Case T‑499/12

HSH Investment Holdings Coinvest-C Sàrl

and

HSH Investment Holdings FSO Sàrl

v

European Commission

‛State aid — Banking sector — Restructuring of HSH Nordbank — Decision declaring the aid compatible with the internal market on certain conditions — Action for annulment — Lack of individual concern — Minority shareholder of the aid beneficiary — Concept of a separate interest — Partial inadmissibility — Capital dilution’

Summary — Judgment of the General Court (Eighth Chamber), 12 November 2015

State aid — Prohibition — Exceptions — Aid capable of being regarded as compatible with the internal market — Aid to remedy serious disturbance in the economy of a Member State — Assessment — Account not to be taken of previous practice

State aid — Prohibition — Exceptions — Aid capable of being regarded as compatible with the internal market — Aid to remedy serious disturbance in the economy of a Member State — Aid to the financial sector in the financial crisis — Allocation of burdens — Insufficient dilution of the shareholding of minority shareholders — Correction by means of a single payment in favour of the majority shareholder — Lawfulness

State aid — Prohibition — Exceptions — Aid capable of being regarded as compatible with the internal market — Aid to remedy serious disturbance in the economy of a Member State — Aid to the financial sector in the financial crisis — Allocation of burdens — No breach of principle of proportionality

State aid — Prohibition — Exceptions — Aid capable of being regarded as compatible with the internal market — Aid to remedy serious disturbance in the economy of a Member State — Aid to the financial sector in the financial crisis — Allocation of burdens — Determination of the issue price of shares in the context of a recapitalisation involving the shareholders of the undertaking in receipt of aid — Possibility of the Commission refusing to take account of a general guarantee and requiring that account be taken of the expected restructuring and compensation measures — Lawfulness

State aid — Decision of the Commission finding a national measure compatible with the internal market on certain conditions — No infringement of Article 7(1) of Regulation No 659/1999 and of the principle of legal certainty

Actions for annulment — Natural or legal persons — Decision of the Commission declaring aid compatible with the internal market on certain conditions — Action by a shareholder of the aid beneficiary — Admissibility — Condition — Interest in bringing proceedings distinct from that of the undertaking receiving the aid

Actions for annulment — Natural or legal persons — Locus standi — Measures of direct and individual concern to them — Decision of the Commission declaring aid compatible with the internal market on certain conditions — Individual concern — Criteria — Capacity as party to the administrative procedure — No clearly defined position as a negotiator — Inadmissibility

In the context of the examination of the admissibility of an annulment action brought by a non-privileged applicant, if the latter has no interest in bringing proceedings, it is unnecessary to examine whether that applicant is directly and individually concerned for the purposes of the fourth paragraph of Article 263 TFEU. In that regard, it is for the applicant to prove that it has an interest in bringing proceedings, in particular by demonstrating a personal interest in obtaining the annulment of the contested measure. However, where an action for annulment is brought by a non-privileged applicant against a measure that has not been addressed to it, the requirement that the binding legal effects of the contested measure must be capable of affecting the interests of the applicant by bringing about a distinct change in its legal position overlaps with the conditions laid down in the fourth paragraph of Article 263 TFEU. Consequently, in order to assess whether the contested decision is actionable by the applicants, the Court must examine whether that decision constitutes an act which has binding legal effects on them. (see paras 23, 25-27)

See the text of the decision. (see paras 29, 30, 33, 45)

In the context of an annulment action, unless an applicant can show that it has an interest in bringing proceedings separate from that possessed by an undertaking which it partly controls and which is concerned by a European Union measure, in order to defend its interests in relation to that measure, its only remedy lies in the exercise of its rights as a member of the undertaking which itself has a right of action. In that regard, where its action seeks to obtain the total annulment of a Commission decision declaring an aid compatible with the internal market, a shareholder of the undertaking receiving the aid does not have an interest in bringing an action distinct from the latter. That is in particular the case where, first, in the absence of rescue measures, such as a recapitalisation, a general guarantee and a guarantee of liquidity, the undertaking benefiting from those measures would very probably have become insolvent and its shareholder, whose shareholding would have had to be sold below cost price, or even wiped out, as part of the liquidation procedure, would have lost its investment. Next, the interest of a shareholder which does not participate in the recapitalisation, even though it could legally have done so, coincides with the interest of the recapitalised undertaking, namely in receiving State aid to secure the future of the undertaking. Finally, if the aid measures at issue had been considered to be incompatible with the internal market, the Member State would have been compelled to recover the aid from the recipient, which would have had an impact on the shareholder’s financial situation proportionate to the size of its shareholding. By contrast, a shareholder in an undertaking in receipt of aid has an interest in bringing an action distinct from the latter where its action seeks to obtain the partial annulment of a Commission decision of which certain aspects of the conditions imposed for declaring the aid compatible with the internal market adversely affect, even potentially, the property rights of the shareholder, or imply a lesser remuneration of the latter on account of the decrease in the nominal value of each share. However, in the case of a measure banning and then restricting dividends, even though those measures concern the distribution of the profits of an undertaking, the interests of a shareholder and of the undertaking in receipt of the aid converge where, in order to enable the rescue of that undertaking, the common interest of the latter and all its shareholders has been to increase the undertaking’s capital ratio so that it could improve its rating and attract new investors. First, an undertaking may have an interest in paying dividends in order to retain its shareholders and reward them for their investment and may, therefore, be affected by a measure which prohibits, and then restricts, dividend payments, and is consequently entitled to challenge such a measure. Secondly, the absence of dividend payments benefits the undertaking as it strengthens its capital base. The shareholder’s interest is very much secondary. As a general rule, the interest of a shareholder in the short term is to secure, as soon as possible, a return on his investment and, thus, a dividend payment. In the medium and long term, the shareholder wishes to see the undertaking grow so that, for example, he may realise a capital gain when his shares are sold, and, in times of crisis, where the undertaking’s growth objective proves impossible to achieve, he wishes to see it survive or recover. (see paras 31, 40-43, 57-59, 61-63)

See the text of the decision. (see paras 64, 65)

See the text of the decision. (see paras 68-76)

In State aid matters, Article 7(1) of Regulation No 659/1999 laying down detailed rules for the application of Article [108 TFEU] provides for four types of decisions which may terminate the formal investigation procedure: a decision finding that the measure at issue does not constitute aid, a decision finding that, where appropriate, following modification by the Member State concerned, the aid at issue is compatible with the internal market (‘a positive decision’), a decision whereby the Commission attaches to a positive decision conditions subject to which the aid may be considered compatible with the internal market and lays down obligations to enable compliance with the decision to be monitored (‘a conditional decision’) and, finally, a decision whereby the Commission finds that the aid is not compatible with the internal market (‘a negative decision). A decision whereby State aid granted to an undertaking is considered compatible with the internal market only on the condition that corrections are made with regard to burden sharing among shareholders in order to enhance the contribution of minority shareholders constitutes a conditional decision within the meaning of Article 7(4) of Regulation No 659/1999. In such a context, it was thus unnecessary for the Commission to determine whether indirect State aid was granted to the minority shareholders, since it was precisely in order to prevent the measure from constituting indirect State aid that the said corrections were adopted. Therefore, the Commission does not infringe Article 7(1) of Regulation No 659/1999 or the principle of legal certainty by not taking a position, in the operative part of the contested decision, as to whether the minority shareholders had received indirect aid, since it was to prevent such a situation arising that the corrections concerning burden sharing among shareholders in order to enhance the contribution of minority shareholders were stipulated. (see paras 79-81)

In State aid matters, when setting the issue price for shares in the context of a recapitalisation involving the shareholders of the undertaking in receipt of aid, the Commission may refuse to take account of a general guarantee and require that the anticipated restructuring and compensatory measures be taken into consideration. Those measures, such as the sale of portfolios or cessation of certain business activities would, in any event, have been required by the markets and the banks, once a consensus on the survival of the undertaking was reached, to increase the latter’s profitability. In that context, where the purpose of a valuation report is to determine the value of the aid beneficiary without aid, in order to set, on that basis, the issue price of the shares specifically intended to fund the aid measures, it is natural that, in order to determine its value, the said undertaking takes into account the constraints relating to the procedures which should be foreseen by a prudent and alert economic operator. That does not apply to aid measures which do not correspond to part of the undertaking’s market value, but constitute extraordinary facilities aimed at preventing the bankruptcy of that undertaking and enabling its recovery over time. In that regard, in accordance with the Commission communication on the application of State aid rules to measures taken in relation to financial institutions in the context of the global financial crisis, the grant of a State guarantee must be regarded as an emergency measure and must, accordingly, necessarily be temporary, and such a guarantee must also be accompanied by restructuring or liquidation measures in relation to the beneficiary. Whilst it is logical and useful for the aided undertaking to inform its commercial partners and the banks of the financial position it would be in once the general guarantee were granted, the latter cannot be taken into account to determine the value of the new shares issued as part of the recapitalisation without automatically overstating that value. (see para. 101)

See the text of the decision. (see paras 108, 111-113)

In State aid matters, in order to share burdens between minority shareholders and a public establishment which is the majority shareholder in an undertaking in receipt of aid, a single payment consisting in the payment by that recipient undertaking of a sum of money to the said public establishment to be used to increase the physical capital of the aided undertaking, even if it results, in economic terms, in a reduction of the value of the minority shareholders’ stake in the share capital of the undertaking in receipt of aid, is, nevertheless, well founded in law in so far as it requires those minority shareholders to make an effort proportionate to that made by the public-sector shareholders during the recapitalisation, with the result that the minority shareholders do not benefit indirectly from aid and that the measures at issue may be declared compatible with the internal market. (see para. 123)