CELEX: 62002TJ0357(01)
Language: en
Date: 2011-07-14 00:00:00
Title: Judgment of the General Court (Fourth Chamber, extended composition) of 14 July 2011. # Freistaat Sachsen (Germany) v European Commission. # State aid - Aid granted by the authorities of the Free State of Saxony - Aid for coaching, participation in fairs, cooperation and design promotion - Decision declaring the aid scheme in part compatible and in part incompatible with the common market -Aid scheme for small and medium-sized enterprises - Failure to exercise discretion -Obligation to state reasons. # Case T-357/02 RENV.

Case T-357/02 RENV
      Freistaat Sachsen (Germany)
      v
      European Commission
      (State aid – Aid granted by the authorities of the Land of Saxony – Aid for coaching, participation in fairs, cooperation and design promotion – Decision declaring the aid scheme compatible in part and incompatible in part with the common market – Aid scheme for small and medium-sized enterprises – Failure to exercise discretion – Duty to state reasons)
      Summary of the Judgment
      1.      State aid – Effect on trade between Member States – Adverse effect on competition – Criteria for assessment – Aid scheme
      (Art. 87(1) EC; Commission Regulation No 70/2001, Art. 5)
      2.      State aid – Prohibition – Exceptions – Aid categories, set out in legislation, which can be regarded as compatible with the
            common market – Regulation No 70/2001 on aid for small and medium-sized enterprises – Possibility to review the aid in the
            light of the criteria defined by Article 87(3) EC
      (Arts 87(3) EC and 88(3) EC; Commission Regulation No 70/2001)
      3.      State aid – Prohibition – Exceptions – Aid which may be considered compatible with the common market – Discretion of the Commission
            – Possibility of adopting guidelines – Individual assessment outside the guidelines – Admissibility
      (Art. 87(3) EC)
      4.      State aid – Prohibition – Exceptions – Aid which may be considered compatible with the common market – Discretion of the Commission
            – Judicial review – Limits
      (Art. 87(3)(c) EC)
      5.      State aid – Prohibition – Exceptions – Aid for certain areas affected by the division of Germany – Scope of the derogation
            – Restrictive interpretation
      (Art. 87(1) and (2)(c) EC)
      6.      State aid – Prohibition – Exceptions – Aid which may be considered compatible with the common market – Operating aid – Exclusion
      1.      For the purposes of categorising a national measure as State aid, it is not necessary to demonstrate 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. More particularly, in the case of an aid programme, the Commission
         may confine itself to examining the characteristics of the programme in question in order to determine whether, by reason
         of the high amounts or percentages of aid, the nature of the investments for which aid is granted or other terms of the programme,
         it gives an appreciable advantage to recipients in relation to their competitors and is likely to benefit in particular undertakings
         engaged in trade between Member States.
      
      In the case of aid to small and medium-sized enterprises, the intensity of which is between 50 and 80% depending on the subprogramme
         and depending on the area in which the recipient undertaking was situated, it is clear that that aid is capable of distorting
         intra-Community trade. According to Article 5 of Regulation No 70/2001 on the application of Articles 87 EC and 88 EC to State
         aid to small and medium sized enterprises, aid to small and medium-sized enterprises is compatible with the common market
         if it does not exceed 50% of the costs of the services received.
      
      (see paras 30-32)
      2.      The object of Regulation No 70/2001 on the application of Articles 87 EC and 88 EC to State aid to small and medium sized
         enterprises is to declare compatible with the common market by reference to Article 87(3) EC, and thus to exempt from the
         obligation to notify laid down in Article 88(3) EC, all individual aid and aid schemes in favour of small and medium-sized
         enterprises which satisfy the conditions defined in that regulation. That does not mean that no aid in favour of small and
         medium-sized enterprises can be declared compatible with the common market following an examination by the Commission by reference
         to the criteria defined in Article 87(3) EC, following notification by a Member State pursuant to Article 88(3) EC. Indeed,
         recital 4 to Regulation No 70/2001 states that ‘[t]his Regulation is without prejudice to the possibility for Member States
         of notifying aid to small and medium-sized enterprises’ and that ‘[s]uch notifications will be assessed by the Commission
         in particular in the light of the criteria set out in this Regulation’. 
      
      (see paras 42-43)
      3.      The Commission can establish general implementing measures which structure the way in which it exercises the discretion conferred
         on it by Article 87(3) EC. However, it cannot wholly deprive itself of that discretion where it assesses a specific case,
         and that is particularly so in relation to cases which it has not expressly referred to, or indeed has not regulated, in those
         general implementing rules. That discretion is therefore not exhausted by the adoption of such general rules and there is,
         in principle, no obstacle to an individual assessment outside the context of those rules, provided, however, that the Commission
         complies with the higher rules of law, such as the rules of the Treaty and the general principles of Community law.
      
      (see para. 44)
      4.      The Commission’s assessment of an aid programme must necessarily be based on the facts, economic analyses and evidence submitted
         by the applicant at the stage of the administrative procedure preceding the adoption of the contested decision. The review
         by the Community judicature of complex economic assessments made by the Commission must necessarily be confined to verifying
         whether the rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately
         stated and whether there has been any manifest error of assessment of the facts or misuse of powers.
      
      (see para. 55)
      5.      Article 87(2)(c) EC, which concerns aid granted to the economy of certain areas of the Federal Republic of Germany affected
         by the division of Germany, must be interpreted restrictively, in that the economic disadvantages caused by that division
         can only mean the economic disadvantages caused in certain areas of Germany by the isolation which the establishment of that
         physical frontier entailed, such as the breaking of communication links or the loss of markets as a result of the breaking
         off of commercial relations between the two parts of German territory. General references to the economic consequences of
         the division of Germany cannot serve to justify the compatibility with Article 87(3)(c) EC of aid the intensity of which exceeds
         that provided for in Regulation No 70/2001 on the application of Articles 87 EC and 88 EC on State aid for small and medium-sized
         enterprises.
      
      (see paras 78-79)
      6.      Winning new markets and also efforts to remain on the market are part of the normal strategy of each enterprise wishing to
         maintain a lasting presence on the market. Expenditure is necessary in order to permit that continuous and extended presence
         on the market and State aid granted for those purposes will necessarily reduce the current expenditure of the small and medium-sized
         enterprises. Those contributions therefore come within the category of operating aid, incompatible with the common market.
      
      (see paras 102, 105)
JUDGMENT OF THE GENERAL COURT (Fourth Chamber, Extended Composition)
      14 July 2011 (*)
      
      (State aid – Aid granted by the authorities of the Land of Saxony – Aid for coaching, participation in fairs, cooperation and design promotion – Decision declaring the aid scheme compatible in part and incompatible in part with the common market – Aid scheme for small and medium-sized enterprises – Failure to exercise discretion – Obligation to state reasons)
      In Case T‑357/02 RENV,
      Freistaat Sachsen (Germany), represented by T. Lübbig, lawyer,
      
      applicant,
      v
      European Commission, represented by K. Gross, V. Kreuschitz and T. Maxian Rusche, acting as Agents,
      
      defendant,
      APPLICATION for annulment of the second paragraph of Article 2 and Articles 3 and 4 of Commission Decision 2003/226/EC of
         24 September 2002 on an aid scheme which the Federal Republic of Germany is planning to implement – ‘Guidelines on assistance
         for SMEs – Improving business efficiency in Saxony’: Subprogrammes 1 (Coaching), 4 (Participation in fairs), 5 (Cooperation)
         and 7 (Design promotion) (OJ 2003 L 91, p. 13),
      
      THE GENERAL COURT (Fourth Chamber, Extended Composition),
      composed of O. Czúcz (President), E. Cremona, I. Labucka (Rapporteur), S. Frimodt Nielsen and K. O’Higgins, Judges,
      Registrar: C. Heeren, Administrator,
      having regard to the written procedure and further to the hearing on 30 June 2010,
      gives the following
      Judgment
       Background to the dispute
      1        In the context of a programme of the Ministry of the Economy and Labour of the Land of Saxony designed to improve the performance
         of small and medium-sized enterprises established on its territory, the Land granted persons exercising a profession in that
         territory and small and medium-sized enterprises with a registered office or place of business there non-refundable subsidies
         for projects to promote the economy. Those subsidies were provided for in an aid scheme which was first notified to the Commission
         of the European Communities in 1992, authorised by the Commission and extended on several occasions following new authorisations.
         The aid was intended to improve the production capacities and competitiveness of small and medium-sized enterprises.
      
      2        By letter of 29 December 2000, received at the Commission on 3 January 2001, the Federal Republic of Germany notified a new
         version of that aid scheme.
      
      3        On 12 January 2001, the Commission adopted Regulation (EC) No 70/2001 on the application of Articles 87 [EC] and 88 [EC] to
         State aid to small and medium‑sized enterprises (OJ 2001 L 10, p. 33; ‘the Regulation exempting SMEs’), which entered into
         force on 2 February 2001. Upon entering into force, the Regulation exempting SMEs repealed and replaced the Community guidelines
         on State aid for small and medium-sized enterprises (OJ 1996 C 213, p. 4). It defines the criteria that individual aid and
         aid schemes for small and medium‑sized enterprises must meet in order to be compatible with the common market, within the
         meaning of Article 87(3) EC, and exempts qualifying aid from the obligation to notify laid down in Article 88(3) EC. Recital
         4 to that regulation states that ‘[t]his Regulation is without prejudice to the possibility for Member States of notifying
         aid to small and medium-sized enterprises. Such notifications will be assessed by the Commission in particular in the light
         of the criteria set out in this Regulation. The guidelines on State aid for small and medium-sized enterprises [adopted by
         the Commission] should be abolished from the date of entry into force of this Regulation, since their contents are replaced
         by [it].’
      
      4        Furthermore, recital 16 to the Regulation exempting SMEs states the following: ‘In the light of the World Trade Organisation
         (WTO) Agreement on Subsidies and Countervailing Measures, this Regulation should not exempt export aid or aid favouring domestic
         over imported products. Aid towards the costs of participation in trade fairs or of studies or consultancy services needed
         for the launch of a new or existing product on a new market does not normally constitute export aid.’
      
      5        By letter of 5 February 2001, the Commission questioned the German authorities about the application of the Regulation exempting
         SMEs and informed them that the aid scheme in question would not be examined under the accelerated procedure.
      
      6        In December 2001, the Commission initiated a formal investigation procedure with regard to some of the measures provided for
         by the notified aid scheme, namely the measures provided for by the subprogrammes ‘Coaching’, ‘Participation in fairs’, ‘Cooperation’
         and ‘Design promotion’ (together ‘the four subprogrammes at issue’). Conversely, the Commission decided not to raise any objections
         with respect to the other notified measures.
      
      7        Following its investigation, the Commission adopted, on 24 September 2002, Decision 2003/226/EC on an aid scheme which the
         Federal Republic of Germany is planning to implement – ‘Guidelines on assistance for SMEs – Improving business efficiency
         in Saxony’: Subprogrammes 1 (Coaching), 4 (Participation in fairs), 5 (Cooperation) and 7 (Design promotion) (OJ 2003 L 91,
         p. 13; ‘the contested decision’). In the first place, the Commission considered that the measures envisaged by the four subprogrammes
         at issue constituted State aid. In the second place, the Commission stated that, in order to be considered compatible with
         the common market, that aid must come within the scope of the Regulation exempting SMEs and observe the thresholds laid down
         in that regulation, with the exception of the operating aid provided for in the subprogramme ‘Cooperation’, which it considered
         to be incompatible with the common market. 
      
      8        By its judgment of 3 May 2007 in Case T‑357/02 Freistaat Sachsen v Commission [2007] ECR II‑1261, this Court granted the application of the applicant, Freistaat Sachsen, for annulment of a number of provisions
         of the contested decision (the second paragraph of Article 2 and Articles 3 and 4). 
      
      9        On appeal by the Commission, the Court of Justice, by judgment of 11 December 2008 in Case C‑334/07 P Commission v Freistaat Sachsen [2008] ECR I‑9465, set aside the judgment of this Court and referred the case back to it.
      
       Procedure and forms of order sought by the parties following referral of the case
      10      The case was allocated to the Fourth Chamber (Extended Composition) of the Court.
      
      11      Pursuant to Article 119(1)(a) and (b) of the Rules of Procedure of the General Court, the applicant and the Commission lodged
         statements of written observations.
      
      12      On hearing the report of the Judge-Rapporteur, the Court decided to open the oral procedure and, by way of measures of organisation
         of procedure provided for in Article 64 of the Rules of Procedure, requested the parties to reply in writing to certain questions.
         The parties complied with that request within the period prescribed.
      
      13      The parties presented oral argument and answered the questions put by the Court at the hearing on 30 June 2010.
      
      14      The applicant claims that the Court should annul the contested decision.
      
      15      The Commission contends that the Court should dismiss the action as unfounded.
      
      16      In their written submissions lodged after referral of the case, the parties did not address the question of costs. In their
         written submissions at first instance, the applicant had claimed that the Court should order the Commission to pay the costs
         and the Commission had claimed that the applicant should be ordered to pay the costs.
      
       Pleas in law and arguments of the parties
      17      In support of its action, the applicant initially put forward five pleas in law, alleging:
      
      –        first, the procedural irregularity of the contested decision, which follows from the fact that the Commission did not apply
         the accelerated clearance procedure to the aid scheme at issue;
      
      –        second, the material irregularity of the contested decision, stemming from the fact that the Regulation exempting SMEs was
         not applicable in the present case;
      
      –        third, that the aid scheme at issue could be authorised under the Community guidelines on State aid for small and medium-sized
         enterprises;
      
      –        fourth, failure by the Commission to exercise its discretion during the investigation of the aid scheme at issue, and also
         breach of the obligation to state reasons; and
      
      –        fifth, that the Commission has not demonstrated that competition was actually or potentially distorted by the aid scheme at
         issue, and also breach of the obligation to state reasons.
      
      18      By its judgment in Freistaat Sachsen v Commission, this Court rejected the first plea, upheld the second plea and decided that there was no need to examine the last three
         pleas.
      
      19      In its judgment in Commission v Freistaat Sachsen, the Court of Justice considered that, since the plea alleging that the application of the Regulation exempting SMEs to the
         contested decision was retroactive in nature was unfounded, it was appropriate to rule solely on the fourth and fifth pleas
         put forward by the applicant before this Court. The Court of Justice therefore referred the case back to this Court for judgment
         on the latter two pleas.
      
      20      Since the fifth plea relates to the characterisation of the measures at issue as State aid and the fourth plea relates to
         the compatibility of the measures characterised as State aid with the common market, the fifth plea will be examined before
         the fourth plea.
      
       Law 
       Fifth plea, alleging failure by the Commission to demonstrate that competition was actually or potentially distorted by the
            aid scheme at issue, and also breach of the obligation to state reasons
       Arguments of the parties
      21      The applicant claims that the Commission ought, pursuant to Article 87(1) EC, to have shown what the distortion of competition
         in the present case consisted of. The contested decision, however, contains no assertion from which it might be concluded
         that the aid scheme at issue was liable to distort competition in the circumstances of the present case or on the basis of
         which it might be positively asserted that the ingredients of such a change of competition were present. The Commission states
         only that the notified measures are, as aid, liable to distort competition (recital 52 to the contested decision) and that
         aid intensity in excess of 50% would cause a ‘disproportionate distortion of competition’ (recital 60 to the contested decision).
         In support of that assertion, the applicant relies on Joined Cases T‑254/00, T‑270/00 and T‑277/00 Hôtel Cipriani and Others v Commission [2008] ECR II‑3269 and, in particular, paragraph 230 of that judgment, which states that, ‘with regard to multisectoral aid
         schemes, it is clear from the case-law that the Commission may merely study the characteristics of the programme at issue
         in order to assess whether, by reason of the large amounts or high percentage of the aid, the characteristics of the investments
         being supported or other arrangements provided for under the programme, the latter gave an appreciable advantage to recipients
         in relation to their competitors and was likely to benefit in particular undertakings engaged in trade between Member States’.
      
      22      In the applicant’s submission, the Commission claims that the obligation to bear half of the costs contributes to the efficiency
         and feasibility of the measure and concludes that trading conditions would be altered in the presence of a higher aid intensity
         (recitals 60, 67 and 71 to the contested decision). In fact, such an assertion, based on an aid ceiling of 50%, could be transposed
         to any subsidy ceiling whatsoever and cannot therefore support the Commission’s findings.
      
      23      In basing that assessment on the Regulation exempting SMEs, the Commission fails to demonstrate to the requisite standard
         the existence of a distortion of competition, whereas, according to the case-law of the Court of Justice, not only is such
         demonstration necessary in order to satisfy the requirement to state reasons for the purpose of Article 253 EC but it also
         constitutes an application of the criteria laid down in Article 87(1) EC.
      
      24      The Commission’s failure to develop sufficiently the criterion of distorted competition also constitutes an infringement of
         Article 253 EC that justifies the annulment of the contested decision.
      
      25      The Commission disputes the arguments put forward by the applicant.
      
       Findings of the Court
      26      In the context of the present plea, the applicant raises two closely linked arguments. First, the Commission failed to state
         sufficient reasons for its finding that competition was actually or potentially distorted by the aid scheme at issue and,
         second, the reasoning set out in the contested decision (in particular at recital 52) does not permit such a conclusion to
         be drawn. 
      
      27      In the first place, as regards the question whether the reasoning set out in the contested decision with respect to one of
         the ingredients of State aid is sufficient, it should be borne in mind that, according to consistent case-law, the statement
         of reasons required by Article 253 EC must be appropriate to the measure at issue and must disclose in a clear and unequivocal
         fashion the reasoning followed by the institution which adopted the measure, in such a way as to enable the persons concerned
         to ascertain the reasons for the measure and to enable the competent Court to exercise its power of review. The requirements
         to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure
         in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom
         it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into
         all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article
         253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the
         matter in question (see Joined Cases T‑309/04, T‑317/04, T‑329/04 and T‑336/04 TV 2/Danmark and Others v Commission [2008] ECR II‑2935, paragraph 178 and the case-law cited).
      
      28      It should also be observed that, at recital 52 to the contested decision, the Commission states that: 
      
      ‘The four subprogrammes … fall within the scope of Article 87(1) [EC] … for the following reasons: they provide for the granting
         of aid from State resources to firms involved in producing goods or providing services involved in intra‑Community trade.
         These grants enable recipients to improve their overall financial situation and to enhance their market position. It must
         therefore be assumed that the measures under scrutiny are liable to distort competition and thereby affect trade between Member
         States. Germany has not challenged this finding.’ 
      
      29      Thus, that recital requires that all the constituent elements of State aid are satisfied in the present case and, in particular,
         infers the existence of distortion of competition from the fact that the recipient undertakings are involved in ‘producing
         goods or providing services involved in intra-Community trade and [that] [t]hese grants enable recipients to improve their
         overall financial situation and to enhance their market position’. 
      
      30      In the second place, as regards the question whether the Commission was correct to find the existence of a restriction of
         competition in the present case, it is appropriate to recall that, according to the case-law, for the purpose of categorising
         a national measure as State aid, it is not necessary to demonstrate 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 (Case C‑494/06 P Commission v Italy and Wam [2009] ECR I‑3639, paragraph 50).
      
      31      More particularly, in the case of an aid programme, like the one at issue in the present case, the Commission may confine
         itself to examining the characteristics of the programme in question in order to determine whether, by reason of the high
         amounts or percentages of aid, the nature of the investments for which aid is granted or other terms of the programme, it
         gives an appreciable advantage to recipients in relation to their competitors and is likely to benefit in particular undertakings
         engaged in trade between Member States (Case 248/84 Germany v Commission [1987] ECR 4013, paragraph 18).
      
      32      According to recital 52 to the contested decision, read in conjunction with Part 2 ‘Description of the measure’ and Part 3
         ‘Grounds for initiating the procedure’, the intensity of the proposed aid was between 50 and 80%, depending on the subprogramme
         and depending on the area in which the recipient undertaking was situated. According to Article 5 of the Regulation exempting
         SMEs, however, aid to small and medium-sized enterprises is to be compatible with the common market if it does not exceed
         50% of the costs of the services received. It is clear, therefore, that aid of such intensity is capable of distorting intra-Community
         trade. 
      
      33      Consequently, in the light of all the foregoing, the present plea must be rejected in its entirety.
      
       Fourth plea, alleging failure by the Commission to exercise its discretion when examining the aid scheme at issue, and also
            breach of the obligation to state reasons
      34      The present plea consists of five parts. By the first part, the applicant maintains that the contested decision is illegal
         on the ground that the Commission merely assessed the compatibility of the aid scheme at issue by reference to the criteria
         set out in the Regulation exempting SMEs. By the second, third, fourth and fifth parts, the applicant takes issue with the
         Commission for having incorrectly assessed the four subprogrammes concerned, thus also committing a breach of its obligation
         to state reasons.
      
       First part, relating to the assessment of the compatibility of the aid scheme at issue solely by reference to the Regulation
         exempting SMEs 
      
      –       Arguments of the parties
      35      The applicant claims that the Commission cannot refrain from exercising its discretion. Thus, without disputing the extent
         of the Commission’s discretion when it examines the compatibility with the common market of aid schemes notified to it by
         a Member State, the applicant maintains that that examination is subject to certain limits, foremost among which is the obligation
         to exercise that discretion. In support of its argument, the applicant refers to the concept of non‑exercise of discretion
         in German law, known as ‘Ermessenausfall’ or ‘Ermessensnichtgebrauch’, which constitutes an illegality, as it does in Austrian
         administrative law. In France, such a situation corresponds to an ‘excès du pouvoir négatif’, whereas at common law failure
         to exercise discretion on the part of an authority which, taking the view that it is bound by its own practice or by guidelines,
         fails to examine each individual case, is covered by the ‘ultra vires doctrine’. The Commission’s obligation to exercise its discretion is not extinguished with the adoption of provisions imposing
         rules on it.
      
      36      In the present case, the applicant takes issue with the Commission for having examined the various aid measures solely by
         reference to the criteria laid down in the Regulation exempting SMEs, as though that regulation exhaustively governed all
         aid schemes in favour of small and medium-sized enterprises. In considering that the level of intensity of the aid of the
         subprogrammes was too high, the Commission merely applied the provisions of the Regulation exempting SMEs instead of also
         exercising its own discretion. Thus, it reinforced the conditions applicable to aid to SMEs by setting the maximum amount
         of recoverable costs at 50% and at the same time departing from its previous practice in taking decisions. In relying solely
         on the general considerations of the Regulation exempting SMEs, without taking account of the particular circumstances of
         the present case, the Commission therefore failed to use its discretion.
      
      37      In that regard, the applicant submits that it follows from recital 4 to the Regulation exempting SMEs that that regulation
         is not intended to govern aid to small and medium-sized enterprises exhaustively. The objective of that regulation is therefore
         not to reduce the Commission’s discretion and to freeze the criteria applicable to those aid measures. The Regulation exempting
         SMEs is designed solely to simplify the procedure for monitoring such measures and make it more effective.
      
      38      In acting in that way, the Commission goes against its practice in taking decisions relating to cases which, by their object,
         come under the Regulation exempting SMEs but do not qualify for the exemption defined in that regulation. It follows from
         that practice that the Commission regularly rules, by means of individual exemptions and pursuant to Article 87(3)(c) EC,
         on isolated situations or on aid measures which do not come under the Regulation exempting SMEs. In such cases, the Commission
         confirms, in particular, and sometimes expressly, that examination on a case-by-case basis must not be limited to an exemption
         under the Regulation exempting SMEs applied by analogy, but must be carried out directly on the basis of Article 87(3)(c) EC.
      
      39      The applicant also observes that, in view of the particular economic situation of Saxony, a former territory of the German
         Democratic Republic, the Commission ought to have examined the aid measures without reference to the conditions defined in
         the Regulation exempting SMEs or, at least, to have explained why its examination did not disregard those conditions. On that
         point, the applicant takes issue with the Commission for having failed to adopt a position on the detailed considerations
         put forward during the administrative procedure. 
      
      40      Consequently, the Commission ought to have authorised the notified aid scheme by examining it directly in the light of the
         criteria defined in Article 87(3) EC.
      
      41      The Commission disputes the arguments put forward by the applicant.
      
      –       Findings of the Court
      42      First of all, it must be emphasised that the object of the Regulation exempting SMEs is to declare compatible with the common
         market by reference to Article 87(3) EC, and thus to exempt from the obligation to notify laid down in Article 88(3) EC, all
         individual aid and aid schemes in favour of small and medium-sized enterprises which satisfy the conditions defined in that
         regulation. That does not mean that no aid in favour of small and medium-sized enterprises can be declared compatible with
         the common market following an examination by the Commission by reference to the criteria defined in Article 87(3) EC, following
         notification by a Member State pursuant to Article 88(3) EC.
      
      43      That possibility is expressly stated at recital 4 to the Regulation exempting SMEs, according to which ‘[t]his Regulation
         is without prejudice to the possibility for Member States of notifying aid to small and medium-sized enterprises’ and ‘[s]uch
         notifications will be assessed by the Commission in particular in the light of the criteria set out in this Regulation’. The
         use of the adverbial phrase ‘in particular’ clearly indicates that the criteria defined in the Regulation exempting SMEs are
         not the only ones by reference to which the Commission may assess aid projects notified to it, which, moreover is confirmed
         by expressions used in the French and German versions of that recital (‘notamment’ and ‘in erster Linie’ respectively).
      
      44      It should also be observed that, while the Commission can establish general implementing measures which structure the way
         in which it exercises the discretion conferred on it by Article 87(3) EC, it cannot wholly deprive itself of that discretion
         where it assesses a specific case, and that is particularly so in relation to cases which it has not expressly referred to,
         or indeed has not regulated, in those general implementing rules. That discretion is therefore not exhausted by the adoption
         of such general rules and there is in principle no obstacle to an individual assessment outside the context of those rules,
         provided, however, that the Commission complies with the higher rules of law, such as the rules of the Treaty and the general
         principles of Community law (judgment of 20 September 2007 in Case T‑375/03 Fachvereinigung Mineralfaserindustrie v Commission, not published in the ECR, paragraph 141).
      
      45      Consequently, following the notification of the aid measures at issue by the Federal Republic of Germany, the Commission was
         under an obligation to examine the compatibility of those measures with the common market and in doing so to exercise the
         discretion conferred on it by the Treaty.
      
      46      In that regard, it must be held that the Commission did exercise its discretion in the context of the contested decision,
         in particular when it examined the compatibility of the subprogramme ‘Coaching’ with the common market, by reference to the
         criteria defined in the Regulation exempting SMEs and also on the basis of Article 87(3)(a) and (c) EC (recitals 57 to 65
         to the contested decision).
      
      47      That analysis, which is based on the Commission’s experience in that sphere at the time when the contested decision was adopted,
         namely in September 2002, cannot be called in question on the ground that the Commission may have subsequently adopted decisions
         in which considerations other than those set out in the contested decision were taken into consideration, notably in cases
         involving notified aid not falling within the scope of the Regulation exempting SMEs.
      
      48      It follows from the foregoing that the applicant cannot claim that the Commission refused, in the present case, to use its
         discretion to examine the various arguments that may have been submitted during the administrative procedure in order to establish
         the compatibility of the various aid measures with the common market. The arguments relating to the outcome of that examination
         and the reasons provided in that regard will be examined in the context of the other parts of this plea. 
      
      49      Consequently, the first part of the fourth plea must be rejected. 
      
       Second part, alleging incorrect assessment of the subprogramme ‘Coaching’ and breach of the obligation to state reasons 
      –       Arguments of the parties
      50      The applicant takes issue with the Commission for having considered that the subprogramme ‘Coaching’ was incompatible with
         the common market within the meaning of Article 87(3)(c) EC on the ground that the aid ceiling for small enterprises was fixed
         at 65%, without undertaking any assessment of the particular circumstances existing in Saxony and of the notified aid scheme.
         Nor, likewise, did the Commission explain how requiring that the undertakings assume half of the costs would increase the
         effectiveness and profitability of the notified aid. The applicant claims that only nine months before the notification of
         the aid scheme at issue the Commission authorised aid measures comparable to those awarded by the Land of Thuringia under
         the programme ‘Richtlinien des Freistaates Thüringen zur einzelbetrieblichen Technologieförderung’ (OJ 2000 C 266, p. 4).
         The use of its discretion implies that the Commission should explain in detail what new experiences led it to alter its practice
         in taking decisions. Although it clamed to use its wide discretion in ascertaining whether an aid ceiling of 65% could be
         authorised, it rejected that option immediately on the sole ground that an intensity in excess of 50% would exceed the amount
         necessary to encourage undertakings to incur costs in relation to ‘coaching’.
      
      51      The applicant maintains that the aid ceiling of 50% provided for in Article 5 of the Regulation exempting SMEs does not exhaustively
         govern aid for consultancy to small and medium-sized enterprises and that according to recital 11 to that regulation small
         enterprises and medium-sized enterprises cannot be subject to the same criteria. Whereas Article 5(a) of the Regulation exempting
         SMEs provides for an aid intensity of 50% for medium-sized enterprises, higher reimbursements for small enterprises should
         be authorised by the Commission in application of its discretion. In maintaining that recital 11 refers solely to the specific
         situation of the grant of investment aid outside assisted regions, the Commission does not explain why differentiation between
         small enterprises and medium-sized enterprises should not be possible in relation to the services of outside consultants.
      
      52      In the applicant’s submission, in taking the view that the financial burden borne by the undertakings was modest, the Commission
         disregarded the fact that a large number of Saxony undertakings have only very limited capital and have problems in securing
         loans, which the Commission itself has acknowledged.
      
      53      The applicant maintains that the fact that the Commission did not take account of the fact that the amount of aid that could
         be authorised by the aid scheme at issue was limited to the sum of EUR 400, or even EUR 500, per working day for young undertakings,
         could facilitate the ‘incorrect grant’ of certain aid. The contested decision thus encourages recourse to more expensive aid
         instead of permitting the more differentiated approach permitted by the programme at issue.
      
      54      The Commission disputes the arguments put forward by the applicant.
      
      –       Findings of the Court
      55      By this part of the present plea, the applicant takes issue with the Commission, in substance, for not having carried out
         an assessment of the programme in question in spite of the considerable evidence put forward in that regard. It should be
         observed, at the outset, that such an assessment must necessarily be based on the facts, economic analyses and evidence submitted
         by the applicant at the stage of the administrative procedure preceding the adoption of the contested decision. According
         to consistent case-law, moreover, review by the Community judicature of complex economic assessments made by the Commission,
         such as those in this case, must necessarily be confined to verifying whether the rules on procedure and on the statement
         of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest
         error of assessment of the facts or misuse of powers (Joined Cases C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P
         and C‑219/00 P Aalborg Portland and Others v Commission [2004] ECR I‑123, paragraph 279, and Joined Cases C‑501/06 P, C‑513/06 P, C‑515/06 P and C‑519/06 P GlaxoSmithKline Services v Commission [2009] ECR I‑9291, paragraph 85).
      
      56      As regards the inadequacy of the statement of reasons, on which the applicant also relies, it should be borne in mind that,
         as already stated at paragraph 27 above, the statement of reasons required by Article 253 EC must be appropriate to the measure
         at issue and must disclose the reasoning followed by the institution. It is not necessary for the reasoning to go into all
         the relevant facts and points of law and the reasoning must be assessed with regard not only to its wording but also to its
         context and to all the legal rules governing the matter in question (see TV 2/Danmark and Others v Commission, paragraph 178 and the case-law cited).
      
      57      In the present case, it was stated at recital 35 to the contested decision that the Commission examined the subprogramme ‘Coaching’,
         in so far as it provides for aid intensities of up to 65% for small enterprises in areas facing particular problems, whereas
         the Regulation exempting SMEs provides for a maximum aid intensity of 50% of the gross cost (Article 5(a) of that regulation).
      
      58      The Federal Republic of Germany’s observations are analysed in detail at recitals 57 to 65 to the contested decision. The
         Commission states there that the subprogramme was assessed not only by reference to its compatibility with the Regulation
         exempting SMEs but also on the basis of Article 87(3)(c) EC. During its assessment, the Commission observed that, in its experience,
         an aid intensity in excess of 50% would exceed the amount necessary to provide enterprises with an incentive to incur the
         expenditure in question and that such a single rate was appropriate for all small and medium-sized enterprises, whether small
         enterprises or medium-sized enterprises, whether or not they were situated in the assisted regions. The Commission observes
         that, unlike aid for investment, aid for ‘coaching’ does not have either a direct or a long-lasting effect on regional development
         or job creation, with the consequence that it is not necessary to authorise higher aid intensities in assisted areas. In any
         event, the Commission states that differentiation between small and medium-sized enterprises is possible within the limits
         of intensity provided for in the Regulation exempting SMEs.
      
      59      The considerations thus expressed by the Commission clearly reflect its reasoning and thus satisfy the criteria established
         in the consistent case-law concerning the obligation to state reasons referred to at paragraph 27 above.
      
      60      As regards the example relating to the aid authorised in the Land of Thuringia, it is appropriate to take into consideration
         the information provided by the Commission with respect to the time (30 months) that elapsed between the adoption of the two
         decisions concerned. The Commission is correct, moreover, to indicate that the two cases are not comparable, since the authorised
         aid measure did not relate to ‘coaching’ and, in particular, in view of the fact that the Regulation exempting SMEs, which
         contains the assessment criteria applied in the contested decision, was not yet in force on the date of adoption of the decision
         relating to the aid provided by the Land of Thuringia.
      
      61      As regards the interpretation which the applicant puts on Article 5(a) of the Regulation exempting SMEs, read with recital
         11 to that regulation, it must be held that there is nothing in the wording of that recital to suggest that, in order to ensure
         differentiation of treatment between small enterprises and medium-sized enterprises, it is necessary or permissible to exceed
         the aid intensity fixed by the Regulation exempting SMEs. As the Commission correctly states, differentiation between small
         and medium-sized enterprises is possible without the margin of 50% being exceeded if only small enterprises receive aid of
         such intensity. In any event, since, as stated at paragraph 48 above, the Commission did not base its assessment solely on
         the Regulation exempting SMEs, that argument of the applicant must be rejected as ineffective.
      
      62      As regards the applicant’s argument that the contested decision encourages recourse to more expensive aid (see paragraph 53
         above), it should be observed that that argument is not only economically illogical but it also contradicts the applicant’s
         argument relating to the inadequacy of the funds of small and medium‑sized Saxony enterprises. In fact, an enterprise with
         inadequate funds will not be induced to choose, from between two offers of the same quality, the more expensive service, in
         view of the fact that it will be required to pay at least 50% of the price.
      
      63      Consequently, it must be held that the applicant has not supplied the evidence and elements on the basis of which it would
         be possible to conclude that the aid in question, even if it is manifestly in excess of the aid intensities provided for in
         the Regulation exempting SMEs, can, owing to specific circumstances, be considered to be compatible with the common market
         within the meaning of Article 87(3) EC. 
      
      64      The Commission therefore did not make a manifest error of assessment in considering that aid intensities higher than those
         provided for in the Regulation exempting SMEs cannot be deemed compatible with the common market under Article 87(3)(c) EC.
      
      65      The second part of the fourth plea must therefore be rejected in its entirety.
      
       Third part, alleging incorrect assessment of the subprogramme ‘Participation in fairs’ and breach of the obligation to state
         reasons
      
      –       Arguments of the parties
      66      The applicant takes issue with the Commission for having considered that the subprogramme ‘Participation in fairs’ was incompatible
         with the common market in so far as it provided that participation in a fair could benefit from aid up to three times. The
         Commission based that finding on Article 5(b) of the Regulation exempting SMEs, which provided for an exemption only for an
         undertaking’s first participation in a given fair or exhibition, with the consequence that such repeated aid would be incompatible
         with the common market.
      
      67      The applicant submits that the Commission failed to use its discretion, in so far as it allowed itself to be guided by the
         provisions of the Regulation exempting SMEs without providing the slightest explanation of how repeated participation in fairs
         could not be eligible even in exceptional cases. The use of the formula ‘exercising once again in full its margin of discretion
         would in no way alter this finding’ at recital 67 to the contested decision shows, in the applicant’s submission, that the
         Commission did not use that power.
      
      68      The applicant also claims that the Commission misinterpreted the concept of ‘market proximity’. Thus, in the case of State
         aid for research and development, the Commission determines the authorised aid intensity according to the degree of market
         proximity. Where the market is distant, an aid intensity of 100% could be allowed. The reference to the alleged ‘market proximity’
         of participation in fairs does not suffice to justify limiting the aid to a single participation. The Commission ought to
         have ruled on the degree of market proximity of participation in fairs in the context of a comparison with other situations
         giving rise to aid, in order to exercise its discretion in the light of those factors. 
      
      69      Nor is limiting the aid to a single participation in fairs and exhibitions justified from an economic viewpoint. The applicant
         takes issue with the Commission for not having given further consideration to the evidence supplied, which showed that only
         repeated participation in the same fair or exhibition could enhance the exhibitor’s prospects on the market, particularly
         in cases where the objective of such participation is to penetrate foreign markets. Small and medium-sized Saxony enterprises
         generally do not have the necessary capital to participate in a fair. Thus aid limited to a single participation is not sufficient
         to achieve the objective of the aid referred to in the Regulation exempting SMEs, namely access to potential markets (recital
         5). Sixty per cent of enterprises which participated in fairs within the framework of common German stands would not have
         done so without the aid. The need for Saxony enterprises to participate in fairs is also justified by export rates, which
         are appreciably below the national average.
      
      70      Owing to the transition from a planned economy to a market economy, Saxony enterprises must, in the applicant’s submission,
         overcome numerous barriers to market entry. Promoting the participation of small and medium-sized enterprises in foreign fairs
         is therefore, from the aspect of economic policy, an essential objective of the notified aid scheme, which has enabled enterprises
         to have access to world markets.
      
      71      In the contested decision, the Commission refers to none of the arguments submitted by the applicant and by the Federal Republic
         of Germany, nor did it take the particular economic situation of Saxony into account.
      
      72      The Commission disputes the arguments put forward by the applicant.
      
      –       Findings of the Court
      73      The parties are divided on the question of the financing of repeated participation in fairs. The applicant observes that in
         considering the financing of such participation up to three times, as envisaged by the subprogramme in question, to be incompatible
         with the common market, the Commission failed to make use of its discretion. The applicant also claims that the Commission
         did not state why repeated financing could not be compatible with the common market, even in exceptional cases.
      
      74      In that regard, it should be observed that the Commission applied the criteria set out in the Regulation exempting SMEs and
         concluded that the subprogramme in question was not compatible with Article 5(b) of the Regulation exempting SMEs and could
         not be deemed compatible with the common market under Article 87(3)(c) EC either. 
      
      75      The applicant, for its part, submitted that the aid was necessary on account of the difficulties caused by the transition,
         in Saxony, to a market economy, which are reflected in the lack of capital necessary for small and medium-sized enterprises
         and also by export rates, which are appreciably below the national average. The objective of repeated participation in fairs
         or exhibitions is to penetrate foreign markets.
      
      76      As regards the applicant’s arguments concerning the transition to a market economy, it should be observed that they are confined
         to general references to the difficult economic situation in Saxony.
      
      77      It should also be borne in mind that similar arguments have been put forward in numerous cases concerning Article 87(2)(c) EC,
         which concerns the aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division
         of Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that division.
         
      
      78      However, the Court of Justice has interpreted that provision narrowly, stating that ‘Article [87](2)(c) [EC] cannot, without
         disregarding both the nature of that provision as a derogation and its context and objectives, permit full compensation for
         the undeniable economic backwardness suffered by the new Länder’ and that ‘the economic disadvantages caused by the division of Germany could only mean the economic disadvantages caused
         in certain areas of Germany by the isolation which the establishment of a physical frontier entailed, such as the breaking
         of communication links or the loss of markets as a result of the breaking-off of commercial relations between the two parts
         of German territory’ (Joined Cases C‑57/00 P and C‑61/00 P Freistaat Sachsen and Others v Commission [2003] ECR I‑9975, paragraphs 23 and 42). 
      
      79      As that specific provision of the Treaty has been interpreted restrictively, general references to the economic consequences
         of the division of Germany cannot serve to justify the compatibility with Article 87(3)(c) EC of aid the intensity of which
         exceeds that provided for in the Regulation exempting SMEs. 
      
      80      As for the applicant’s argument that the Commission ought to have compared the degree of market proximity of the fairs at
         issue in the present case and that of other situations giving rise to aid, it should be observed that such comparison is not
         strictly necessary. Market proximity is an objective criterion, not a relative one. In that regard, it should be observed
         that fairs are commercial events, which not only offer a wide choice of goods and services but are also often accompanied
         by a varied programme of activities and offer a large number of services to the public in order to attract a large number
         of visitors. Consequently, fairs are closely linked with the market, and indeed are confused with it.
      
      81      It follows that the Commission was correct to describe the measures in question, in the contested decision, as ‘directly serving
         the market’.
      
      82      Thus, as the Commission observes at recital 66 to the contested decision, the recipient of the aid, after having participated
         in such an event, must be in a position to decide in full knowledge of the facts whether it would be useful to participate
         again at its own expense.
      
      83      As regards the applicant’s arguments concerning the rate of exports, which are below the national average, and the need to
         conquer international markets, it should be borne in mind that even though, as stated at recital 16, the Regulation exempting
         SMEs does not exempt export aid generally, the costs of participating in commercial fairs are not normally regarded as export
         aid (see paragraph 4 above). The aid in question is therefore compatible in principle with the Regulation exempting SMEs.
         None the less, even though it is clear that small and medium-sized enterprises participate in fairs in order to promote their
         products and that participation in such events allows them, where appropriate, to increase the rate of exports, which is possible
         in the present context, the general references to the low rate of exports of the Land of Saxony cannot justify higher aid
         intensities than that provided for in the Regulation exempting SMEs.
      
      84      Consequently, the Commission was correct to take the view that aid intensities higher than that provided for in the Regulation
         exempting SMEs cannot be deemed compatible with the common market under Article 87(3)(c) EC.
      
      85      As regards the obligation to state reasons, it should be borne in mind that at recitals 66 and 67 to the contested decision
         the Commission stated that the subprogramme in question was not in line with Article 5(b) of the Regulation exempting SMEs,
         according to which the exemption is to apply only to the first participation of an enterprise in a particular fair or exhibition
         and the gross aid is not to exceed 50% of the costs. The Commission explains that limitation by the need to ensure the incentive
         effect of the aid, since, after a first jointly financed participation, it is reasonable to expect that a small or medium-sized
         enterprise will be in a position to assess whether it will be useful to repeat the participation at its own expense. The Commission
         also explains that a measure directly serving the market, such as participation in a fair or an exhibition, which exceeds
         the 50% aid ceiling cannot be deemed to be compatible with the common market under Article 87(3)(c) EC.
      
      86      Those considerations of the Commission clearly reflect its reasoning and thus satisfy the criteria laid down in the consistent
         case-law on the obligation to state reasons referred to at paragraph 27 above.
      
      87      The third part of the fourth plea must therefore be rejected.
      
       Fourth part, alleging incorrect assessment of the subprogramme ‘Cooperation’ and breach of the obligation to state reasons
      –       Arguments of the parties
      88      The applicant takes issue with the Commission for having considered that the subprogramme ‘Cooperation’ envisaged operating
         aid and should therefore be examined in the light of the Guidelines on national regional aid (OJ 1998 C 74, p. 9; ‘the Guidelines’),
         which require, in particular, that such aid be limited in time and progressively reduced (point 4.17).
      
      89      Contrary to the Commission’s contention, promotion measures do not entail operating aid, since the possibility of assuming
         the cost of the rent for cooperation offices or the wages of staff does not replace operating resources and does not generally
         reduce current expenditure. In the applicant’s submission, the measures envisaged subsidise only new additional costs connected
         with cooperation outside the enterprise.
      
      90      In that regard, the applicant submits that the Commission acted inconsistently with its normal practice, since already in
         the programme notified in 1992 aid for ‘staff costs, materials and travel’ of the body that was to implement the measures
         and common establishments had been reimbursed ‘to a fair degree’.
      
      91      The applicant maintains that the progressive reduction is intended to maintain the incentive nature of the aid without creating
         dependency. In the present case, the aid was so limited that it was incapable of creating any dependency. Thus, by continuing
         with the reduction of the amounts, the aid would lose its incentive nature.
      
      92      Furthermore, the Commission has never applied point 4.17 of the Guidelines strictly, as it has taken account of other factors
         that allowed it not to apply a progressive reduction.
      
      93      The applicant refers to the conditions set out at recital 16 to and in Article 1(2)(b) of the Regulation exempting SMEs and
         claims that the setting-up of an enterprise pool abroad is not the same as the establishment and operation of a distribution
         network within the meaning of that regulation, since the principal objective of those pools was to assess the prospects of
         success on new markets. The investigation of new markets and the establishment of initial business contacts, through an enterprise
         pool, should be authorised in so far as the promotion of the introduction of products is not regarded as export aid. The ‘direct
         nature’ necessary to the existence of export aid is absent, moreover.
      
      94      The Commission also made an error of assessment in confining the permissible aid intensity to 50%. The applicant refers to
         the arguments which it developed in the context of the preceding complaints and emphasises that the Commission did not analyse
         the specific features of the Saxony economy, the structure of which is characterised by the existence of small enterprises.
         The applicant also disputes the Commission’s considerations that the measures provided for in the context of the subprogramme
         ‘Cooperation’ were ‘directly serving the market’. The applicant states that the feasibility studies constitute only prospective
         studies intended to assess the potential of cooperation.
      
      95      The applicant submits that the Commission cannot declare that the establishment of enterprise pools abroad is incompatible
         with the common market in reliance on its previous practice in taking decisions, since it has authorised measures much closer
         to distribution, in the strict sense, abroad, since those measures directly supported the conclusion of contracts, than the
         measures envisaged in the present case.
      
      96      As regards the Commission’s observation at recital 69 to the contested decision that the Federal Republic of Germany ‘is free
         to support the measure “establishment of cooperation offices in Germany”‘as de minimis aid, the applicant submits that such an approach is unhelpful, specifically where it is a question of promoting cooperation,
         since, for example, the circle of potential beneficiaries wishing to cooperate is subject to permanent variations and is generally
         not sufficiently known or definable at the beginning of the promotion. A case-by-case approach is therefore inappropriate
         and that question too ought to have been the subject of reflection by the Commission.
      
      97      The Commission disputes the arguments put forward by the applicant.
      
      –       Findings of the Court
      98      The applicant’s principal argument concerns the operations and activities envisaged by the cooperation offices and the enterprise
         pools. The applicant observes that those pools must be distinguished from commercial representations and that the aid envisaged
         by the subprogramme at issue relating to the enterprise pools cannot be regarded as operating aid. 
      
      99      It should also be observed that the parties have submitted no factual elements concerning the establishment, geographic location,
         type of activities and results achieved by the cooperation offices and enterprise pools. 
      
      100    It is none the less unlikely that a small or medium-sized enterprise in the area, which still suffers difficulties associated
         with the transition to a market economy and which lacks its own funds, would invest in a cooperation office or an enterprise
         pool whose activities were not directly concerned with winning new markets. 
      
      101    Furthermore, it follows clearly from the documents supplied by the Commission in the annexes to the answers to the initial
         questions put by the Court that the purpose of establishing those offices was to promote exports, the financing of which is
         illegal not only under the Treaty but also under the WTO Agreement on Subsidies and Countervailing Measures, as stated at
         recital 70 to the contested decision.
      
      102    As regards the characterisation of the aid in question as operating aid, it should be observed that winning new markets and
         also efforts to remain on the market are part of the normal strategy of each enterprise wishing to maintain a lasting presence
         on the market. Expenditure is necessary in order to permit that continuous and extended presence on the market and State aid
         granted for those purposes will necessarily reduce the current expenditure of the small and medium-sized enterprises. Those
         contributions therefore come within the category of operating aid.
      
      103    Last, as regards the possibility, invoked by the applicant, that the aid in question will be authorised if practice is taken
         into account, the information provided by the Commission, in particular that the menu of regional aid in Germany expired on
         31 December 2003, whereas the programme at issue was to end later, must be considered sufficient. In addition, in previous
         decisions the Commission also explained that it derogated only exceptionally from the principle of progressive reduction.
      
      104    As regards the applicant’s argument relating to the de minimis rule, it must be rejected as ineffective, since the Commission’s reference to that rule in the contested decision was made
         purely for the sake of completeness. 
      
      105    When all the preceding considerations are taken into account, it must be held that the Commission was correct to consider
         that higher aid intensities than that provided for in the Regulation exempting SMEs cannot be deemed compatible with the common
         market under Article 87(3)(c) EC either. In addition, the Commission was correct to consider that, in so far as the subprogramme
         ‘Cooperation’ envisaged operating aid, it was incompatible with the common market. 
      
      106    As regards the reasoning in the contested decision relating to the subprogramme ‘Cooperation’, and in so far as the applicant
         does not put forward any specific argument in that regard, it must be observed that the Commission analysed the aid for the
         creation and operation of cooperation offices in Germany and the aid for the creation of enterprise pools inside and outside
         the Community separately. In the first place, the Commission characterised the aid for the establishment and operation of
         cooperation offices in Germany as operating aid that must be examined in the light of the Guidelines and satisfy all their
         conditions without exception, in particular the conditions of point 4.17. The Commission then explained the reasons why those
         conditions are not satisfied. In the second place, the Commission characterised the aid for the creation of enterprise pools,
         responsible for assisting small and medium-sized enterprises in studying foreign markets and penetrating those markets, as
         export aid, which is excluded from the scope of the Regulation exempting SMEs by Article 1(2)(b) of that regulation. The Commission
         added that maximum aid intensities of 80% to promote, in the context of that subprogramme, measures directly serving the market
         altered trading conditions to a degree contrary to the common interest and that that aspect of the measure could not be deemed
         compatible with the common market pursuant to Article 87(3)(c) EC.
      
      107    Those considerations clearly reflect the Commission’s reasoning and thus satisfy the criteria laid down in the consistent
         case-law concerning the obligation to state reasons referred to at paragraph 27 above.
      
      108    The fourth part of the fourth plea must therefore be rejected in its entirety.
      
       Fifth part, alleging incorrect assessment of the subprogramme ‘Design promotion’ and breach of the obligation to state reasons
      –       Arguments of the parties
      109    As regards the subprogramme ‘Design promotion’, the applicant claims that the Commission also takes as the sole criterion
         the aid intensity provided for in the Regulation exempting SMEs and refers to the arguments developed on the same subject
         in relation to the other subprogrammes. The applicant maintains that the Commission wrongly failed to use its discretion.
      
      110    The Commission disputes the arguments put forward by the applicant.
      
      –       Findings of the Court
      111    The applicant has put forward no specific arguments in the context of the present part, but confines itself to making reference
         to its arguments in relation to the other subprogrammes. 
      
      112    Consequently, as the applicant’s arguments in the context of the preceding parts have been rejected, in view of the fact that
         the Commission considers that the subprogramme at issue is incompatible with the common market for ‘reasons similar’ to those
         applied in the case of the other subprogrammes, it must also be held, with respect to the present part, that the Commission
         was correct to take the view that higher aid intensities than that provided for in the Regulation exempting SMEs cannot be
         deemed compatible with the common market under Article 87(3)(c) EC either.
      
      113    As regards the reasons stated in the contested decision for the subprogramme in question, it should be observed that the Commission
         stated at recital 41 that ‘the subprogramme … basically [fell] within the scope of Article 5 (consultancy and other services
         and activities) of [the] Regulation [exempting SMEs] but, since here too the aid intensities exceed[ed] the ceiling of 50%
         gross laid down in Article 5(b), the Commission had serious doubts as to its compatibility with the common market’. The Commission
         also considered at recital 73 to the contested decision that, for reasons similar to those applicable to the other subprogrammes,
         the subprogramme ‘Design promotion’ was not in line with the Regulation exempting SMEs and was incompatible with the common
         market in so far as it provided for consultancy services that exceeded the ceiling of 50% gross.
      
      114    In the absence of any specific arguments put forward by the applicant, it must be held that the abovementioned considerations
         of the Commission clearly reflect its reasoning and thus satisfy the criteria laid down in the case-law on the obligation
         to state reasons referred to at paragraph 27 above.
      
      115    The fifth part of the fourth plea must therefore be rejected.
      
      116    In the light of all the foregoing considerations, the contested decision, read as a whole, contains the analysis of the compatibility
         of the subprogrammes in question with the Treaty and states to the requisite legal standard the reasons on which it is based.
      
      117    Consequently, the fourth plea must be rejected in its entirety.
      
      118    Taking account of all the foregoing, the action must be dismissed in its entirety.
      
       Costs 
      119    In the judgment of this Court, the Commission was ordered to pay the costs. In the judgment of the Court of Justice costs
         were reserved. It is therefore for this Court to determine, in the present judgment, all the costs relating to the various
         proceedings, in accordance with Article 121 of the Rules of Procedure.
      
      120    Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been
         applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the
         costs, in accordance with the form of order sought by the Commission.
      
      On those grounds,
      THE GENERAL COURT (Fourth Chamber, Extended Composition)
      hereby:
      1.      Dismisses the action;
      2.      Orders Freistaat Sachsen (Germany) to bear its own costs and to pay those incurred by the European Commission, both before
            the General Court and before the Court of Justice.
      
               Czúcz
            
            
               Cremona
            
            
               Labucka
            
         
               Frimodt Nielsen 
            
             
            
                     O’Higgins
            
         Delivered in open court in Luxembourg on 14 July 2011.
      [Signatures]
      * Language of the case: German.