue;

– order the Commission to pay the costs.

33 Eurallumina claims, in essence, that the Court should:

– annul or alter Alumina Decision I in so far as it determines the existence of the aid at issue and orders the Italian Republic to recover it;

– order the Commission not to order the recovery of the aid granted by the Italian Republic until 31 December 2006 or, at least, until 31 December 2003, on the basis of the exemption at issue;

– order the Commission to pay the costs.

34 The Commission contends that the Court should:

– dismiss the present actions;

– order the Italian Republic and Eurallumina to pay the costs.

Law

35 As a preliminary point, it should be borne in mind that the present actions both seek the annulment of Alumina Decision I in so far as it determines the existence of the aid at issue and orders the Italian Republic to recover it (‘the contested decision’). In that respect, the actions have the same subject matter.

Admissibility

36 In Case T‑60/06 RENV II, the Commission raises pleas of inadmissibility against (i) the first plea, in so far as it alleges infringement of the conditions set out in Article 87(1) EC for the classification of State aid relating, first, to the advantage conferred on the recipient and, second, to the distortion of competition and the effect on trade between Member States, and (ii) the sixth plea, in so far as it alleges infringement of the principle of legal certainty arising from the excessive duration of the formal investigation procedure not having been taken into account in the contested decision. Those specific complaints were articulated for the first time in the reply and thus constitute new pleas in law, within the meaning of Article 48(2) of the Rules of Procedure of 2 May 1991, which should be rejected as inadmissible.

37 The Italian Republic does not respond to those pleas of inadmissibility.

38 In Case T‑62/06 RENV II, the Commission argues that the action is inadmissible, in that it seeks to obtain more than the annulment of the contested decision. It is of the view, moreover, that the plea by which Eurallumina disputes that the exemption at issue constitutes State aid, within the meaning of 87(1) EC, was articulated for the first time in the reply and thus constitutes a new plea, within the meaning of Article 48(2) of the Rules of Procedure of 2 May 1991, which must be rejected as inadmissible.

39 Eurallumina maintains that the plea of inadmissibility directed against the action in Case T‑62/06 RENV II must be rejected as unfounded. However, it does not respond to the plea of admissibility directed against a new plea alleging, in essence, infringement of Article 87(1) EC.

40 As regards, first of all, the plea of inadmissibility directed against the action in Case T‑62/06 RENV II in that it seeks to obtain more than the annulment of the contested decision, it must be stated that, other than the annulment of the contested decision, that action seeks to have the Court order the Commission not to order the recovery of the aid granted by the Italian Republic until 31 December 2006 or, at least, until 31 December 2003, on the ground that that aid was lawful.

41 However, that request seeks only to establish the existence of unlawfulness impairing the contested decision and capable of justifying the upholding of the pleas and complaints relied on in support of the request for annulment of the contested decision and, therefore, the upholding of the latter request itself. That request is therefore devoid of any independent scope compared with the application for annulment of the contested decision.

42 Even supposing, as the Commission suggests, that that request pursues ends other than the mere annulment of the contested decision, such as the making of an order or the adoption of an operative part prohibiting the Commission from determining the existence of the aid at issue or ordering its recovery, it should be rejected as inadmissible, the Court lacking jurisdiction to accede to it.

43 According to established case-law, it is not for the Court to issue directions to the institutions or to substitute itself for them (see judgment of 24 January 1995 in Ladbroke Racing v Commission, T‑74/92, ECR, EU:T:1995:10, paragraph 75 and the case-law cited). That was particularly so in connection with a review of the legality of an act under Article 230 EC, in so far as the first subparagraph of Article 233 EC expressly stipulated that it was for the institution whose act had been declared void to take the necessary measures to comply with the judgment (see, to that effect, judgments of 24 June 1986 in AKZO Chemie and AKZO Chemie UK v Commission, 53/85, ECR, EU:C:1986:256, paragraph 23, and Ladbroke Racing v Commission, EU:T:1995:10, paragraph 75).

44 As regards, next, the plea of inadmissibility directed, in Case T‑62/06 RENV II, against a plea by which Eurallumina disputes that the exemption at issue constitutes aid, within the meaning of Article 87(1) EC, it has no basis in fact and must, therefore, be rejected, in so far as it is not apparent from the reply that Eurallumina raised such a plea.

45 In relation, last, to the pleas of inadmissibility directed, in Case T‑60/06 RENV II, against the complaints alleging (i) infringement of the conditions set out in Article 87(1) EC for the classification of State aid relating, first, to the advantage conferred on the recipient and, second, to the distortion of competition and the effect on trade between Member States, and (ii) infringement of the principle of legal certainty arising from the excessive duration of the formal investigation procedure not having been taken into account in the contested decision, it is appropriate to note that, pursuant to Article 44(1)(c) of the Rules of Procedure of 2 May 1991 read in conjunction with Article 48(2) thereof, no new plea in law could be introduced after the application had been lodged unless it was based on matters of law or of fact which came to light in the course of the procedure. However, a plea which constituted an amplification of a plea previously made, either expressly or by implication, in the original application and was closely linked to it had to be declared admissible (see judgment of 15 October 2008 in Mote v Parliament, T‑345/05, ECR, EU:T:2008:440, paragraph 85 and the case-law cited). A similar solution applied to a complaint articulated in support of a plea in law.

46 In order to be regarded as an amplification of a plea or complaint previously set out, a new argument had to present a sufficiently close connection with the pleas or complaints put forward initially in the originating application to be considered as forming part of the normal evolution of debate in proceedings before the Court (see, to that effect, judgment of 26 November 2013 in Groupe Gascogne v Commission, C‑58/12 P, ECR, EU:C:2013:770, paragraph 31).

47 In the present case, as the Commission correctly observes, the complaints mentioned in paragraph 45 above do not feature in the application in Case T‑60/06 RENV II and therefore constitute new complaints.

48 In addition, those new complaints were not based on any matter of fact or law which was revealed during the proceedings before the Court.

49 Last, those new complaints do not constitute the amplification of any of the pleas articulated in the application in Case T‑60/06 RENV II, which relate to different questions of law. In particular, they do not present a close connection with the first plea, alleging infringement of the condition of selectivity laid down in Article 87(1) EC, or with the sixth plea, based on the legal argument according to which the principles of protection of legitimate expectations, legal certainty and presumption of legality preclude State aid from being recovered where it has previously been authorised by the Council on the basis of tax harmonisation rules.

50 In view of the considerations set out in paragraphs 45 to 49 above, it is necessary to uphold the pleas of inadmissibility raised by the Commission in Case T‑60/06 RENV II and, consequently, to reject, as inadmissible, the complaints alleging (i) infringement of the conditions set out in Article 87(1) EC for the classification of State aid relating, first, to the advantage conferred on the recipient and, second, to the distortion of competition and the effect on trade between Member States, and (ii) infringement of the principle of legal certainty arising from the excessive duration of the formal investigation procedure not having been taken into account in the contested decision.

Substance

51 In support of the action in Case T‑60/06 RENV II, the Italian Republic relies on six pleas in law. The first plea alleges infringement of Article 87(1) EC and contradictory reasoning. The second plea alleges infringement of Article 1(b)(ii) and Article 4 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), and of Decisions 93/697, 96/273, 97/425, 1999/255, 1999/880 and 2001/224 (‘the Council’s authorisation decisions’). The third plea alleges infringement of the rules governing aid for environmental protection and, in particular, the second subparagraph of point 82(a) of the Community Guidelines on State aid for environmental protection (OJ 2001 C 37, p. 3; ‘the 2001 Guidelines’). The fourth plea alleges infringement of Article 87(3) EC and the Guidelines on national regional aid (OJ 1998 C 74, p. 9; ‘the Guidelines on regional aid’). The fifth plea alleges infringement of Article 18 of Directive 2003/96, read in combination with Annex II thereto, and of Decision 2001/224. The sixth plea alleges infringement of the principles of protection of legitimate expectations, legal certainty and of presumption of legality.

52 In support of the action in Case T‑62/06 RENV II, Eurallumina relies on four pleas in law. The first plea alleges infringement of the principle of protection of legitimate expectations. The second plea alleges infringement of the principles of legal certainty, presumption of validity, the effet utile of acts of the institutions and of the principle lex specialis derogat legi generali. The third plea in law alleges infringement of the principle of sound administration. The fourth plea alleges, in essence, infringement of the obligation to state reasons laid down in Article 253 and of the principle of protection of legitimate expectations.

53 It is appropriate to examine, first of all, the plea by which Eurallumina disputes, in essence, the applicability to the exemption at issue of the State aid rules, namely the second plea raised in support of the action in Case T‑62/06 RENV II, alleging infringement of the principles of legal certainty, presumption of validity, the effet utile of acts of the institutions and of the principle lex specialis derogat legi generali.

54 Next, it is necessary to examine the plea by which the Italian Republic objects, essentially, to the classification of the exemption at issue as State aid, within the meaning of Article 87(1) EC, for the period up until 31 December 2003, namely the first plea raised in support of the action in Case T‑60/06 RENV II, alleging infringement of Article 87(1) EC and contradictory reasoning.

55 It is appropriate to continue by examining the pleas by which the Italian Republic criticises, essentially, the classification of the exemption at issue as new aid and not as existing aid, within the meaning of Article 88 EC, namely the second plea, alleging infringement of Article 1(b)(ii) and Article 4 of Regulation No 659/1999 and of the Council’s authorisation decisions, and the fifth plea, alleging infringement of Article 18 of Directive 2003/96, read in combination with Annex II thereto, and of Decision 2001/224, raised in support of the action in Case T‑60/06 RENV II.

56 Next, it is appropriate to examine the pleas by which the Italian Republic criticises, essentially, the Commission for having declared incompatible with the common market, within the meaning of Article 87(3) EC, the aid granted until 31 December 2003 on the basis of the exemption at issue, namely the third plea, alleging infringement of the rules governing aid for environmental protection and, in particular, the second subparagraph of point 82(a) of the 2001 Guidelines, and the fourth plea, alleging infringement of Article 87(3) EC and the Guidelines on regional aid, raised in support of the action in Case T‑60/06 RENV II.

57 Last, the Court will conclude by examining the pleas by which the applicants dispute, essentially, the recovery of the aid at issue, namely (i) the sixth plea, alleging infringement of the principles of protection of legitimate expectations, legal certainty and of presumption of legality, raised in support of the action in Case T‑60/06 RENV II, and (ii) the first plea, alleging infringement of the principle of protection of legitimate expectations, and the third plea, alleging infringement of the principle of sound administration, and the fourth plea, alleging breach of the obligation to state reasons laid down in Article 253 EC and infringement of the principle of protection of legitimate expectations, raised in support of the action in Case T‑62/06 RENV II.

The second plea, alleging infringement of the principles of legal certainty, presumption of validity, the effet utile of acts of the institutions and of the principle lex specialis derogat legi generali, raised in support of the action in Case T‑62/06 RENV II

58 Eurallumina claims that the Commission infringed the principles of legal certainty, lex specialis derogat legi generali, presumption of validity and of the effet utile of acts of the institutions, in the contested decision, in finding that the exemption at issue constituted unlawful and recoverable State aid, for the period from 3 February 2002 to 31 December 2003. It argues, in essence, that the abovementioned principles precluded the application of the State aid rules to the exemption at issue.

– Infringement of the principles of legal certainty, presumption of legality and of the effet utile of acts of the institutions

59 Eurallumina claims that the Commission infringed, in the contested decision, the principles of legal certainty, presumption of legality and of the effet utile of acts of the institutions, as interpreted by the case-law, in that it classified the exemption at issue as State aid, whose recovery it could order, for the period from 3 February 2002 to 31 December 2003. In that regard, first, Eurallumina bases its argument on the indirect challenge, by the contested decision, to the legality of Article 18 of Directive 2003/96, which replaced and repealed Directives 92/81 and 92/82, and Decision 2001/224, nevertheless presumed legal, as well as their implementing measures, adopted by the Italian Republic. Second, it relies on the contested decision’s undermining of the effet utile of Article 18 of Directive 2003/96 and of Decision 2001/224, in that it prevented them from producing their full effect until 31 December 2006. Third, it cites the lack of appropriate proposals from the Commission, under Article 8(5) of Directive 92/81 or Article 18 of Directive 2003/96, in order for the Council to conduct an early review of the authorisation to apply the exemption at issue until 31 December 2006. Fourth, it refers to the Commission’s failure to bring an action for annulment, pursuant to Article 230 EC, against the Council’s authorisation decisions. Fifth, Eurallumina relies on the proposals for Council authorisation decisions, in which the Commission consistently proposed to the Council to authorise the Italian Republic to apply or to continue applying the exemption at issue, most recently until 31 December 2002. Sixth, it invokes the impossibility, for it, to anticipate the Commission’s change of attitude regarding the legality of the Council’s authorisation decisions and the lawfulness of the exemption at issue. Seventh, it pleads a contradictory conduct of the Commission, which, in initiating the formal investigation procedure from 30 October 2001 and ordering the recovery of the aid at issue, acted in a manner contrary to the wording and spirit of its proposal for a Council authorisation decision of 15 November 2000, pursuant to which the Italian Republic should be authorised to continue applying the exemption at issue until 31 December 2002. Eighth, it refers to the content of the proposals for Council authorisation decisions, which fuelled the legitimate expectation it had that the exemption at issue was lawful until 31 December 2006.

60 The Commission contends that the present complaint should be rejected as unfounded.

61 The present complaint raises, in essence, the question whether the contested decision produces legal effects contrary to those produced by Decision 2001/224 and by Article 18 of Directive 2003/96, which, allegedly, expressly authorised the Italian Republic to continue applying the exemption at issue until 31 December 2006.

62 In that respect, it should be noted that measures of the institutions are in principle presumed to be lawful and accordingly produce legal effects until such time as they are withdrawn, annulled in an action for annulment or declared invalid following a reference for a preliminary ruling or a plea of illegality (see, to that effect, judgments of 15 June 1994 in Commission v BASF and Others, C‑137/92 P, ECR, EU:C:1994:247, paragraph 48; 8 July 1999 Chemie Linz v Commission, C‑245/92 P, ECR, EU:C:1999:363, paragraph 93; and 5 October 2004 Commission v Greece, C‑475/01, ECR, EU:C:2004:585, paragraph 18).

63 It is apparent from settled case-law, moreover, that the principle of legal certainty aims to ensure that situations and legal relationships governed by EU law remain foreseeable (judgments of 10 April 2003 in Schulin, C‑305/00, ECR, EU:C:2003:218, paragraph 58, and 15 September 2005 Ireland v Commission, C‑199/03, ECR, EU:C:2005:548, paragraph 69). To that end, it is essential that the institutions observe the principle that they may not alter measures which they have adopted and which affect the legal and factual situation of persons, meaning that they may amend such acts only in accordance with the rules on competence and procedure (see judgment of 21 October 1997 in Deutsche Bahn v Commission, T‑229/94, ECR, EU:T:1997:155, paragraph 113 and the case-law cited). Observance of the principle of legal certainty also requires that the institutions avoid, as a matter of principle, inconsistencies that might arise in the implementation of the various provisions of EU law. This is all the more necessary when those provisions pursue the same objective, such as undistorted competition in the common market (see, to that effect and by analogy, judgments of 15 June 1993 in Matra v Commission, C‑225/91, ECR, EU:C:1993:239, paragraphs 41 and 42, and 31 January 2001 RJB Mining v Commission, T‑156/98, ECR, EU:T:2001:29, paragraph 112 and the case-law cited).

64 In the present case, as the Commission correctly notes, the line of argument behind the present complaint is directly refuted by the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812).

65 In paragraphs 45 to 48 of that judgment, the Court of Justice drew a clear distinction between the respective powers of the Council and the Commission in the field of harmonisation of legislation relating to excise duties, on the one hand, and in the area of State aid, on the other. It also held that the purpose and scope of the procedure laid down in Article 8(4) of Directive 92/81 differed from those of the rules established in Article 88 EC.

66 In paragraph 49 of the same judgment, it thus concluded that a Council decision authorising a Member State, in accordance with Article 8(4) of Directive 92/81, to introduce an exemption from excise duties could not have the effect of preventing the Commission from exercising the powers conferred on it by the EC Treaty and, consequently, setting in motion the procedure laid down in Article 88 EC in order to review whether that exemption constituted State aid and on the conclusion of that procedure, if appropriate, to adopt a decision such as Alumina Decision I.

67 The Court of Justice further explained, in paragraph 50 of the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), that the fact that the Council’s authorisation decisions granted full exemptions from excise duties while setting detailed conditions of a geographical and temporal nature and that those conditions had been strictly respected by the Member States had no effect on the division of powers between the Council and the Commission and therefore could not deprive the Commission of the right to exercise its powers.

68 In paragraph 51 of the same judgment, it noted moreover that respect for that division of powers prompted recital 5 of Decision 2001/224, which was in force in the period for which the contested decision ordered the recovery of the aid at issue, to state that Decision 2001/224 was to be without prejudice to the outcome of any procedures that might be initiated under Articles 87 EC and 88 EC and that it did not override ‘the requirement for Member States to notify instances of potential State aid to the Commission’.

69 Last, in paragraphs 52 and 53 of the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), the Court of Justice again indicated that the fact that the Council’s authorisation decisions had been adopted on a proposal from the Commission and that the Commission had never used the powers available to it, under Article 8(5) of Directive 92/81 or Articles 230 EC and 241 EC, in order to secure the abolition or alteration of those decisions could not preclude the exemptions from excise duty from being classified as State aid, within the meaning of Article 87(1) EC, if the conditions governing the existence of State aid were met.

70 Pursuant to the second paragraph of Article 61 of the Statute of the Court of Justice of the European Union, where a case is referred back to the General Court, that Court is to be bound by the decision of the Court of Justice on points of law. In view of paragraph 54 of the grounds of the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), it must be stated that the grounds referred to in paragraphs 65 to 69 above constitute the necessary support for the operative part of that judgment, by which the Court of Justice set aside the judgment in Ireland v Commission, cited in paragraph 23 above (EU:T:2012:134), and referred the Alumina I cases back to the General Court.

71 However, it is apparent from those grounds that, in setting in motion the procedure laid down in Article 88 EC in order to determine whether the exemption at issue constituted State aid and in adopting, on the conclusion of that procedure, Alumina Decision I, the Commission was merely exercising powers conferred on it by the EC Treaty in the area of State aid and that, in so doing, it could not have encroached upon the competences vested in the Council by the EC Treaty in the area of the harmonisation of legislation relating to excise duties or the acts adopted by the Council in the exercise of those powers.

72 It follows that, in implementing the procedure laid down in Article 88 EC in order to examine whether the exemption at issue constituted State aid and in adopting, on the conclusion of that procedure, Alumina Decision I, the Commission could not infringe the acts adopted by the Council and which, like Article 18 of Directive 2003/96, read in combination with the provisions of Annex II thereto, or Article 1(2) of Decision 2001/224, expressly authorised the Italian Republic to continue applying the exemption at issue until 31 December 2006. Those latter decisions could produce effects only within the area covered by the rules in the field of harmonisation of legislation relating to excise duties and did not predetermine the effects of any decision, such as Alumina Decision I, which could be adopted by the Commission in the exercise of its powers in the area of State aid.

73 In addition, it follows from paragraphs 52 and 53 of the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), in which the Court of Justice notes that the concept of State aid corresponds to an objective situation and cannot depend on the conduct or statements of the institutions, that the fact that the Commission had taken the view, at the time when the Council adopted the authorisation decisions, that the exemptions from excise duty did not give rise to a distortion of competition and did not impede the proper functioning of the common market could not preclude those exemptions from being classified as State aid, within the meaning of Article 87(1) EC, if the conditions governing the existence of State aid were met.

74 It follows, a fortiori, from the approach adopted by the Court of Justice that the Commission was not bound, for the purpose of the classification of the exemptions from excise duty as State aid, by the Council’s assessments, in its decisions in the field of harmonisation of legislation relating to excise duties, according to which those exemptions did not give rise to a distortion of competition and did not impede the proper functioning of the common market.

75 Eurallumina therefore has no basis to argue, in the present case, that the contested decision produces legal effects contrary to those produced by Decision 2001/224 and Article 18 of Directive 2003/96.

76 As regards the legal argument, relied on in support of the present complaint, based on the legitimate expectation Eurallumina could have that the exemption at issue was lawful, it is in fact linked to the first and fourth pleas raised in support of the action in Case T‑62/06 RENV II, in that they allege infringement of the principle of protection of legitimate expectations, and will therefore have to be examined in the context of those pleas.

77 Accordingly, subject to the examination of that argument, the complaint alleging infringement of the principles of legal certainty, presumption of legality and of the effet utile of acts of the institutions must be rejected as unfounded.

– Infringement of the principle lex specialis derogat legi generali

78 By the present complaint, Eurallumina claims that the Commission infringed the principle lex specialis derogat legi generali, in the contested decision, in that it did not give precedence to Article 93 EC and its implementation measures, including Article 8(4) and (5) of Directive 92/81 and Article 18(1) of Directive 2003/96, over Articles 87 EC and 88 EC. In that respect, first, Eurallumina bases its argument on the wording of Article 87 EC, which provides that it applies ‘save as provided in this [EC] Treaty’, with the result that it cannot in particular be applied where there are specific tax harmonisation measures, adopted on the basis of Article 93 EC. Second, it refers to Directive 92/81 and Directive 2003/96, based on Article 93 EC, which provide a specific framework under which the Council and the Commission act together to authorise and monitor derogations from the harmonisation of the structures of excise duties on mineral oils. Third, it cites the proposal from the Commission to the Council to extend the exemption at issue, which is based on the assessment that it was compatible with the EC Treaty, in particular with the provisions guaranteeing fair competition and the absence of distortion in the functioning of the common market. Fourth, it relies on recital 5 of Decision 2001/224, which did not authorise the Commission to drain that decision of its effects and which cannot prevail over the provisions of the EC Treaty or of Directive 92/81.

79 The Commission contends that the present complaint should be rejected as unfounded.

80 The present complaint thus raises the question whether, as Eurallumina claims, Article 93 EC and its implementation measures, including Article 8(4) and (5) of Directive 92/81 and Article 18(1) of Directive 2003/96, may be classified as lex specialis in relation to Articles 87 EC and 88 EC and whether, therefore, they override those latter articles.

81 In that regard, it is important to recall that, in accordance with the principle lex specialis derogat legi generali, special provisions prevail over general rules in situations which they specifically seek to regulate (see, to that effect, judgments of 30 April 2014 in Barclays Bank, C‑280/13, ECR, EU:C:2014:279, paragraph 44, and 5 November 2014 Mayaleh v Council, T‑307/12 and T‑408/13, ECR, EU:T:2014:926, paragraph 198 and the case-law cited).

82 In the present case, as the Commission correctly notes, the line of argument for the present complaint is directly refuted by the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812).

83 As pointed out in paragraph 65 above, the Court of Justice drew, in paragraphs 45 to 48 of the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), a clear distinction between the respective powers of the Council and the Commission in the field of harmonisation of legislation relating to excise duties, on the one hand, and in the area of State aid, on the other. It also held that the purpose and scope of the procedure laid down in Article 8(4) of Directive 92/81 differed from those of the rules established in Article 88 EC.

84 It follows that the rules in the field of harmonisation of tax legislation, Article 93 EC and its implementing measures in particular, and the State aid rules, including Articles 87 EC and 88 EC, are two autonomous bodies of rules and that the first cannot be regarded as lex specialis in relation to the second.

85 Accordingly, the present complaint, alleging infringement of the principle lex specialis derogat legi generali, must be rejected as unfounded.

86 Subject to paragraphs 76 and 77 above, the second plea raised in support of the action in Case T‑62/06 RENV II is thus rejected in its entirety.

The first plea, alleging infringement of Article 87(1) EC and contradictory reasoning, raised in support of the action in Case T‑60/06 RENV II

87 The Italian Republic argues that, in the contested decision, the Commission infringed one of the conditions set out in Article 87(1) EC for the classification of State aid, in that it found, erroneously, that the exemption at issue was selective. In that regard, first, it relies on point 14 of Table A annexed to the 1995 legislative decree, which indicates that the exemption at issue benefited, in a general manner, each economic operator that used mineral oils as fuel to produce alumina, irrespective of where those oils were consumed. Second, it claims that, even though, in Italy, it was only Eurallumina’s Sardinian plant that benefited from the exemption at issue, that circumstance is of a purely factual nature linked to the specificity of alumina production. Furthermore, the Italian Republic argues that, in the contested decision, the selectivity of the exemption at issue was reasoned in a contradictory manner.

88 The Commission contends that the first plea should be rejected as unfounded.

89 As regards the plea alleging contradictory reasoning in the contested decision in relation to the condition of selectivity laid down in Article 87(1) EC, it is worth noting that, according to Article 44(1) of the Rules of Procedure of 2 May 1991, the application initiating proceedings had to contain a summary of the pleas in law on which it was based. That summary had to be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the action, if necessary without any other supporting information. Accordingly, the application had to specify the nature of the grounds on which the action was based, so that a mere abstract statement of the grounds did not satisfy the requirements of the Rules of Procedure of 2 May 1991 (see, to that effect, judgment of 27 September 2012 in Nynäs Petroleum and Nynas Belgium v Commission, T‑347/06, ECR, EU:T:2012:480, paragraph 107). A similar solution applied to a complaint relied on in support of a plea in law.

90 In the present case, as the Commission correctly argues, the complaint alleging contradictory reasoning, in relation to the condition of selectivity laid down in Article 87(1) EC, is devoid of all substance. In the application in Case T‑60/06 RENV II, the line of argument developed by the Italian Republic in support of the first plea concerns only whether, in the contested decision, the Commission infringes the condition of selectivity laid down in Article 87(1) EC. However, it does not indicate the reasons why the grounds of the contested decision regarding that condition are contradictory.

91 Therefore, in view of the present complaint, alleging contradictory reasoning in the contested decision, the application in Case T‑60/06 RENV II does not meet the requirements of precision prescribed by Article 44(1)(c) of the Rules of Procedure of 2 May 1991. That complaint must therefore be rejected as inadmissible.

92 With regard to the complaint alleging infringement, in the contested decision, of the condition of selectivity laid down in Article 87(1) EC, in the first place, it is appropriate to examine the argument of the Italian Republic according to which point 14 of Table A annexed to the 1995 legislative decree indicates that the exemption at issue benefited, in a general manner, each economic operator that used mineral oils as fuel to produce alumina, irrespective of where those oils were consumed. That argument essentially raises the question whether the Commission erred, in the contested decision, in assessing the condition of selectivity in relation to the exemption from excise duty, as authorised by the Council on the basis of Article 8(4) of Directive 92/81, and not in relation to the exemption from excise duty, as provided for in point 14 of Table A annexed to the 1995 legislative decree.

93 The selective nature of the exemption at issue, on the regional level, means that it applies only in Sardinia. However, as correctly observed by the Italian Republic and acknowledged by the Commission, in recitals 17 and 63 of Alumina Decision I, and by the Court of Justice, in paragraph 50 of the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), it is the Council’s authorisation decisions, adopted on the basis of Article 8(4) of Directive 92/81, which set detailed conditions of a geographical nature and accorded the exemption at issue a selective character on the regional level, in that they authorised the Italian Republic to apply or to continue to apply the exemption only in Sardinia.

94 The fact remains that the relevant measure for the purposes of the examination in the light of the State aid rules is, in this case, the exemption at issue, as authorised by the Council on the basis of Article 8(4) of Directive 92/81, since the Italian Republic applied the exemption provided for in point 14 of Table A annexed to the 1995 legislative decree while observing the detailed geographic and temporal conditions to which the Council had made its authorisation subject.

95 The Commission was therefore correct, in the contested decision, to assess the condition of selectivity in relation to the exemption at issue, as actually applied by the Italian Republic. Accordingly, the present argument of the Italian Republic, alleging erroneous assessment of the condition of selectivity in relation to the exemption from excise duty, as provided for in point 14 of Table A annexed to the 1995 legislative decree, must be rejected as unfounded.

96 In the second place, it is appropriate to examine the argument of the Italian Republic alleging, in essence, that the Commission committed an error, in recital 63 of the contested decision, in finding that the exemptions from excise duty were selective to the extent that they ‘only appl[ied] to companies that produce[d] alumina’, that, ‘in practice, in each Member State there [wa]s only one company benefiting from the exemption at stake’ and that it was ‘Eurallumina in Sardinia’, even though the fact that only Eurallumina’s Sardinian plant had benefited from the exemption at issue was a circumstance of a purely factual nature linked to the specificity of alumina production in Italy.

97 In that regard, it should be borne in mind that Article 87(1) EC prohibits State aid ‘favouring certain undertakings or the production of certain goods’, that is to say selective aid (judgment of 15 December 2005 in Italy v Commission, C‑66/02, ECR, EU:C:2005:768, paragraph 94).

98 Regarding appraisal of the condition of selectivity, it is clear from settled case-law that Article 87(1) EC requires assessment of whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ in comparison with others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation (see judgment of 15 November 2011 in Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, ECR, EU:C:2011:732, paragraph 75 and the case-law cited).

99 The determination of the reference framework has a particular importance in the case of tax measures, since the very existence of an advantage may be established only when compared with ‘normal’ taxation. The ‘normal’ tax rate is the rate in force in the geographical area constituting the reference framework (judgment of 6 September 2006 in Portugal v Commission, C‑88/03, ECR, EU:C:2006:511, paragraph 56).

100 In the present case, recitals 63 and 64 of Alumina Decision I state the following:

‘(63) In the case at hand ... the exemptions only apply to companies that produce alumina and in practice, in each Member State there is only one company benefiting from the exemption at stake: ... Eurallumina in Sardinia ... As long as the Council Decisions were binding, the exemptions were regionally selective, because these Decisions only authorised exemptions in certain regions and potential investors interested to make investments in alumina production in other regions could not be sure to receive similar treatment. The selection of the regions has no relationship whatsoever with the internal logic of the national tax systems at stake.

(64) Before Directive 2003/96 ... became applicable, Community law required Member States, in principle, to impose excise duties on mineral oils, so that specific exemptions, limited to a given production and to given regions, could not be considered as being justified by the nature and general scheme of the system. The arguments by which ... Italy defend[s] the exemption only for the production of alumina derive from the circumstances in the markets and from the circumstances of alumina production in the specific regions concerned. These arguments do not derive from the nature and logic of the respective domestic tax systems, given that the latter were to comply with the requirements laid down by Community law. Consequently, the measures granted before Directive 2003/96 ... became applicable, cannot be found justified by the nature and general scheme of the system and constitute State aid within the meaning of Article 87(1) [EC].’

101 Contrary to what the Italian Republic claims, it follows from recitals 63 and 64 of Alumina Decision I that, in that decision, the Commission did not rely, in its analysis of the selectivity of the exemption at issue, on the fact that that exemption had, in practice, benefited only a single alumina producer situated in Sardinia, namely Eurallumina, but on the dual fact that, in the reference framework corresponding to the Italian tax system, the exemption at issue appeared to be a selective measure on the regional level, in so far as it favoured every alumina producer situated in Sardinia over potential investors wishing to make investments in alumina production in other Italian regions, and selective from a substantive perspective, in that it favoured companies producing alumina and alumina production over companies producing other goods or services and other production.

102 It follows that the present argument of the Italian Republic, which is based on an incorrect reading of Alumina Decision I, has no factual basis and must, therefore, be rejected.

103 It is therefore necessary to reject the first plea raised in support of the action in Case T‑60/06 RENV II in its entirety.

The second plea, alleging infringement of Article 1(b)(ii), Article 4 of Regulation No 659/1999 and of the Council’s authorisation decisions, raised in support of the action in Case T‑60/06 RENV II

104 The Italian Republic claims, in essence, that the Commission infringed Article 1(b)(ii), Article 4 of Regulation No 659/1999 and the Council’s authorisation decisions, in that it found, in recital 67 of the contested decision, that the aid at issue constituted new aid, which had become unlawful, within the meaning of Article 1(f) of Regulation No 659/1999, since it had not been notified to it before being put into effect. In its view, the aid at issue should have been classified as existing aid, within the meaning of Article 1(b)(ii) of Regulation No 659/1999. In that regard, first, the Italian Republic relies on the Council’s authorisation decisions, most recently Decision 2001/224, which authorised it to continue applying the exemption at issue. Second, it invokes the lex specialis nature of Article 93 EC, which establishes the Council’s competence in matters of tax harmonisation and forms the legal basis of Directive 92/81 and the Council’s authorisation decisions, in relation to the lex generalis of Articles 87 EC and 88 EC, which establish the Commission’s competence in State aid matters. Third, it refers to the Council’s obligation, under Article 8(4) of Directive 92/81, to ensure that the exemption at issue was justified by specific policy considerations, that it did not give rise to a distortion of competition and that it did not impede the proper functioning of the common market.

105 The Commission contends that the second plea should be rejected as unfounded.

106 The present plea raises, in essence, the question whether the Commission committed an error, in the contested decision, in assessing the lawfulness of the exemption at issue in the light of the rules applicable to new aid, even though it was existing aid, within the meaning of Article 1(b)(ii) of Regulation No 659/1999, since it had been authorised by the Council’s authorisation decisions, most recently by Decision 2001/224.

107 In that regard, it is important to point out that, according to Article 1(b)(ii) of Regulation No 659/1999, ‘existing aid’ can mean ‘authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council’.

108 The EC Treaty establishes different procedures according to whether the aid is existing or new. Whereas new aid must, under Article 88(3) EC, be notified in advance to the Commission and cannot be implemented before the procedure has culminated in a final decision, existing aid may, under Article 88(1) EC, be duly implemented as long as the Commission has not found it to be incompatible (see judgment of 24 March 2011 in Freistaat Sachsen and Others v Commission, T‑443/08 and T‑455/08, ECR, EU:T:2011:117, paragraph 187 and the case-law cited). Existing aid may therefore only be the subject, should the situation arise, of a decision of incompatibility producing effects for the future (see judgment in Freistaat Sachsen and Others v Commission, EU:T:2011:117, paragraph 187 and the case-law cited).

109 In the present case, as the Commission correctly notes, the line of argument behind the present plea is directly refuted by the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812).

110 In paragraph 49 of that judgment, the Court of Justice concluded that a Council decision authorising a Member State, in accordance with Article 8(4) of Directive 92/81, to introduce an exemption from excise duties could not have the effect of preventing the Commission from exercising the powers conferred on it by the Treaty and, consequently, setting in motion the procedure laid down in Article 88 EC in order to review whether that exemption constituted State aid and on the conclusion of that procedure, if appropriate, to adopt a decision such as the contested decision. In paragraph 47 of the same judgment, the Court had previously held that the purpose and scope of the procedure laid down in Article 8(4) of Directive 92/81 differed from the rules established in Article 88 EC for governing new and existing State aid. It follows from those reasons that the Council’s authorisation decisions, adopted on the basis of Article 8(4) of Directive 92/81, may in no way be analysed as authorisation decisions for an aid scheme or for individual aid, within the meaning of Article 1(b)(ii) of Regulation No 659/1999.

111 It follows that the authorisation decisions of the Council adopted on the basis of Article 8(4) of Directive 92/81 do not permit, in the present case, the exemption at issue to be classified as ‘existing aid’ within the meaning of Article 1(b)(ii) of Regulation No 659/1999.

112 The second plea raised in support of the action in Case T‑60/06 RENV II must therefore be rejected as unfounded.

The fifth plea, alleging infringement of Article 18 of Directive 2003/96, read in combination with Annex II thereto, and of Decision 2001/224, raised in support of the action in Case T‑60/06 RENV II

113 The Italian Republic essentially claims that, in the contested decision, the Commission infringed Article 18 of Directive 2003/96, read in combination with the provisions of Annex II thereto, and Article 1(2) of Decision 2001/224, which expressly authorised it to continue applying the exemption at issue until 31 December 2006. The entry into force of Directive 2003/96, on 1 January 2004, ended its obligation of notifying the aid at issue to the Commission and the Commission had no competence to adopt the contested decision.

114 The Commission contends that the fifth plea should be rejected as unfounded.

115 In the present case, as the Commission correctly notes, the line of argument behind the present plea is directly refuted by the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812).

116 It is apparent from the grounds of the judgment in Commission v Ireland and Others, cited in paragraph 25 above (EU:C:2013:812), mentioned in paragraphs 65 to 69 above that, in setting in motion the procedure laid down in Article 88 EC in order to determine whether the exemption at issue constituted State aid and in adopting, on the conclusion of that procedure, the contested decision, the Commission was merely exercising the powers conferred on it by the EC Treaty in the area of State aid and that, in so doing, it could not have encroached upon the competences vested in the Council by the Treaty in the area of the harmonisation of legislation relating to excise duties or the acts adopted by the Council in the exercise of those powers.

117 It follows that, in implementing the procedure laid down in Article 88 EC in order to examine whether the exemption at issue constituted State aid and in adopting, on the conclusion of that procedure, Alumina Decision I, the Commission could not infringe the acts adopted by the Council and which, like Article 18 of Directive 2003/96, read in combination with the provisions of Annex II thereto, or Article 1(2) of Decision 2001/224, expressly authorised the Italian Republic to continue applying the exemption at issue until 31 December 2006. Those latter decisions could produce effects only within the area covered by the rules in the field of harmonisation of excise duty legislation and did not predetermine the effects of any decision, such as the contested decision, that could be adopted by the Commission in the exercise of its powers in the area of State aid.

118 Therefore, the Italian Republic is not justified in arguing that the contested decision infringes Article 18 of Directive 2003/96, read in combination with the provisions of Annex II thereto, and Article 1(2) of Decision 2001/224.

119 Accordingly, the fifth plea raised in support of the action in Case T‑60/06 RENV II must be rejected as unfounded.

The third plea, alleging infringement of the rules governing aid for environmental protection and, in particular, the second subparagraph of point 82(a) of the 2001 Guidelines, raised in support of the action in Case T‑60/06 RENV II

120 The Italian Republic considers, in essence, that the Commission infringed, in Alumina Decision I, the rules governing aid for environmental protection and, in particular, the second subparagraph of point 82(a) of the 2001 Guidelines, in so far as it declined to find that the aid at issue presented a close connection with the achievement by Eurallumina of environmental protection objectives. In that regard, first, the Italian Republic bases its argument on the significant impact of alumina production on the environment, associated with the necessity of safely disposing of the waste resulting from the industrial cycle, which explains why the area in which Eurallumina was established had been declared a zone with high risk of environmental emergency by decision of the Italian Council of Ministers of 30 November 1990. Second, it relies on the environmental commitments, to be performed at its own expense, undertaken by Eurallumina, in the context of implementing an environmental rehabilitation and remediation plan, approved by decree of the President of the Italian Council of Ministers of 23 April 1993, and in particular the remediation programme enacted by the Italian Ministry of the Environment on 15 June 1995 and the programme contract concluded with the Italian authorities on 12 April 1999. Third, it relies on the obligation to reduce sulphur oxide and dust emissions, imposed by the Italian Ministry of the Environment on Eurallumina, by a decree in 1998. Fourth, it cites the commitment made by Eurallumina, by an agreement, of 27 April 1999, concluded with the Sardinia region, to construct a special facility for the desulphurisation of fumes emitted by calcining kilns and boilers and, in that context, it refers to Eurallumina’s significant investments in its Sardinian plant, which continued until 2005 and after which it obtained ISO 14001 certification. Fifth, it relies on the letter, of 6 February 2002, which it sent to the Commission during the formal investigation procedure, outlining the main costs imposed on Eurallumina by Italian tax and environmental legislation and the environmental commitments undertaken by Eurallumina.

121 The Commission contends that the third plea should be rejected as, in part, inadmissible or, in any event, unfounded and, for the remainder, unfounded.

122 The present plea essentially asks whether, in recital 75 of Alumina Decision I, the Commission erred in declining to find that the aid at issue had been granted in consideration of the achievement, by Eurallumina, of environmental protection objectives and that, to that extent, it was compatible with the common market, in view of points 47 to 52 of the 2001 Guidelines.

123 In that respect, it is necessary to note that point 82 of the 2001 Guidelines, published in the Official Journal on 3 February 2001, provides inter alia the following:

‘...

In the case of non-notified aid, the Commission will apply:

(a) these guidelines if the aid was granted after their publication in the Official Journal of the European Communities;

...’

124 In addition, points 47 to 51 of the 2001 Guidelines state the following:

‘47. When adopting taxes that are to be levied on certain activities for reasons of environmental protection, Member States may deem it necessary to make provision for temporary exemptions for certain firms notably because of the absence of harmonisation at European level or because of the temporary risks of a loss of international competitiveness. In general, such exemptions constitute operating aid caught by Article 87 of the EC Treaty. In analysing these measures, it has to be ascertained among other things whether the tax is to be levied as the result of a Community decision or an autonomous decision on the part of a Member State.

...

49. If the tax is to be levied as the result of a Community directive, there are two possible scenarios:

...

(b) a Member State applies tax to certain products at the minimum rate laid down in the Community directive and grants an exemption to certain firms, which are thus subject to taxation at a rate below the minimum rate. If such an exemption is not authorised by the directive in question, it will constitute aid which is incompatible with Article 87 [EC]. If it is authorised by the directive, the Commission may take the view that it is compatible with Article 87 [EC] in so far as it is necessary and is not disproportionate in the light of the Community objectives pursued. The Commission will be specially concerned to ensure that any such exemption is strictly limited in time.

50. In general, the tax measures in question should make a significant contribution to protecting the environment. Care should be taken to ensure that the exemptions do not, by their very nature, undermine the general objectives pursued.

51. These exemptions can constitute operating aid which may be authorised on the following conditions:

1. When, for environmental reasons, a Member State introduces a new tax in a sector of activity or on products in respect of which no Community tax harmonisation has been carried out or when the tax envisaged by the Member State exceeds that laid down by Community legislation, the Commission takes the view that exemption decisions covering a 10-year period with no degressivity may be justified in two cases:

(a) these exemptions are conditional on the conclusion of agreements between the Member State concerned and the recipient firms whereby the firms or associations of firms undertake to achieve environmental protection objectives during the period for which the exemptions apply or when firms conclude voluntary agreements which have the same effect. Such agreements or undertakings may relate, among other things, to a reduction in energy consumption, a reduction in emissions or any other environmental measure. The substance of the agreements must be negotiated by each Member State and will be assessed by the Commission when the aid projects are notified to it. Member States must ensure strict monitoring of the commitments entered into by the firms or associations of firms. The agreements concluded between a Member State and the firms concerned must stipulate the penalty arrangements applicable if the commitments are not met.

These provisions also apply where a Member State makes a tax reduction subject to conditions that have the same effect as the agreements or commitments referred to above;

(b) these exemptions need not be conditional on the conclusion of agreements between the Member State concerned and the recipient firms if the following alternative conditions are satisfied:

– where the reduction concerns a Community tax, the amount effectively paid by the firms after the reduction must remain higher than the Community minimum in order to provide the firms with an incentive to improve environmental protection,

...

2. The provisions in point 51.1 may be applied to existing taxes if the following two conditions are satisfied at the same time:

(a) the tax in question must have an appreciable positive impact in terms of environmental protection;

(b) the derogations for the firms concerned must have been decided on when the tax was adopted ...’

125 In recitals 71 and 73 of Alumina Decision I, the Commission stated that ‘the aid granted after 3 February 2001 [had to] be assessed under the 2001 Guidelines ... in accordance with [the second subparagraph of] point 82(a) of those guidelines’ and, more specifically, under points 47 to 52 thereof, which lay down rules applicable to all operating aid in the form of tax reductions or exemptions.

126 In recitals 73 to 76 of the same decision, it also stated the following:

‘(73) ... Originally, excise duties on mineral oils were not designed as an instrument of environmental policy. However, one likely feature for a levy to be considered as environmental would be that the taxable base of the levy has a clear negative effect on the environment. As the use of mineral oils has a clear negative effect on the environment, excise duties on mineral oils can be considered as environmental taxes.

(74) In all three Member States to which this Decision is addressed, the excise duties on mineral oils existed before the introduction of the exemptions in question, and they must therefore be considered as existing taxes within the meaning of point 51.2 of the 2001 [Guidelines]. The excise duties, however, have an appreciable positive impact in terms of environmental protection within the meaning of point 51.2(a), as they constitute a significant incentive for producers to reduce their consumption of mineral oils. The excise taxes concerned may not have had an explicit environmental purpose from the outset and the exemptions were decided on many years ago, in particular in the case of Ireland and Italy, and in any event in all three Member States well before the 2001 [Guidelines] became applicable. Therefore, their situation may be considered as if they had been decided at the time the excise tax was adopted. Consequently, in accordance with point 51.2 of the guidelines, the provisions in point 51.1 may be applied to the exemptions to be assessed in this decision.

(75) In their comments, the beneficiaries submitted that they had undertaken significant environmental investments in return for the exemptions. However, there is no evidence that the beneficiaries concluded any agreements with the Member States concerned whereby they committed to achieve environmental protection objectives during the period for which the exemptions applied. Nor were the tax exemptions subject to conditions that would ensure the same effect as such agreements and commitments. Furthermore it appears that the environmental investments did not go beyond what was necessary to comply with relevant legislation or beyond what was feasible and economical from a commercial point of view. As a consequence, the conditions for applying point 51.1(a) of the 2001 Guidelines ... are not fulfilled and only the provisions of point 51.1(b) are applicable in this case.

(76) In respect of the period until 31 December 2003, the exemptions concern a Community tax, namely a tax that has been harmonised on the basis of Directive 92/82 ... Therefore, point 51.1(b), first indent, of the 2001 Guidelines ... is applicable. According to that provision, a reduction can be approved if the amount effectively paid by the beneficiaries after the reduction remains higher than the Community minimum. However, all three exemptions were full exemptions. Taking into account the positive environmental impact of the tax referred to in recital (73) of this Decision, the measures in question can only be declared compatible with the common market to the extent that beneficiaries are required to pay a rate higher than the Community minimum rate set by Directive 92/82 ..., which for that period amounted to EUR 13 per 1 000 kg. Therefore, only the exemption from the tax beyond a rate of EUR 13.01 can be considered compatible, while the exemption up to the level of EUR 13.01 constitutes incompatible aid.’

127 As a preliminary point, it is appropriate to note that, according to settled case-law, in the specific area of State aid, the Commission is bound by the guidelines and notices that it issues, to the extent that they do not depart from the rules in the EC Treaty (see judgment of 2 December 2010 in Holland Malt v Commission, C‑464/09 P, ECR, EU:C:2010:733, paragraph 47 and the case-law cited).

128 In the present case, the Italian Republic does not challenge recital 67 of Alumina Decision I, in which it is indicated that the aid at issue was never notified to the Commission. Since the aid was granted after 3 February 2001, the 2001 Guidelines are applicable to it, in accordance with point 82 thereof (see paragraph 123 above).

129 In order to establish that the aid at issue is compatible with the common market under the 2001 Guidelines, the Italian Republic produced, in annex to the application, a series of acts and agreements which, in its view, show that Eurallumina was required to achieve numerous environmental protection objectives or voluntarily committed itself to achieving such objectives during the period in which the aid at issue had been granted.

130 The Commission nevertheless considers that that line of argument should be rejected as inadmissible, since the Italian Republic did not produce those acts and agreements during the formal investigation procedure.

131 In that regard, it must be pointed out that, in so far as the Italian Republic relies, in support of the action in Case T‑60/06 RENV II, on items of information which it claims were not available when the contested decision was adopted, or which were not brought to the attention of the Commission during the formal investigation procedure, that information cannot be taken into account by the Court for the purposes of assessing the legality of that decision.

132 In an action for annulment, the legality of the measure concerned must be assessed in the light of the matters of fact and of law existing at the time when that measure was adopted (judgment of 14 January 2004 in Fleuren Compost v Commission, T‑109/01, ECR, EU:T:2004:4, paragraph 50). Thus, according to the case-law, the legality of a decision concerning aid must be assessed in the light of the information available to the Commission when the decision was adopted (see judgment in Fleuren Compost v Commission, EU:T:2004:4, paragraph 51 and the case-law cited). A Member State therefore cannot rely before the EU judicature on matters of fact which were not put forward in the course of the pre-litigation procedure laid down in Article 88 EC (see judgment in Fleuren Compost v Commission, EU:T:2004:4, paragraph 51 and the case-law cited).

133 In the present case, it is apparent from the file that, in the written comments it sent by letter of 6 February 2002, during the formal investigation procedure, the Italian Republic argued, generally, that the aid at issue partially compensated the operational costs imposed on Eurallumina by Italian tax and environmental legislation. More specifically, it stated that a part of the aid at issue was intended to compensate the additional costs associated with environmental protection and that it therefore fell within the scope of the 2001 Guidelines. In that regard, the Italian Republic explained that, as from 1974, the regional authorities had prohibited the disposal of residue in the Mediterranean Sea, a practice that was still allowed in France and Greece. That prohibition had resulted in high costs for Eurallumina amounting to 6 000 million Italian lira (ITL) (EUR 3 million). Due to the strict emission limits (25% below the national limit for sulphur oxides (SO x )), the company had had to invest in new de-sulphuring technology at a cost of ITL 44 000 million (EUR 22 million) which entailed an additional operating cost of ITL 6 000 million (EUR 3 million) annually, including amortisation. Despite those investments, the company still had to pay ITL 1 100 million (EUR 0.55 million) annually for emission taxes.

134 In recital 56 of Alumina Decision I, the Commission took into account the information thus communicated by the Italian Republic, but considered, in recital 75 of the same decision, that it did not support the conclusion that, during the period covered by the contested decision, the exemption at issue had been intended as the consideration for agreements concluded between the Italian authorities and Eurallumina by which Eurallumina committed itself to achieving environmental protection objectives or equivalent objectives arising, for Eurallumina, from Italian legislation. In addition, the Commission maintained that no evidence had been provided to it showing that the environmental investments made by Eurallumina went beyond what was necessary to comply with Italian legislation or what was commercially feasible and economical. The Commission therefore concluded that the conditions for applying point 51(1)(a) of the 2001 Guidelines were not fulfilled in the present case.

135 Concerning the documents produced by the Italian Republic in annex to the application, it is not apparent from the file that they were communicated to the Commission during the formal investigation procedure. Furthermore, the Italian Republic does not claim in its written pleadings, in response to the Commission’s arguments, that such communication took place. Last, at the hearing, the Commission confirmed, in response to an oral question from the Court, that the documents in question had not been produced during the formal investigation procedure. In such circumstances, it must be considered that the documents produced in annex to the application had not been produced previously. Thus, it follows from the case-law cited in paragraph 132 above that the information contained in those documents cannot be taken into account for the purposes of assessing the legality the contested decision, unless they merely reiterate information which had already been communicated to the Commission in the formal investigation procedure, inter alia by the abovementioned letter of 6 February 2002.

136 As regards the only information which had been communicated to the Commission by the letter of 6 February 2002, the Commission was right to consider, in the contested decision, that it did not permit it to conclude that the benefit of the exemption at issue would have been subject to the Eurallumina’s compliance with obligations to achieve certain environmental protection objectives. Additionally, that information did not permit the Commission to conclude that the exemption at issue had been intended as the consideration for commitments made by Eurallumina to achieve environmental protection objectives going beyond those already arising from Italian tax or environmental legislation, particularly national rules which imposed emissions reductions for meeting air quality standards or the payment of taxes on emissions, or the conclusion of voluntary agreements with the same effect, within the meaning of point 51(1)(a) of the 2001 Guidelines. In the letter of 6 February 2002, the Italian Republic moreover acknowledged that ‘the aid granted to Eurallumina, defined by the Commission as operating aid ..., partially compensate[d] the operational costs of the undertaking imposed by Italian tax and environmental legislation’. Moreover, it is apparent from recital 45 of Alumina Decision I that, during the formal investigation procedure, Eurallumina itself had indicated that the ‘significant investments’ made in its Sardinian plant had been done so ‘to ensure compliance with the most restrictive norms and regional environmental standards’. In any event, the only information that was communicated to the Commission by the letter of 6 February 2002 did not permit it to verify that, as the Italian Republic claims in the present action, the exemption at issue was actually intended, in the contracts or agreements concluded with the Italian authorities, as consideration for investments made by Eurallumina to meet commitments to achieve environmental protection objectives going beyond those already arising from the legislation that was applicable to it.

137 Even supposing that account were to be taken of the acts and conventions produced by the Italian Republic in annex to the application, they would not support, in the present case, the finding that Eurallumina committed itself, in return for the benefit it would derive from the exemption at issue, to achieving environmental protection objectives going beyond those already arising from Italian legislation or to concluding voluntary agreements with the same effect. It does indeed follow in particular from Article 3 of the programme contract concluded on 12 April 1999 between the Italian authorities and Eurallumina as well as from Articles 2 to 4 of the convention of 27 April 1999 concluded between the Sardinia region and Eurallumina that Eurallumina committed itself to making certain investments aimed at achieving environmental objectives under a plan for the environmental remediation of its plant in Portoscuso (Sardinia). However, contrary to what the Italian Republic claims, those investments aimed at achieving environmental objectives did not have to be made solely at Eurallumina’s expense, since it was expressly provided, in Article 4 of the programme contract of 12 April 1999 and in Articles 4 to 6 of the convention of 27 April 1999, that, for the purposes of putting Eurallumina’s commitments into effect, the Sardinia region committed itself to contributing financially to the completion of the plan for the environmental remediation of the plant in Portoscuso at a maximum of 30% of the expenditure deemed eligible and, in any event, for a maximum amount of ITL 17 500 million. On the other hand, it is not apparent from those agreements that the exemption at issue was also intended as a financial contribution to the environmental investments made by Eurallumina. As for the rest, the documents produced by the Italian Republic in annex to the application show only operational costs imposed on Eurallumina by Italian tax and environmental legislation, such as those corresponding to emissions reductions for meeting air quality standards or the actual payment of taxes on emissions.

138 Therefore, the Commission was right to conclude, in recital 75 of Alumina Decision I, that the conditions for applying point 51(1)(a) of the 2001 Guidelines were not fulfilled in the present case.

139 Accordingly, the third plea raised in support of the action in Case T‑60/06 RENV II must be rejected as unfounded.

The fourth plea, alleging infringement of Article 87(3) EC and the Guidelines on regional aid, raised in support of the action in Case T‑60/06 RENV II

140 The Italian Republic claims that the Commission infringed Article 87(3) EC and the Guidelines on regional aid, in recitals 78 to 80 of Alumina Decision I, in so far as it took the view that the aid at issue could not be regarded as compatible with the common market, within the meaning of those provisions, on the ground that it facilitated the economic development of Sardinia. In that regard, first, it points to the economic backwardness of Sardinia, which is one of the disadvantaged regions coming under Objective 1 of the Structural Funds, is in last place among Italian regions for wealth and individual income and moreover is below the national average in terms of employed persons and industrial firms relative to the resident population. Second, it refers to the economic backwardness of the territory of Sulcis-Iglesiente in which Eurallumina’s plant in Sardinia was established, which has an unemployment rate of around 21% of the workforce, with youth unemployment at around 50%. Third, it cites the guarantee of approximately 1 800 salaried jobs provided by Eurallumina, directly in its Sardinian plant and indirectly in the Sardinian plants of Alcoa Italia SpA, of which it was the sole supplier of alumina. Fourth, it bases an argument on the documentation provided to the Commission concerning the disadvantageous living conditions in Sardinia, both in terms of population density and quality of life and the high unemployment rate. Fifth, it relies on recital 79 of Alumina Decision I, in which the Commission acknowledges that Sardinia is eligible under the derogation in Article 87(3)(a) EC. Sixth, it invokes the applicability, in the present case, of point 4.15 of the Guidelines on regional aid, which provides that regional operating aid may be granted in regions eligible under the derogation in Article 87(3)(a) EC. Seventh, it alleges the inapplicability, in the present case, of point 4.17 of the Guidelines on regional aid, which provides that operating aid must be both limited in time and progressively reduced, since Sardinia is a region of low population density which benefits from the derogation in Article 87(3)(a) EC.

141 The Commission contends that the fourth plea should be rejected as unfounded.

142 The present plea essentially asks whether, in recital 80 of Alumina Decision I, the Commission erred in finding that the aid at issue could not be regarded as compatible with the common market, within the meaning of Article 87(3)(a) EC and points 4.11 to 4.17 of the Guidelines on regional aid, on the ground that it facilitated the economic development of Sardinia.

143 In that respect, it should be borne in mind that, according to Article 87(3)(a) EC, aid aimed at promoting the economic development of areas where the standard of living is abnormally low or where there is serious underemployment may also be considered to be compatible with the common market. According to the case-law, the use of the words ‘abnormally’ and ‘serious’ in the derogation contained in Article 87(3)(a) EC shows that it concerns only areas where the economic situation is extremely unfavourable in relation to the Community as a whole (judgment of 14 October 1987 in Germany v Commission, 248/84, ECR, EU:C:1987:437, paragraph 19).

144 The Guidelines on regional aid set out the criteria followed by the Commission in examining the compatibility of regional State aid with the common market, under Article 87(3)(a) EC in particular.

145 The points of the Guidelines on regional aid concerning all regional aid that correspond to ‘operating aid’ are worded as follows:

‘4.15. Regional aid aimed at reducing a firm’s current expenses (operating aid) is normally prohibited. Exceptionally, however, such aid may be granted in regions eligible under the derogation in [Article 87(3)(a) EC] provided that (i) it is justified in terms of its contribution to regional development and its nature and (ii) its level is proportional to the handicaps it seeks to alleviate ... It is for the Member State to demonstrate the existence of any handicaps and gauge their importance.

4.16. In the outermost regions qualifying for exemption under [Article 87(3)(a) and (c) EC], and in the regions of low population density qualifying either for exemption under [Article 87(3)(a) EC] or under [Article 87(3)(c) EC] on the basis of the population density test referred to at point 3.10.4, aid intended partly to offset additional transport costs ... may be authorised under special conditions ... It is the task of the Member State to prove that such additional costs exist and to determine their amount.

4.17. With the exception of the cases mentioned in point 4.16, operating aid must be both limited in time and progressively reduced. ...’

146 In recitals 78 to 81 of Alumina Decision I, the Commission examined the compatibility with the common market of new aid on the basis of Article 87(3)(a) EC and the Guidelines on regional aid. Recitals 78 to 80 of Alumina Decision I state the following:

‘(78) As regards the exemption in Article 87(3)(a) [EC], which refers to promotion of the economic development of areas where the standard of living is abnormally low or where there is serious underemployment, the Commission notes that for the latter part of the period for which the exemptions were granted, the 1998 Community guidelines on national regional aid are applicable. Point 4.15 of those guidelines specifies that operating aid may exceptionally be granted in regions eligible under the derogation in Article 87(3)(a) [EC], provided that it is justified in terms of its contribution to regional development and its nature and its level is proportional to the handicaps it seeks to alleviate. It is for the Member State to demonstrate the existence of any handicaps and gauge their importance. In accordance with point 4.17 of the [Guidelines on regional aid], operating aid must be both limited in time and progressively reduced. Those conditions have not been fulfilled in this case.

(79) ... Sardinia is a region eligible under the derogation in Article 87(3)(a) [EC]. ...

(80) In the decisions by which the Commission initiated the procedure laid down in Article 88(2) [EC], the Commission raised doubts as to whether the aids could be found compatible with the common market under Article 87(3)(a) [EC]. The Italian ... authorities did not bring forward any elements in order to alleviate those doubts. They did not demonstrate the existence of particular handicaps nor did they gauge their importance in order to justify the granting of operating aid. High energy prices and competition from third-country imports, in particular, do not have a regional character. Even if the non-availability of natural gas were to be a particular regional handicap of the regions concerned, which has not been proven, ... Italy [has] not gauged the importance of any such handicap to justify the level of aid. The Italian legislation, which according to Eurallumina results in additional costs, may partly have a regional character as Sardinia has been declared an area of high risk of environmental crisis but, in general, cannot be considered as a particular handicap for the region. In any event, it appears that the exemptions in question in this case are not limited in time nor progressively reduced as the guidelines require. Therefore the aid cannot be found to be compatible with the common market on the ground that it facilitates the development of certain regions.’

147 As a preliminary point, it should be noted that, although the Guidelines on regional aid, internal measures adopted by the administration, cannot be regarded as rules of law, they nevertheless form rules of conduct indicating the practice to be followed from which the administration may not depart, in an individual case, without giving reasons which are compatible with the principle of equal treatment (judgment of 9 June 2011 in Diputación Foral de Vizcaya and Others v Commission, C‑465/09 P to C‑470/09 P, EU:C:2011:372, paragraph 120). Such rules may produce, under certain conditions and depending on their content, legal effects (judgment in Diputación Foral de Vizcaya and Others v Commission, EU:C:2011:372, paragraph 120).

148 As regards the Commission’s application, in recital 80 of Alumina Decision I, of point 4.15 of the Guidelines on regional aid, it is important to note that the wording of the latter provision indicates that regional operating aid is normally prohibited and may, exceptionally, be granted in regions eligible under the derogation in Article 87(3)(a) EC only on condition that it is justified in terms of its contribution to regional development and its nature and its level is proportional to the handicaps it seeks to alleviate, which is for the Member State concerned to demonstrate.

149 That provision requires in particular that the Member State demonstrate that the operating aid seeks to alleviate a specific regional handicap which must be addressed by its recipient and that the level of that aid is proportional to what is necessary to alleviate that handicap.

150 However, the items of information communicated by the Italian Republic, during the formal investigation procedure, did not suffice to establish that the aid at issue sought to alleviate a particular regional handicap, suffered by Eurallumina, and that the level of the aid was proportional to that handicap.

151 In the decision to initiate the formal investigation procedure, published in the Official Journal on 2 February 2002, the Commission stated that the Italian authorities inter alia ‘underlined … the fact that Sardinia was a very disadvantaged region, that it did not have access to natural gas and that the eventual consequences of the closure of the alumina production in terms of employment for the region were very grave’.

152 In that regard, it is necessary to point out that, as is apparent from the case-law, the fact that the prevailing economic situation in a region is sufficiently unfavourable so as to make it eligible within the meaning of Article 87(3)(a) EC does not mean that any aid project which might be carried out in that region must automatically be considered necessary for its development (see, to that effect, judgment of 13 June 2013 in HGA and Others v Commission, C‑630/11 P to C‑633/11 P, ECR, EU:C:2013:387, paragraph 112). Thus, the mere invocation of Sardinia’s unfavourable economic situation, particularly in terms of underemployment, was not sufficient, in the present case.

153 In that context, the only element that could actually constitute a particular regional handicap is the lack of access to natural gas in Sardinia cited by the Italian Republic. However, as the Commission rightly notes in recital 80 of Alumina Decision I, the Italian Republic did not determine or even attempt to gauge the importance of such a handicap for Eurallumina in its Sardinian plant. It also notes, rightly, in the same recital, that the Italian Republic did not, in any event, determine or simply even attempt to gauge the importance of such a handicap in order to prove that the aid at issue was proportional to it.

154 It is apparent, moreover, from the letter of 6 February 2002 that, during the formal investigation procedure, the Italian Republic again argued the following:

‘It is not to be forgotten that the undertaking concerned is situated in a region which is one of those that may be covered by the derogations set out in Article 87(3) [EC], to the extent that it is characterised by a high rate of unemployment. The Italian Republic decided at the time to support its creation and development specifically in order to support employment opportunities alternative to the ones which are no longer offered by mine extraction activities. From this perspective, Eurallumina presents an important opportunity for which a replacement can hardly be found. The undertaking currently employs 760 workers, including 350 highly specialised workers. Ceasing alumina production would create very serious and insoluble problems for their reintegration into the labour market.’

155 That being the case, the Italian Republic did not report any particular regional handicap endured by Eurallumina which the aid at issue would have sought to alleviate, as required in point 4.15 of the Guidelines on regional aid. As already noted in paragraph 152 above, the mere invocation of the situation of underemployment existing in Sardinia was not sufficient, in the present case.

156 Last, the Italian Republic produced, in annex to the application, documents seeking to demonstrate the disadvantageous living conditions in Sardinia, based on comparative data relating to levels of income and rates of underemployment. The Commission has not contended that the arguments based on the documents in question are inadmissible, on the ground that those documents were not communicated during the formal investigation proce