Case C-110/02: Action brought on 25 March 2002 by Commission of the European Communities against Council of the European Union
Date: 2002-06-01
Institutions: Court of Justice
Subjects: Council of the European Union, European Commission, abuse of power, action for annulment (EU), control of State aid, infringement of EU law, powers of the institutions (EU)

C 131/8

EN

Official Journal of the European Communities

1.6.2002

Action brought on 25 March 2002 by Commission of the
European Communities against Council of the European
Union

(Case C-110/02)

(2002/C 131/14)

An action against the Council of the European Union was
brought before the Court of Justice of the European Communi-
ties on 25 March 2002 by the Commission of the European
Communities, represented by Francisco Santaolalla Gadea,
Dimitris Triantafyllou and Vittorio Di Bucci, acting as Agents,
with an address for service in Luxembourg.

The applicant claims that the Court should:

— annul Council Decision 2002/114/EC (1);

— order the defendant to pay the costs.

Pleas in law and main arguments

— Lack of competence of

the Council:

the underlying
assumption of the Treaty is that it is for the Commission,
as a general rule, to monitor State aid. It is true to say
that in the framework of such a monitoring system
the third subparagraph of Article 88(2) EC remains
applicable, but only as a departure from the usual
mechanism, that is to say as an extraordinary power
under the general law which must be interpreted restric-
tively. Since it is not explicitly provided for, instances of
Council decisions which come
after Commission
decisions must be resolved in accordance with the
principles which underlie the explicit conflicts rule con-
tained in the Treaty, namely: that there is no order of
precedence in conflicts of competences, no preemption
and no power to revoke or amend. Once the Commission
has adopted a final decision, the Council can no longer
intervene. Likewise and for the same reasons the Council
also has no power to negative the effects of a final
decision of the Commission, as in the present case, by
emptying it of its substance by authorising the grant of
aid in an amount equal to that of the aid declared to be
incompatible.

— Misuse of powers and abuse of process: where the
Council uses its powers of authorisation not just to grant
authorisation, in exceptional circumstances, for aid which
would otherwise be, in all likelihood, declared incompat-
ible by the Commission, but, after the adoption of the
Commission decision, with a view to nullifying its effects,
it is exercising its powers with a purpose other than that
intended by the Treaty.

Although the Treaty empowers the Council to intervene
exceptionally where what is required is an assessment of
the compatibility of a measure with the common market,
it does not allow it to substitute its own assessment for
that of the Commission as to the existence of State aid.

By adopting the contested decision, the Council has itself
bypassed, and allowed a Member State to bypass, the
remedy under Article 230 and the applicable time-limits
in order to negative the effects of a decision which could
no longer be annulled by the Community judicature.

— Infringement of the Treaty and of general principles of
Community law: the contested decision constitutes a
flagrant infringement of Article 14 of Council Regulation
659/99 (2) since, in this specific case, it is preventing the
effective recovery of aid by authorising aid in an equi-
valent amount.

The contested decision also upsets the institutional equi-
librium established by the Treaty between the Com-
mission and the Council in that the latter has usurped the
supervisory role which, other than within the narrowly-
bounded exception provided for in Article 88(2), falls
within the purview of the Commission.

The conduct in question also upsets the institutional
balance between the ‘executive’
institutions and the
Community judicature and, more generally, undermines
the jurisdictional system set up by the Treaty.

There has also been an infringement of the principle of
legal certainty as embodied in the procedural time-limits.

— (In the alternative): manifest error of assessment and
misuse of powers as regards the existence of exceptional
circumstances.

— (In the further alternative): lack of or erroneous statement

of reasons.

(1) Council Decision 2002/114/EC of 21 January 2002 authorising
the Government of Portugal to grant aid to Portuguese pig farmers
who were beneficiaries of the measures granted in 1994 and
1998 (OJ L 43 of 14.2.2002, p. 18).

(2) Council Regulation (EC) No 659/1999 of 22 March 1999 laying
down detailed rules for the application of Article 93 of the EC
Treaty (OJ L 83 of 27.3.1999, p. 1).