Case T-198/01

Technische Glaswerke Ilmenau GmbH

v

Commission of the European Communities

(State aid – Action for annulment – Private creditor test – Aid for rescuing and restructuring firms in difficulty – Rights of the defence – Statement of reasons)

Judgment of the Court of First Instance (Fifth Chamber, Extended Composition), 8 July 2004

Summary of the Judgment

1. Acts of the institutions – Statement of reasons – Obligation – Scope – Commission decision on State aid

(Arts 87(1) EC, 88(2) EC and 253 EC)

2. State aid – Administrative procedure – Right of the recipient of the aid to be heard – Limits

(Art. 88(2) EC)

3. State aid – Definition – Criterion for appraisal – Private investor test – Discretion of the Commission – Judicial review – Limits

(Art. 87(1) EC)

4. State aid – Definition – Remission of debts granted by public bodies to a firm in difficulty – Criterion for appraisal – Private investor criterion

(Art. 87(1) EC)

5. State aid – Recovery of unlawful aid – Restoration of the prior situation – Breach of the principle of proportionality – None – Liquidation of the recipient undertaking – Obligation for the Member State which granted the aid to ensure actual recovery

(Art. 88(2) EC)

6. State aid – Prohibition – Exceptions – Aid which may be considered compatible with the common market – Discretion of the Commission – Judicial review – Limits

(Art. 87(3) EC)

7. State aid – Administrative procedure – Obligation to hear the views of the recipient of State aid resources on the legal assessment by the Commission – None

(Art. 88 EC)

8. Community law – Principles – Rights of the defence – Whether applicable to administrative procedures initiated by the Commission – Examination of plans to grant aid – Scope

(Art. 88(2) EC)

9. State aid – Commission decision finding non-notified aid to be incompatible with the common market – Obligation to state the reasons on which the decision is based – Scope

(Arts 88(3) EC and 253 EC)

1. The statement of reasons required by Article 253 EC must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted that measure in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the Court to exercise its power of review. The requirement to state reasons must be assessed according to the circumstances of the case. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and all the legal rules governing the matter in question.

In particular, in a decision on State aid, the Commission is not obliged to adopt a position on all the arguments relied on before it by the parties concerned, within the meaning of Article 88(2) EC, it being sufficient for it to set out the facts and the legal considerations having decisive importance in the context of the decision.

(see paras 59-60)

2. The procedure for reviewing State aid is a procedure initiated in respect of the Member State responsible for granting the aid. The parties concerned, within the meaning of Article 88(2) EC, which include the recipient of the aid, cannot themselves seek to debate the issues with the Commission in the same way as may the abovementioned Member State and, therefore, they play the role of a source of information for the Commission.

In that connection, none of the provisions on the procedure for reviewing State aid reserves a special role, among the interested parties, to the recipient of aid since the procedure for reviewing State aid is not a procedure initiated against the recipient of the aid, which would entail rights on which it could rely and which were as extensive as the rights of the defence as such.

(see paras 61, 191-193)

3. The assessment, by the Commission, of the question whether a State measure satisfies the test of a private operator in a market economy involves a complex economic appraisal. Where the Commission adopts a measure involving such an appraisal, it enjoys a wide discretion and, even though judicial review is in principle a comprehensive review of whether a measure falls within the scope of Article 87(1) EC, review of that measure is limited to establishing whether there has been compliance with the rules governing procedure and the statement of reasons, whether any error in law has been made, whether the facts on which the contested finding was based have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers. In particular, the Court is not entitled to substitute its own economic assessment for that of the author of the decision.

(see para. 97)

4. In order to determine whether the reduction of some of the debts of a firm in difficulty constitutes State aid to a body governed by public law, it is appropriate to compare that body to a private creditor seeking to obtain payment of sums owed to it by a debtor in financial difficulties.

(see paras 98-99)

5. The aim pursued by the Commission when it requires repayment of unlawful aid is to make the recipient forfeit the advantage which it has enjoyed over its competitors on the market and to restore the situation prior to payment of the aid. Moreover, recovery cannot depend on the form in which the aid was granted.

Furthermore, since the withdrawal of unlawful aid by recovery is the logical consequence of the finding that it is unlawful, the recovery of unlawfully granted State aid for the purpose of re-establishing the previously existing situation cannot, in principle, be regarded as disproportionate to the objectives of the Treaty provisions on State aid.

Finally, if the recipient undertaking does go into liquidation, it is for the Member State which granted the aid to ensure, in accordance with the relevant rules provided for under national law, that the aid is in fact recovered and that liquidation does not preclude enforcement of the Commission decision ordering recovery of the aid.

(see paras 132-133, 139)

6. The Commission has wide discretion in matters falling under Article 87(3) EC. Judicial review of that measure must therefore be limited to establishing whether there has been compliance with the rules governing procedure and the statement of reasons, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers. The Court is not entitled to substitute its own economic assessment for that of the Commission.

Nevertheless, the Commission is bound by the guidelines and notices that it issues in the area of supervision of State aid inasmuch as they do not depart from the rules in the Treaty and are accepted by the Member States. Under Article 253 EC, the Commission is to state the reasons for its decisions, including those refusing to declare aid compatible with the common market on the basis of Article 87(3)(c) EC.

(see paras 148-149)

7. Neither the provisions on State aid nor the case-law require the Commission to hear the views of the recipient of State resources on its legal assessment of the measure in question or to inform the Member State concerned – or, a fortiori, the recipient of the aid – of its position before adopting its decision, where the interested parties and the Member State concerned have been given notice to submit their comments.

(see para. 198)

8. Observance of the rights of the defence requires that the Member State concerned be placed in a position in which it may effectively make known its views on the observations submitted by interested third parties under Article 88(2) EC and on which the Commission proposes to base its decision and that, in so far as the Member State has not been afforded the opportunity to comment on such observations, the Commission may not incorporate them in its decision against that State. However, in order for such an infringement of the right to be heard to result in annulment, it must be established that, had it not been for such an irregularity, the outcome of the procedure might have been different.

(see para. 201)

9. Whilst, in the statement of reasons for its decision, the Commission is bound to refer at least to the circumstances in which aid has been granted where those circumstances show that the aid is such as to affect trade between Member States, it is not bound to demonstrate the actual effect of aid already granted. If it were so bound, that requirement would ultimately give Member States which grant unlawful aid an advantage over those which notify aid at the planning stage.

(see para. 215)