Keywords

Summary



Keywords

1. Procedure – Intervention – Conditions for admissibility – Interest in the result of the case – Concept

(Statute of the Court of Justice, Art. 40, second para.)

2. State aid – Recovery of unlawful aid – Determination of liability in the event of a transfer of assets – Economic continuity test

(Art. 88(2) EC)

3. State aid – Recovery of unlawful aid – Calculation of the amount of aid to be recovered and determination of the addressees of the orders for recovery – Member State experiencing difficulties – Duty of cooperation between the Commission and the Member State

(Arts 10 EC and 88(2) EC)

4. State aid – Concept – Assessment according to the private investor test – Assessment of all factors relevant to the transaction at issue and its context

(Art. 87(1) EC)

5. State aid – Concept – Advantage granted to beneficiaries of State Aid – Need to take into account the effects of a measure to determine the advantage to the beneficiary

(Art. 87(1) EC)

6. State aid – Concept – Application of the private investor test – Aid consisting of the payment of rents for the sub-leasing of aircraft lower than those paid under the main contracts

(Art. 87(1) EC)

7. State aid – Examination by the Commission – New aid – Burden of proof – Apportionment between the Commission and the Member State – Condition – Compliance with respective procedural obligations

(Arts 10 EC, 87(1) EC and 88(2) and (3) EC)

8. State aid – Examination by the Commission – Diligent and impartial examination – Possibility of adopting a decision on the basis of the information available – Conditions

(Arts 10 EC, 87(1) EC and 88 EC)

9. State aid – Adverse effect on competition – Effect on trade between Member States – Liberalisation of an economic sector at Community level

(Art. 87(1) EC)

10. State aid – Recovery of unlawful aid – Possible legitimate expectation on the part of interested third parties – Protection – Conditions and limits

(Arts 88(2) and (3) EC)

11. State aid – Commission decision finding aid incompatible with the common market and ordering its repayment – Duty to state reasons as regards the means of calculating the amount to be repaid

12. Community law – Principles – Rights of the defence – Application to administrative procedures initiated by the Commission – Scope

Summary

1. In the context of State aid, when an intervener was recognised as having a direct and present interest in the result of the case, for the purposes of the second paragraph of Article 40 of the Statute of the Court of Justice, on the ground, first, that it was in competition with the recipients of the aid, and, second, that it had actively participated in the formal investigation procedure which led to the adoption of the decision declaring the aid incompatible with the common market, which is favourable to it, it retains such a direct and present interest as long as the recipients of the aid are recognised as having a legal interest in seeking the annulment of that decision. The intervener retains a corresponding interest in intervening in support of the Commission to argue for the legality of that decision, be it only for the purposes of making claims for compensation, followed by possible actions, based on the unlawful grant of aid which caused it injury.

(see para. 64)

2. In the circumstance where aid was paid to a company in difficulty which transferred certain assets to a new company created from the hiving-off of its operations, that new company could be regarded as the effective recipient of the aid if there is financial continuity between those two companies. By contrast, in the absence of financial unity between the two companies, the aid at issue granted to the original company after the hiving-off cannot be recovered from the new company on the sole ground that it obtained an indirect benefit from it.

In order to determine whether the obligation to recover aid paid to a company in difficulty can be extended to a new company to which the former company has transferred certain assets, where that transfer gives rise to the conclusion that there was financial continuity between the two companies, the following elements may be taken into consideration: the purpose of the transfer (assets and liabilities, continuity of the workforce, bundled assets), the transfer price, the identity of the shareholders or owners of the acquiring firm and of the original firm, the moment at which the transfer was carried out (after the start of the investigation, the initiation of the procedure or the final decision) and, lastly, the economic logic of the transaction. Moreover, the criteria laid down in the case-law for identifying the effective recipient of aid are objective.

The purpose of the obligation to recover aid is to restore the competitive situation in the economic sector concerned, and not to enable the public administration to recover its debts. In this regard, the economic logic of an asset transfer transaction must therefore be examined from the point of view of restoring the competitive situation in the sector concerned.

(see paras 104-106, 135, 146, 148)

3. In a decision finding that aid was incompatible with the common market and requiring its recovery, the Commission is not required to state to what extent each recipient undertaking has benefited from the amount of the aid in question. It is for the Member State concerned to determine the amount which must be repaid by each of those undertakings in its recovery of the aid. It is sufficient for the Commission’s decision to include information enabling the recipient to work out himself, without overmuch difficulty, that amount. If it encounters unforeseen difficulties, it may submit its problems for consideration by the Commission, and the Commission and State must work together in good faith, in accordance with the duty of genuine cooperation enshrined particularly in Article 10 EC, with a view to overcoming those difficulties whilst fully observing the Treaty provisions, and in particular the provisions on State aid.

(see paras 126, 315-318)

4. In the light of the provisions of Article 87 EC the Commission must always examine all the relevant features of the transaction at issue and its context, particularly in applying the private investor test. The Commission is required to ascertain, in the light of all the relevant information, whether the conditions for the application of Article 87(1) EC are satisfied.

Whilst the Commission is entitled to take account of the context of the measures at issue, for example the fact that the aid was granted in the context of restructuring and privatisation, it is none the less required to examine whether, in the light of the private investor test, the measures at issue corresponded to normal commercial transactions in a market economy.

Even where a measure follows measures of the same nature classed as State aid, that fact does not rule out, a priori, that the said measure satisfies the market economy private investor test. It is in any case for the Courts of the European Union to ascertain whether, having regard to the relevant features, that measure can reasonably be severed from the earlier aid measures and be regarded, for the purposes of applying the private investor test, as an independent measure.

(see paras 172-177)

5. It follows from Article 87(1) EC that the concept of aid is objective, the test being whether a State measure confers an advantage on one or more particular undertakings. In particular, in order to determine whether a measure in question can constitute State aid, regard must primarily be had to the effects of the aid on the undertakings favoured and not the status of the public or private institutions which grant it.

(see paras 211-212)

6. For the purposes of the application of the private investor test, it is necessary to determine whether the measures in question confer on the recipient undertaking an economic advantage which it would not have obtained under normal market conditions. The fact that the transaction is reasonable for the public authorities or public undertaking granting the aid is not sufficient to render that conduct compliant with the private investor test.

As regards an aid granted in the form of rents for the sub-leasing of aircraft lower than the rentals paid under the head-leases, for the purposes of the application of the private investor test, it is necessary to compare the rents at issue with those of the market. The Commission is required to ascertain, in accordance with the private investor test, whether the rents were lower than those which the sub-leasing undertaking would have paid under normal market conditions.

(see paras 213-214)

7. It is for the Commission to put forward the evidence relating to the grant of new aid. In fact, it follows from the provisions of Article 88(2) and (3) EC that, in the absence of such a demonstration, the new measures in question cannot be regarded as State aid for the purposes of Article 87(1) EC.

However, the application of that rule on the burden of proof is subject to compliance by the Commission and the Member State concerned with their respective procedural obligations in the course of the exercise by that institution of its powers to cause the Member State to provide it with all the necessary information.

On the other hand, the burden of proof of the compatibility of aid with the common market, by way of derogation from Article 87(1) EC, rests, generally, on the Member State concerned, which must show that the conditions for that derogation are satisfied.

(see paras 224-225, 329)

8. 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 towards that institution under Article 10 EC to provide information requested from it either for the purpose of assessing the compatibility of new or modified aid with the common market or of verifying whether aid previously approved has been properly applied. Before taking such a decision, however, the Commission must order the Member State to provide it, within the time-limit it lays down, with all the documentation, information and data necessary to carry out its review. 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 a decision on the basis of the information available to it. Those procedural obligations are binding both on the Member State concerned and on the Commission in order to permit the latter to carry out its review on the basis of sufficiently clear and precise information while ensuring respect for the right of the Member State concerned to be heard. It should be pointed out that observance of the rights of the defence is, in all procedures initiated against a person which are liable to culminate in a measure adversely affecting that person, a fundamental principle of European Union law which must be guaranteed even in the absence of any specific rules.

The Member State cannot be accused of not having provided sufficient information to the Commission when the decision to initiate the formal investigation procedure contains no preliminary assessment of the contested measures, with a view to determining whether they contain any element of aid, and, in default, in the administrative procedure, of, first, any express putting in issue of those measures and, second, any request for information relating to the compliance of those measures with market conditions.

In such a case, it is for the Commission, in accordance with its duty of careful impartial examination in the interest of sound administration of the fundamental rules of the Treaty on State aid, to pursue its investigations and to deepen its inquiry in order to establish, amongst other things, whether the measures at issue were consistent with the private operator test. To that end, it is for the Commission to serve on the Member State an order to provide additional information stating the nature of the information required, be it to commission an additional expert report.

(see paras 226, 229, 240, 246, 248-249)

9. In order to justify the classification of a measure as State aid, the Commission is required, under Article 87(1) EC, to establish a threat of distortion of competition, which is the case when that measure strengthens the recipient undertaking’s position compared to other undertakings, which are in competition with it in a sector that has been liberalised at Community level.

(see para. 312)

10. The grant of State aid even in the form of guarantees cannot give rise to third parties’ legitimate expectation that those guarantees were proper, if they were given in breach of Article 88(3) EC. It is, in fact, for the third parties concerned to display the required prudence and diligence and to satisfy themselves that the rules of European Union law have been complied with.

(see para. 354)

11. A decision finding that aid was incompatible with the common market, which does not contain a detailed schedule of the aid measures at issue, but which nevertheless permits, on the basis of the sufficiently precise information in the grounds of the judgment, which cannot be severed from its enacting terms, quantification of the aid in question, cannot be regarded as not properly reasoned. Quantification is, in any event, for the authorities of the Member States to undertake as part of the execution of the decision finding the aid incompatible, cooperating in good faith with the Commission.

(see para. 388)

12. Observance of the rights of the defence is, in all procedures initiated against a person which are liable to culminate in a measure adversely affecting that person, a fundamental principle of European Union law which must be guaranteed even in the absence of any specific rules. In State aid matters, the Commission may, for the purposes of assessing a measure in the light of Article 87 EC, rely on evidence collected from a third party, only after having put the Member State concerned in a position to submit its comments on that evidence.

Failure to communicate to the Member State a report which is based exclusively on the information collected from the recipients of the aid during the inspection on site by the Commission’s experts and which contains no factual evidence of which the undertakings, which were recipients of the measures in question and owned entirely by the Member State, would have been unaware is not as such capable of adversely affecting that Member State’s rights of defence.

(see paras 399-401)