Keywords

Summary



Keywords

1. State aid – Prohibition – Derogations – Commission under an obligation to determine whether aid is compatible in accordance with the substantive rules in force when the aid was paid

(Art. 87(1) and (3)(d) EC)

2. State aid – Prohibition – Derogations – Discretion of the Commission – Judicial review – Limits

(Art. 87(3) EC)

3. State aid – Prohibition – Derogations – Aid which may be considered compatible with the common market – Export aid in the book sector

(Art. 87(3)(d) EC)

Summary

1. All new State aid which has not been notified and has already been disbursed is necessarily incompatible with the common market if it is capable of distorting competition by selectively favouring certain undertakings or the production of certain goods during the period in which it was paid and if it is not covered by any derogation from the general prohibition of State aid under Article 87(1) EC. Once it has produced its effect, the aid in question becomes definitively compatible or incompatible with the common market.

The analysis as to whether aid that has been paid and not notified is compatible with the common market does not only require an assessment of whether, at the time when the relevant decision was adopted, the Community interest demanded that the aid be repaid. The Commission must also ascertain whether, during the period in which the aid in question was paid, that aid was likely to distort competition.

While the Commission enjoys a wide discretion to admit aid by way of derogation from the general prohibition in Article 87(1) EC, that discretion cannot be used while disregarding the fact that it was during the period in which the aid in question was unlawfully paid that it could have distorted competition in a manner contrary to the Community interest, as determined under the existing legislative framework. The Commission therefore erred in law by applying Article 87(3)(d) EC to the period before 1 November 1993, instead of applying the substantive rules in force during the period in question.

Community legislation on State aid would be neither clear not predictable for those who are subject to it if aid which could not be regarded as compatible during a particular period, in the absence of a derogation from the general prohibition of State aid under Article 87(1) EC, which was applicable in that period, could subsequently be regarded as compatible if such a derogation were made available. Moreover, to consider that aid which has not been notified can be declared compatible with the common market by virtue of a derogation which was not in force when that aid was paid would result in conferring an advantage on the Member State which granted it in relation to any other Member State which might have intended to grant similar aid but refrained from doing so since there was no derogation authorising this. That would serve to encourage Member States not to notify aid which they considered incompatible with the common market, in the absence of an applicable derogation, in the hope that such a derogation might be adopted subsequently.

(see paras 58-61, 66-67)

2. In the application of Article 87(3) EC, the Commission has a wide discretion the exercise of which involves complex economic and social assessments which must be made in a Community context. Judicial review of the manner in which that discretion is exercised is therefore confined to establishing that the rules of procedure and the rules relating to the duty to give reasons have been complied with and to verifying the accuracy of the facts relied on and that there has been no error of law, manifest error in the assessment of the facts or misuse of powers. It is not for the Court of First Instance, therefore, to substitute its economic assessment for that made by the institution which adopted the decision.

(see para. 96)

3. With regard to the examination of export aid in the book sector granted to a book agency, the purpose of which is to offset the extra costs of handling small orders, the Commission commits a manifest error of assessment if it applies to its initial assessment of the costs individual multiplying factors, which are justified on the basis of additional technical processing difficulties which could be resolved by the use of tele-transmission. It is clearly inconsistent to argue that, where orders are not tele-transmitted, extra costs are incurred, and at the same time to apply the same individual multiplying factor to orders that have been tele-transmitted and those which have not been so transmitted. With regard to the absence of tele-transmission, it would be acceptable to apply a multiplying factor to the costs incurred in processing small orders only if tele-transmission was clearly less widely used in processing small orders than in other orders.

(see paras 101, 124-125,130)