CELEX: 62011CC0630
Language: en
Date: 2013-03-21
Title: Opinion of Advocate General Bot delivered on 21 March 2013.#HGA Srl and Others (C‑630/11 P), Regione autonoma della Sardegna (C‑631/11 P), Timsas srl (C‑632/11 P) and Grand Hotel Abi d’Oru SpA (C‑633/11 P) v European Commission.#Appeals — Regional State aid — Aid to the hotel industry in Sardinia — New aid — Alteration to an existing aid scheme — Corrective decision — Possibility of adopting such a decision — Regulation (EC) No 659/1999 — Articles 4(5), 7(6), 10(1), 13(2), 16 and 20(1) — Incentive effect of the aid — Protection of legitimate expectations.#Joined Cases C‑630/11 P to C‑633/11 P.

Opinion of the Advocate-General
               
            
            Opinion of the Advocate-General
            1. The present cases should lead the Court to determine whether, for the purpose of considering whether regional State aid is compatible with the internal market, the requirement for an application for aid to be submitted before work begins is an essential requirement for proof of the incentive effect and therefore of the necessity of the aid.
            2. These cases concern appeals brought by HGA Srl and Others (2) (Case C-630/11 P), the Regione autonoma della Sardegna (C-631/11 P), Timsas Srl (3) (C-632/11 P) and Grand Hotel Abi d’Oru SpA (4) (C-633/11 P) (‘the appellants’), who seek the annulment of the judgment of the General Court of the European Union of 20 September 2011 in Joined Cases T-394/08, T-408/08, T-453/08 and T-454/08 Regione autonoma della Sardegna and Others  v Commission ECR, (5) dismissing their actions for the annulment of Commission Decision 2008/854/EC of 2 July 2008 on a State aid scheme ‘Regional Act No 9 of 1998 — Misuse of aid measure N 272/98’ C 1/04 (ex NN 158/03 and CP 15/2003). (6)
            3. In the contested decision, the European Commission found that State aid granted in accordance with a regional Italian law in breach of the obligation to submit an application for aid before starting work on the project in question is incompatible with the common market, that obligation being laid down by the Guidelines on national regional aid. (7)
            4. As that point is the essential element in the dispute, I shall deal only with the findings on that legal aspect of the case. The other provisions of the judgment under appeal appear to me to be confirmed beyond dispute.
            I – The legal context 
            5. The Guidelines codified the Commission’s practice in implementing the derogations laid down in Article 107(3) TFEU. 
            6. In 1998 the Commission published Guidelines on national regional aid. The last paragraph of point 4.2 of the 1998 Guidelines provides that ‘aid schemes must lay down that an application for aid must be submitted before work is started on the projects’.
            7. Point 6.1 of the Guidelines states as follows:
            ‘… [T]he Commission will assess the compatibility of regional aid with the common market on the basis of these Guidelines as soon as they are applicable. However, aid proposals which are notified before these Guidelines are communicated to the Member States and on which the Commission has not yet adopted a final decision will be assessed on the basis of criteria in force at the time of notification.’
            II – The facts giving rise to the disputes 
            8. On 10 March 1998 the new Guidelines laid down by the Commission for regional State aid were published in the Official Journal of the European Communities . Because of the point to which the present opinion exclusively relates, it is relevant to note the wording of point 4.2 of the Guidelines, which requires aid schemes to lay down that an application for aid must be submitted before work is started on the projects.
            9. On 11 March 1998 the Regione autonoma della Sardegna (Sardinia Autonomous Region) adopted Regional Law No 9 on incentives for the renovation and adaptation of hotel buildings and provisions amending and supplementing Regional Law No 40 of 14 September 1993 (credit measures for the hotel industry) (Legge regionale No 9, incentivi per la riqualificazione e l’adeguamento delle strutture alberghiere e norme modificative e integrative della legge regionale 14 settembre 1993, n. 40 (interventi creditizi a favore dell’industria alberghiera)), (8) granting initial investment aid for undertakings in the hotel sector in Sardinia (Italy), with a date of entry into force of 5 April 1998.
            10. By letter of 6 May 1998, the Italian authorities notified the Commission of the initial regional aid scheme in the form of Law No 9/1998.
            11. Following the Commission’s request for further information, the Italian authorities informed the Commission by letter of 22 June 1998 that the measures implementing the initial aid scheme would not be adopted until it had received the Commission’s approval.
            12. By letter of 28 September 1998, the Italian authorities informed the Commission that aid could be granted only for projects which were to be carried out ‘subsequently’ and that this condition would be confirmed in the measures implementing Law No 9/1998.
            13. By letter of 12 November 1998, the Commission decided to approve the regional aid scheme, (9) finding it compatible with the internal market within the meaning of Article 107(3)(a) TFEU. In the approval decision the Commission pointed out that applications for finance had to be submitted before work on projects began.
            14. The Regione autonoma della Sardegna then, on 29 April 1999, adopted Decree No 285 implementing Law No 9/1998. (10) The decree provided that the initial aid scheme was to be implemented by way of a procedure calling for the submission of applications, that the aid granted was to be for projects to be carried out after the submission of applications, and that eligible expenses had to be subsequent to the submission of applications. However, the transitional provisions included a provision which, contrary to the 1998 Guidelines which were laid down slightly more than one year previously, stated that, at the stage of the first application of Decree No 285/1999, expenses incurred after 5 April 1998, that is to say, after Law No 9/1998 entered into force, were eligible.
            15. On 27 July 2000 the Regione autonoma della Sardegna adopted Resolution No 33/3 (deliberazione No 33/3) rescinding Decree No 285/1999 on account of procedural defects, and Resolution No 33/4 (deliberazione No 33/4) establishing new provisions implementing the initial aid scheme, this time clearly complying with the requirements of the last paragraph of point 4.2 of the 1998 Guidelines, as the transitional provision had been withdrawn.
            16. On the same day the Regione autonoma della Sardegna adopted Resolution No 33/6 (deliberazione No 33/6), which provided that, in so far as the publication of Decree No 285/1999, which contained provisions not conforming with the rules of EU law, might have created an expectation on the part of potential recipients of aid that all work carried out after 5 April 1998 would be regarded as eligible, work carried out after that date should be taken into consideration on the first application of Law No 9/1998, provided that the work had been the subject of an application for aid in the context of the first annual call for applications.
            17. In response to an enquiry from the Commission concerning the compatibility of the existing aid schemes with the 1998 Guidelines, which were applicable from 1 January 2000, the Italian authorities confirmed to the Commission, in a letter of 2 November 2000, that they had adhered to the principle of the necessity of aid by referring to Resolution No 33/4, which expressly lays down the eligibility of expenditure incurred after the application for aid, without referring to Resolution No 33/6.
            18. After the first call for applications was published by the Regione autonoma della Sardegna on 29 December 2000, the Commission asked the Italian authorities, by letter of 28 February 2001, for additional information concerning the way in which the requirement for the application to be submitted before the project was carried out had been met in relation to the procedure for calls.
            19. By letter of 25 April 2001, the Italian authorities once again confirmed that the aid scheme complied with the 1998 Guidelines, enclosing once again Resolution No 33/4, but again without referring to Resolution No 33/6.
            20. Following a complaint of 21 February 2003 concerning misuse of the original aid scheme, the Commission asked the Italian authorities for additional information. They replied on 22 March 2003, referring for the first time to Resolution No 33/6.
            21. This was followed by a decision of the Commission of 3 February 2004 to initiate the formal examination procedure laid down by Article 108(2) TFEU concerning misuse of the original aid scheme. (11) The Commission found that the Italian authorities had not fulfilled the obligation in the approval decision or the requirements laid down in the 1998 Guidelines, and concluded that there could have been misuse of the original aid scheme within the meaning of Article 16 of Regulation (EC) No 659/1999, (12) and expressed doubts as to the compatibility of aid granted for investment schemes begun before the date of the application for aid.
            22. The Italian authorities informed the Commission of their observations on 19 April 2004 and 25 June 2005, and Grand Hotel Abi d’Oru did likewise on 30 April 2004.
            23. On 22 November 2006 the Commission notified the Italian Republic of its decision to correct and extend the scope of pending procedure C 1/2004 pursuant to Article 108(2) TFEU. (13) In particular, the Commission pointed out that Resolution No 33/6 had not been mentioned in the initiation decision although it was on the basis of that Resolution, and not Resolution No 33/4, that aid had been granted to 28 undertakings for investment projects begun before the date of the applications for aid. The Commission added that misuse of aid within the meaning of Article 16 of Regulation No 659/1999, to which the initiation decision refers, covered situations where a recipient of authorised aid uses it a way contrary to the conditions laid down in the decision to grant aid, and not situations where a Member State, by amending an existing aid scheme, creates new unlawful aid (Article 1(c) and (f) of Regulation No 659/1999).
            24. The Commission adopted the contested decision, in which it found that the aid scheme as implemented did not comply with the approval decision and that the aid projects which were begun before any application for aid was submitted should therefore be regarded as illegal.
            25. The operative part of the contested decision reads as follows:
            ‘Article 1 
            The State aid granted in accordance with Regional [Law] No 9 of 1998, unlawfully put into effect by [the Italian Republic] in Resolution … No 33/6 and in the first call for applications, is incompatible with the common market unless the recipient of the aid submitted an application for aid under the scheme before starting work on an initial investment project. 
            …’
            III – The procedure before the General Court and the judgment under appeal 
            26. By applications lodged at the Registry of the General Court on 16 and 25 September 2008 and on 3 and 6 October 2008 respectively, the Regione autonoma della Sardegna, SF Turistico Immobiliare Srl, Timsas and Grand Hotel Abi d’Oru brought actions for the total or partial annulment of the contested decision.
            27. According to the judgment under appeal, those applicants adduced a number of pleas in law, including that which is the subject of the present opinion, namely that there was a manifest error of assessment regarding the existence of an incentive effect. They claimed that the Commission had not correctly assessed the incentive effect of the contested scheme in view of the characteristics of the local market and in the light of the economic operators’ subjective understanding of the functioning of the support mechanism. The applicants put forward a number of arguments concerning the inapplicability of the 1998 Guidelines, the provisions relating to a previous aid scheme, the context in national law, the fact that the undertakings were certain, after the adoption of Law No 9/1998, that they would be able to obtain aid under that law, and the particular situation or conduct of the recipients of the contested aid.
            28. In paragraphs 213 to 215 of the judgment under appeal the General Court observed that the mere finding that the application for aid was submitted before work on the projects began is a straightforward, relevant and appropriate criterion enabling the Commission to presume the existence of an incentive effect. The General Court went on to point out that, in relation to that plea in law, it was no longer necessary to call into question that criterion, but only to consider whether the applicants had shown the existence, in the present case, of circumstances capable of ensuring the incentive effect for the scheme in qu estion, even if the application for aid was not submitted before work began on the projects in question. (14)
            29. The General Court rejected the applicants’ arguments relating to their particular situation or their conduct before it went on to consider their arguments relating generally to the scheme at issue.
            30. With regard to the argument that the mere entry into force of Law No 9/1998 gave the undertakings the certainty that they could receive aid, the General Court observed that the assessment of the compatibility of aid measures or of an aid scheme with the internal market falls within the exclusive competence of the Commission, subject to review by the European Union judicature, (15) and that, in the absence of a decision of the Commission on such compatibility, the mere adoption of national law measures providing for the establishment of an aid scheme cannot give potential beneficiaries under that scheme the certainty that they will be able to receive such aid. (16)
            31. The General Court concluded that that was the case with regard to the provisions of Law No 9/1998. The Court referred to the fact that the approval decision put an end to any hope that the potential beneficiaries might have had regarding the admissibility of projects begun before applications for aid were submitted, because the decision expressly ruled out the grant of aid, under the scheme established by Law No 9/1998, for such projects. (17)
            32. The General Court dismissed the actions brought by the applicants and ordered them to pay the Commission’s costs, except those incurred by reason of the intervention, and bear their own costs.
            IV – The procedure before the Court and the forms of order sought by the parties 
            33. By order of the President of the Court of 29 March 2012, Cases C-630/11 P to C-633/11 P were joined pursuant to Article 54 of the Rules of Procedure of the Court of Justice for the purposes of the written and oral procedure and of the judgment.
            34. HGA and Others and the Regione autonoma della Sardegna claim that the Court should:
            – set aside and/or vary the judgment under appeal;
            – annul the contested decision.
            35. Timsas and Grand Hotel Abi d’Oru claim that the Court should:
            – set aside the judgment under appeal;
            – annul the contested decision;
            – order the Commission to pay the costs of the proceedings both at first instance and before the Court of Justice.
            36. The Commission claims that the Court should:
            – dismiss the appeals;
            – order the appellants to pay the costs of the proceedings both at first instance and before the Court of Justice.
            V – The appeals 
            A – The appellants’ arguments concerning the ground of appeal alleging a manifest error of assessment regarding the existence of an incentive effect 
            37. The fourth ground of appeal of HGA and Others and the first ground of appeal of the Regione autonoma della Sardegna complain that the General Court failed to observe the principles of necessity and of the incentive effect. According to them, the judgment under appeal is unlawful in so far as the General Court took the view that, in order to find that there was no incentive effect and no necessity for aid, it was sufficient to apply first of all the criterion relating to the submission of the application for aid before work began on the projects, which it regarded as relevant and appropriate for assessing the incentive effect of an aid scheme. (18) In the appellants’ opinion, the General Court ought to have stated that the mere failure to submit an application for aid before work began on the projects cannot be considered sufficient for a finding that the aid had no incentive effect and was not necessary.
            38. According to HGA and Others and the Regione autonoma della Sardegna, other circumstances could have been taken into account by the Commission in its assessment of the compatibility of the aid, in so far as prior application for the aid is not a legal obligation but a mere criterion for assessment.
            39. First, they refer to the fact that the appellants had become certain, even before submitting their application, that they would obtain the aid because they undoubtedly fulfilled all the conditions laid down by Law No 9/1998.
            40. Secondly, HGA and Others and the Regione autonoma della Sardegna, claim that the fact that they knew that the conditions for the application of Article 107(3)(a) and/or (c) TFEU were fulfilled proved that there was an incentive effect.
            41. Thirdly, they claim that they could have arranged to carry out renovation programmes under aid schemes other than that of Law No 9/1998.
            42. The Regione autonoma della Sardegna then submits that, as the 1998 Guidelines were drawn up at the same time as Law No 9/1998, they could not have been taken into account by the undertakings and that, until the date of the approval decision, the system previously in force did not require a prior application for aid.
            43. Finally, HGA and Others, the Regione autonoma della Sardegna and Timsas rely on the judgment in Graphischer Maschinenbau  v Commission , (19) according to which the Commission cannot, from the mere fact that the development was commenced before the date of notification of the aid intended to finance it, infer that the aid does not satisfy the criterion as to incentive. (20)
            44. The Commission rejects all the appellants’ arguments as unfounded or inadmissible.
            B – My assessment 
            45. First of all, Graphischer Maschinenbau  v Commission  is absolutely not applicable to the present case.
            46. That judgment, cited by HGA and Others, the Regione autonoma della Sardegna and Timsas, according to which the Commission cannot infer from the mere fact that work was started before the date of notification of the aid intended to finance it that the aid does not satisfy the criterion as to incentive, (21) is not applicable to the present cases because the context of that case was totally different in so far as it related to the Community Guidelines on State aid for rescuing and restructuring firms in difficulty. (22) The firm in question whose financial situation was such that it needed aid for restructuring in order to ensure its viability could not be absolutely certain that it would receive aid for its restructuring programme in order to return to viability.
            47. Next, like the Commission in its response, I consider that HGA and Others and the Regione autonoma della Sardegna misconstrue the judgment under appeal.
            48. Contrary to the General Court, they submit that the mere failure to submit an application for aid before beginning work on the projects cannot be considered sufficient to conclude that the aid has no incentive effect and is not necessary.
            49. I note that, after observing that the criterion of whether the application for aid was submitted before work on the investment project began was a straightforward, relevant and appropriate criterion enabling the Commission to presume the existence of an incentive effect, (23) the General Court added that it was necessary to consider whether the appellants had shown that the scheme could guarantee an incentive effect, even if no application for aid was submitted before work began on the investment project. (24)
            50. Accordingly, the General Court went on to consider the various circumstances cited by the appellants and concluded that they were not capable of ensuring that the aid scheme had an incentive effect.
            51. Therefore, contrary to the appellants’ assertion, the General Court did not conclude that the criterion of non-submission of the application for aid before work begins must inevitably lead to exclusion of the incentive effect, without the possibility of proof of the contrary.
            52. However, in spite of the appellants’ misreading of the relevant passages of the judgment under appeal, the fact remains that the appellants intend, by that ground of appeal, to call into question the General Court’s assessment of the existence or otherwise of an incentive effect of the aid.
            53. In its reasoning, the General Court makes the criterion of submission of the aid application before the beginning of the work a presumption of the existence of an incentive effect, not an essential condition for the necessity of the aid.
            54. Even if the conclusion ultimately reached by the General Court is approved, that is to say, the rejection of the claim, I think that there is an error of law in the grounds set out by the General Court which should be rectified in the interest of future actions.
            55. For an aid to be found compatible with the internal market under Article 107(3) TFEU, it must comply with certain basic principles, one of which is the necessity of the aid.
            56. Generally speaking, it is the Commission alone that has the power to assess the compatibility of the aid with the internal market, subject to the unlimited jurisdiction of the European Union judicature in the case of proceedings before the courts. By assessing the general arrangement of the proposed system in relation to the objective pursued, the Commission must decide whether it is admissible overall.
            57. The principle of the necessity of the aid was affirmed by the Court in Philip Morris Holland v Commission . (25) According to that principle, aid without which the alleged objective would have been pursued in any case by the recipients cannot be found compatible with the internal market. (26)
            58. The incentive effect for undertakings of the aid in question is, in the final analysis, only the consequence of its necessity. Was it the aid authorised by the Commission that induced them to take part in the project? How then should the incentive effect be defined? Particularly as it is proof of the necessity of the aid, which is a fundamental requirement for the proposed scheme to be compatible with the Treaty.
            59. The principle of the necessity of the aid was given objective form by the Commission in the 1998 Guidelines, which help to ensure that the Commission acts in a manner which is transparent, foreseeable and consistent with legal certainty. (27)
            60. For example, if there are several aid schemes concerning the same region which are juxtaposed or succeed one another or overlap, the question whether an application, which must by nature, it seems to me, refer to a specific scheme approved by the Commission, (28) is to be submitted first, appears to be a criterion which excludes any doubt, dispute or legal uncertainty. That criterion in no way harms the undertakings because the fact that an application must be submitted first means, once that requirement is fulfilled, that necessity, the essential requirement, is automatically demonstrated and no dispute on that point can arise.
            61. As the General Court very rightly observes at paragraph 208 of the judgment under appeal, it is clear from the introductory section of the 1998 Guidelines that they lay down in a general and abstract manner the criteria used by the Commission for assessing whether regional aid is compatible with the internal market pursuant to Article 107(3)(a) and (c) TFEU, and consequently guarantee legal certainty for the Member States granting such aid. The condition in point 4.2 of the Guidelines that aid schemes must lay down that an application for aid must be submitted before work is started on the projects applies to all aid covered by the Guidelines, irrespective of its subject-matter, form or amount, and therefore seems to me to meet fully the requirement of certainty and to take into account the exact nature of the Commission’s role as called for by the nature of things.
            62. As the General Court very rightly observes in paragraph 215 of the judgment under appeal, the requirement in point 4.2 of the Guidelines aims to establish whether an aid measure has an incentive effect, and is therefore necessary, in a situation where it is not possible to conduct a full examination of all the economic aspects of the individual investment decision by the future beneficiaries of the aid. The General Court points out that it appears from the second to fourth paragraphs of point 2 of the 1998 Guidelines that in principle the Commission will approve regional aid only in the form of aid schemes, because it considers that individual ad hoc aid does not meet the requirement that the equilibrium between the resulting distortions of competition and the advantages of the aid in terms of the development of a less-favoured region can be guaranteed. The General Court adds that, when considering whether a notified aid scheme is compatible with the internal market, the particular circumstances of the various potential beneficiaries of the scheme and the specific projects for which they may apply for grants are by definition unknown to the Commission. The General Court concludes from this that, in order to assess the compatibility of an aid scheme with the internal market, the Commission must take as a basis criteria which are either independent of the particular circumstances of the future beneficiaries or uniform for all beneficiaries. The requirement for an application for aid to precede the start of work on the subsidised project makes it possible to ensure that the undertaking concerned has clearly manifested its intention to receive aid under the scheme in question before starting work on the project. That precludes the ex post  submission of applications for projects on which work has started irrespective of the existence of an aid scheme.
            63. It follows from the foregoing observations, which I endorse, that the Commission was entitled to set up an objective criterion for proving the existence of the incentive effect, and that the criterion chosen, that is to say, that the application for aid should precede the start of work on the projects, is an appropriate and relevant means of establishing the incentive effect of the offer, and not a mere presumption.
            64. Furthermore, in paragraph 169 of the judgment under appeal the General Court states that it is apparent from the pre-litigation procedure between the Commission and the Regione autonoma della Sardegna and from the latter’s conduct before the General Court that it was aware of the condition that the application for aid should be submitted before work began. The General Court states that, as the Commission rightly points out, the Regione autonoma della Sardegna never denied in correspondence with the Commission or before the Court that it had given an undertaking to grant aid only to projects which were begun after the submission of an application for aid.
            65. Therefore, the implicit recognition that a prior application for aid was an essential requirement seems to me to be confirmed by the exchanges between the Commission and the Italian authorities in the course of the pre-litigation procedure. It is clear from those exchanges that the Commission made enquiries from the Italian authorities on several occasions concerning their compliance with the principle of the necessity of aid, and the Italian authorities always confirmed that they accepted the criterion of a prior application. (29) In the course of those exchanges, which took place in the context of Article 4(3) TEU, which states that, pursuant to the principle of sincere cooperation, the European Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties, the Italian authorities, rather than negotiate an agreement with the Commission on the transitional scheme set up by Resolution No 33/6, simply concealed its existence. By adopting Decree No 285/1999 and Resolution No 33/6, the Italian authorities knew perfectly well that they were going against the approval decision because, as the General Court observes in paragraph 168 of the judgment under appeal, in the part of the approval decision given over to the description of the approved scheme, the Commission stated unambiguously that ‘undertakings must have submitted an application for financing before work is started on the investment projects’.
            66. Taking all those factors into account, it seems to me that the General Court erred in law in so far as it ought to have found not, as it did in paragraphs 215 and 226 of the judgment under appeal, that the criterion of a prior application is a simple, relevant and adequate criterion enabling the Commission to presume an incentive effect, but that the condition that an application for aid is made before work is done on the projects, after approval by the Commission, is an essential condition showing the necessity of the aid. That essential nature could be called into question and could make it possible to consider other circumstances only if, for the purpose of examining the compatibility of a particular aid scheme, documents originating from the Commission alone (correspondence, declarations, decisions, notifications, etc.) had been misleading with regard to the applicability or the conditions for the applicability of the last paragraph of point 4.2 of the 1998 Guidelines to the scheme in question. This conclusion seems to me to be confirmed by the additional precautions laid down by the Commission in the Guidelines on national regional aid for 2007-2013. (30)
            67. Although the General Court erred in law, the error is not such as to entail the annulment of the judgment under appeal.
            68. It has consistently been held that if the grounds of a judgment of the General Court disclose an infringement of EU law but its operative part is shown to be well founded on other legal grounds, the appeal must be dismissed. (31)
            69. It follows that as, in my view, the General Court’s dismissal of the appellants’ actions for annulment is well founded on the ground that there was no incentive effect and on the other grounds relating to issues which I have not considered, the error in law in paragraphs 215 and 226 of the judgment under appeal is not such as to invalidate that judgment. (32)
            70. Therefore I consider that the appeals must be dismissed.
            VI – Costs 
            71. Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded or where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs. Under Article 138(1) of the Rules of Procedure, applicable to appeal proceedings by virtue of Article 184(1) of the rules, 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 Commission has applied for costs against the appellants and the appellants have been unsuccessful, they should be ordered to pay the costs.
            VII – Conclusion 
            72. In the light of the foregoing considerations, I propose that the Court should:
            1. Dismiss the appeals;
            2. Order HGA Srl and Others, the Regione autonoma della Sardegna, Timsas Srl and Grand Hotel Abi d’Oru SpA to pay the costs.
            (1) . 
            (2)  – ‘HGA and Others’.
            (3)  – ‘Timsas’.
            (4)  – ‘Grand Hotel Abi d’Oru’.
            (5)  – ‘The judgment under appeal’.
            (6)  – OJ 2008 L 302, p. 9; ‘the contested decision’.
            (7)  – OJ 1998 C 74, p. 9; ‘the 1998 Guidelines’.
            (8)  – Bollettino ufficiale della Regione Autonoma della Sardegna  No 9, 21 March 1998; ‘Law No 9/1998’. 
            (9)  – ‘The approval decision’.
            (10)  – Bolletino ufficiale della Regione Autonoma della Sardegna  No 15, 8 May 1999; ‘Decree No 285/1999’.
            (11)  – OJ 2004 C 79, p. 4; ‘the initiation decision’.
            (12)  – Council Regulation (EC) No 659/1999 of 2 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1).
            (13)  – OJ 2007 C 32, p. 2.
            (14)  – Paragraph 226 of the judgment under appeal.
            (15)  – Case 78/76 Steinike & Weinlig [1977] ECR 595, paragraph 9; Case C-354/90 Fédération nationale du commerce extérieur des produits alimentaires and Syndicat national des négociants et transformateurs de saumon [1991] ECR I-5505, paragraph 14; and Case C-119/05 Lucchini  [2007] ECR I-6199, paragraph 52.
            (16)  – See, to that effect, Case C-5/89 Commission v Germany [1990] ECR I-3437, paragraph 14, and Case C-169/95 Spain  v Commission [1997] ECR I-135, paragraph 51.
            (17)  – Paragraphs 233 and 234 of the contested decision. 
            (18)  – Paragraph 226 of the judgment under appeal.
            (19)  – Case T-126/99 [2002] ECR I-2427.
            (20)  – Paragraph 43.
            (21)  – Ibid.
            (22)  – OJ 1997 C 283, p. 2.
            (23)  – Paragraph 215 of the judgment under appeal.
            (24)  – Paragraph 226 of the judgment under appeal.
            (25)  – Case 730/79 [1980] ECR 2671.
            (26)  – Paragraph 17.
            (27)  – Case C-310/99 Italy  v Commission [2002] ECR I-2289, paragraph 52.
            (28)  – I do not see how an application for authorisation which is not accepted by the Commission could have the slightest incentive effect as it would then be only a mere proposal.
            (29)  – Points 12 and 17 to 19 above.
            (30)  – OJ 2006 C 54, p. 13.
            (31)  – Case C-221/10 P Artegodan  v Commission [2012] ECR, paragraph 94 and the case-law cited.
            (32)  – See, to that effect, Case C-415/02 P Alcon  v OHIM  [2007] ECR I-3569, paragraph 41 and the case-law cited.
         
      
    ---documentbreak--- 
      
         OPINION OF ADVOCATE GENERAL
      BOT
      delivered on 21 March 2013 (
            1
         )
      
         Joined Cases C-630/11 P to C-633/11 P
      
      
         HGA Srl and Others (C-630/11 P),
      
         Regione autonoma della Sardegna (C-631/11 P),
      
         Timsas Srl (C-632/11 P),
      
         Grand Hotel Abi d’Oru SpA (C-633/11 P)
      
      
         v
      
      
         European Commission
      
      ‛Appeals — State aid — Regional aid approved by the Commission for the hotel industry in Italy (Regione autonoma della Sardegna) — Regulation (EC) No 659/1999 — Grants by the Italian authorities for projects commenced before the date of applications for aid — Formal examination procedure — Decision finding misuse of approved aid and declaring the grants incompatible with the internal market — Rectification decision finding the approved aid illegal — Guidelines — Criteria for compatibility of aid — Necessity of aid — Incentive effect’
      
               1. 
            
            
               The present cases should lead the Court to determine whether, for the purpose of considering whether regional State aid is compatible with the internal market, the requirement for an application for aid to be submitted before work begins is an essential requirement for proof of the incentive effect and therefore of the necessity of the aid.
            
         
               2. 
            
            
               These cases concern appeals brought by HGA Srl and Others (
                     2
                  ) (Case C-630/11 P), the Regione autonoma della Sardegna (C-631/11 P), Timsas Srl (
                     3
                  ) (C-632/11 P) and Grand Hotel Abi d’Oru SpA (
                     4
                  ) (C-633/11 P) (‘the appellants’), who seek the annulment of the judgment of the General Court of the European Union of 20 September 2011 in Joined Cases T-394/08, T-408/08, T-453/08 and T-454/08 Regione autonoma della Sardegna and Others v Commission ECR, (
                     5
                  ) dismissing their actions for the annulment of Commission Decision 2008/854/EC of 2 July 2008 on a State aid scheme ‘Regional Act No 9 of 1998 — Misuse of aid measure N 272/98’ C 1/04 (ex NN 158/03 and CP 15/2003). (
                     6
                  )
            
         
               3. 
            
            
               In the contested decision, the European Commission found that State aid granted in accordance with a regional Italian law in breach of the obligation to submit an application for aid before starting work on the project in question is incompatible with the common market, that obligation being laid down by the Guidelines on national regional aid. (
                     7
                  )
            
         
               4. 
            
            
               As that point is the essential element in the dispute, I shall deal only with the findings on that legal aspect of the case. The other provisions of the judgment under appeal appear to me to be confirmed beyond dispute.
            
         
         I – The legal context
      
      
               5.
            
            
               The Guidelines codified the Commission’s practice in implementing the derogations laid down in Article 107(3) TFEU.
            
         
               6.
            
            
               In 1998 the Commission published Guidelines on national regional aid. The last paragraph of point 4.2 of the 1998 Guidelines provides that ‘aid schemes must lay down that an application for aid must be submitted before work is started on the projects’.
            
         
               7.
            
            
               Point 6.1 of the Guidelines states as follows:
               ‘… [T]he Commission will assess the compatibility of regional aid with the common market on the basis of these Guidelines as soon as they are applicable. However, aid proposals which are notified before these Guidelines are communicated to the Member States and on which the Commission has not yet adopted a final decision will be assessed on the basis of criteria in force at the time of notification.’
            
         
         II – The facts giving rise to the disputes
      
      
               8.
            
            
               On 10 March 1998 the new Guidelines laid down by the Commission for regional State aid were published in the Official Journal of the European Communities. Because of the point to which the present opinion exclusively relates, it is relevant to note the wording of point 4.2 of the Guidelines, which requires aid schemes to lay down that an application for aid must be submitted before work is started on the projects.
            
         
               9.
            
            
               On 11 March 1998 the Regione autonoma della Sardegna (Sardinia Autonomous Region) adopted Regional Law No 9 on incentives for the renovation and adaptation of hotel buildings and provisions amending and supplementing Regional Law No 40 of 14 September 1993 (credit measures for the hotel industry) (Legge regionale No 9, incentivi per la riqualificazione e l’adeguamento delle strutture alberghiere e norme modificative e integrative della legge regionale 14 settembre 1993, n. 40 (interventi creditizi a favore dell’industria alberghiera)), (
                     8
                  ) granting initial investment aid for undertakings in the hotel sector in Sardinia (Italy), with a date of entry into force of 5 April 1998.
            
         
               10.
            
            
               By letter of 6 May 1998, the Italian authorities notified the Commission of the initial regional aid scheme in the form of Law No 9/1998.
            
         
               11.
            
            
               Following the Commission’s request for further information, the Italian authorities informed the Commission by letter of 22 June 1998 that the measures implementing the initial aid scheme would not be adopted until it had received the Commission’s approval.
            
         
               12.
            
            
               By letter of 28 September 1998, the Italian authorities informed the Commission that aid could be granted only for projects which were to be carried out ‘subsequently’ and that this condition would be confirmed in the measures implementing Law No 9/1998.
            
         
               13.
            
            
               By letter of 12 November 1998, the Commission decided to approve the regional aid scheme, (
                     9
                  ) finding it compatible with the internal market within the meaning of Article 107(3)(a) TFEU. In the approval decision the Commission pointed out that applications for finance had to be submitted before work on projects began.
            
         
               14.
            
            
               The Regione autonoma della Sardegna then, on 29 April 1999, adopted Decree No 285 implementing Law No 9/1998. (
                     10
                  ) The decree provided that the initial aid scheme was to be implemented by way of a procedure calling for the submission of applications, that the aid granted was to be for projects to be carried out after the submission of applications, and that eligible expenses had to be subsequent to the submission of applications. However, the transitional provisions included a provision which, contrary to the 1998 Guidelines which were laid down slightly more than one year previously, stated that, at the stage of the first application of Decree No 285/1999, expenses incurred after 5 April 1998, that is to say, after Law No 9/1998 entered into force, were eligible.
            
         
               15.
            
            
               On 27 July 2000 the Regione autonoma della Sardegna adopted Resolution No 33/3 (deliberazione No 33/3) rescinding Decree No 285/1999 on account of procedural defects, and Resolution No 33/4 (deliberazione No 33/4) establishing new provisions implementing the initial aid scheme, this time clearly complying with the requirements of the last paragraph of point 4.2 of the 1998 Guidelines, as the transitional provision had been withdrawn.
            
         
               16.
            
            
               On the same day the Regione autonoma della Sardegna adopted Resolution No 33/6 (deliberazione No 33/6), which provided that, in so far as the publication of Decree No 285/1999, which contained provisions not conforming with the rules of EU law, might have created an expectation on the part of potential recipients of aid that all work carried out after 5 April 1998 would be regarded as eligible, work carried out after that date should be taken into consideration on the first application of Law No 9/1998, provided that the work had been the subject of an application for aid in the context of the first annual call for applications.
            
         
               17.
            
            
               In response to an enquiry from the Commission concerning the compatibility of the existing aid schemes with the 1998 Guidelines, which were applicable from 1 January 2000, the Italian authorities confirmed to the Commission, in a letter of 2 November 2000, that they had adhered to the principle of the necessity of aid by referring to Resolution No 33/4, which expressly lays down the eligibility of expenditure incurred after the application for aid, without referring to Resolution No 33/6.
            
         
               18.
            
            
               After the first call for applications was published by the Regione autonoma della Sardegna on 29 December 2000, the Commission asked the Italian authorities, by letter of 28 February 2001, for additional information concerning the way in which the requirement for the application to be submitted before the project was carried out had been met in relation to the procedure for calls.
            
         
               19.
            
            
               By letter of 25 April 2001, the Italian authorities once again confirmed that the aid scheme complied with the 1998 Guidelines, enclosing once again Resolution No 33/4, but again without referring to Resolution No 33/6.
            
         
               20.
            
            
               Following a complaint of 21 February 2003 concerning misuse of the original aid scheme, the Commission asked the Italian authorities for additional information. They replied on 22 March 2003, referring for the first time to Resolution No 33/6.
            
         
               21.
            
            
               This was followed by a decision of the Commission of 3 February 2004 to initiate the formal examination procedure laid down by Article 108(2) TFEU concerning misuse of the original aid scheme. (
                     11
                  ) The Commission found that the Italian authorities had not fulfilled the obligation in the approval decision or the requirements laid down in the 1998 Guidelines, and concluded that there could have been misuse of the original aid scheme within the meaning of Article 16 of Regulation (EC) No 659/1999, (
                     12
                  ) and expressed doubts as to the compatibility of aid granted for investment schemes begun before the date of the application for aid.
            
         
               22.
            
            
               The Italian authorities informed the Commission of their observations on 19 April 2004 and 25 June 2005, and Grand Hotel Abi d’Oru did likewise on 30 April 2004.
            
         
               23.
            
            
               On 22 November 2006 the Commission notified the Italian Republic of its decision to correct and extend the scope of pending procedure C 1/2004 pursuant to Article 108(2) TFEU. (
                     13
                  ) In particular, the Commission pointed out that Resolution No 33/6 had not been mentioned in the initiation decision although it was on the basis of that Resolution, and not Resolution No 33/4, that aid had been granted to 28 undertakings for investment projects begun before the date of the applications for aid. The Commission added that misuse of aid within the meaning of Article 16 of Regulation No 659/1999, to which the initiation decision refers, covered situations where a recipient of authorised aid uses it a way contrary to the conditions laid down in the decision to grant aid, and not situations where a Member State, by amending an existing aid scheme, creates new unlawful aid (Article 1(c) and (f) of Regulation No 659/1999).
            
         
               24.
            
            
               The Commission adopted the contested decision, in which it found that the aid scheme as implemented did not comply with the approval decision and that the aid projects which were begun before any application for aid was submitted should therefore be regarded as illegal.
            
         
               25.
            
            
               The operative part of the contested decision reads as follows:
               ‘Article 1
               The State aid granted in accordance with Regional [Law] No 9 of 1998, unlawfully put into effect by [the Italian Republic] in Resolution … No 33/6 and in the first call for applications, is incompatible with the common market unless the recipient of the aid submitted an application for aid under the scheme before starting work on an initial investment project.
               …’
            
         
         III – The procedure before the General Court and the judgment under appeal
      
      
               26.
            
            
               By applications lodged at the Registry of the General Court on 16 and 25 September 2008 and on 3 and 6 October 2008 respectively, the Regione autonoma della Sardegna, SF Turistico Immobiliare Srl, Timsas and Grand Hotel Abi d’Oru brought actions for the total or partial annulment of the contested decision.
            
         
               27.
            
            
               According to the judgment under appeal, those applicants adduced a number of pleas in law, including that which is the subject of the present opinion, namely that there was a manifest error of assessment regarding the existence of an incentive effect. They claimed that the Commission had not correctly assessed the incentive effect of the contested scheme in view of the characteristics of the local market and in the light of the economic operators’ subjective understanding of the functioning of the support mechanism. The applicants put forward a number of arguments concerning the inapplicability of the 1998 Guidelines, the provisions relating to a previous aid scheme, the context in national law, the fact that the undertakings were certain, after the adoption of Law No 9/1998, that they would be able to obtain aid under that law, and the particular situation or conduct of the recipients of the contested aid.
            
         
               28.
            
            
               In paragraphs 213 to 215 of the judgment under appeal the General Court observed that the mere finding that the application for aid was submitted before work on the projects began is a straightforward, relevant and appropriate criterion enabling the Commission to presume the existence of an incentive effect. The General Court went on to point out that, in relation to that plea in law, it was no longer necessary to call into question that criterion, but only to consider whether the applicants had shown the existence, in the present case, of circumstances capable of ensuring the incentive effect for the scheme in question, even if the application for aid was not submitted before work began on the projects in question. (
                     14
                  )
            
         
               29.
            
            
               The General Court rejected the applicants’ arguments relating to their particular situation or their conduct before it went on to consider their arguments relating generally to the scheme at issue.
            
         
               30.
            
            
               With regard to the argument that the mere entry into force of Law No 9/1998 gave the undertakings the certainty that they could receive aid, the General Court observed that the assessment of the compatibility of aid measures or of an aid scheme with the internal market falls within the exclusive competence of the Commission, subject to review by the European Union judicature, (
                     15
                  ) and that, in the absence of a decision of the Commission on such compatibility, the mere adoption of national law measures providing for the establishment of an aid scheme cannot give potential beneficiaries under that scheme the certainty that they will be able to receive such aid. (
                     16
                  )
            
         
               31.
            
            
               The General Court concluded that that was the case with regard to the provisions of Law No 9/1998. The Court referred to the fact that the approval decision put an end to any hope that the potential beneficiaries might have had regarding the admissibility of projects begun before applications for aid were submitted, because the decision expressly ruled out the grant of aid, under the scheme established by Law No 9/1998, for such projects. (
                     17
                  )
            
         
               32.
            
            
               The General Court dismissed the actions brought by the applicants and ordered them to pay the Commission’s costs, except those incurred by reason of the intervention, and bear their own costs.
            
         
         IV – The procedure before the Court and the forms of order sought by the parties
      
      
               33.
            
            
               By order of the President of the Court of 29 March 2012, Cases C-630/11 P to C-633/11 P were joined pursuant to Article 54 of the Rules of Procedure of the Court of Justice for the purposes of the written and oral procedure and of the judgment.
            
         
               34.
            
            
               HGA and Others and the Regione autonoma della Sardegna claim that the Court should:
               
                        —
                     
                     
                        set aside and/or vary the judgment under appeal;
                     
                  
                        —
                     
                     
                        annul the contested decision.
                     
                  
         
               35.
            
            
               Timsas and Grand Hotel Abi d’Oru claim that the Court should:
               
                        —
                     
                     
                        set aside the judgment under appeal;
                     
                  
                        —
                     
                     
                        annul the contested decision;
                     
                  
                        —
                     
                     
                        order the Commission to pay the costs of the proceedings both at first instance and before the Court of Justice.
                     
                  
         
               36.
            
            
               The Commission claims that the Court should:
               
                        —
                     
                     
                        dismiss the appeals;
                     
                  
                        —
                     
                     
                        order the appellants to pay the costs of the proceedings both at first instance and before the Court of Justice.
                     
                  
         
         V – The appeals
      
      A – The appellants’ arguments concerning the ground of appeal alleging a manifest error of assessment regarding the existence of an incentive effect
      
      
               37.
            
            
               The fourth ground of appeal of HGA and Others and the first ground of appeal of the Regione autonoma della Sardegna complain that the General Court failed to observe the principles of necessity and of the incentive effect. According to them, the judgment under appeal is unlawful in so far as the General Court took the view that, in order to find that there was no incentive effect and no necessity for aid, it was sufficient to apply first of all the criterion relating to the submission of the application for aid before work began on the projects, which it regarded as relevant and appropriate for assessing the incentive effect of an aid scheme. (
                     18
                  ) In the appellants’ opinion, the General Court ought to have stated that the mere failure to submit an application for aid before work began on the projects cannot be considered sufficient for a finding that the aid had no incentive effect and was not necessary.
            
         
               38.
            
            
               According to HGA and Others and the Regione autonoma della Sardegna, other circumstances could have been taken into account by the Commission in its assessment of the compatibility of the aid, in so far as prior application for the aid is not a legal obligation but a mere criterion for assessment.
            
         
               39.
            
            
               First, they refer to the fact that the appellants had become certain, even before submitting their application, that they would obtain the aid because they undoubtedly fulfilled all the conditions laid down by Law No 9/1998.
            
         
               40.
            
            
               Secondly, HGA and Others and the Regione autonoma della Sardegna, claim that the fact that they knew that the conditions for the application of Article 107(3)(a) and/or (c) TFEU were fulfilled proved that there was an incentive effect.
            
         
               41.
            
            
               Thirdly, they claim that they could have arranged to carry out renovation programmes under aid schemes other than that of Law No 9/1998.
            
         
               42.
            
            
               The Regione autonoma della Sardegna then submits that, as the 1998 Guidelines were drawn up at the same time as Law No 9/1998, they could not have been taken into account by the undertakings and that, until the date of the approval decision, the system previously in force did not require a prior application for aid.
            
         
               43.
            
            
               Finally, HGA and Others, the Regione autonoma della Sardegna and Timsas rely on the judgment in Graphischer Maschinenbau v Commission, (
                     19
                  ) according to which the Commission cannot, from the mere fact that the development was commenced before the date of notification of the aid intended to finance it, infer that the aid does not satisfy the criterion as to incentive. (
                     20
                  )
            
         
               44.
            
            
               The Commission rejects all the appellants’ arguments as unfounded or inadmissible.
            
         B – My assessment
      
      
               45.
            
            
               First of all, Graphischer Maschinenbau v Commission is absolutely not applicable to the present case.
            
         
               46.
            
            
               That judgment, cited by HGA and Others, the Regione autonoma della Sardegna and Timsas, according to which the Commission cannot infer from the mere fact that work was started before the date of notification of the aid intended to finance it that the aid does not satisfy the criterion as to incentive, (
                     21
                  ) is not applicable to the present cases because the context of that case was totally different in so far as it related to the Community Guidelines on State aid for rescuing and restructuring firms in difficulty. (
                     22
                  ) The firm in question whose financial situation was such that it needed aid for restructuring in order to ensure its viability could not be absolutely certain that it would receive aid for its restructuring programme in order to return to viability.
            
         
               47.
            
            
               Next, like the Commission in its response, I consider that HGA and Others and the Regione autonoma della Sardegna misconstrue the judgment under appeal.
            
         
               48.
            
            
               Contrary to the General Court, they submit that the mere failure to submit an application for aid before beginning work on the projects cannot be considered sufficient to conclude that the aid has no incentive effect and is not necessary.
            
         
               49.
            
            
               I note that, after observing that the criterion of whether the application for aid was submitted before work on the investment project began was a straightforward, relevant and appropriate criterion enabling the Commission to presume the existence of an incentive effect, (
                     23
                  ) the General Court added that it was necessary to consider whether the appellants had shown that the scheme could guarantee an incentive effect, even if no application for aid was submitted before work began on the investment project. (
                     24
                  )
            
         
               50.
            
            
               Accordingly, the General Court went on to consider the various circumstances cited by the appellants and concluded that they were not capable of ensuring that the aid scheme had an incentive effect.
            
         
               51.
            
            
               Therefore, contrary to the appellants’ assertion, the General Court did not conclude that the criterion of non-submission of the application for aid before work begins must inevitably lead to exclusion of the incentive effect, without the possibility of proof of the contrary.
            
         
               52.
            
            
               However, in spite of the appellants’ misreading of the relevant passages of the judgment under appeal, the fact remains that the appellants intend, by that ground of appeal, to call into question the General Court’s assessment of the existence or otherwise of an incentive effect of the aid.
            
         
               53.
            
            
               In its reasoning, the General Court makes the criterion of submission of the aid application before the beginning of the work a presumption of the existence of an incentive effect, not an essential condition for the necessity of the aid.
            
         
               54.
            
            
               Even if the conclusion ultimately reached by the General Court is approved, that is to say, the rejection of the claim, I think that there is an error of law in the grounds set out by the General Court which should be rectified in the interest of future actions.
            
         
               55.
            
            
               For an aid to be found compatible with the internal market under Article 107(3) TFEU, it must comply with certain basic principles, one of which is the necessity of the aid.
            
         
               56.
            
            
               Generally speaking, it is the Commission alone that has the power to assess the compatibility of the aid with the internal market, subject to the unlimited jurisdiction of the European Union judicature in the case of proceedings before the courts. By assessing the general arrangement of the proposed system in relation to the objective pursued, the Commission must decide whether it is admissible overall.
            
         
               57.
            
            
               The principle of the necessity of the aid was affirmed by the Court in Philip Morris Holland v Commission. (
                     25
                  ) According to that principle, aid without which the alleged objective would have been pursued in any case by the recipients cannot be found compatible with the internal market. (
                     26
                  )
            
         
               58.
            
            
               The incentive effect for undertakings of the aid in question is, in the final analysis, only the consequence of its necessity. Was it the aid authorised by the Commission that induced them to take part in the project? How then should the incentive effect be defined? Particularly as it is proof of the necessity of the aid, which is a fundamental requirement for the proposed scheme to be compatible with the Treaty.
            
         
               59.
            
            
               The principle of the necessity of the aid was given objective form by the Commission in the 1998 Guidelines, which help to ensure that the Commission acts in a manner which is transparent, foreseeable and consistent with legal certainty. (
                     27
                  )
            
         
               60.
            
            
               For example, if there are several aid schemes concerning the same region which are juxtaposed or succeed one another or overlap, the question whether an application, which must by nature, it seems to me, refer to a specific scheme approved by the Commission, (
                     28
                  ) is to be submitted first, appears to be a criterion which excludes any doubt, dispute or legal uncertainty. That criterion in no way harms the undertakings because the fact that an application must be submitted first means, once that requirement is fulfilled, that necessity, the essential requirement, is automatically demonstrated and no dispute on that point can arise.
            
         
               61.
            
            
               As the General Court very rightly observes at paragraph 208 of the judgment under appeal, it is clear from the introductory section of the 1998 Guidelines that they lay down in a general and abstract manner the criteria used by the Commission for assessing whether regional aid is compatible with the internal market pursuant to Article 107(3)(a) and (c) TFEU, and consequently guarantee legal certainty for the Member States granting such aid. The condition in point 4.2 of the Guidelines that aid schemes must lay down that an application for aid must be submitted before work is started on the projects applies to all aid covered by the Guidelines, irrespective of its subject-matter, form or amount, and therefore seems to me to meet fully the requirement of certainty and to take into account the exact nature of the Commission’s role as called for by the nature of things.
            
         
               62.
            
            
               As the General Court very rightly observes in paragraph 215 of the judgment under appeal, the requirement in point 4.2 of the Guidelines aims to establish whether an aid measure has an incentive effect, and is therefore necessary, in a situation where it is not possible to conduct a full examination of all the economic aspects of the individual investment decision by the future beneficiaries of the aid. The General Court points out that it appears from the second to fourth paragraphs of point 2 of the 1998 Guidelines that in principle the Commission will approve regional aid only in the form of aid schemes, because it considers that individual ad hoc aid does not meet the requirement that the equilibrium between the resulting distortions of competition and the advantages of the aid in terms of the development of a less-favoured region can be guaranteed. The General Court adds that, when considering whether a notified aid scheme is compatible with the internal market, the particular circumstances of the various potential beneficiaries of the scheme and the specific projects for which they may apply for grants are by definition unknown to the Commission. The General Court concludes from this that, in order to assess the compatibility of an aid scheme with the internal market, the Commission must take as a basis criteria which are either independent of the particular circumstances of the future beneficiaries or uniform for all beneficiaries. The requirement for an application for aid to precede the start of work on the subsidised project makes it possible to ensure that the undertaking concerned has clearly manifested its intention to receive aid under the scheme in question before starting work on the project. That precludes the ex post submission of applications for projects on which work has started irrespective of the existence of an aid scheme.
            
         
               63.
            
            
               It follows from the foregoing observations, which I endorse, that the Commission was entitled to set up an objective criterion for proving the existence of the incentive effect, and that the criterion chosen, that is to say, that the application for aid should precede the start of work on the projects, is an appropriate and relevant means of establishing the incentive effect of the offer, and not a mere presumption.
            
         
               64.
            
            
               Furthermore, in paragraph 169 of the judgment under appeal the General Court states that it is apparent from the pre-litigation procedure between the Commission and the Regione autonoma della Sardegna and from the latter’s conduct before the General Court that it was aware of the condition that the application for aid should be submitted before work began. The General Court states that, as the Commission rightly points out, the Regione autonoma della Sardegna never denied in correspondence with the Commission or before the Court that it had given an undertaking to grant aid only to projects which were begun after the submission of an application for aid.
            
         
               65.
            
            
               Therefore, the implicit recognition that a prior application for aid was an essential requirement seems to me to be confirmed by the exchanges between the Commission and the Italian authorities in the course of the pre-litigation procedure. It is clear from those exchanges that the Commission made enquiries from the Italian authorities on several occasions concerning their compliance with the principle of the necessity of aid, and the Italian authorities always confirmed that they accepted the criterion of a prior application. (
                     29
                  ) In the course of those exchanges, which took place in the context of Article 4(3) TEU, which states that, pursuant to the principle of sincere cooperation, the European Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties, the Italian authorities, rather than negotiate an agreement with the Commission on the transitional scheme set up by Resolution No 33/6, simply concealed its existence. By adopting Decree No 285/1999 and Resolution No 33/6, the Italian authorities knew perfectly well that they were going against the approval decision because, as the General Court observes in paragraph 168 of the judgment under appeal, in the part of the approval decision given over to the description of the approved scheme, the Commission stated unambiguously that ‘undertakings must have submitted an application for financing before work is started on the investment projects’.
            
         
               66.
            
            
               Taking all those factors into account, it seems to me that the General Court erred in law in so far as it ought to have found not, as it did in paragraphs 215 and 226 of the judgment under appeal, that the criterion of a prior application is a simple, relevant and adequate criterion enabling the Commission to presume an incentive effect, but that the condition that an application for aid is made before work is done on the projects, after approval by the Commission, is an essential condition showing the necessity of the aid. That essential nature could be called into question and could make it possible to consider other circumstances only if, for the purpose of examining the compatibility of a particular aid scheme, documents originating from the Commission alone (correspondence, declarations, decisions, notifications, etc.) had been misleading with regard to the applicability or the conditions for the applicability of the last paragraph of point 4.2 of the 1998 Guidelines to the scheme in question. This conclusion seems to me to be confirmed by the additional precautions laid down by the Commission in the Guidelines on national regional aid for 2007-2013. (
                     30
                  )
            
         
               67.
            
            
               Although the General Court erred in law, the error is not such as to entail the annulment of the judgment under appeal.
            
         
               68.
            
            
               It has consistently been held that if the grounds of a judgment of the General Court disclose an infringement of EU law but its operative part is shown to be well founded on other legal grounds, the appeal must be dismissed. (
                     31
                  )
            
         
               69.
            
            
               It follows that as, in my view, the General Court’s dismissal of the appellants’ actions for annulment is well founded on the ground that there was no incentive effect and on the other grounds relating to issues which I have not considered, the error in law in paragraphs 215 and 226 of the judgment under appeal is not such as to invalidate that judgment. (
                     32
                  )
            
         
               70.
            
            
               Therefore I consider that the appeals must be dismissed.
            
         
         VI – Costs
      
      
               71.
            
            
               Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded or where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs. Under Article 138(1) of the Rules of Procedure, applicable to appeal proceedings by virtue of Article 184(1) of the rules, 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 Commission has applied for costs against the appellants and the appellants have been unsuccessful, they should be ordered to pay the costs.
            
         
         VII – Conclusion
      
      
               72.
            
            
               In the light of the foregoing considerations, I propose that the Court should:
               
                        1.
                     
                     
                        Dismiss the appeals;
                     
                  
                        2.
                     
                     
                        Order HGA Srl and Others, the Regione autonoma della Sardegna, Timsas Srl and Grand Hotel Abi d’Oru SpA to pay the costs.
                     
                  
         (
            1
         )	Original language: French.
      (
            2
         )	‘HGA and Others’.
      (
            3
         )	‘Timsas’.
      (
            4
         )	‘Grand Hotel Abi d’Oru’.
      (
            5
         )	‘The judgment under appeal’.
      (
            6
         )	OJ 2008 L 302, p. 9; ‘the contested decision’.
      (
            7
         )	OJ 1998 C 74, p. 9; ‘the 1998 Guidelines’.
      (
            8
         )	Bollettino ufficiale della Regione Autonoma della Sardegna No 9, 21 March 1998; ‘Law No 9/1998’.
      (
            9
         )	‘The approval decision’.
      (
            10
         )	Bolletino ufficiale della Regione Autonoma della Sardegna No 15, 8 May 1999; ‘Decree No 285/1999’.
      (
            11
         )	OJ 2004 C 79, p. 4; ‘the initiation decision’.
      (
            12
         )	Council Regulation (EC) No 659/1999 of 2 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1).
      (
            13
         )	OJ 2007 C 32, p. 2.
      (
            14
         )	Paragraph 226 of the judgment under appeal.
      (
            15
         )	Case 78/76 Steinike & Weinlig [1977] ECR 595, paragraph 9; Case C-354/90 Fédération nationale du commerce extérieur des produits alimentaires and Syndicat national des négociants et transformateurs de saumon [1991] ECR I-5505, paragraph 14; and Case C-119/05 Lucchini [2007] ECR I-6199, paragraph 52.
      (
            16
         )	See, to that effect, Case C-5/89 Commission v Germany [1990] ECR I-3437, paragraph 14, and Case C-169/95 Spain v Commission [1997] ECR I-135, paragraph 51.
      (
            17
         )	Paragraphs 233 and 234 of the contested decision.
      (
            18
         )	Paragraph 226 of the judgment under appeal.
      (
            19
         )	Case T-126/99 [2002] ECR I-2427.
      (
            20
         )	Paragraph 43.
      (
            21
         )	Ibid.
      (
            22
         )	OJ 1997 C 283, p. 2.
      (
            23
         )	Paragraph 215 of the judgment under appeal.
      (
            24
         )	Paragraph 226 of the judgment under appeal.
      (
            25
         )	Case 730/79 [1980] ECR 2671.
      (
            26
         )	Paragraph 17.
      (
            27
         )	Case C-310/99 Italy v Commission [2002] ECR I-2289, paragraph 52.
      (
            28
         )	I do not see how an application for authorisation which is not accepted by the Commission could have the slightest incentive effect as it would then be only a mere proposal.
      (
            29
         )	Points 12 and 17 to 19 above.
      (
            30
         )	OJ 2006 C 54, p. 13.
      (
            31
         )	Case C-221/10 P Artegodan v Commission [2012] ECR, paragraph 94 and the case-law cited.
      (
            32
         )	See, to that effect, Case C-415/02 P Alcon v OHIM [2007] ECR I-3569, paragraph 41 and the case-law cited.