Case T-318/00

Freistaat Thüringen

v

Commission of the European Communities

‛State aid — Misuse of aid — Risk of evasion of the recovery order — Recovery of aid from the companies which acquired the current assets of the initial recipient’

Judgment of the Court of First Instance (Third Chamber, Extended Composition), 19 October 2005 . II-4187

Summary of the Judgment

State aid — Recovery of unlawful aid — Scope of application — Aid granted to a group of undertakings with a practice of making internal transfers of assets — Recovery from an undertaking in the group which did not receive the aid and which did not derive any benefit from the transfers — Not permitted

In the administrative procedure relating to State aid, the Commission is empowered to adopt a decision on the basis of the information available when it is faced with a Member State which fails to comply with its obligation of cooperation and refuses to provide information requested from it for the purpose of assessing the compatibility of aid with the common market. Before taking such a decision, however, the Commission must comply with certain procedural requirements. In particular, it must order the Member State to provide it, within the time-limit it lays down, with all the documentation, information and data necessary in order that it may examine the compatibility of the aid with the common market. It is only if the Member State, notwithstanding the Commission's order, fails to provide the information requested that the Commission is empowered to terminate the procedure and make its decision, on the basis of the information available to it, on the question whether or not the aid is compatible with the common market. These requirements have been taken up and given concrete expression in Article 5(2), Article 10(3) and Article 13(1) of Regulation No 659/1999 relating to the application of Article 88 EC. Since, by the decision to initiate the formal investigation procedure provided for in Article 6(1) of Regulation No 659/1999 and by the publication thereof in the Official Journal of the European Union, the Member State and other interested parties are informed of the facts on which the Commission intends to base its final decision, if those parties believe that some of the facts contained in the decision to initiate the formal investigation procedure are incorrect, they must inform the Commission thereof during the administrative procedure or risk not being able to challenge those facts at the litigation stage. By contrast, where there is no information to the contrary from interested parties, the Commission is empowered to base itself on the factual elements it has at the time it adopts its final decision, even if they are incorrect, provided that the factual elements in question were the subject of an information injunction issued by the Commission to the Member State to provide it with the necessary information. If, however, the Commission fails to order the Member State to provide it with information on the facts on which it intends to rely, it cannot subsequently justify any errors of fact by stating that, at the time of adopting the decision ending the formal investigation procedure, it was entitled to rely only on the information it had at that time. The Commission is not thereby exempt from all judicial review of its findings of fact. If the Member State has fulfilled its obligation to provide all of the information requested by the Commission, it will be quite easy for it to use the information it provided during the procedure to demonstrate that any errors of fact contained in the contested decision are not attributable to it. Moreover, when the Commission bases a decision on the information available as to certain factual elements without having complied, specifically with respect to those elements, with the procedural requirements established by the case-law and laid down in Regulation No 659/1999, the Court of First Instance may exercise its power of review on the matter of whether taking those facts into account was likely to give rise to an error of assessment vitiating the legality of the contested decision. (see paras 73, 88-89)

It follows from the first subparagraph of Article 88(2) EC and Article 1(g) of Regulation No 659/1999 relating to the application of Article 88 EC that, in order to demonstrate that aid granted under an authorised aid scheme has been misused, the Commission must establish that that aid was used in a manner contrary to that scheme as approved by the Commission, that is, in breach of the national rules governing that scheme or supplementary conditions which have been accepted by the Member State as part of approval of the scheme by the Commission. In that regard, breach of a mere supplementary condition imposed unilaterally by the party granting the aid, without that condition having been explicitly provided for by such national rules governing that scheme, as approved by the Commission, cannot be considered sufficient evidence to show that the aid has been misused within the meaning of the first subparagraph of Article 88(2) EC. (see paras 113-114, 144-145, 149)

Both the existence and the amount of aid fall to be assessed in the light of the situation prevailing at the time it was granted. Accordingly, the fact that a public guarantee is at stake in the event of a recipient undertaking becoming insolvent in no way changes the nature of that guarantee for the purposes of Article 87 EC and does not give rise to new aid. Nevertheless, in some cases, the unilateral waiver by a public guarantor of rights it holds against the recipient when the guarantee is called in may constitute aid. This is particularly the case where the public guarantor does not conduct itself like a rational economic operator by taking all possible steps to obtain repayment of the amount it had to settle under the guarantee. Moreover, if it emerges that the waiver of a claim initially covered by a loan guarantee, once the guarantee is enforced, is definitive, thus resulting directly in the recipient's debt load being reduced, that waiver is, in principle, liable to constitute separate aid because it confers an economic advantage in addition to the loan guarantee and its enforcement. (see paras 125-126)

The statement of reasons required by Article 253 EC must disclose in the act itself in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the measure in question in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights and the Court to exercise its power of review. In the case of a Commission decision taken in a matter involving State aid, the requirements to be satisfied by the statement of reasons depend inter alia on the need for information of those to whom the measure is addressed or of other parties to whom it is of direct and individual concern within the meaning of Article 230 EC. Thus the requirement to state reasons in such a decision cannot be determined solely according to the interest of the Member State to which the decision is addressed, since that interest may be lesser for specific reasons relating to certain elements of law or of fact which might be challenged during the administrative procedure but encompass all of the considerations of fact and of law which make up the basis of the decision. (see paras 127, 156)

The regulatory framework for the Treu-handanstalt's activities, as adopted by the Commission, constitutes a series of derogations from the general principle laid down in Article 87(1) EC that State aid is incompatible with the common market. By adopting those derogations, the Commission intended to simplify the task of the Treuhandanstalt, a unique body in its field, which was to restructure the undertakings of the former German Democratic Republic and to ensure their transition from a planned economy to a market economy. It follows that, as a condition for the application of a scheme derogating from the general principle laid down in Article 87(1) EC that State aid is incompatible with the common market, the term ‘privatisation’ must be construed narrowly in the context of the Treuhandanstalt aid schemes. On such an interpretation, a privatisation can be taken to exist, for the purpose of these schemes, in principle only where a private investor acquires a proportion of the shares of a public undertaking capable of affording him control of the undertaking in question. Thus, the setting-up of a new undertaking to pursue a new commercial activity in the form of a joint venture between an undertaking from the former German Democratic Republic and an undertaking from the Federal Republic of Germany cannot be viewed as privatisation for the purposes of the above-mentioned Treuhandanstalt schemes. Unlike the privatisation envisaged by those schemes, which is intended to bring an undertaking from a planned economy into a market economy, creating a new undertaking enabled a completely new business plan with new resources and a new commercial activity to be set up. (see paras 176-177)

In the statement of reasons for a decision finding that State aid granted under a general aid scheme approved by the Commission is incompatible with the common market, the Commission may base its finding solely on the fact that the aid does not comply with the conditions laid down when the aid scheme was approved, where there are no explanations given during the administrative procedure — the burden of proof of which lies with the Member State concerned — establishing that it was not aid or that, in any event, that aid was compatible with the common market and had not been misused. (see para. 180)

Even if a recital in a disputed act contains an incorrect reference of fact, that defect need not lead to the annulment of that act if the other recitals of the contested decision state reasons capable of establishing that the decision is well founded. (see para. 191)

The mere fact that aid granted by a public authority to an undertaking was used to repay a loan guaranteed by that authority does not lead to the conclusion that it was intervention under that guarantee and not new aid. (see paras 247, 281)

The Commission is not entitled to require recovery of unlawful State aid from the recipient undertaking where, at the time of adopting a decision to that effect, it knew or ought to have known that that undertaking had not had actual use of the aid. A decision ordering the recovery of aid from the recipient undertaking does not comply with the principles governing the recovery of unlawful State aid where the Commission, at least at the time of adopting the decision, had a body of valid, consistent evidence indicating that that undertaking had not had actual use of much of the aid due to its being diverted and that that evidence gave at least an approximate picture of the scale of the diversion. The Commission cannot, in order to justify its decision, hide behind the fact that the Member State concerned did not provide specific information as to the portion of the aid which was diverted, as it did not exercise the powers it had to have that information provided to it. (see paras 321-323)

An undertaking belonging to a group of associated undertakings within which there are internal mechanisms for the transfer of assets cannot be required to reimburse unlawful State aid, even though it was not the recipient thereof, on the grounds that, because it belonged to that group, it had actual use thereof, once it is common ground that those transfer mechanisms were used solely to the detriment of that undertaking and not for its benefit. (see para. 324)