Keywords

Summary



Keywords

1. Preliminary rulings – Determination of validity – Question on the validity of a decision which has not been challenged under Article 230 EC

(Arts 230 EC and 234 EC)

2. Preliminary rulings – Jurisdiction of the Court – Limits – Question manifestly irrelevant

(Art. 234 EC)

3. Competition – Community rules – Persons to whom Community measures are addressed – Undertakings – Definition

(Art. 87(1) EC)

4. Competition – Community rules – Persons to whom Community measures are addressed – Undertakings – Definition

(Art. 87(1) EC)

5. State aid – Definition

(Art. 87(1) EC)

6. State aid – Definition – Selective nature of the measure

(Art. 87(1) EC)

7. State aid – Effect on trade between Member States – Impairment of competition – Criteria for assessment

(Art. 87(1) EC)

8. State aid – Definition

(Art. 87(1) EC)

Summary

1. Where a question referred for a preliminary ruling determining the validity of a Commission Decision was referred by the national court of its own motion, and not at the request of a legal entity which, having had the opportunity to bring proceedings for annulment of that decision, has not done so within the period laid down by Article 230 EC, the question cannot, on the latter ground, be declared inadmissible.

(see paras 72-74)

2. The Court may decide not to give a preliminary ruling determining the validity of a Community act where it is quite obvious that that determination, requested by the national court, bears no relation to the actual facts of the main action or its purpose.

(see para. 75)

3. In the field of competition law, the concept of ‘undertaking’ covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed.

Any activity consisting in offering goods or services on a given market is an economic activity. Whilst, usually, the economic activity is carried on directly on the market, that may, however, be the case both of an operator in direct contact with the market and, indirectly, of another entity controlling that operator as part of an economic unit which they together form.

In that regard, the mere fact of holding shares, even controlling shareholdings, is insufficient to characterise as economic an activity of the entity holding those shares, when it gives rise only to the exercise of the rights attached to the status of shareholder or member, as well as, if appropriate, the receipt of dividends, which are merely the fruits of the ownership of an asset. On the other hand, an entity which, owning controlling shareholdings in a company, actually exercises that control by involving itself directly or indirectly in the management thereof, must be regarded as taking part in the economic activity carried on by the controlled undertaking and must therefore itself, in that respect, be regarded as an undertaking within the meaning of Article 87(1) EC.

If that is not the case, the simple separation of an undertaking into two different entities, the first of which pursues directly the former economic activity and the second of which controls the first, being fully involved in its management, would be sufficient to deprive the Community rules relating to State aid of their practical effect. It would enable the second entity to benefit from subsidies or other advantages granted by the State or by means of State resources and to use them in whole or in part for the benefit of the former, in the interest, also, of the economic unit formed by the two entities.

Therefore, a legal person such as a banking foundation controlling the capital of a banking company, the statutes of which contain rules which reveal a function going beyond the simple placing of capital by an investor, make possible the exercise of functions relating to control, but also to direction and financial support, and thus illustrate the existence of organic and functional links between the banking foundations and the banking companies, may be treated as an ‘undertaking’ within the meaning of Article 87(1) EC and thus be subject to the Community rules relating to State aid.

(see paras 107-118, 125, operative part 1)

4. A legal person, such as a banking foundation the activity of which is limited to the payment of contributions to non‑profit‑making organisations, cannot be treated as an ‘undertaking’ within the meaning of Article 87(1) EC. Such an activity is of an exclusively social nature and is not carried on on the market in competition with other operators. As regards that activity, a banking foundation acts as a voluntary body or charitable organisation and not as an undertaking.

On the other hand, where a banking foundation, acting itself in the fields of public interest and social assistance, uses the authorisation given it by the national legislature to effect the financial, commercial, real estate and asset operations necessary or opportune in order to achieve the aims prescribed for it, it is capable of offering goods or services on the market in competition with other operators, for example in fields like scientific research, education, art or health.

On that hypothesis, such a banking foundation must be regarded as an undertaking, in that it engages in an economic activity, notwithstanding the fact that the offer of goods or services is made without profit motive, since that offer will be in competition with that of profit-making operators and must be subject to the application of the Community rules relating to State aid.

(see paras 119-125, operative part 1)

5. The definition of aid is more general than that of a subsidy because it includes not only positive benefits, such as subsidies themselves, but also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which thus, without being subsidies in the strict sense of the word, are similar in character and have the same effect.

Consequently, a measure by which the public authorities grant certain undertakings a tax exemption which, although not involving the transfer of State resources, places the recipients in a more favourable financial position than other taxpayers amounts to State aid within the meaning of Article 87(1) EC. Likewise, a measure allowing certain undertakings a tax reduction or to postpone payment of tax normally due can amount to State aid.

(see paras 131-132)

6. A tax advantage accorded to certain undertakings on account of their legal form, a legal person governed by public law or a foundation, and of the sectors in which they carry on their activities, does not apply to all economic operators and cannot therefore be considered to be a general measure of tax or economic policy, with the result that it is selective.

(see paras 135-136, 138)

7. Article 87(1) EC prohibits aid which affects trade between Member States and distorts or threatens to distort competition. For the purpose of categorising a national measure as prohibited State aid, it is necessary, not to establish that the aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition. In particular, when aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in intra‑Community trade, the latter must be regarded as affected by that aid. In that regard, the fact that an economic sector has been liberalised at Community level may serve to determine that the aid has a real or potential effect on competition and affects trade between Member States .

In addition, it not necessary that the beneficiary undertaking itself be involved in intra-Community trade. Aid granted by a Member State to an undertaking may help to maintain or increase domestic activity, with the result that undertakings established in other Member States have less chance of penetrating the market of the Member State concerned. Furthermore, the strengthening of an undertaking which, until then, was not involved in intra-Community trade may place that undertaking in a position which enables it to penetrate the market of another Member State.

(see paras 139-143)

8. An exemption from retention on dividends accruing to banking foundations which hold shares in banking companies and pursue exclusively aims of social welfare, education, teaching, and study and scientific research may be categorised as State aid within the meaning of Article 87(1) EC. Such a national measure involves State financing. Also, it is selective. Finally, such an advantage occurs in the financial services sector which has been involved in an important liberalisation process at Community level, which has enhanced the competition that may already have resulted from the free movement of capital provided for in the Treaty and can strengthen, first, in terms of financing and/or funding, the position of the economic unit, active in the banking sector, formed by the banking foundation and the banking company and, second, the banking foundation’s position in an activity carried on, in particular, in the social, scientific or cultural field.

(see paras 133, 138, 145-146, operative part 2)