Keywords

Summary



Keywords

1 ECSC - Steel aid - Administrative proceedings - Right of the aid recipient to a fair hearing - Limits

(General Decision No 3855/91, Art. 6(4))

2 ECSC - Steel aid - May be authorised by the Commission - Conditions - Must be notified - Where aid has not been notified in good time - Effects

(ECSC Treaty, Art. 4(c); General Decisions Nos 257/80, 3484/85, 3855/91 and 2496/96)

3 ECSC - Steel aid - Recovery of unlawful aid - Legitimate expectations on the part of the recipients - Protection - Conditions and limits

4 ECSC - Steel aid - Recovery of unlawful aid - Whether in breach of the principle of proportionality - No such breach - Application of interest - Permissible - Date from which interest may be calculated - Fixed as the date on which aid was paid - Permissible

5 ECSC - Steel aid - Prohibited - Conditions - Interference with the conditions of competition - Need not be established

(ECSC Treaty, Art. 4(a), (b) and (c))

6 Actions for annulment - Commission decisions or recommendations under the ECSC Treaty - Evaluation of the situation, resulting from economic facts or circumstances - Judicial review - Limits - Misuse of power - Where the Commission has clearly disregarded provisions of the Treaty or any rule of law relating to its application

(ECSC Treaty, Art. 33, first para.)

7 ECSC - Steel aid - May be authorised by the Commission - Assessment to be made - Must refer to the Community context - Investments in research and development

(ECSC Treaty, Art. 4(c))

8 ECSC - Steel aid - Recovery of unlawful aid - Application of national law - Conditions and limits - Payment of interest justified by the need to restore the previous situation

Summary

1 In the context of the ECSC Treaty, administrative proceedings regarding State aid are opened only against the Member State concerned, the recipient of the aid being considered to be only an `interested party' in that connection. It does not follow either from the wording of Article 6(4) of the Fifth Steel Aid Code or from any other provision regarding State aid or from Community case-law that the Commission is required to hear the recipient's views on the Commission's legal assessment of the aid in question. Not having the same rights to a fair hearing as those which individuals against whom a proceeding has been instituted are recognised as having, the recipient has only the right to be involved in the administrative proceeding to the extent appropriate in the light of the circumstances of the case.

2 Unlike the provisions of the EC Treaty on State aid, which empower the Commission on a permanent basis to adopt decisions on its compatibility with the common market, the derogations laid down in the Steel Aid Codes to the principle of the absolute prohibition of aid in Article 4(c) of the ECSC Treaty can be granted only during a period which those Codes determine. Thus, once the period of applicability of a Code has expired, the Commission is no longer empowered to authorise aid to the steel industry under the derogations provided if that aid has not been notified in accordance with that Code.

In cases where the aid has not been notified, the Member State which has disregarded its obligation to notify aid cannot demand that the Commission verify its compatibility with the common market in the light of an expired Code. Similarly, such a State, having failed to comply with the conditions laid down by the Code, is not justified in pleading the principle of legal certainty in order to benefit from the derogations set out therein.

3 Undertakings in receipt of State aid cannot entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure, as a diligent operator should be able to ascertain. Only in exceptional circumstances can recipients of unlawful aid assert a legitimate assumption as to the lawfulness of aid in reliance on this principle.

4 The principle of proportionality requires that the measures adopted by Community institutions must not exceed what is appropriate and necessary for attaining the objective pursued; where there is a choice between several appropriate measures, the least onerous measure must be used.

Since the withdrawal of unlawful aid by way of recovery is the logical consequence of the finding that it is unlawful, such a measure cannot in principle be regarded as disproportionate to the objectives of the ECSC Treaty in regard to State aid. It also follows that such a measure, even if it is applied long after the aid was granted, cannot constitute a penalty for which Community law does not provide.

Since the ECSC Treaty would be rendered ineffective if recipient undertakings were permitted to benefit from the availability of the money during the period between the granting and the actual recovery of the aid, a decision of the Commission ordering the recovery of illegal aid may legitimately require interest to be recovered on the sums granted in order to eliminate any financial advantages incidental to such aid.

Moreover, as regards the fixing of the date from which that interest is to be calculated, it must be noted that such interest is equivalent to the financial advantage arising from the availability of the funds in question, free of charge, over a given period. Consequently, the Commission is entitled to consider that such interest should start to run from the date on which the aid was paid.

5 Aid covered by the ECSC Treaty is deemed incompatible with the common market without there being any need to establish or even to consider whether there is, in actual fact, any interference with the conditions of competition or whether such interference is liable to occur. It follows that if the Commission considers that the aid in question comes within the scope of the ECSC Treaty without having previously ascertained whether it has an `effect on Community trade', it commits no error of law.

6 In exercising its jurisdiction to hear and determine actions for annulment of decisions or recommendations of the Commission, the Community judicature may not, pursuant to the second sentence of Article 33(1) of the ECSC Treaty, examine the evaluation of the situation, resulting from economic facts or circumstances, in the light of which the Commission took its decisions or made its recommendations, save where the Commission is charged with having misused its powers or manifestly failed to comply with the provisions of the Treaty or any rule of law relating to its application.

In order to establish that the Commission manifestly infringed the provisions of the ECSC Treaty or an aid Code in such a way as to justify annulment of the contested decision, the evidence adduced by the applicant must be sufficient to render the factual assessment in the decision implausible.

7 The granting of exemptions from Article 4(c) of the ECSC Treaty presupposes an examination entailing assessments to be made by the Commission in a Community context. The fact that expenditure on the purchase of equipment is shown in the aid recipient's balance sheet in accordance with national legislation and is described there as investment in research and development, or in other areas, does not demonstrate, in itself, that the aid in question is capable of qualifying for exemption under the ECSC Treaty.

8 In the absence of provisions of Community law governing the recovery of amounts unduly paid, the recovery of aid improperly granted must be carried out in accordance with the rules and procedures laid down by national law. However, the application of national law must not undermine the scope and effectiveness of Community law. In other words, the application of the national provisions must not make it impossible in practice to recover the sums improperly granted or be discriminatory in relation to comparable cases which are governed solely by national legislation.

Moreover, the purpose of the recovery of State aid that is incompatible with the common market is to restore the previous situation, which presupposes that all of the financial advantages resulting from the aid which adversely affect competition in the common market have been eliminated. A decision of the Commission ordering the recovery of unlawful aid may therefore also require interest to be recovered on the sums granted in order to eliminate any financial advantages incidental to such aid.

To refrain from claiming, in addition to the recovery of the aid, the payment of interest on the sums unlawfully granted, would be tantamount to enabling the undertaking in receipt of those sums to retain financial advantages resulting from the grant of the unlawful aid in the form of an interest-free loan. That in itself would therefore constitute aid which would distort, or threaten to distort, competition.