2005/468/EC: Commission Decision of 30 June 2004 on the aid scheme implemented by Sweden for an exemption from the tax on energy from 1 January 2002 to 30 June 2004(notified under document number C(2004) 2210)   (Text with EEA relevance)
Date: 2004-06-30
Institutions: European Commission
Subjects: State aid, Sweden, aid system, control of State aid, electrical energy, environmental tax, processing industry, tax exemption

25.6.2005

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Official Journal of the European Union

L 165/21

COMMISSION DECISION

of 30 June 2004

on the aid scheme implemented by Sweden for an exemption from the tax on energy from
1 January 2002 to 30 June 2004

(notified under document number C(2004) 2210)

(Only the Swedish text is authentic)

(Text with EEA relevance)

(2005/468/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(5)

Having regard to the Treaty
establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments
pursuant to the provision of the first subparagraph of Article
88(2) cited above (1), and having regard to their comments,

Whereas:

(1)

(2)

(3)

(4)

I. PROCEDURE

By letter dated 11 June 2003, the Commission informed
Sweden of its decision to initiate the procedure laid down
in Article 88(2) of the EC Treaty with respect to the
exemption from the energy tax on electricity in favour
of the manufacturing industry.

By letter of 9 July 2003, registered by the Commission
on the same day (A/34842), Sweden commented on the
opening of the procedure.

The Commission’s decision to initiate the procedure was
published in the Official Journal of the European Union on
9 August 2003 (2). The Commission invited interested
parties to submit their comments on the aid.

The Commission received comments from the Confed-
eration of Swedish Enterprises (Svenskt näringsliv) on
29 September 2003.

(1) OJ C 189, 9.8.2003, p. 6.
(2) See footnote 1.

The comments from the Confederation of Swedish Enter-
prises were received in due time (3) and were forwarded
by the Commission to the Swedish Government, which
was given the opportunity to react. Sweden made no
comments on the submission.

II. DETAILED DESCRIPTION OF THE AID MEASURE

The Act on Tax on Energy (Lagen om skatt på energi) was
introduced in Sweden in 1957. Under the act, energy tax
fuels and electricity. The tax has
is levied on fossil
positive
in terms of
energy saving and energy efficiency.

steering effects

environmental

The tax on electricity is due in full by households,
companies in the service sector and also by manufac-
turing companies as regards electricity used for heating
other than in production processes.

According to Chapter 11, Article 3, of the Act on Tax on
Energy, electricity used in industrial activities in the
manufacturing process (NACE Rev. 1, sections C and
fully exempted from the energy tax (4). The
D)
introduced in its present
exemption was
form on
i.e. before Sweden’s accession to the
1 January 1993,
EEA and the EU. It has remained unchanged since then.

is

(6)

(7)

(8)

(9)

The tax rate on electric power has, for the period under
examination, been set to between SEK 0,198 and SEK
0,241 per kWh.

(3) In line with Regulation (EEC, Euratom) No 1182/71 of the Council
of 3 June 1971 determining the rules applicable to periods, dates
and time-limits (OJ L 124, 8.6.1971, p. 1), and in particular its
Article 3,
the deadline for comments ended on 10 September
2003. By letter of 15 August 2003, the Confederation of Swedish
Enterprises asked for an extension of
the deadline until 30
September 2003, which was accepted by the Commission by
letter dated 9 September 2003.

(4) The exemption is also applicable for electricity used in greenhouses.
That part of the exemption will be subject to a separate Commission
decision.

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(10) According to the Swedish authorities, the full reduction
results in a loss of State revenue amounting to about SEK
11 000 million (about EUR 1 190 million) per year.

(11)

The Commission initiated the procedure because of its
doubts with regard to the nature of the measure as State
the alleged aid. The
aid and to the compatibility of
Commission considered that the tax exemption system
constituted State aid within the meaning of Article 87(1)
of the EC Treaty. The Commission had doubts on the
compatibility of
the alleged aid with the Community
guidelines on state aid for environmental protection (5)
(hereinafter referred to as the Guidelines).

(16)

(17)

III. COMMENTS FROM INTERESTED PARTIES

Comments made by the Confederation of Swedish
Enterprises

(18)

The Confederation of Swedish Enterprises argues that the
taxes on electricity and on CO2 emissions should be
regarded as two components of the same energy tax
system. The reason for that is that there is a close link
between the two taxes: in order not to create an over-
demand for electricity, an increase in the CO2 tax has to
be balanced by a corresponding increase in the electricity
tax.

In total, the energy taxation increased from 1993 to
2004 by SEK 27 000 million (about EUR 3 000
raise would not have been possible
million). That
the manufacturing
without
sector
tax
exemption from the electricity tax does not result in a
i.e. the measure is not financed
loss of State revenue,
through State resources.

exemption for
energy

full
from the

tax. Thus,

full

the

the

The Confederation of Swedish Enterprises considers that
it is in the logic of the system to exempt the Swedish
manufacturing industry, as the industry has sufficient
reasons for electricity savings because electricity is a
large cost component for these companies. In order to
maintain the competitiveness of Swedish industry while
raising the energy taxation as a whole, the industry has
to be exempted from the electricity tax.

(15)

For the same reasons as those set out in recital 21 by the
the Confederation of Swedish
Swedish Government,
Enterprises considers the measure does not distort or
threaten to distort competition, nor
favour certain
production.

(5) OJ C 37, 3.2.2001, p. 3.

the following reasons,

For
Swedish Enterprises
recovery can be made:

contests,

the Confederation of
in any case,

that

the
a

Firstly, according to Article 14 of Council Regulation
(EC) No 659/1999 of 22 March 1999 laying down
detailed rules for the application of Article 93 of the
EC Treaty (6)
(hereafter referred to as the procedural
Regulation), a recovery can only be made of unlawful
aid, which in Article 1(f) of
the same regulation is
defined as ‘new aid put into effect in contravention of
the Treaty’. As the Commission in
Article 93(3) of
paragraph 2.2 of its decision to open the investigation
procedure concludes that the measure constitutes existing
aid, no recovery can be made ex tunc.

Secondly, due to legitimate expectations of the benefi-
ciaries, no recovery can be made. The act in question
has been proposed by the Swedish Government and
adopted by the Swedish Parliament. Companies should
not have to question decisions from their Parliament.
Moreover, there are previous Commission decisions (7),
in which measures to the manufacturing sector have
been approved as general measures. Moreover, Council
Directive 2003/96/EC of 27 October 2003 restructuring
the Community framework for the taxation of energy
products and electricity (8) (hereafter referred to as the
Energy Tax Directive) makes it possible to maintain the
zero tax rate on electricity for
the large electricity
consumers as from 1 January 2004. The prudent trader
should have the right to legitimately expect that to be the
case also for the two years before that date.

(19)

Thirdly, a recovery would go against the principle of
proportionality. The aim of a recovery is to restore
alleged distorted competition. As the Confederation of
Swedish Enterprises does not consider the measure to
distort or threaten to distort competition, there is no
legitimate and public interest for a recovery. Moreover,
many of the companies concerned would have difficulties
repaying the aid and a risk of bankruptcy cannot be
excluded for certain companies.

(20)

Finally, the Confederation of Swedish Enterprises agrees
with the opinion of the Swedish Government (see recital
28) that the Commission has not fulfilled its obligation
laid down in Article 17(2) of the procedural Regulation.

(6) OJ L 83, 27.3.1999, p. 1. Regulation amended by the 2003 Act of

accession.

(7) For example, N 255/96 — Sweden — Act on excise duties on
energy (OJ C 71, 7.3.1997, p. 10) and NN 72a/2000 — Sweden
— Prolongation of CO2 scheme (OJ C 117, 21.4.2001, p. 19).
(8) OJ L 283, 31.10.2003, p. 51. Directive as last amended by Directive

2004/75/EC (OJ L 157, 30.4.2004, p. 100).

(12)

(13)

(14)

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IV. COMMENTS BY THE SWEDISH GOVERNMENT

The tax exemption does not constitute an advantage
for the Swedish manufacturing industry

(26)

(21)

industry uses

a high
The Swedish manufacturing
proportion of electricity compared to competitors in
other countries, who instead use coal or natural gas.
As these energy sources in many Member States have
been tax-free, Sweden considers it reasonable to exempt
the Swedish manufacturing industry from the tax on
electricity.
the Swedish tax levels in the
energy area are generally high compared to the corre-
sponding level
in most other Member States. It would
not have been possible to achieve these levels without an
exemption from the electricity tax for certain sectors.

In addition,

The electricity tax and the energy tax should be seen
as one tax system

In Sweden an energy tax is levied on fossil fuels and on
electricity and a CO2 tax is levied on fossil fuels. The
taxes are viewed by the Swedish Government as parts of
the same tax system, which aims at increasing energy
efficiency
the Swedish
Government
the Commission in its
assessment of compatibility should take into account
the tax burden resulting from all components of the
tax system together rather than assessing the exemption
from the electricity tax in isolation.

emissions. Thus,
that

and CO2
argues

(22)

The Swedish Government thus, does not agree that the
tax exemption grants an advantage for
the Swedish
industry compared to other Member States.

(27)

A reasonable period is required for adjustment of
the energy tax system

(23)

By letter of 16 March 2001, the Swedish Government
accepted the appropriate measures proposed in points 75
to 77 of the Guidelines.

(28)

(24) On 8 November 2001, the fact that the exemption of a
certain industry from the energy tax constituted State aid
was clarified by the Court ruling on the Austrian energy
tax rebate (Case C-143/99, Adria-Wien-Pipeline) (9).

The Commission did not respect
the procedural
steps regarding appropriate measures, which are set
out in the procedural Regulation. The aid is not
illegal and can thus not be recovered

The Swedish Government has, on several occasions,
submitted to the Commission information from which
the scheme in question is evident (10). Thus, Sweden
considers its obligation according to Article 17(1) of
the procedural Regulation to submit all necessary infor-
mation to the Commission’s
review of existing aid
schemes to be fulfilled.

The Swedish Government argues that the Commission
has violated Article 17(2) of the procedural Regulation,
which requires the Commission to inform the Member
State if it considers that a measure has become incom-
patible with the common market before it proposes
appropriate measures.
proposed,
without such information, appropriate measures not for
individual schemes but for all schemes in force at the
time when the new environmental guidelines came into
force.

The Commission

(25)

it was not

clear whether

The Swedish Government states that at the time when
Sweden accepted the appropriate measures under the
the measure
Guidelines,
constituted State aid. Following the Adria-Wien ruling,
it became clear for the Swedish Government that the
measure contains components which cause problems in
the State aid area. However, Sweden argues that, as the
energy tax is technically complicated, a reasonable time
was required from the government decision until the
entering into force of amended rules. It is envisaged to
have an energy tax on electricity for the manufacturing
industry, which is in line with the minimum levels of the
new Energy Directive in place from 1 July 2004.

(9) Judgment of the Court of Justice of 8 November 2001 in Case C-
143/99 Adria-Wien Pipeline GmBH and Wietersdorfer & Peggauer
Zementwerke v Finanzlandesdirektion für Kärnten [2001] ECR I-8365.

(29) Due to procedural irregularity the aid is not illegal and

cannot be recovered.

A recovery would constitute retroactive taxation,
which is not allowed according to Swedish constitu-
tional law

(30) According to chapter 2, Article 10, second paragraph, of
the Instrument of Government
(Regeringsformen),
tax
is based on a provision
can not be levied unless it
which was in force at the time when the fact that gave
rise to the tax took place.

(10) For example, in the reply to the Commission’s letter of 7 May 1996
(D/50485, the Swedish authorities submitted the full Act on Tax on
Energy from which the full energy tax exemption on electricity for
the manufacturing sector was clear. In addition, brief descriptions of
the measure were included in letters dated 15 April 1998 and
31 May 1999, which were sent by the Swedish authorities to the
Commission.

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(32)

(33)

(34)

(35)

(31) As the Swedish Act on Tax on Energy does not contain
rules according to which companies in the manufac-
turing industry are obliged to pay tax on electricity, an
amendment of the act would constitute such retroactive
taxation, which is illegal according to Swedish constitu-
tional law.

V. ASSESSMENT OF THE AID

Period to be assessed

In its decision to open the Article 88(2) procedure, the
Commission found that the measure constituted existing
aid as defined in Article 1(b)(i) of Regulation (EC) No
the time of Sweden’s accession to the
659/1999 at
European Union and until 1 January 2002. Sweden has
expressly accepted the appropriate measures proposed by
the Commission according to which all existing environ-
mental aid schemes should have been brought into line
with the Guidelines (point 77). The Commission found
that that had not been done in this case. Sweden was
therefore asked to submit all comments which could be
relevant for the investigation for the period 1 January
2002 to 31 December 2005.

(37)

(38)

Existence of aid

In order for a measure to be considered as State aid
within the meaning of Article 87(1) of the EC Treaty,
four criteria have to be simultaneously fulfilled. The
it must be
measure must favour certain undertakings,
selective,
it must be funded through State resources
and it must affect trade between Member States.

In its assessment of whether the measure provides the
beneficiaries with an advantage, the Commission has to
compare companies in a comparable legal and factual
situation (13). Thus, the Commission cannot assess the
position of the Swedish manufacturing industry vis-à-
vis any other European manufacturing industry, but has
to assess the advantage of the Swedish manufacturing
industry compared to the situation of other companies
in Sweden.
In this respect, the fact that the measure
discharges companies, in the manufacturing sector, of a
cost that they would otherwise have to bear, provides the
undertakings with an advantage compared to other
in the Swedish industry. By granting a tax
sectors
exemption only to certain undertakings,
the measure
favours
them in comparison to other undertakings,
which has the potential to distort competition.

The comments received from the Swedish Government
by letter dated 9 July 2003 cover explicitly the period
requested by the Commission. The Swedish Government
has exercised its rights of defence with regard to the full
period.

(39)

Third parties were able to comment on the application of
the scheme for the same period. The Confederation of
Swedish Enterprises presented its comments on the
energy tax exemption by letter dated 29 September
2003. Their right to submit observations has therefore
been respected.

By Act on amendment of the Act (1994:1776) on Tax
on Energy (11), a new electricity tax system will be
introduced. That act should enter into force on 1 July
2004 and was notified to the Commission by letter dated
1 April 2004 (12). Thus, a separate Commission decision
will be taken for that measure.

The exemption is restricted to undertakings in the manu-
facturing sector (NACE Rev. 1 Sections C and D). It has
been established by the European Court of Justice (14),
that ‘neither the large number of eligible undertakings
nor the diversity and size of the sectors to which those
undertakings belong provide any grounds for concluding
that a State initiative constitutes a general measure’. The
Confederation of Swedish Enterprises refers to the fact
concerning aid
in decisions
the Commission has,
N 255/1996 and NN 72/A/2000,
approved the
Swedish CO2 tax scheme as being a general measure.
This is not correct,
in the first-mentioned decision the
CO2 tax scheme is found to constitute compatible State
aid. The second decision concerns a prolongation of the
same scheme and is approved under the same provisions.
On the
the
Commission (15), confirmed by the European Courts’
case-law (16),
energy
intensive industry or for a given sector of the economy
as being selective measures. Thus,
the Commission
concludes that the tax exemption is selective.

to regard exemptions

constant practice of

contrary,

the

for

is

it

(36)

Consequently, this compatibility assessment concerns the
period from 1 January 2002 until such time as the
current system is applied.

(11) See Svensk författningssamling SFS 2003:810.
(12) See N 156/2004 —Sweden —‘Energy tax on electricity used by the
manufacturing sector’, not yet published in the Official Journal.

(13) See for example Judgment in Case C-143/99 (see footnote 9).
(14) See Adria-Wien Pipeline, in particular paragraph 48.
(15) Decision 2002/676/EC, ECSC of 3 April 2002 on the dual-use
exemption which the United Kingdom is planning to implement
under the Climate Change Levy and the extended exemption for
(OJ L 229, 27.8.2002, p. 15);
certain competing processes
N 449/01 — Germany — ‘Ecological tax reform’ after 31 March
2002, (OJ C 137, 8.6.2002, p. 24), N 74/A/02 — Finland — ‘Aid
to energy intensive companies’, (OJ C 104, 30.4.2003, p. 9), and
C 33/03 (ex NN 34/03) — Austria — ‘Energy tax refund 2002 and
2003’, not yet published in the Official Journal.
(16) See case C-143/99, Adria-Wien Pipeline, quoted above.

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(40)

the

structure

and functioning of

in order to reduce their energy costs,

The Commission finds that the selectivity of the measure
is not justified by the logic of the system as it is not
consistent with the internal
logic of the tax. On the
contrary, the exemption is a clear deviation from the
tax. The
overall
the tax is to steer undertakings to take
objective of
energy saving measures. Even if
the undertakings
concerned already take energy reduction measures to a
large extent
it
cannot be said that the energy taxation has no additional
steering effect. Energy consumption is in general tech-
nology-dependent and,
thus, only fixed in the short
term. In the long term, inter alia, through technological
progress and innovation,
is normally possible to
it
respect, as
achieve further efficiency gains.
energy consumption by all sectors is equally damaging
to the environment, any exemption from an energy tax
for undertakings in the manufacturing industry, which by
definition are also polluters, cannot be in the logic of the
system.

In this

(46)

(41)

The measure is imputable to the State and financed by
State resources as the State accepts a loss of tax revenue.
The Commission does not agree with the Confederation
of Swedish Enterprise,
in that there is no loss of tax
the electricity and CO2
that
revenue due to the fact
taxes actually paid have increased. On the contrary, an
increase in the tax rate leads to a higher loss of tax
revenue caused by the exemption.

(42) At least some beneficiaries are engaged in sectors where
trade between Member States takes place. Therefore the
measure is liable to affect trade and distort competition.

(47)

(43)

By way of conclusion, the Commission finds that the
measure constitutes State aid under Article 87(1) of the
EC Treaty.

Compatibility of the aid

(44)

The Commission maintains its position that the tax on
electricity cannot be assessed together with the CO2 tax.
As stated in the decision to open the Article 88(2)
procedure, there are two reasons for this. Firstly, the
CO2 tax is not levied on the electricity consumption.
the electricity in Sweden is
Secondly, as 90 % of
produced from nuclear and hydropower plants, the elec-
tricity tax does not have the same steering effect on CO2
emissions as the CO2 tax. Thus, the electricity tax has to
be assessed separately.

(45) Until 31 December 2001,

constituted
existing State aid within the meaning of Article 1(b)(i)

scheme

the

the procedural Regulation. However, according to
of
the Guidelines and because of Sweden’s
point 77 of
acceptance of
the appropriate measures, all existing
State aid for environmental protection should have
into line with the Guidelines before
been brought
1 January 2002.

The Swedish Government argues that a reasonable time
was needed to implement a new energy tax system which
is compatible with the Guidelines. Firstly, two and a half
years have passed between the deadline for bringing the
scheme into line with the Guidelines and the entering
into force of a revised energy tax system. Although the
Commission recognises that energy taxation is of a
complex nature, it considers that the period of two and
a half years to be unreasonably long. Secondly,
the
Swedish Government did not make use of the possibility
to extend the deadline for
the
Guidelines for certain measures, which was made and
approved for France and Germany (17). On the contrary,
by letter of 16 March 2001, the Swedish Government
accepted the appropriate measures proposed by the
Commission. If the Swedish Government had problems
to amend the scheme within the given deadline, it could
appropriate measures with the
have
exception of their application to the scheme in question.

implementation of

accepted the

Consequently, the Commission has assessed the compat-
ibility of the aid under the Guidelines. In the opening
decision the Commission expressed the view that no
other derogations as provided for by Article 87(2) or
(3) of the EC Treaty seem applicable. This conclusion
must be confirmed after the Article 88(2) procedure.
During this procedure, no new elements were put
the
forward which would alleviate the doubts
Commission expressed in its decision to open the
formal
Commission
procedure.
therefore concludes the following:

investigation

that

The

(48)

Point 51.2 of the Guidelines allows the application of the
provisions in point 51.1 in case a tax has an appreciable
positive impact in terms of environmental protection and
where the derogation has become necessary as a result of
a significant change in economic conditions that placed
the firms in a particularly difficult competitive situation.
The energy tax aims to steer towards energy savings and
energy efficiency. The present Swedish energy tax system
has remained unchanged since 1993. In this respect, the
measure establishes the derogation from an existing tax
which has been decided on when the tax was adopted. It
falls therefore under point 51.2 of the Guidelines which
refer to the compatibility criteria of point 51.1.

(17) OJ C 34, 7.2.2002, p. 13.

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(49)

the Guidelines

second indent, of

For the period 1 January 2002 to 31 December 2003,
point 51.1(b),
is
applicable, as the exemption concerns a domestic tax
imposed in the absence of a Community tax. That
to pay a
provision requires benefiting companies
significant proportion of the national tax. The reason
for that is to leave them with an incentive to improve
their environmental performance. This follows from the
wording in point 51.1.b first subparagraph, which allows
for tax reductions from a harmonised tax if the benefi-
ciaries pay more than the Community minimum rates ‘in
order to provide firms with an incentive to improve
environmental protection’. The exemption results in a
zero-tax on electricity used in the manufacturing
process by the manufacturing sector. The Commission
can, thus, conclude that the undertakings did not pay a
significant proportion of the national tax. Therefore, the
measure as it stands cannot, for the period 1 January
2002 until 31 December 2003, be declared compatible
in accordance with the Guidelines. Since no other ground
for compatibility applies,
this aid must be declared
incompatible with the common market.

(50) As mentioned in recital 18, Directive 2003/96/EC
entered into force on 1 January 2004. That directive
takes the objective of environmental protection explicitly
into account (see in particular recitals 3, 6, 7 and 12).
The Commission, therefore, considers that the respect of
the minimum rates of Directive 2003/96/EC will provide
undertakings with an incentive to improve environmental
protection. For this reason, the Commission can, in the
present case, accept the respect of the minimum rates
also as equal to a significant proportion of the national
tax as requested under point 51.1(b), second indent, of
the Guidelines. Therefore, for the period 1 January 2002
until 31 December 2003 the Swedish measure can be
declared compatible to the extent that beneficiaries are
required to pay the minimum rates set by Directive
2003/96/EC.
to the
amount resulting from the application of the minimum
levels set out in the Energy Tax Directive.

aid corresponds

Incompatible

businesses which

concluded
have
energy-intensive
agreements, or equivalent,
to undertake measures to
achieve environmental objectives or increased energy effi-
ciency equivalent to what would have been achieved if
the Community minimum levels had been observed. In
the present case, the conditions for applying a zero tax
rate are not fulfilled. Therefore, similarly for the period
since 1 January 2004, the Swedish measure may only be
declared compatible to the extent that beneficiaries are
required to pay the minimum rates set by Directive
2003/96/EC.
to the
amount resulting from the application of the minimum
levels set out in the energy tax Directive.

aid corresponds

Incompatible

(52)

that

the Commission concludes

Consequently,
the
measure is, during the period 1 January 2002 until
such time as the current system is applied, not in line
with the Guidelines and the energy tax Directive. The
incompatible aid corresponds to the amount resulting
from the application of the minimum levels set out in
the energy tax Directive.

Recovery of incompatible aid

(53) Where unlawfully granted State aid is found to be incom-
patible with the common market, it must according to
Article 14(1) of the procedural Regulation be recovered
from the beneficiary. Through recovery of the aid, the
competitive position that existed before it was granted is
restored as far as is possible. The fact that the aid is
law — which is
provided in accordance with national
generally the case — does not affect a recovery, as
Community law overrides national law.

(51)

For the period 1 January 2004 until such time as the
current system is applied, the tax is harmonised by the
Directive 2003/96/EC. Therefore, point 51.1(b),
first
the Guidelines is applicable. According to
indent, of
that provision, a reduction can be approved if
the
amount effectively paid by the beneficiaries after the
Community
reduction
the
the Directive
minimum. According to Article 10 of
2003/96/EC,
the minimum tax rate for electricity is
fixed to EUR 0,5 per MWh for business use. Thus, the
fixed minimum rate was not respected in the present
case. According to Article 17(2) and (4) of the same
Directive, a tax rate down to zero is allowed for

remains

higher

than

(54) However, Article 14(1) of

require

‘the Commission shall not
the aid if

the procedural Regulation
the
states
that
recovery of
this would be contrary to a
general principle of Community law’. The case-law of
Justice (18) and the Commission’s own
the Court of
decision-making practice have established that, where,
as a result of the Commission’s actions, legitimate expec-
tations exist on the part of the beneficiary of a measure
the aid has been granted in accordance with
that
Community law,
the aid
then an order
would infringe a general principle of Community law.

to recover

(18) Judgment of the Court of Justice of 24 November 1987 in Case

223/85 RSV v Commission, [1987] ECR 4617.

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is the responsibility of a Member State to make
It
national measures compatible with Community State
aid rules in order to prevent distortion of competition,
to notify any State aid measure to the Commission in
accordance with Article 88(3) of the EC Treaty and to
refrain from implementing it pending its examination. In
principle, undertakings cannot claim legitimate expec-
If undertakings
tations in respect of
could successfully base themselves on a national
law,
even adopted in good faith, but which does not
comply with State aid rules and therefore has the effect
to distort competition, the aim of Community state aid
control could not be fulfilled.

illegal State aid.

the Court ruled that

in Case 265/85 Van den Bergh en
In the judgment
‘[…] any trader in
Jurgens (19),
regard to whom an institution has given rise
to
justified hopes may rely on the principle of protection
of legitimate expectation. On the other hand, if a prudent
and discriminating trader
foreseen the
adoption of a Community measure likely to affect his
interests, he cannot plead that principle if the measure
is adopted.’

could have

(58)

(59)

that that information was sent and used in other contexts
and that these submissions cannot in any case replace a
formal notification required by Article 88(3) of the EC
Treaty.

constituted

The Confederation of Swedish Enterprises claims that the
aid constitutes existing aid and that,
therefore, no
recovery can be required. The Commission finds that
until
the measure
31 December 2001. From 1 January 2002,
the aid
became new aid as it should have been brought into
line with the Guidelines. Therefore,
the Commission
does not agree with the argument brought forward by
the Confederation of Swedish Enterprises.

existing

only

aid

Thus, the Commission does not find that the arguments
made by Sweden provide a ground for a decision without
a recovery. However, it transpires from the Court’s case-
law that the Commission is required to take into consid-
eration, on its own initiative, the exceptional circum-
to Article
stances that provide justification, pursuant
14(1) of
to refrain
for it
from ordering the recovery of unlawfully granted aid
where such recovery is contrary to a general principle
of Community law, such as respect for the legitimate
expectation of beneficiaries.

the procedural Regulation,

(55)

(56)

(57)

to bring all

The Swedish authorities argue that the aid should not be
recovered as the Commission did not fulfil its obligations
set out in Article 17(2) of the procedural Regulation. In
in order to adapt existing aid to the new
this case,
the Commission proposed to the Member
guidelines,
States
their existing environmental aid
schemes
in line with the Guidelines by 1 January
2002. It has been confirmed by case-law that such a
proposal made in guidelines constitutes one way of
carrying out the regular and periodic cooperation under
which the Commission, in conjunction with the Member
States, must keep under constant review existing systems
appropriate
to
of
measures (20). An agreement on a complete list of all
existing aid schemes between the Commission and each
Member State would be impractical and it is reasonable
the
to leave the responsibility of
schemes to the Member States. This even more so
since they are involved in the drafting of new guidelines
these for
and are well aware of
existing aid schemes before they enter into force.
In
the Swedish authorities claim that Sweden
this case,
has informed the Commission about
the scheme by,
for example, submitting the complete Swedish taxation
act to the Commission. The Commission takes the view

the implications of

the adaptation of

them any

propose

and

aid

(19) Judgment of

the Court of

Justice of 11 March 1987 in Case
C-265/85 Van den Bergh en Jurgens BV v Commission [1987] ECR
1155, in particular paragraph 44.

(20) Judgment of the Court of Justice of 18 June 2002 in Case C-242/00
Federal Republic of Germany v Commission of the European Communities
[2002] ECR I-5603, in particular paragraph 28.

(60) According to Article 19 of the procedural Regulation, the
appropriate measures only become binding for
the
Member State concerned by the acceptance by the
Member State to implement those measures. This has
been confirmed in case-law (21). Thus,
the change in
the status of the measure from existing aid to new aid
was a consequence of the acceptance of the Swedish
Government of the appropriate measures proposed in
the Guidelines.

(61) On the basis of Article 26(1) of the procedural Regu-
lation, it is conceivable that the fact that the Commission
did not publish the
Swedish
Government of the Guidelines, may have led some bene-
ficiaries to believe in good faith that the national measure
at issue was still to be regarded as existing aid. In Article
it is set out that the Commission shall publish ‘a
26,

acceptance by

the

(21) Case C-242/00 Federal Republic of Germany v Commission of the
European Communities (see footnote 18), Judgment of 15 October
1996 in Case C-311/94 IJssel-VlietCombinatie BV v Minister van
Economische Zaken [1996] ECR I-5023,
in particular paragraphs
36 and 37, and Judgment of 5 October 2000 in Case C-288/96
Federal Republic of Germany v Commission of the European Communities
[2000] ECR I-8237, particularly paragraphs 62 to 65.

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25.6.2005

that

concludes

that
the

the same Regulation states

the decisions taken pursuant

to
summary notice of
Article 18 in conjunction with Article 19(1)’. Article
‘where the
18 of
Commission […]
aid
existing
scheme is not, or is no longer, compatible with the
common market,
recommendation
proposing appropriate measures to the Member State
concerned.’ Article 19(1) of
that Regulation sets out
that where the Member State accepts the proposed
appropriate measures, the Commission shall ‘record that
finding’ and inform the Member State thereof.

issue

shall

it

a

(62)

(63)

implementation of

The Commission did not publish the acceptance by each
Member State of the appropriate measures proposed by
the Commission for
the
the
Guidelines. It is, therefore, difficult for the Commission
to show that the beneficiaries were properly informed of
the acceptance given by the Swedish Government and of
the consequent change in the status of the aid. However,
the Commission’s
at
the publication of
it must
decision to open the Article 88(2) procedure,
have been clear for the beneficiaries that the measure is
no longer existing aid and that it may be incompatible
with the Guidelines. In this case, such publication took
place on 9 August 2003.

the date of

all

these

into account,

in the pre-sent

the
considerations
Taking
Commission concludes
case,
that,
recovery of aid granted before the date of the publication
of
the decision to open the investigation procedure
would be contrary to the principle of protection of
in accordance with
legitimate expectations. Therefore,
Article 14 of the procedural Regulation, the Commission
decides that recovery shall not be required for the period
1 January 2002 to 8 August 2003.

(64)

Thus, aid provided under this scheme since 9 August
2003 should be recovered.

VI. CONCLUSION

(65)

The Commission finds that Sweden has unlawfully kept
in force Act (1994:1776) on Tax on Energy and without
modification since 1 January 2002 in breach of the obli-
gation arising from its own acceptance of the appropriate
measures proposed by the Commission and of Article
88(3) of the EC Treaty.

(67)

(68)

(69)

The aid is, since 1 January 2002, incompatible with the
Guidelines and in particular point 51.1(b) second subpar-
agraph thereof and any other derogation as provided for
by Article 87(2) and (3) of the EC Treaty. Since no other
reasons of compatibility can be envisaged for the scheme
as such, the latter is incompatible with the common
market.

In accordance with Article 14(1) of the procedural Regu-
lation, the unlawfully paid aid should be recovered. In
this case, the recovery period should start on the date of
the publication of the decision by the Commission to
open the Article 88(2) procedure regarding the case
and end on the date when the new energy tax system
enters into force, i.e. aid provided during the period 9
August 2003 to 30 June 2004 should be recovered.

This Decision concerns the aid scheme in question and
in particular as
must be implemented immediately,
regards the recovery of all individual aid granted under
the scheme. The Commission also notes that a decision
on an aid scheme is without prejudice to the possibility
that individual aid may be deemed, wholly or partially,
compatible with the common market on its own merits
(for
instance, because the individual grant of aid is
covered by the de minimis rules or in the context of a
future Commission decision or by virtue of an exemption
regulation),

HAS ADOPTED THIS DECISION:

Article 1

The tax exemption granted by Sweden since 1 January 2002
under the Act on Tax on Energy (1994:1776) is a State aid
scheme, unlawfully put into effect by Sweden in breach of
Article 88(3) of the Treaty. Such aid is incompatible with the
common market to the extent that beneficiaries are not required
to pay the minimum rates set by Council Directive 2003/96/EC.
Since no other ground for compatibility applies, this aid must
be declared incompatible with the common market.

Article 2

Sweden shall abolish the aid scheme referred to in Article 1 in
so far as it is continuing to produce effects.

(66)

The scheme constitutes State aid within the meaning of
Article 87(1) of the EC Treaty.

Sweden shall take all necessary measures to recover from

1.
the beneficiary the aid referred to in Article 1.

Article 3

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L 165/29

Sweden shall cancel all payment of outstanding aid with

2.
effect of the date of the present decision.

Recovery

shall be

and in
3.
accordance with the procedures under national
law, provided
these allow the immediate and effective implementation of this
Decision.

effected without delay

Article 4

inform the Commission, within two months
Sweden shall
following notification of
the measures
planned and already taken to comply with it. It shall provide
this information using the questionnaire attached in Annex 1 of
this Decision.

this Decision, of

Article 5

This decision is addressed to the Kingdom of Sweden.

4.
The sums to be recovered shall bear interest throughout
the period running from the date on which they were put at the
disposal of the beneficiaries until their actual recovery.

Done at Brussels, 30 June 2004.

The interest shall be calculated in conformity with the
laid down in Commission Regulation (EC) No

5.
provisions
794/2004 (22).

For the Commission

Mario MONTI
Member of the Commission

(22) OJ L 140, 30.4.2004, p. 1.

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ANNEX

Information regarding the implementation of Commission Decision 2005/468/EC

1. Total number of beneficiaries and total amount of aid to be recovered

1.1. Please explain in detail how the amount of aid to be recovered from individual beneficiaries will be calculated?

— the principal,

— the interest.

1.2. What is the total amount of unlawful aid granted under this scheme that is to be recovered (gross aid equivalent,

prices of …)?

1.3. What is the total number of beneficiaries from which unlawful aid granted under this scheme is to be recovered?

2. Measures planned and already taken to recover the aid

2.1. Please describe in detail what measures are planned and what measures have already been taken to effect an
immediate and effective recovery of the aid. Please also indicate where relevant the legal basis for the measures
taken/planned.

2.2. By what date will the recovery of the aid be completed?

3. Information by individual beneficiary

Please provide details for each beneficiary from whom unlawful aid granted under the scheme is to be recovered in the
table overleaf.

Identity of the beneficiary

Amount of unlawful aid granted (*)
Currency:

Amounts reimbursed (**)
Currency:

(*) Amount of aid put at the disposal of the beneficiary (in gross aid equivalents; in prices of …).
(**) Gross amounts reimbursed (including interest).