JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber, Extended Composition)

19 October 2005 ( )

(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)

In Case T-318/00,

Freistaat Thüringen (Germany), represented by M. Schütte, lawyer, with an address for service in Luxembourg,

applicant,

supported by

Federal Republic of Germany, represented by W.-D. Plessing and T. Jürgensen, acting as Agents, assisted by R. Bierwagen, lawyer,

intervener,

Commission of the European Communities, represented by K.‑D. Borchardt and V. Kreuschitz, acting as Agents, assisted by C. Koenig, with an address for service in Luxembourg,

defendant,

supported by

ODS Optical Disc Service GmbH, established in Hamburg (Germany), represented by I. Brinker and U. Soltész, lawyers, with an address for service in Luxembourg,

intervener,

APPLICATION for annulment of Commission Decision 2000/796/EC of 21 June 2000 on State aid granted by Germany to CDA Compact Disc Albrechts GmbH (Thuringia) (OJ 2000 L 318, p. 62),

THE COURT OF FIRST INSTANCE

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

composed of J. Azizi, President, R. García-Valdecasas, J.D. Cooke, M. Jaeger and F. Dehousse, Judges,

Registrar: D. Christensen, Administrator,

having regard to the written procedure and further to the hearing on 5 May 2004,

gives the following

Judgment

Law

1 Article 87 EC provides:

‘Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.

…’

2 Article 88 EC provides:

‘1. The Commission shall, in cooperation with Member States, keep under constant review all systems of aid existing in those States. It shall propose to the latter any appropriate measures required by the progressive development or by the functioning of the common market.

2. If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the common market having regard to Article 87, or that such aid is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission.

…’

3 According to Article 5 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):

‘1. Where the Commission considers that information provided by the Member State concerned … is incomplete, it shall request all necessary additional information. Where a Member State responds to such a request, the Commission shall inform the Member State of the receipt of the response.

2. Where the Member State concerned does not provide the information requested within the period prescribed by the Commission or provides incomplete information, the Commission shall send a reminder, allowing an appropriate additional period within which the information shall be provided.

…’

4 In addition, Article 6 of Regulation No 659/1999 provides:

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

…’

5 According to Article 10 of Regulation No 659/1999:

‘1. Where the Commission has in its possession information from whatever source regarding alleged unlawful aid, it shall examine that information without delay.

2. If necessary, it shall request information from the Member State concerned. … Article 5(1) and (2) shall apply mutatis mutandis.

3. Where, despite a reminder pursuant to Article 5(2), the Member State concerned does not provide the information requested within the period prescribed by the Commission, or where it provides incomplete information, the Commission shall by decision require the information to be provided (hereinafter referred to as an “information injunction”). The decision shall specify what information is required and prescribe an appropriate period within which it is to be supplied.’

6 Article 13(1) of Regulation No 659/1999 provides:

‘The examination of possible unlawful aid shall result in a decision pursuant to Article 4(2), (3) or (4). In the case of decisions to initiate the formal investigation procedure, proceedings shall be closed by means of a decision pursuant to Article 7. If a Member State fails to comply with an information injunction, that decision shall be taken on the basis of the information available.’

7 Article 14 of the same regulation provides:

‘1. Where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the recipient (hereinafter referred to as a “recovery decision”). The Commission shall not require recovery of the aid if this would be contrary to a general principle of Community law.

2. The aid to be recovered pursuant to a recovery decision shall include interest at an appropriate rate fixed by the Commission. Interest shall be payable from the date on which the unlawful aid was at the disposal of the recipient until the date of its recovery.

3. Without prejudice to any order of the Court of Justice of the European Communities pursuant to Article [242 EC], recovery shall be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission’s decision. To this effect and in the event of a procedure before national courts, the Member States concerned shall take all necessary steps which are available in their respective legal systems, including provisional measures, without prejudice to Community law.’

8 Article 16 of Regulation No 659/1999, entitled ‘Misuse of aid’, states:

‘Without prejudice to Article 23, the Commission may in cases of misuse of aid open the formal investigation procedure pursuant to Article 4(4). Articles 6, 7, 9 and 10, Article 11(1), Articles 12, 13, 14 and 15 shall apply mutatis mutandis.’

9 In 1994 the Commission adopted Community guidelines on State aid for rescuing and restructuring firms in difficulty (OJ 1994 C 368, p. 12), amended in 1997 (OJ 1997 C 283, p. 2) (‘Guidelines on aid for rescuing and restructuring’).

Facts

10 By Decision 2000/796/EC of 21 June 2000 on State aid granted by Germany to CDA Compact Disc Albrechts GmbH, Thuringia (‘the contested decision’), the Commission ruled on the legality of the financial aid granted by various German public entities from 1991 to 1995 for a compact disc (‘CD’) production plant and CD accessories, established in Albrechts, Thuringia (‘the Albrechts CD plant’).

A – General context

11 In the contested decision, the Commission distinguished between three phases: first, the start-up phase of the undertaking, second, the undertaking’s restructuring phase and, lastly, the acquisition of some of the undertaking’s assets by the company MediaTec Datenträger GmbH (‘MTDA’).

1. The undertaking’s start-up phase (1990 to 1992)

12 The contested decision indicates that the Albrechts CD plant was created by a joint venture agreement concluded on 20 February 1990 between, on the one hand, the VEB (nationally owned) Kombinat Robotron, established in Dresden, Saxony (‘Robotron’) and, on the other, the company R. E. Pilz GmbH & Co. Beteiligungs KG (‘PBK’), a company forming part of the Pilz Group established in Kranzberg, Bavaria (‘the Pilz Group’). Robotron held a two thirds share in the capital of the joint venture, then called ‘Pilz & Robotron GmbH & Co. Beteiligungs KG’ (‘the joint venture’), with the remaining one third held by PBK. The joint venture was set up for the purpose of manufacturing CDs, CD boxes and accessories. Mr Reiner Pilz, managing director of the Pilz Group, also ensured the management of the plant (recital 11 of the contested decision).

13 In order to achieve its corporate objective, on 29 August 1990 the joint venture and Pilz GmbH & Co. Construction KG (‘Pilz Construction’), a company belonging to the Pilz Group, signed a general contracting turnkey agreement for the construction of a CD production plant for an all-inclusive price of DEM 235.525 million, plus lot development costs of DEM 7.5 million (recitals 12 and 20 of the contested decision).

14 Under an additional contract dated 26 May 1992, the partners in the joint venture agreed to expand manufacturing capacity for CDs and CD boxes. An all-inclusive price of DEM 39 million for all deliveries and services was agreed (recital 22 of the contested decision).

15 In order to finance those investments, the joint venture, Robotron and PBK borrowed the necessary funds from a bank consortium. Those bank loans were partially or totally covered by guarantees from the Treuhandanstalt (‘the THA’), a public body responsible for financing the privatisation of undertakings in the former German Democratic Republic and from the Land of Bavaria. Moreover, the Länder of Thuringia and Bavaria, the latter through the Bayerische Landesanstalt für Aufbaufinanzierung (‘the LfA’), the Bavarian body charged with the financing of infrastructures, granted investment subsidies and allowances to the joint venture.

16 During the start-up phase of the Albrechts CD plant, ownership of the shares in the capital of the joint venture changed hands several times. First, when Robotron was wound up by the THA in 1992, the shares in the joint venture held by the company were taken over by PBK. Subsequently, PBK, in turn, transferred almost all of the shares held by it in the joint venture to the company Pilz GmbH & Co. Compact Disc KG, another company belonging to the Pilz Group (‘Pilz Compact Disc’), so that the joint venture became a subsidiary of the latter company. Lastly, on 24 November 1992, following that transfer and the transfer of its head office to Albrechts, the joint venture operated under the name Pilz Albrechts GmbH (‘PA’). Immediately after that transfer, it was integrated into the Pilz Group’s central cash-management system (recitals 13 and 14 of the contested decision).

2. Restructuring phase (1993 to 1998)

17 The CD production plant commenced operations in 1993. From the outset, it encountered major difficulties and became heavily indebted (recital 15 of the contested decision).

18 In order to remedy the situation, a restructuring agreement was concluded on 7 March 1994 by the Pilz Group (including PA), the banks and the public bodies (the THA, the LfA, the Thüringer Industriebeteiligungsgesellschaft (‘the TIB’) and the Thüringer Aufbaubank (‘the TAB’)) which had participated in the financing for the establishment of the Albrechts CD plant. Under that agreement, a large portion of the bank loans which had been granted for the purpose of building the CD production plant was partially or totally paid off. Moreover, under the restructuring agreement, the shares in PA were acquired by TIB – 98% of the shares – and TAB – 2% of the shares – with retroactive effect from 1 January 1994, with the result that PA no longer belonged to the Pilz Group. From October 1994, the company also underwent a name change and subsequently operated under the name CDA Compact Disc Albrechts GmbH (‘CD Albrechts’) (recitals 15 and 17 of the contested decision). In 1994 and 1995, the TAB and the LfA granted several rounds of credit to CD Albrechts.

19 It was also in 1994 that the German authorities noticed that a large part of the financial assistance which had been granted to finance the establishment of the Albrechts CD plant had been misused, particularly in the central cash-management system in the Pilz Group, for the other companies in the group. Moreover, on 25 July 1995, insolvency proceedings were initiated in respect of the assets of all the companies in the Pilz Group. Lastly, Mr Reiner Pilz has been sentenced to prison for fraudulent bankruptcy and other offences (recital 16 of the contested decision).

3. Acquisition of certain assets by MTDA

20 With effect from 1 January 1998, MTDA, a wholly-owned subsidiary of the TIB whose main centre of activities is the production of high-performance data-storage media, in particular recordable CDs (CD-ROM) and DVDs, acquired some of the assets belonging to CD Albrechts, namely fixed and current assets, short-term usable assets, technical know-how and marketing organisation (recital 18 of the contested decision).

21 At the time of that acquisition, CD Albrechts changed its name to LCA Logistik Center Albrechts GmbH (‘LCA’), whilst MTDA changed its name to CDA Datenträger Albrechts GmbH (‘CDA’). LCA continued to own the land on which the company operated, the existing buildings, the technical infrastructure and the logistical installations. Moreover, LCA and CDA concluded an agreement on the exchange of services, which provides, first, for a lease contract with an annual rent of DEM 800 000 and, second, for a service contract worth around DEM 3 million a year, depending on the volume of business (recital 19 of the contested decision).

22 On 22 September 2000, LCA asked to be put into liquidation as part of bankruptcy proceedings.

B – Administrative procedure

23 In response to reports in the press that the German authorities had granted aid for the establishment of the Albrechts CD plant, in October 1994 the Commission asked the Federal Republic of Germany to provide it with information on that aid. An intense exchange of correspondence ensued, and various meetings were held between the German authorities and the Commission (recitals 1 to 3 of the contested decision).

24 By letter of 17 July 1998 (‘the decision to initiate the procedure’), the Commission informed the Federal Republic of Germany of its decision to initiate the formal investigation procedure provided for under Article 88(2) EC with regard to that aid. A list of questions being put to the German authorities was enclosed with that letter. The decision to initiate the procedure was published in the Official Journal of the European Communities of 15 December 1998 (Commission notice pursuant to Article [88(2) EC] to other Member States and interested parties on aid for setting up CD Albrechts GmbH, Thuringia, former Pilz Group, Bavaria, OJ 1998 C 390, p. 7).

25 The German authorities reacted to the decision to initiate the procedure by sending various letters containing additional information. A number of meetings were again held between the German authorities and representatives of the Commission.

26 However, considering that the information provided by the German authorities did not provide satisfactory answers to its questions, the Commission, by letter of 22 July 1999, set a deadline of 31 August 1999 for answers to its questions. After having requested an extension of that deadline by letter of 28 July 1999 and after having had another meeting with representatives of the Commission on 23 September 1999 in Brussels, the German authorities provided supplementary information.

27 After expiry of the time-limit laid down in the decision to initiate the procedure, the companies CDA and Point Group Ltd, a competitor of CDA, informed the Commission that they were interested parties and submitted observations.

28 On 21 June 2000, the Commission closed the procedure by adopting the contested decision.

C – Findings of fact and legal assessment

29 The Commission made separate assessments of the aid granted by the Federal Republic of Germany during the start-up phase, the restructuring phase and, lastly, the acquisition of certain assets of CD Albrechts by MTDA.

1. Financial aid granted by the Federal Republic of Germany during the start-up phase

30 In the contested decision, the Commission identified five types of financial measures granted during the start-up phase. In a synoptic table in recital 32 of the contested decision, it described them as follows:

Measure Amount (DEM million) Recipient Granted by Date Legal basis 1 100% deficiency guarantee, initially 80% guarantee covering DEM 52.7 million 54.7 PBK LfA 1991 Law on the assumption of guarantees and sureties of the Free State of Bavaria 2 Investment grants and allowances 19.42 Joint venture LfA 1991/1992 Joint scheme for improving regional economic structures, Investment Allowance Law 3 Waiver 3.0 PBK LfA 1994 None 4 100% guarantee 190.0 Robotron AG, joint venture THA 1992 THA scheme 5 Investment grants and allowances 63.45 Joint venture, from 24.11.1992, PA Thuringia 1991 to 1993 Joint scheme for improving regional economic structures, Investment Allowance Law Total 330.57





31 It is apparent from the table, first, that in 1992 the THA provided a 100% guarantee worth DEM 190 million which covered most of the bank loans granted to Robotron and to the joint venture. According to the Commission, that guarantee must be considered to be State aid which is incompatible with the common market because it was not granted in accordance with the conditions laid down in the aid schemes approved by the Commission by letter SG(91) D/17825 of 26 September 1991 (‘the first THA scheme’) and by letter SG(92) D/17613 of 8 December 1992 (‘the second THA scheme’), respectively. It considers, however, that of the DEM 190 million initially covered, only the amount of DEM 120 million actually paid out by the THA as part of the guarantee should be recovered.

32 Second, the Commission found that, until 31 December 1993, the Land of Thuringia had granted to the joint venture, then to PA, under the Investitionszulagengesetz (Investment Allowance Law) and the 20th and 21st Rahmenpläne der Gemeinschaftsaufgabe Verbesserung der regionalen Wirtschaftstruktur (Framework programmes adopted, for 1992 and 1993, pursuant to the Law of 6 October 1969 on the Joint scheme for improving regional economic structures (‘the GA scheme’)), investment subsidies and allowances totalling DEM 63.45 million. In the Commission’s view, however, that regional aid was granted wrongly under the joint scheme and the Investment Allowance Law and, therefore, since it is incompatible with the common market, it must be repaid. In the light of the decision taken by the Land of Thuringia to order the recovery of DEM 32.5 million, the Commission considers that DEM 30.95 million must still be recovered.

33 Third, the Commission found that, in 1991 and 1992, the Land of Bavaria had, through the LfA, granted the joint venture investment subsidies and allowances totalling DEM 19.42 million. Because those grants and allowances were misused for the benefit of companies in the Pilz Group, the Commission considers that they were granted wrongly under the GA scheme and the Investment Allowance Law. It is thus, in the Commission’s view, aid which is incompatible with the EC Treaty.

34 Fourth, the Commission found that the Land of Bavaria had established, pursuant to the Richtlinien für die Übernahme von Staatsbürgschaften im Bereich der gewerblichen Wirtschaft (Guidelines for the granting of State guarantees in industry and commerce, published in Notice of the Bavarian Ministry of Finance of 7 August 1973, No L 6811-1/7-43358 (‘Guidelines for the granting of guarantees by the Land of Bavaria’)), a guarantee changed from 80% to 100% on the loans totalling DEM 54.7 million ultimately obtained by PBK. According to the Commission, the German authorities, despite the request for information contained in the decision to initiate the procedure, did not provide sufficiently detailed particulars to dispel its doubts as to the legality of the operations relating to the guarantee provided by the Land of Bavaria (the LfA). Moreover, given that the aid in question was not used to finance investment but was misused, it found that that guarantee constituted unlawful aid.

35 Fifth, the Commission took the view that LfA’s waiver of the debt of DEM 3 million which had arisen for PBK due to the payment of that amount to the banks pursuant to the guarantee referred to in paragraph 34 was State aid. In its view, that aid is incompatible with the common market because it was granted without a legal basis.

36 In the light of those findings, the Commission concluded that, during the start-up phase of the Albrechts CD plant, the Federal Republic of Germany had granted, contrary to Article 88(3) EC, State aid totalling DEM 260.57 million. That aid was comprised of aid measures from the Land of Thuringia totalling DEM 63.45 million, from the LfA totalling DEM 77.12 million (DEM 54.7 million in the form of a guarantee, DEM 19.42 million in the form of investment allowances and DEM 3 million in the form of debt waivers) and from the THA totalling DEM 120 million.

37 According to the Commission, that aid is incompatible mainly because it conferred an advantage on the companies belonging to the Pilz Group and was therefore misused within the meaning of Article 88(2) EC.

2. Financial measures granted during the restructuring phase

38 In the contested decision, the Commission identified and classified as aid 12 financial measures granted during the undertaking’s restructuring phase. In a synoptic table contained in recital 39 of the contested decision, those measures are presented as follows:

Measure Amount in DEM million Recipient Granted by Date Legal basis 1 Loan 25.0 PA TAB October 1993 None 2 Loan 20.0 PA TAB March 1994 None 3 Purchase price 3.0 PBK TIB March 1994 None 4 Grant 12.0 PA TIB March 1994 None 5 Shareholding 33.0 PA TIB (98%) TAB (2%) March 1994 None 6 Loan 2.0 PA LfA March 1994 None 7 Shareholder’s loan 3.5 PA TIB April 1994 None 8 Loan 15.0 Pilz Group LfA June 1994 None 9 Loan 15.0 CD Albrechts TAB October 1994 None 10 Loan 7.0 CD Albrechts LfA December 1994 None 11 Loan 9.5 CD Albrechts TAB January 1995 None 12 Interest 21.3 since the end of 1993 Total 166.3





39 First, the Commission found that, in October 1993, the TAB had granted PA a loan of DEM 25 million in order to cover that company’s liquidity shortfalls, but that those funds had accrued directly to the other companies in the group through the Pilz Group’s central cash-management system.

40 Second, the Commission found that, in March 1994, the TAB had granted PA a credit of DEM 20 million to enable it to repay the loan which had been secured by the THA, but that those funds had also accrued directly to the companies belonging to the Pilz Group through the central cash-management system.

41 Third, the Commission found that, in March 1994, the TIB had paid PBK DEM 3 million for the purchase of shares in PA held by PBK.

42 Fourth, the Commission found that, in March 1994, the TIB had made a grant in the form of a DEM 12 million contribution to PA’s capital reserve.

43 Fifth, the Commission found that, in March 1994, the TIB and the TAB had acquired 98% and 2%, respectively, of the shares in PA, worth a total of DEM 33 million.

44 Sixth, the Commission found that, in March 1994, the Land of Bavaria had, through the LfA, granted a loan of DEM 2 million to PA.

45 Seventh, the Commission found that, in April 1994, the TIB had granted a shareholder’s loan of DEM 3.5 million to PA.

46 Eighth, the Commission found that, in June 1994, the LfA had granted an operating loan of DEM 15 million to the Pilz Group, which was intended as a bridging loan to cover the period up until such time as an investor willing to buy the Albrechts CD plant was found.

47 Ninth, the Commission found that, in October 1994, the TAB had granted a loan of DEM 15 million to CD Albrechts. It observed that, although the funds had been paid to CD Albrechts, they had been used to provide services to the companies in the Pilz Group, services for which they never paid, so that they had received an advantage.

48 Tenth, the Commission found that, in December 1994, the Land of Bavaria had, through the LfA, granted a fresh DEM 7 million loan to CD Albrechts.

49 Eleventh, the Commission found that, in January 1995, the TAB had granted a DEM 9.5 million loan to CD Albrechts.

50 Twelfth, the Commission found that, according to the information from the German authorities, PA and CD Albrechts had received advantages in the form of interest totalling DEM 21.3 million in the period from the end of 1993 to 1998.

51 According to the Commission, the 12 financial measures described above, totalling DEM 166.3 million, must be considered to be illegal State aid which is incompatible with the common market. To the extent that those measures conferred an advantage on the TIB and the TAB after those bodies had assumed economic responsibility for the Albrechts CD plant, they could be approved by the Commission only on the basis of Article 87(3)(c) EC and in accordance with the Guidelines on aid for rescuing and restructuring. The Commission is also of the view that it is obvious that the aforementioned measures do not comply with those guidelines, since the information it has does not establish that they were granted as part of a viable restructuring plan containing concrete internal measures enabling the Commission to find that the undertaking’s long-term profitability and viability has been restored within a reasonable time. In addition, no private investor has emerged who is willing to acquire the current companies LCA and CDA, so that, without private investment, it is not possible to determine whether the aid is proportionate to the restructuring costs.

3. Recovery of the aid

52 Acting pursuant to Article 14(1) of Regulation No 659/1999, the Commission decided that the Federal Republic of Germany had to demand repayment of the aid found to be illegal and incompatible with the common market which was paid out both during the start-up phase and during the restructuring phase of the Albrechts CD plant.

53 The Commission also stated that, in order to ensure compliance with its decision and eliminate all distortion of competition, it had to, if necessary, require that the procedure for recovering the aid not be limited to the initial recipient of that aid, but be extended to any undertaking carrying on its activities using the transferred means of production. It stated that, in order to determine whether an undertaking is actually carrying on the activities of the initial recipient of the aid, it took account of a certain number of elements, including the subject-matter of the transfer, the purchase price, the identity of the partners and owners of the former undertaking and of the investor, the date of completion of the transfer and the commercial nature thereof. It took the view that, in the present case, LCA and CDA were definitely benefiting from the aid which had previously been granted to PBK, the joint venture and PA, because they were using the assets and infrastructure of those undertakings in order to carry on their activities. Accordingly, it decided that that aid had to be repaid by LCA, CDA and any other undertakings to which the assets of the joint venture, PA or PBK had been or would be transferred, as they fell to be considered as ‘recipients’ of that aid.

4. Operative part of the contested decision

54 In the light of those assessments, the Commission adopted the following decision:

‘Article 1

1. DEM 260.57 million of the aid granted to [PBK, the joint venture and PA] by [the Federal Republic of] Germany for the establishment, operation and consolidation of the CD plant in Albrechts (Thuringia) was used elsewhere within the Pilz Group.

This amount consists in DEM 63.45 million from the [Land of] Thüringen, DEM 77.12 million [from] the [LfA] and DEM 120 million from the [THA].

The wrongful use constitutes a misuse of aid within the meaning of Article 88(2) [EC] and the aid is therefore incompatible with the [EC] Treaty.

2. The aid totalling DEM 166.3 million for the restructuring of [CD Albrechts] is incompatible with the provisions of the EC Treaty pursuant to Article 87(1) thereof.

Article 2

1. [The Federal Republic of] Germany shall take the necessary measures to recover from the respective beneficiaries the aid referred to in Article 1 and unlawfully made available to them.

2. Recovery shall be effected in accordance with the procedures of national law. The sums to be recovered shall bear interest from the date on which they were made available to the beneficiaries until their actual recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant-equivalent of regional aid.

3. For the purposes of this article the term “beneficiaries” shall include CDA … and LCA … as well as any other undertaking to which [PBK’s, the joint venture’s and PA’s] assets and/or infrastructure have been transferred or will be transferred in such a way as to evade the consequences of this Decision.

…’

Procedure and forms of order sought

55 By application lodged at the Registry of the Court of First Instance on 10 October 2000, the Land of Thuringia brought an action for annulment of the contested decision. That action was registered under number T‑318/00.

56 By order of 28 May 2001 of the President of the Third Chamber, Extended Composition, of the Court of First Instance, the Federal Republic of Germany was granted leave to intervene in support of the forms of order sought by the Land of Thuringia, whilst ODS Optical Disc Service GmbH (‘ODS’), a competitor of CDA, was granted leave to intervene in support of the forms of order sought by the Commission.

57 ODS and the Federal Republic of Germany lodged their statements in intervention on 29 August and 3 September 2001 respectively. On 24 October 2001, the Land of Thuringia and the Commission lodged their observations on the statements in intervention lodged by ODS and the Federal Republic of Germany.

58 By order of 30 September 2002, the Court of First Instance (Third Chamber, Extended Composition) decided to stay the proceedings pending the judgment of the Court of Justice in Joined Cases C‑328/99 and C‑399/00 Italy andSIM 2 Multimedia v Commission. In the light of the judgment delivered on 8 May 2003 in those joined cases, the Court of First Instance asked the parties for their observations on the consequences for the present case. Those observations were lodged on 23 and 24 June 2003.

59 On receiving the report of the Judge‑Rapporteur, the Court of First Instance asked the parties for their comments on the appropriateness of a possible joining of this action with the action having the same subject-matter brought by CDA and registered with the Registry of the Court of First Instance under number T‑324/00. After the parties’ observations had been received, the cases were joined by order of 8 March 2004, for the purposes of the hearing and judgment.

60 On receiving the report of the Judge‑Rapporteur, the Court of First Instance decided to open the oral procedure and, by way of measures of organisation of procedure provided for in Article 64 of the Rules of Procedure of the Court of First Instance, asked the parties to supply certain documents and put questions to them in writing.

61 The parties presented oral argument and replied to the questions put by the Court of First Instance at the hearing on 5 May 2004.

62 By order of 23 July 2004, Cases T‑318/00 and T‑324/00 were disjoined for the purposes of judgment.

63 The Land of Thuringia claims that the Court of First Instance should:

– annul the contested decision;

– in the alternative, annul Article 1(1) of the contested decision, in so far as it declares the aid paid to the joint venture and to PA to be incompatible with the common market, and annul Article 1(2) and Article 2(3) of the contested decision;

– order the Commission to pay the costs.

64 The Federal Republic of Germany, intervener, contends that the Court of First Instance should:

– annul the contested decision.

65 The Commission, supported by ODS, contends that the Court of First Instance should:

– dismiss the action;

– order the Land of Thuringia to pay the costs.

Law

I – Preliminary observations

66 In support of its action, the Land of Thuringia puts forward several pleas in law relating to breach of the rights of the defence, incorrect findings of fact, breach of the obligation to state reasons, infringement of Articles 87 EC and 88 EC and their implementing provisions, breach of the principle of proportionality and, lastly, breach of the principle of legal certainty and of a ‘principle of certainty’.

67 The Court of First Instance will examine, first, the pleas put forward in support of the forms of order seeking annulment of Article 1 of the contested decision. Next, the Court of First Instance will consider the pleas relating to the order for recovery contained in Article 2 of the contested decision.

II – The legality of Article 1 of the contested decision

68 The Land of Thuringia states essentially that Article 1 of the contested decision is unlawful because the Commission’s assessment of the various financial measures granted as part of the Albrechts CD plant project is based on errors of fact, is contrary to Article 87(1) EC and Article 88(2) EC and fails to comply with the obligation to state reasons.

69 Accordingly, it is necessary to examine in turn, for each of the financial measures which were identified in the tables reproduced in paragraphs 30 and 38 above, the pleas put forward by the Land of Thuringia.

70 The Court of First Instance considers it necessary, however, to examine first the Land of Thuringia’s argument that the Commission was not entitled to rely on the information it had at the time it adopted the contested decision.

A – Whether the contested decision could be based on the information available

1. Arguments of the parties

71 The Land of Thuringia submits that, in the present case, the Commission was not entitled to base the contested decision on the information it possessed at the time it adopted the contested decision. It states, first, that, as evidenced by the second sentence of Article 13(1) of Regulation No 659/1999 and consistent case-law, the Commission may base a decision on the information available only when the Member State has failed to reply or has replied incompletely to an information injunction from the Commission (Case C‑301/87 France v Commission (‘Boussac’) [1990] ECR I‑307, paragraphs 19 and 22; and Joined Cases C‑324/90 and C‑342/90 Germany and Pleuger Worthington v Commission [1994] ECR I‑1173, paragraph 26). It also observes that, even if the national authorities must provide the Commission with all relevant information in order to assist it in its task of monitoring State aid, the Commission has an obligation to clarify the facts as much as possible. In its view, that implies that the Commission must inform the national authorities, in a clear and precise manner, of all of the information it requires for its task, and that it must adopt a decision on the basis of the information available only in extreme cases where, despite its requests, it has not been able to obtain the required clarifications. The Land of Thuringia states that, in the present case, the German authorities replied to the Commission’s various requests for information and, in particular, to the questions annexed to the decision to initiate the procedure. It observes that, with one exception, the questions contained in the letter of formal notice of 22 July 1999 were not the same as those annexed to the decision to initiate the procedure, which shows, in its view, that the procedure had progressed in the interim. It submits that if the Commission believed that the answers to the questions annexed to the decision to initiate the procedure were insufficient, it should have said so in its letter of 22 July 1999. Accordingly, the Land of Thuringia submits that, since the Commission did not ask the German authorities for clarifications, it was not entitled to base the contested decision on the information available.

72 The Commission, supported by ODS, disagrees with the Land of Thuringia’s assertion.

2. Findings of the Court

73 It is settled case-law that 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 (Boussac, paragraph 71 above, paragraph 22; and Germany and Pleuger Worthington v Commission, paragraph 71 above, paragraph 26). 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 (Boussac, paragraph 71 above, paragraphs 19 and 22). 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.

74 It is in the light of those principles that it must be determined whether in the present case the Commission was entitled to adopt the contested decision taking account only of the information which it had in its possession in June 2000.

75 It is appropriate to begin by reviewing the course of the administrative procedure in the case.

76 It began in October 1994, with the sending of a letter to the German authorities. In that letter, the Commission requested the German authorities to provide information on the State aid granted for the establishment of a CD plant in Albrechts. In response, the German authorities, by letter of 9 November 1994, notified aid from the Land of Thuringia and from the Land of Bavaria in favour of the joint venture and the Pilz Group. By letter of 15 November 1994, the Commission asked for more detailed information on that aid. The German authorities elaborated on their notification by letter dated 3 March 1995 notifying new aid granted by the THA, the Land of Thuringia and the Land of Bavaria. Since that aid had already been granted, the Commission registered it under number NN 54/95 (recital 2 of the contested decision). By letters dated 1 August 1995, 16 October 1995 and 25 November 1996, the Commission asked additional questions which the German authorities answered by letters dated 22 August 1995, 25 August 1995, 18 January 1996 and 17 April 1997. On 3 February 1997 and on 22 and 23 September 1997, meetings were held in Brussels and Erfurt between representatives of the Commission and the German authorities. By letter dated 20 January 1998, the German authorities submitted a summary of their comments on the case based on the outcome of the meeting with Commission representatives (recital 3 of the contested decision).

77 Following a preliminary examination of the information provided by the German authorities, the Commission was of the view that the disputed measures raised serious doubts as to its compatibility with the common market and, therefore, on 17 July 1998 it adopted the decision to initiate the procedure.

78 By that decision, it also ordered the Federal Republic of Germany ‘to provide, within one month of receiving [the decision], all the necessary documentation, information and data for assessing the compatibility with Article [87 EC] of the aid’. An annex containing seven questions was enclosed with the decision to initiate the procedure.

79 By letter of 26 August 1998, the Federal Republic of Germany reacted to the decision to initiate the procedure. On 15 October 1998, another meeting was held in Brussels between representatives of the Commission and the German authorities. By letter dated 11 November 1998, the latter submitted further information.

80 Taking the view that the information provided was still insufficient, the Commission, by letter of 4 March 1999, once again ordered the German authorities to provide the necessary information and, in particular, to answer the questions attached to the decision to initiate the procedure.

81 In response to that fresh order, the German authorities, by letters of 30 March, 1 April and 16 April 1999, provided further information.

82 The Commission, however, considered that that information was still not a sufficient response to the questions contained in the attachment to the decision to initiate the procedure (in particular, questions 3 to 7). Accordingly, by letter of 22 July 1999, it set a deadline of 31 August 1999 for the questions to be answered. It also requested the Federal Republic of Germany to provide it with additional information and documentation.

83 After this deadline had been extended in response to a request by letter dated 28 July 1999 and after a further meeting had been held between representatives of the Commission and the German authorities in Brussels on 23 September 1999, the German authorities sent further information by letters dated 28 September and 19 October 1999.

84 The Commission adopted the contested decision on 21 June 2000.

85 With respect to the Land of Thuringia’s argument that the German authorities provided all of the information requested and that the Commission was thus not entitled to base itself on the information available, the Court finds, as a preliminary point, that it is clear from the course of the administrative procedure that the Commission complied with the procedural requirements laid down by the case-law and provided for in Regulation No 659/1999. On three occasions it formally ordered the Federal Republic of Germany to provide it with the information necessary in order that it might examine the compatibility of the disputed aid with the common market.

86 Moreover, contrary to the contentions put forward by the Land of Thuringia, the Commission’s letter of 22 July 1999 does not indicate that the German authorities replied to all of the questions save one. On the contrary, in that letter the Commission again requested the German authorities to answer questions 3 to 7 in the annex to the decision to initiate the procedure.

87 Next, the Land of Thuringia has not established that the German authorities provided complete answers to all of the questions put by the Commission in the annex to the decision to initiate the procedure. In particular, it has not demonstrated that the German authorities provided a specific list of the aid granted since 1991, despite several requests to that effect from the Commission. Likewise, it did not establish that the German authorities replied to the question relating to the existence of possible restructuring plans. It is, moreover, evident from the case-file that the German authorities replied only in a vague manner to the question concerning the description of the transactions carried out as part of the acquisition of the joint venture by the TAB and the TIB, and to the question relating to the description of the circumstances and conditions under which the loans were waived by the private banks in 1994.

88 It should also be borne in mind that, according to Article 6(1) of Regulation No 659/1999, ‘the decision to initiate the formal investigation procedure shall summarise the relevant issues of fact and law, shall include a preliminary assessment of the Commission as to the aid character of the proposed measure and shall set out the doubts as to its compatibility with the common market’. That decision and the publication thereof in the Official Journal of the European Communities inform the Member State and other interested parties of the facts on which the Commission intends to base its decision. It follows that, 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 (see, to that effect, with respect to the Member State, Joined Cases C‑278/92 to C‑280/92 Spain v Commission [1994] ECR I‑4103, paragraph 31). By contrast, in accordance with the principles laid down in the case-law and the relevant provisions as described in paragraph 73 above, 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, it 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.

89 Contrary to the suggestion made by the Land of Thuringia, 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.

90 In the circumstances described in paragraphs 85 to 88 above and having regard in particular to the three injunctions issued by the Commission to the Land of Thuringia during the administrative procedure, the latter has not demonstrated that the Commission took account in the contested decision of matters of fact without having complied with the applicable procedural requirements. Consequently, the Commission was entitled to base itself on the information it had in its possession at the time of adopting the contested decision.

91 In the light of the foregoing, this plea must be rejected.

B – The guarantee provided by the Land of Bavaria (the LfA) to PBK

1. Arguments of the parties

92 The Land of Thuringia submits, first, that the Commission committed an error of fact in respect of this measure. It states that, contrary to what the Commission found in recital 30 of the contested decision, the guarantee provided by the Land of Bavaria, which initially covered 80% of the bank loans granted to PBK, was not converted into a guarantee covering 100% of the loans for a total amount of DEM 54.7 million. It states, in particular, that the DEM 54.7 million referred to by the Commission corresponds to the book value of the loans (not including interest) which were 80% guaranteed by the Land of Bavaria when the restructuring agreement was concluded in March 1994. In its view, contrary to what the Commission found in the contested decision, the Land of Bavaria did not agree to provide a 100% guarantee for that amount. On the contrary, under the restructuring agreement, the total amount of loans guaranteed by the Land of Bavaria was reduced, first, following the banks’ waiver of repayment of DEM 12 million in loans and, second, following various interventions by the Land of Bavaria. It states that it is only the remainder, namely DEM 41.4 million, which the Land of Bavaria (the LfA) agreed to guarantee 100% under the restructuring agreement and that, in 1995, the LfA had to meet its guarantee in total by paying the relevant amount to the banks. It adds that the Land of Bavaria’s claim on the joint venture for a total amount of DEM 41.4 million resulting from that payment, as well as the Land of Bavaria’s other claims on the joint venture for DEM 9 million, were ultimately acquired by the TAB on 7 November 1995 for DEM 15 million. It maintains that that claim held by the TAB on the joint venture was repaid in its entirety by CDA after it acquired the assets of LCA.

93 The Land of Thuringia states that that information was provided to the Commission by the German authorities during the administrative procedure. It states that it is clear from the letters of 18 January 1996 and 30 March 1999 that the Land of Bavaria’s guarantee, which initially covered 80% of the bank loans granted to PBK, was not converted into a guarantee covering 100% of the loans for a total amount of DEM 54.7 million. In its view, the granting of that alleged 100% guarantee related, in reality, to the initial guarantee and, moreover, covered only a remaining amount of DEM 41.4 million. In its view, the Commission wrongly failed to make a finding in this respect, whereas this element was decisive because it showed that the provision of the 100% guarantee by the Land of Bavaria under the restructuring agreement was not new aid, but rather intervention in relation to existing aid which had been granted under an authorised aid scheme.

94 The Land of Thuringia adds that it follows from that information that, contrary to what the Commission found in recital 30 of the contested decision, the LfA did not pay DEM 54.7 million and a further DEM 7 million as part of its intervention in relation to the guarantee. According to the Land of Thuringia, the LfA at most paid out DEM 48.4 million since in March 1994 it paid DEM 3 million to the banks and granted PA two loans of DEM 2 million each – one to repay the guaranteed loans and the other to guarantee the payment of future interest on those loans – and in 1995 it paid DEM 41.4 million to the banks. It believes that the difference between that amount of DEM 48.4 million and the DEM 54.7 million referred to in recital 30 of the contested decision can be explained inter alia by the fact that the Commission took some amounts into account twice, that is, once as an amount guaranteed by Bavaria and then as an amount paid out by the LfA under that guarantee.

95 The Land of Thuringia submits, second, that the Commission infringed Article 87(1) EC in finding incorrectly in recitals 89 to 93 of the contested decision that, because of the conversion into a 100% guarantee, the disputed guarantee no longer fulfilled the conditions provided for by the legislation pertaining to provisions of guarantees by the Land of Bavaria.

96 Lastly, the Land of Thuringia considers that the Commission infringed the obligation to state reasons because it did not provide reasons in support of its finding that the guarantee provided by the Land of Bavaria did not comply with the applicable legislation.

97 The Commission, supported by ODS, considers that all of the arguments put forward by the Land of Thuringia pertaining to the guarantee provided by the Land of Bavaria must be dismissed as unfounded.

98 First, it denies that it committed an error in its findings of fact relating to that guarantee. It states, first, that despite the injunction issued to the German authorities, they failed to clarify the facts surrounding the measure. In the letter of 30 March 1999, the German authorities merely found it ‘logical’ to increase the guarantee from 80% to 100%, but did not provide any explanation on the point. It considers that, accordingly, it was entitled, in accordance with the judgment in Case C‑47/91 Italy v Commission (‘Italgrani’) [1992] ECR I‑4145), to adopt its decision in the light of the information available. The Commission adds that it was evident from that information that, because of the conversion, the actual provision of the guarantee did not meet the initial conditions provided for by the legislation pertaining to the granting of guarantees by the Land of Bavaria. Since that aid scheme, which had received prior approval from the Commission, provided that the guarantee could cover only a maximum of 80% of the loans, the guarantee from the Land of Bavaria should have been reduced because of the banks’ waiver of repayment of loans totalling DEM 12 million. It adds that neither the German authorities nor the Land of Thuringia could explain the increase of the guaranteed amount from DEM 52.72 to 54.72 million. Lastly, the Commission states that, even if the Land of Thuringia is right when it states that the guaranteed risk had materialised when the Land of Bavaria undertook to provide a 100% guarantee for the remaining amount, the fact remains that the Land of Bavaria should have covered only 80% of the new amount due.

99 Second, it considers that the Land of Thuringia was wrong in stating that it infringed Article 87(1) EC and the obligation to state reasons as regards the legal assessment of the Land of Bavaria’s guarantee.

2. Findings of the Court

100 The Land of Thuringia contests the legality of Article 1 of the contested decision inasmuch as it classifies as State aid incompatible with the common market a financial measure granted by the LfA in the form of a loan guarantee for DEM 54.7 million, alleging error of fact, infringement of Article 87(1) EC and infringement of the obligation to state reasons.

101 It is appropriate to consider, first, whether the Commission committed an error of fact in finding in recital 30 of the contested decision that ‘given the high level of regional aid granted, only DEM 54.7 million of the DEM 65.85 million bank consortium’s loan was used’ and that ‘the LfA granted a deficiency guarantee of 100% instead of the 80% originally envisaged’.

102 As stated in paragraph 88 above, this would be so only if the Land of Thuringia can establish that, during the administrative procedure, the Commission obtained the information necessary to enable it to correct any inaccuracies in the facts as summarised in the decision to initiate proceedings.

103 It should be borne in mind that, in the third subparagraph of part 2.2.1 of the decision to initiate the procedure, the Commission stated that ‘this loan was secured by an 80% deficiency guarantee (DEM 52.72 million) by the Land [of] Bavaria based on an approved aid scheme’. In the fifth subparagraph of the same part, the decision to initiate the procedure states as follows:

‘Owing to the fact that investment subsidies and tax refunds awarded to [PBK] were higher than expected, the banks have extended the DEM 65.85 million loan only to an amount of DEM 54.7 million. In return, the Land [of] Bavaria has changed its original 80% deficiency guarantee (DEM 52.72 million) to a 100% deficiency guarantee (DEM 54.7 million) in 1994. …’

104 Lastly, in its preliminary assessment of the aid, the decision to initiate the procedure states that ‘the Commission also has serious doubts whether the measures in connection with this guarantee, i.e. changing it into a 100% deficiency guarantee and increasing the guaranteed amount from DEM 52.72 million to DEM 54.7 million, were covered by the [authorised] aid scheme’ (first subparagraph of part 3.1.1 of the decision to initiate the procedure).

105 It is clear from these explanations that, at the time the procedure was initiated, the Commission had inferred from the information in its possession that, first, in 1994, the Land of Bavaria’s guarantee covering initially 80% of the loans had been converted into a 100% guarantee and, second, that the guaranteed amount had been increased from DEM 52.72 million to DEM 54.7 million.

106 However, in the letter of 30 March 1999 the German authorities gave their view on that presentation of the facts as regards the Land of Bavaria’s guarantee. They stated that, under the restructuring agreement, the banks agreed to waive claims for DEM 12 million on loans covered by that guarantee and that, because of that waiver, their own risk on those loans was fully covered, so that ‘accordingly, the remaining loan amount remains covered 100% by the Land of Bavaria’s guarantee’. They also outlined the evolution of the loans covered by that guarantee. That description indicates that, before the banks’ waiver under the restructuring agreement, the total amount of loans covered by the Land of Bavaria’s guarantee was DEM 58.4 million. Following the banks’ waiver of DEM 12 million, the intervention by the Land of Bavaria under its DEM 3 million guarantee and the grant of a DEM 2 million loan by the LfA to PA to repay loans, the amount of the guarantee was reduced to DEM 41.4 million.

107 In the light of that information, which has not been contradicted by the Commission or disproven by any of the evidence in the case-file, the Court finds that the Commission erred in finding in recital 30 of the contested decision essentially that the guaranteed amount had been increased from DEM 52.72 to DEM 54.7 million.

108 As regards the consequences of that error of fact, the Court notes that it is on the basis of the finding contained in recital 30 of the contested decision that the Commission found that the amount of aid to be recovered under the Land of Bavaria’s guarantee was DEM 54.7 million (recitals 89 to 93 and 123 of the contested decision). It follows that because of the aforementioned error of fact, the Commission fixed an incorrect amount of aid to be recovered.

109 The Court of First Instance also notes that it does not have all the information necessary to enable it to carry out its review on the merits of the contested decision and that it is therefore necessary for it to raise of its own motion the plea alleging failure to state reasons on this point in the contested decision (see, to that effect, Case C‑166/95 P Commission v Daffix [1997] ECR I-983, paragraph 24; Case T‑61/89 Dansk Pelsdyravlerforening v Commission [1992] ECR II-1931, paragraph 129; and judgment of 8 July 2004 in Case T‑44/00 Mannesmannröhren-Werke v Commission[2004] ECR II‑0000, paragraph 210). The reasons given in recitals 30, 32 and 89 of the contested decision do not enable the Court of First Instance to exercise its power of review because they fail to state in a precise and coherent manner how the Commission established the link between, first, the amount of the loans, reduced from DEM 65.58 million to DEM 54.7 million (recital 30 of the contested decision), second, the amount of the guarantee provided by the LfA, increased from 80% of the loans to 100% of the loans (recitals 30 and 32 of the contested decision) and, third, the amount of the guarantee provided, increased from DEM 52.72 million to DEM 54.7 million (recitals 30 and 89 of the contested decision), to justify its calculation of the respective value of the different aid allotments in question and arrive at the incorrect conclusion referred to in paragraph 108 above. Moreover, in the contested decision, the Commission did not answer the Federal Republic of Germany’s arguments put forward in the letters from the German authorities of 18 January 1996 and 30 March 1999, according to which the Land of Bavaria’s claims were ultimately acquired by the TAB for DEM 15 million, or state reasons for its assessment as to possible repercussions of that transaction on the value and repayment of the aid in question. In those circumstances, the Court finds that in those respects the Commission also infringed the obligation to state reasons laid down in Article 253 EC.

110 Next it is appropriate to consider whether the Commission also infringed Article 87(1) and (2) EC in its legal assessment of that financial measure. The Court notes that the Land of Thuringia has submitted that the Commission incorrectly found that the conditions laid down in the legislation pertaining to the provision of guarantees by the Land of Bavaria were not complied with because, first, the initial guarantee was converted into a 100% guarantee and, second, the loans covered by that guarantee were diverted to the Pilz Group. The Land of Thuringia submits that there was thus no justification for the Commission’s inference that the Land of Bavaria’s guarantee was, from the outset, incompatible with the common market.

111 It is appropriate to bear in mind, first, that in recitals 89 to 93 of the contested decision the Commission explained the reasons which led it to order the recovery of the aid represented by the Land of Bavaria’s guarantee. Thus, having noted in recital 89 that the incomplete information from the German authorities had not dispelled the doubts surrounding the conversion of the initial guarantee, the Commission found that, contrary to the requirements in the legislation pertaining to the grant of guarantees by the Land of Bavaria, ‘this measure did not essentially serve to finance the investment which was the subject of the aid application, and the investor did not make an appropriate contribution from its own funds to financing the investment costs’ (recitals 90 and 91). It added that the statements by the German authorities to the effect that most of the loans granted benefited solely the companies in the Pilz Group led to the conclusion that the aid had been misused (recital 92). It thus concluded that ‘the aid was not used for the investment project involving the setting-up of a CD plant but to keep the entire Pilz Group in business and that it was therefore misused within the meaning of Article 88(2) [EC]’ and that ‘therefore, the aid does not comply with the Treaty’s provisions and should be revoked and recovered by the German authorities’ (recital 93).

112 First, it is clear from those reasons that it was because of the misuse of the aid granted under the Land of Bavaria’s guarantee that the Commission considered that that aid should be recovered. As rightly pointed out by the Commission, the issue of the conversion of the initial guarantee to a 100% guarantee was referred to only incidentally and is not in any way the basis of the Commission’s assessment of this point.

113 Second, the Court notes that the concept of misuse of aid derives directly from the first subparagraph of Article 88(2) EC, which provides that ‘if, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is … being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission’. In addition, Article 1(g) of Regulation No 659/1999 defines ‘misuse of aid’ as ‘aid used by the beneficiary in contravention of a decision taken pursuant to Article 4(3) or Article 7(3) or (4) of this Regulation’.

114 It follows from those provisions 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.

115 It is, moreover, clear in the present case that the Commission has established with certainty that the Land of Bavaria’s guarantee was used in breach of the legislation pertaining to the provision of guarantees by the Land of Bavaria. First, it stated in recital 90 of the contested decision that, under that scheme, the Land of Bavaria provides guarantees to cover loans intended to finance investment (establishment, expansion, etc.) and that, in order to avail itself of that guarantee, the undertaking entitled to submit an application must put up an appropriate proportion of its own funds to finance the project in question, and in order to make it probable that interest will be paid and loans repaid within a reasonable time the overall financing of the project should be secured. Next, it found that, first, ‘this measure did not essentially serve to finance the investment which was the subject of the aid application, and the investor did not make an appropriate contribution from its own funds to financing the investment cost’ (recital 91) and, second, ‘these publicly secured loans … were essentially of economic benefit solely to the companies in the Pilz Group’ (recital 92).

116 In the light of the foregoing, the fact that the guarantee was provided initially in accordance with the aid scheme is irrelevant. As rightly pointed out by the Commission, it is not the initial grant of the aid, but rather its subsequent use in breach of the terms of an authorised aid scheme which constitutes misuse of the aid. It is also clear from the first subparagraph of Article 88(2) EC that a finding of misuse is a criterion distinct from, and independent of, the criterion of compatibility with the common market and can therefore by itself serve as a basis for a decision by the Commission to order the cancellation or amendment of aid. Accordingly, and contrary to the line of argument put forward by the Land of Thuringia, the Commission was right not to include in the contested decision reasons establishing the incompatibility of the Land of Bavaria’s guarantee with the common market. It also follows that the Commission fulfilled its obligation to state reasons on this point under Article 253 EC.

117 Accordingly, the Land of Thuringia’s arguments alleging infringement of Article 87 EC must be dismissed as unfounded.

118 In the light of all of the foregoing, Article 1 of the contested decision must be annulled in so far as the Commission found therein that the State aid granted in respect of the establishment of the Albrechts CD plant includes an amount of DEM 54.7 million under the Land of Bavaria’s guarantee.

C – The waiver of the DEM 3 million claim granted by the Land of Bavaria (the LfA) to PBK

1. Arguments of the parties

119 The Land of Thuringia submits that the Commission found incorrectly in recital 96 of the contested decision that PBK received aid due to the waiver by the LfA of its DEM 3 million claim against that undertaking. In so finding, the Commission disregarded the fact that it had already counted that amount as aid in the assessment of the guarantee provided by the Land of Bavaria – namely the amount of DEM 54.72 million. As the German authorities stated to the Commission during the procedure by letters of 3 March 1995 and 30 March 1999, that claim against PBK arose precisely because of the payment of the same amount to the banks in order to reduce the amount of loans covered by the initial guarantee.

120 Next, it states that the Commission committed an error of assessment in finding in the contested decision that the waiver of the DEM 3 million claim by the LfA constitutes new aid. It states, as noted in the previous paragraph, that that measure was used to repay loans which had been granted for the purpose of building the Albrechts CD plant and which were covered by the Land of Bavaria’s guarantee. It takes the view that, in any event, the Commission infringed the obligation to state reasons because it did not state the reasons for which it considered that the LfA’s waiver of the DEM 3 million claim in favour of PBK constituted aid incompatible with the common market.

121 The Commission, supported by ODS, contests the Land of Thuringia’s entire line of argument concerning the waiver of the DEM 3 million claim. It states, first, that it did not commit an error of fact or of law in respect of that measure because it was not the intervention under the guarantee which was found to be supplementary aid, but rather the subsequent waiver of the claim which arose from that intervention. It adds that, although that waiver had already been found to be aid when the formal investigation procedure was opened, in particular in the table on page 9 of the decision to initiate the procedure, the German authorities did not subsequently raise any objections. The Commission further states that it complied with its obligation to state reasons in respect of that aid. In recital 96 of the contested decision it found, on the basis of the incomplete information provided by the German authorities, that the aid had been granted without any legal basis and was therefore incompatible with the common market.

2. Findings of the Court

122 The Land of Thuringia alleges, in respect of the LfA’s waiver of its DEM 3 million claim against PBK, error as to the facts, manifest error of assessment and infringement of the obligation to state reasons.

123 The Court notes, as a preliminary point, that in recital 96 of the contested decision the Commission found that ‘the waiver of the repayment of a DEM 3 million loan should also be deemed incompatible and the relevant funds recovered as they were granted without any legal basis’.

124 According to the Land of Thuringia, that finding is based on an error of fact and on an incorrect legal assessment in that, by counting both the total amount of the Land of Bavaria’s guarantee (DEM 54.7 million) and the amount of the claim that it decided not to recover from PBK (DEM 3 million), the Commission counted the same aid twice. The Commission in any event infringed the obligation to state reasons by failing to state why it considered the waiver of the claim to be aid incompatible with the common market.

125 The Court notes that 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.

126 It is true that, 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.

127 Only in these proceedings did the Commission state that it is not the intervention under the guarantee that it found to be supplementary aid, but rather the subsequent waiver of the claim which arose from that intervention. It is clear, however, that in law recitals 31 and 96 of the contested decision do not enable either individuals or the Court of First Instance to understand sufficiently the reasoning put forward on this point and, therefore, the Court of First Instance to exercise its power of review of the reasons for which the Commission found, when it adopted that decision, that the waiver of the claim constituted new aid, different from that counted under the Land of Bavaria’s guarantee or its enforcement. It is, moreover, settled case-law that, in principle, explanations given by the Commission during the litigation procedure before the Court of First Instance may not remedy insufficiencies in the statement of reasons in the contested decision (see, to that effect, Joined Cases C‑329/93, C‑62/95 and C‑63/95 Germany and Others v Commission [1996] ECR I-5151, paragraphs 47 and 48; Joined Cases T‑371/94 and T‑394/94 British Airways and Others and British Midland Airways v Commission [1998] ECR II-2405, paragraphs 116 to 119; and judgment of 18 January 2005 in Case T‑93/02 Confédération nationale du Crédit mutuel v Commission [2005] ECR II‑0000, paragraphs 123 to 126).

128 Accordingly, without its being necessary to consider whether the Commission actually counted the same aid twice, the Court finds that, in any event, the Commission could not merely state, in recital 96 of the contested decision, that the waiver of the repayment of the loan constituted aid incompatible with the common market because it was ‘granted without any legal basis’.

129 Therefore, without its being necessary to consider the other pleas put forward by the Land of Thuringia on this point, it was right in submitting that the Commission infringed its obligation to state reasons under Article 253 EC as regards the finding that the waiver of the DEM 3 million claim granted by the LfA to PBK constituted aid.

130 In the light of the foregoing, Article 1(1) of the contested decision must be annulled in so far as the Commission found that the State aid granted for the establishment, operation and consolidation of the Albrechts CD plant includes an amount of DEM 3 million by virtue of the debt waiver granted to PBK.

D – Investment subsidies and allowances of DEM 63.45 million and DEM 19.42 million granted by the Land of Thuringia and the Land of Bavaria (the LfA) to the joint venture and to PA

1. Arguments of the parties

131 The Land of Thuringia submits that the Commission made various errors of fact and errors of assessment and infringed the obligation to state reasons in respect of the investment subsidies and allowances granted by the Land of Thuringia and the Land of Bavaria (the LfA).

132 It states, first, that because the Commission found in recital 88 of the contested decision that a decision was taken to issue a repayment notice to CD Albrechts in respect of DEM 32.45 million which the Land of Thuringia had granted in the form of investment subsidies, the Commission was wrong to order recovery of all of the aid, that is, DEM 63.45 million, in Article 2 of the contested decision.

133 Next, it states that, contrary to what the Commission found in recitals 87 and 88 of the contested decision, the investment subsidies and allowances granted in respect of the establishment of the Albrechts CD plant constitute existing aid, which complies with aid schemes previously approved by the Commission, and not new aid which is incompatible with the common market because it was granted in breach of an alleged prohibition on assistance for capital assets in associated undertakings. It states that, generally, neither the Investment Allowance Law nor the GA scheme nor Community law imposes any prohibition to that effect. Next it observes that, even if the GA scheme did provide for a prohibition on assistance for capital assets in associated undertakings, that prohibition was complied with in this case because, before disbursing the grants, each time it required confirmation from the joint venture that the grants would not be used to maintain capital assets in associated undertakings. In its view, this is clear from the indictment lodged by the Public Prosecutor’s Office with the Landgericht (Regional Court) Mühlhausen on 9 April 1998, which was notified to the Commission in the annex to the letter of 28 September 1999. It adds that it cannot be maintained that, at the time the contract for the establishment of the Albrechts CD plant was concluded, the relationship between the joint venture and Pilz Construction was a relationship between ‘associated undertakings’ because, at that time, the Pilz Group was only a minority shareholder in the joint venture. It submits that, accordingly, the grants complied with the conditions laid down by the GA scheme, thus came within an authorised aid scheme and, therefore, were compatible with the common market. In its view, it was only the diversion of part of the grants to the Pilz Group which made that part of the investment subsidies non-compliant with the conditions laid down by the GA scheme and therefore incompatible with the common market. It also contests the Commission’s assertion that, during the formal investigation procedure, the German authorities did not provide proof that part of the grants had indeed been misused. It states that that information could be found in the indictment lodged by the Public Prosecutor’s Office with the Landgericht Mühlhausen on 9 April 1998 (pp. 10 to 12).

134 Moreover, as regards the grant of investment allowances, the Land of Thuringia states that the Commission failed to determine the conditions under which they were granted and, therefore, concluded incorrectly that the alleged prohibition on assistance in associated undertakings should have precluded the grant of such allowances. It states that the Investment Allowance Law does not contain any such prohibition and that, on the contrary, it enshrines the entitlement of an investor to those allowances, regardless of who the supplier of the capital assets is. It adds that the Commission failed to take account of the fact that part of the investment allowances, namely DEM 6.137 million, was ordered to be recovered and that, for the remainder, the conditions laid down by the Law were indisputably met.

135 Lastly, the Land of Thuringia contests ODS’s assertion that the investment subsidies and allowances should not have been allowed because the investment project commenced on 29 August 1989, that is, before the reunification of Germany. In its view, not only is this statement inaccurate, but also the planning order of 25 January 1991 fixing the particulars for the granting of aid under the GA scheme also allowed for the promotion of projects which commenced after 1 July 1990 and thus before 3 October 1990 (Bundestag, publication 12/895, annex 4). It adds in respect of investment allowances that the applicable legislation was already in force in the Federal Republic of Germany before reunification and was initially maintained after reunification under the Treaty signed on 31 August 1990 between the Federal Republic of Germany and the German Democratic Republic relating to the establishment of German unity (BGBl. 1990 II, p. 889).

136 The Commission denies that it made any error in the assessment of the facts or in its assessment concerning the investment subsidies and allowances.

137 It states, first, that the Land of Thuringia’s assertion that the Commission did not take account of the condition explicitly laid down by the Land for allowing investment subsidies under the GA scheme is incomprehensible because that condition was precisely one of the elements taken into account in the legal assessment of that aid (recitals 87 and 88 of the contested decision). It states that the addition of such a condition was logical because, even if there is no general prohibition regarding grants to associated undertakings, the grant of public funds should be prohibited when, in the context of a central cash-management system, those funds are automatically diverted from their purpose and wind up in other undertakings in the group which do not fulfil the conditions for obtaining those grants (in this case companies in the Pilz Group). It observes that, if grants authorised under Article 87(3) EC are paid to an undertaking which participates in a central cash-management system, those grants must, exceptionally, be considered to be illegal ab initio and therefore be recovered. In the Commission’s view, such a system, from the outset, prevents grants from being used in accordance with their objective. Moreover, the Land of Thuringia’s demand for repayment of the investment subsidies is recognition of the misuse of that aid by the joint venture. It adds that if the Land of Thuringia wishes to maintain that the other grants were used correctly, it must furnish proof to that effect. It observes, however, that during the administrative procedure no one, including the German federal authorities, the Land of Thuringia or any other party, was able to prove that at least part of the grants were used for the establishment, expansion, conversion or rationalisation of the undertaking.

138 Next, it states that, because the German authorities did not provide it with the Land of Thuringia’s decision demanding repayment of the aid, it had no choice but to base its decision on the only information it had at that time it adopted the contested decision, namely the indictment laid before the Landgericht Mühlhausen on 9 April 1998. In its view, that document shows that, in calculating the amount of the aid which they had to order to be repaid, the Thuringia authorities incorrectly assumed that the misused amount was lower, because they did not yet know, at the time of determining the amount to be repaid, that the project as a whole violated the prohibition on grants to associated undertakings and that therefore no grant should have been allowed. Accordingly, it maintains that it was right to find, in the contested decision, that all of the grants allowed should be considered to be illegal and therefore should be repaid, especially when one considers that, at the time of adopting the contested decision, it did not have the information which showed that the DEM 32.45 million demanded by the Land of Thuringia had actually been repaid.

139 Moreover, in response to the Land of Thuringia’s line of argument that it did not consider the possibility that the Albrechts CD plant might be subsidised under the regional aid scheme, it states that in assessing the investment subsidies and allowances it relied on its Guidelines on national regional aid (Information from the Commission – Guidelines on national regional aid, OJ 1998 C 74, p. 9), amended most recently by the Amendments to the Guidelines on national regional aid (OJ 2000 C 258, p. 5) (‘Guidelines on national regional aid’), so that it is not necessary to discuss this issue.

140 Lastly, it submits that, since, first, it is common ground that the investment allowances were misused through the central cash-management system and, second, the proof that part of the allowances was used correctly has not been made out, it is appropriate to order repayment of all of those allowances, since they must be considered to have been incompatible from the moment they were granted. Although repayment of DEM 6.4 million, plus DEM 2.2 million, has already been ordered (recital 79 of the contested decision), it does not have information that that amount has actually been repaid, and so it ordered repayment of the entire amount, DEM 19.42 million. It further submits that the Land of Thuringia’s argument that it did not rule on the investment allowances is inaccurate. It states that it did rule on that issue because, by referring to the preceding recitals in recital 94 of the contested decision, it established the incompatibility of those allowances on the basis of the statements of the German authorities, which tended to indicate that those funds did not benefit the investment project, but rather served to maintain the entire Pilz Group in activity and were therefore misused.

141 ODS concurs with the Commission’s submissions concerning the investment subsidies and allowances. It adds that there is still another reason in support of the Commission’s view that the investment subsidies and allowances granted to the joint venture and then to PA did not comply with the aid scheme provided for by the Investment Allowance Law and the GA scheme, which were approved by the Commission. It states that, according to the statements made by the Land of Thuringia itself, aid was granted before reunification, that is, at a time when those aid schemes had not yet come into effect for the Land of Thuringia (paragraphs 1.2, 3.2 and 2.9.2 of the GA scheme and Guidelines on national regional aid, paragraph 4.2).

2. Findings of the Court

142 For the purposes of the present plea, it is appropriate to consider separately the Land of Thuringia’s arguments relating to the investment subsidies and allowances which were granted by it and those relating to the investment subsidies and allowances granted by the Land of Bavaria (the LfA). In the contested decision, the Commission gave different reasons for those two measures.

a) The investment subsidies and allowances granted by the Land of Thuringia

143 According to Article 1(1) of the contested decision, the investment subsidies and allowances granted by the Land of Thuringia are incompatible with the EC Treaty because they were misused within the meaning of Article 88(2) EC.

144 The concept of misuse derives directly from Article 88(2) EC, which states that ‘[i]f, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources … is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission.’ According to Article 1(g) of Regulation No 659/1999, aid is misused when it is ‘used by the beneficiary in contravention of a decision taken pursuant to Article 4(3) or Article 7(3) or (4) of this Regulation’.

145 It follows from those provisions 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 contravention of the national rules governing that scheme or supplementary conditions which were accepted by the Member State at the time the scheme was approved by the Commission.

146 In the present case, the Commission stated the reasons for its assessment of the misuse of the grants and allowances granted by the Land of Thuringia in recital 87 of the contested decision as follows:

‘According to the investigations of the German criminal prosecution authorities, there was an exchange of goods/services with a total value of DEM 109 million between the companies within the Pilz Group. Consequently, the entire investment plan should not have received assistance since there was an infringement of the prohibition of aid being used to finance capital assets from associated companies. Consequently, the investment grant of DEM 63.45 million made on the basis of [the GA scheme and] the Investment Allowance Law for 1991 and 1992 was incompatible with the programme and thus must be deemed not to be covered [by the authorised schemes].’

Accordingly, the Commission concluded that that aid, which was channelled through the Pilz Group’s central cash-management system, had to be regarded as incompatible with the common market and be recovered. It also noted that, by decision of 27 July 1995, the Land of Thuringia ordered repayment of only DEM 32.5 million, so that a further DEM 30.95 million remained to be recovered (recital 88 of the contested decision).

147 It follows from those reasons that it is because there was an exchange of goods and services within the Pilz Group and the diversion of funds through the centralised cash-management system that the Commission found, in the contested decision, that the prohibition on assistance for capital assets in associated undertakings had been breached and that therefore there had been misuse within the meaning of Article 88(2) EC.

148 The Court notes that, in its written pleadings, the Land of Thuringia maintained, and was not contradicted on this point by the Commission, that that prohibition was not in the GA scheme or the Investment Allowance Law which were approved as aid schemes by the Commission, but was a supplementary condition imposed by the Land of Thuringia on the payment of each instalment of the grants and allowances in this case, in order to prevent their being used to benefit other undertakings in the Pilz Group. The indictment lodged by the Public Prosecutor’s Office with the Landgericht Mühlhausen, which was notified to the Commission during the administrative procedure, appears to support this interpretation.

149 Since the prohibition on support was not part of the aid schemes or the approval decisions for those schemes, the Commission could not, in this case, base its finding that aid has been misused solely on a breach of that prohibition. As stated in paragraph 145 above, in order to show that aid granted pursuant to an authorised aid scheme has been misused, the Commission must show that that aid was used in a manner contrary to the national rules governing that scheme or supplementary conditions which were accepted by the Member State at the time the scheme was approved. However, 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, 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.

150 It is true that, generally, it may be useful in a case such as this one, where the aid recipient is part of a group of companies within which a central cash-management system is used, for the disbursement of grants and other forms of aid to be subject to a strict prohibition on using that aid for other undertakings in the group to which the recipient belongs. The indictment lodged by the Public Prosecutor’s Office with the Landgericht Mühlhausen in fact indicates that it is precisely for that reason that, in the present case, the Land of Thuringia made the disbursement of the grants subject to just such a prohibition. The mere fact, however, that it might have been desirable to include a certain clause in an aid scheme does not obscure the fact that, in the present case, such a provision was not included either in the schemes in question or in the Commission’s decision, so that non-compliance with that clause cannot constitute misuse of aid within the meaning of the first subparagraph of Article 88(2) EC; otherwise, the foreseeability of control carried out by the Commission on the basis of that provision would be undermined.

151 Accordingly, the Land of Thuringia rightly claimed that the Commission made a manifest error of assessment in finding that the investment subsidies and allowances granted by the Land of Thuringia were misused within the meaning of the first subparagraph of Article 88(2) EC, on the sole ground that there had been a breach of the prohibition in force when they were granted.

152 In the light of the foregoing, without its being necessary to consider the other pleas put forward by the Land of Thuringia in this regard, Article 1 of the contested decision must be annulled in so far as the Commission found that the State aid declared to be incompatible with the common market includes an amount of DEM 63.45 million in investment subsidies and allowances granted by the Land of Thuringia.

b) The investment subsidies and allowances granted by the Land of Bavaria (the LfA)

153 Recitals 93 to 95 of the contested decision indicate that, in respect of the investment subsidies and allowances granted by the Land of Bavaria (the LfA), the Commission made the following findings:

‘… the aid was not used for the investment project involving the setting up of a CD plant but to keep the entire Pilz Group in business and … was therefore misused within the meaning of Article 88(2) of the EC Treaty. …

This goes also for the investment subsidies on the basis of the [GA scheme or the Investment Allowance Act] totalling DEM 19.42 million.

The German authorities have informed the Commission that they have taken the steps required under German law to recover the aid in the bankruptcy proceedings concerning the Pilz Group.’

154 The Court notes that the Land of Thuringia rightly states that those grounds, which are vague and not very detailed, infringe Article 253 EC because they do not provide any indication as to why the Commission found that the investment subsidies and allowances granted by the Land of Bavaria were used in breach of the GA scheme and the Investment Allowance Act.

155 It is not sufficient to find, as indicated in recital 95 of the contested decision, that the German authorities informed the Commission that they had taken the steps provided for under German law to recover the aid in question. Regardless of whether those steps could legitimately be construed by the Commission as recognition by the German authorities that the aid had been misused, that would not dispense the Commission from its obligation to state reasons under Article 253 EC as to the incompatibility of the aid in question with the common market.

156 It is settled case-law that the statement of grounds required by Article 253 EC must disclose 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 (Case C‑350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 15, and the case-law cited therein). Moreover, as regards the scope of the persons concerned for the purposes of the case-law cited, the Court of Justice has held that 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 (Joined Cases 296/82 and 318/82 Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985] ECR 809, paragraph 19; Confédération nationale du Crédit mutuel v Commission, paragraph 127 above, paragraph 68). Accordingly, the requirement to state reasons in a decision taken in a matter involving State aid 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 (see, to that effect, British Airways and Others and British Midland Airways v Commission, paragraph 127 above, paragraph 92). Therefore, so long as the contested decision concerns the applicant directly and individually within the meaning of the fourth paragraph of Article 230 EC, as is the case here for the Land of Thuringia, it is entitled to demand that the reasons for the decision make clear all of the considerations of fact and of law which make up the basis of the decision, in order to satisfy the requirements of Article 253 EC.

157 It follows that the Commission has infringed its obligation under Article 253 EC by failing to state the reasons for which it found that the investment subsidies and allowances granted by the Land of Bavaria were used in breach of the GA scheme and the Investment Allowance Act.

158 In the light of the foregoing, without its being necessary to consider the other pleas put forward by the Land of Thuringia in this context, Article 1(1) of the contested decision must be annulled in respect of the investment subsidies and allowances granted by the Land of Bavaria.

E – The THA guarantee in favour of Robotron and the joint venture

1. Arguments of the parties

159 The Land of Thuringia states that the Commission incorrectly found in recitals 97 to 99 of the contested decision that the guarantee provided by the THA and the subsequent intervention under that guarantee are not existing aid under an aid scheme previously approved by the Commission, but rather new aid which is incompatible with the common market. It states, first, that since the THA provided the guarantee for the joint venture in order to facilitate the privatisation of that undertaking, that guarantee was indeed provided under the first and second THA schemes (approved by letters of 26 September 1991 and 8 December 1992 from the Commission) and, accordingly, is existing aid and not new aid. It observes that the THA’s first scheme clearly provided that the THA was entitled to provide guarantees covering obligations of the undertakings in which it held shares, it being understood that the term ‘undertakings’ also covers shareholdings in associated companies or in joint ventures. It adds that this was precisely the case here, since the provision of the guarantee for Robotron and the joint venture allowed for transfers of shares held mostly by Robotron – a State company – to PBK – a private company – whilst eliminating possible claims for compensation against the former. It adds that the statements by the managing director of Robotron, referred to by the Commission in recital 98 of the contested decision in order to establish that the THA’s objective from the beginning was to wind up and not to privatise Robotron, are not relevant because they were not made at the time the guarantee was provided, but rather later, at the time when the winding-up of Robotron was envisaged. The Land of Thuringia states that the contracts setting up the joint venture were all concluded and the guarantee was provided well before the reunification of Germany, that is, at a time when, first, Robotron still genuinely hoped to take part in a market economy – through the joint venture – and become a leader in CD production in the former German Democratic Republic and, second, bankruptcy was not envisaged.

160 Second, the Land of Thuringia disagrees with the Commission’s assertion that the THA schemes, including the conditions for granting the various aid measures under those schemes, must be interpreted narrowly. It submits that, in addition to the fact established by it that the provision of the guarantees to Robotron and the joint venture certainly met the grant conditions under the THA’s schemes, even on a very restrictive reading of those conditions, the Commission’s view disregards the fact that, at the time the schemes were approved by the Commission, all parties – including the Commission – agreed that the THA’s unprecedented task called for a generous application of the Community aid monitoring scheme (see Van Miert, K., Markt, Macht, Wettbewerb. Meine Erfahrungen als Kommissar in Brüssel, Deutsche Verlaganstalt Stuttgart/München, 2000, p. 243 et seq.). In its view, the Commission cannot unilaterally cancel that agreement.

161 Third, the Land of Thuringia states that the guarantee was provided before the reunification of Germany, so that it must be viewed as not constituting State aid, or as constituting State aid which already existed prior to reunification, which expanded the application of the Treaty provisions to the territory of the former German Democratic Republic.

162 Fourth, regarding the intervention under the guarantee, the Land of Thuringia considers that the payment by the THA of DEM 120 million under the restructuring agreement is not State aid because, in so acting, the THA acted as a private investor in a market economy would have done in a similar si