Case C-117/09 P: Appeal brought on 31 March 2009 by Kronoply GmbH, formerly Kronoply GmbH & Co. KG, against the judgment delivered by the Court of First Instance (Fifth Chamber) on 14 January 2009 in Case T-162/06 Kronoply GmbH & Co. KG v Commission of the European Communities
Date: 2009-03-31
Institutions: Court of Justice
Subjects: Germany, State aid, appeal, control of State aid, investment project, regional aid








C_2009141EN.01002602.xml










20.6.2009   


EN


Official Journal of the European Union


C 141/26





Appeal brought on 31 March 2009 by Kronoply GmbH, formerly Kronoply GmbH & Co. KG, against the judgment delivered by the Court of First Instance (Fifth Chamber) on 14 January 2009 in Case T-162/06 Kronoply GmbH & Co. KG v Commission of the European Communities
(Case C-117/09 P)
2009/C 141/47
Language of the case: German

Parties


Appellant: Kronoply GmbH, formerly Kronoply GmbH & Co. KG (represented by: R. Nierer und L. Gordalla, Rechtsanwälte)

Other party to the proceedings: Commission of the European Communities

Form of order sought







1.


Set aside the judgment of the Court of First Instance (Fifth Chamber) of 14 January 2009 in Case T-162/06;










2.


annul the Commission’s decision of 21 September 2005 on State aid No C 5/2004 (ex N 609/2003) by which the Commission declares the State aid which Germany is planning to implement for the appellant to be incompatible with the common market;










3.


in the alternative to (2), refer the matter back to the Court of First Instance;










4.


order the Commission to pay the costs of the proceedings at first instance and of the appeal, in particular the costs of the applicant/appellant.





Pleas in law and main arguments

This appeal relates to the judgment of the Court of First Instance dismissing the appellant’s application for annulment of the Commission’s decision of 21 September 2005 by which the State aid which Germany is planning to implement for Kronoply GmbH & Co. KG is declared to be incompatible with the common market. According to the judgment under appeal, the Commission was right to hold that the aid at issue did not require the beneficiary either to pay consideration or to contribute to an objective in the common interest; in consequence, it was operating aid intended to cover the running costs and could not be authorised. In the Court’s view, the aid at issue was not necessary because it was intended solely for the construction of a production plant which had, however, already been the subject of an earlier notification, and because the investment project had already been completed by means of the aid authorised following that earlier notification long before the notification of the aid at issue.
The appeal is brought on the basis that the judgment under appeal is incompatible with Article 87(3)(a) and (c) EC, with the Guidelines on national regional aid issued pursuant thereto, and with the 1998 multisectoral framework on regional aid for large investment projects. Accordingly, the principles of the protection of legitimate expectations and equal treatment have also been infringed by the Court.
Article 87(3)(a) and (c) EC has been infringed in so far as the Court incorrectly interpreted and assessed the criterion of necessity and the incentive effect.
As far as the assessment of the necessity of the aid at issue is concerned, the Court unlawfully restricts the scope of application of Article 87(3) EC in so far as it errs in law in assuming that an aid recipient can notify aid in respect of an investment project only once, and that each further notification must relate to a new investment project. In addition, the Court focussed in its assessment of necessity on a point in time which was of no consequence at all as far as the appellant’s decision to invest was concerned, and over which, moreover, the appellant could not have had any control. The relevant date, according to the Commission and the Court, was the date on which the aid at issue was notified to the Commission by the Member State. However, by its application to the national authorities for aid to be implemented, the appellant had already done everything that was required and in its power to establish necessity. The date on which the aid is notified to the Commission is outside the appellant’s control. The stance taken by the Court and the Commission would — if taken to its logical conclusion — mean that the necessity of implementing aid would have to be disclaimed in respect of all investment projects if a decision by the Commission on the compatibility or incompatibility of the proposed aid with the common market were to be taken only after the completion or termination of the investment project.
Further, it should be noted that the appellant was not in a position directly to challenge the Commission’s decision regarding the aid originally notified. Where the Commission declares aid to be compatible with the common market, but to an extent that does not correspond to the amount which the recipient requested from the national authorities, the recipient cannot successfully challenge the Commission’s decision in his favour before the Court of First Instance. The period of time between the first decision of the Commission approving the original aid and the notification of the aid at issue is therefore attributable to the fact that the appellant availed itself of what it regarded as the legal remedies which it was entitled to use to challenge the Commission’s letter refusing to amend its first authorisation decision. The fact that the Federal Republic of Germany consequently notified the aid at issue only after the investment project was completed is due solely to the fact that there was an intervening dispute about the categorisation of the letter from the Commission referred to above. The argument that the investment project had since been completed cannot, therefore, serve as a basis for the assessment of necessity.
As regards the criterion of incentive effect, the Court expressly left consideration of that issue open. Even if, contrary to the appellant’s view, necessity and incentive effect are regarded as being two distinct requirements for the authorisation of aid, both have been met in this case.
The third subparagraph of point 4.2 of the Guidelines on national regional aid provides that the criterion of incentive effect is satisfied if the application for aid is submitted before work is started on the project. As stated above, it is only the application for aid that is submitted to the national authorities that can be relevant in that regard. The appellant submitted the application before work was started on the project and thus satisfied that criterion. The Court failed to take this into account, thereby infringing not only Article 87 EC but also the Guidelines for national regional aid.
The judgment under appeal also infringes the multisectoral framework on regional aid and the principle of equal treatment in so far as the Court endorsed the Commission’s inconsistent application of the market assessment. During the notification procedure in respect of the original aid, the Commission had indicated that it would assess the ‘state of competition’ factor in respect of the relevant product market as being 0.75; however, only approximately three weeks later, it assessed the same relevant market differently in another decision and deemed a ‘state of competition’ factor under the multisectoral framework of 1.0 to be appropriate. Even though the Commission has a wide margin of discretion in its economic assessment of the facts, that margin is nevertheless curtailed by the fact that the markets for the same goods are the same, particularly where the markets for the same group of products are assessed within a period of three weeks.
Finally, the Court committed a further error of law by entirely disregarding the appellant’s argument that it was obliged to complete the investment project within 36 months of submission of the application. If the appellant had failed to comply with that obligation, it would have lost all of the aid. The appellant cannot be criticised for having complied with that obligation. That is an infringement of Article 87 EC, as well as of the principle that the Commission must adhere to the rules on dealing with aid that the Commission itself has adopted and implemented.