CELEX: C1998/209/29
Language: en
Date: 1998-07-04 00:00:00
Title: Appeal brought on 26 March 1998 by the French Republic against the judgment delivered on 27 January 1998 by the Second Chamber (Extended Composition) of the Court of First Instance of the European Communities in Case T-67/94 between Ladbroke Racing Ltd and the Commission of the European Communities (Case C-83/98 P)

4.7.98                EN                  Official Journal of the European Communities                                  C 209/15
Appeal brought on 26 March 1998 by the French                            French Government in its Statement in Intervention;
Republic against the judgment delivered on 27 January                    and based part of its reasoning on false premisses.
1998 by the Second Chamber (Extended Composition) of
the Court of First Instance of the European Communities
                                                                         Staggered payment of sums owed to the
in Case T-67/94 (1) between Ladbroke Racing Ltd and the
                                                                         Tr e a s u r y ( M e a s u r e 5 )
         Commission of the European Communities
                       (Case C-83/98 P)
                                                                         As explained in the Commission's Decision, this
                         (98/C 209/29)
                                                                         measure consisted in deferring the date for payment
                                                                         of the public levy by the PMU to the Treasury.
An appeal against the judgment delivered on 27 January
1998 by the Second Chamber (Extended Composition) of
the Court of First Instance of the European Communities                  Whereas the Commission found that the cash-flow
in Case T-67/94 between Ladbroke Racing Ltd and the                      facilities granted to the PMU amounted to an
Commission of the European Communities, was brought                      adjustment of the State levy arrangements in favour
before the Court of Justice of the European Communities                  of that body, which was consistent with the nature
on 26 March 1998 by the French Republic, represented by                  and general scheme of the system and did not
Kareen Rispal Bellanger, Jean-Marc Belorgey and FreÂdeÂrik               constitute State aid, the Court of First Instance held
Million, acting as agents, with an address for service                   that the Commission had misapplied Article 92(1) of
in Luxembourg at the French Embassy, 8, Boulevard                        the Treaty.
Joseph II.
                                                                         The French Government points out that in this regard
The Appellant claims that the Court should annul                         the Court of First Instance took no account of the
paragraph 1 of the operative part of the judgment under                  facts and arguments put forward in its Statement in
appeal and uphold the form of order sought at first                      Intervention. The French Government cannot do
instance by the Commission, that is to say, that                         other than repeat the criticisms voiced in respect of
Ladbroke's application should be dismissed.                              the preceding measure.
Pleas in law and main arguments adduced in support:
                                                                         Furthermore, at paragraph 79 of the judgment under
(A) Application of Article 92(1) of the Treaty                           appeal, the Court of First Instance errs in stating that
                                                                         (1) the contested Decision contains no statement to
     The 1.6 % reduction in the public levy to                           the effect that the change in the rules for payment of
     the benefit of the PMU (Measure 3)                                  the public levies to the Treasury did not constitute an
                                                                         ad hoc derogation, but was a general amendment to
     As described in the Commission's Decision, the                      the tax regime for the entire horse-racing sector and
     measure at issue consisted in the reallocation in                   (2) authorisation to defer payment was granted solely
     favour of the PMU of a share in the levy which had                  for the benefit of the PMU.
     previously gone to public funds.
     The Court of First Instance, after having interpreted               Unclaimed winnings made available to
     the Commission's Decision as declining to regard the                the racecourse undertakings (Measure 1)
     measure in question as State aid on the grounds that
     the measure was:                                                    As explained in the Commission's Decision, this
     (a) merely a limited reduction in the rate of taxation             measure consists in allowing the PMU to retain
           (approximately 1.6 %) and did not strengthen                  unclaimed winnings.
           the financial situation of an undertaking in a
           monopoly position;                                            The Commission essentially took the view that, in so
                                                                         far as that share of resources had always been
      (b) ongoing in character; and
                                                                         allocated to the PMU, it did not constitute a transfer
      (c) not aimed at financing an ad hoc operation but                 of State resources, despite the fact that the racecourse
           at increasing the resources of the recipients of             undertakings could no longer use the funds involved
           the non-public levies''                                       other than for certain purposes, and any sums
                                                                         remaining unused reverted to the State.
     went on to find that these criteria were not an
     appropriate basis for ruling out the existence of aid               The Court of First Instance found that the fact that
     for the purposes of Article 92(1).                                  the State controls the use of these funds Ð which
                                                                         would otherwise constitute the PMU's normal
     In the French Government's submission, in order to                  resources which it could deploy as it wished Ð meant
     reach that conclusion the Court of First Instance                   that they were State resources.
     made a number of errors in law; gave insufficient
     grounds, contrary to Article 190 of the Treaty, for
     certain steps in its reasoning; failed to state a position          In the French Government's submission, that
     with regard to certain crucial factors identified by the            constitutes a further error in law on the part of the
     Commission in its Decision and pleadings, and by the                Court of First Instance.
 ---pagebreak--- C 209/16             EN                   Official Journal of the European Communities                                    4.7.98
    Exemptions from the one-month delay                                   an aid measure which the Commission has held to be
    r u l e f o r t h e d e d u c t i o n o f VAT f r o m                 incompatible with the common market, it may itself,
    1 January 1989 onwards                                                in accordance with the fundamental principles of
                                                                          Community law, take this into account in order to
    The French Government points out that this measure                    waive reimbursement of the measure in question.
    enabled the PMU to deduct VAT paid on its
    purchases by reference to the month when those                   (1) OJ C 90, 26.3.1994, p. 23.
    purchases were made and not the following month,
    as would have been the normal rule.
    Since its inception in 1969, that cash-flow facility
    was offset, however, by the lodging of a permanent
    non-interest-bearing deposit with the Treasury.
                                                                     References for a preliminary ruling from the Consiglio di
                                                                     Stato (Council of State) by orders of that court of
    It is true, as the Court of First Instance observed, that
                                                                     20 January 1998, in the cases of (1) Questore (senior
    the Commission made a factual error in its decision
                                                                     police official), Macerata v. Claudio Peroni, (2) Questore,
    in so far as it stated that the Treasury deposit had
                                                                     Genoa v. Eliana Fasciolo, (3) Questore, Genoa v. Umberto
    only existed since 1989.
                                                                     Merlo, (4) Questore, Catanzaro v. Patrizia Caffarelli, (5)
                                                                     Questore, Milan v. Chiara Picerno, (6) Questore, Imperia
    The Commission considered that the measure at issue
                                                                     v. Gianluca Barrese, Andrea De Sanctis and SaS Riviera,
    constituted a State aid, compatible with the common
                                                                     (7) Questore, Pavia v. Giovanni Giacchetto and (8)
    market before 1989 by reason of the fact that any
                                                                                Questore, Savona v. Francesco Amato
    disturbance thereby caused to the common market
    was negligible. After 1 January 1989, by reason of                                 (Case C-86/98 to C-93/98)
    the existence of the compensatory deposit with the                                        (98/C 209/30)
    Treasury, the Commission took the view that it no
    longer constituted State aid.
                                                                     Reference has been made to the Court of Justice of the
    The Court of First Instance annulled the                         European Communities by orders of the Consiglio di Stato
    Commission's assessment regarding the period after               of 20 January 1998, which were received at the Court
    1 January 1989 on the basis of factors essentially               Registry on 13 March 1998, for a preliminary ruling in
    related to the preceding period and the mere finding             the cases of (1) Questore, Macerata v. Claudio Peroni,
    that the compensation for the year 1989 had been                 (2) Questore, Genoa v. Eliana Fasciolo, (3) Questore,
    inadequate.                                                      Genoa v. Umberto Merlo, (4) Questore, Catanzaro v.
                                                                     Patrizia Caffarelli, (5) Questore, Milan v. Chiara Picerno,
    However, the Court of First Instance could not rely              (6) Questore, Imperia v. Gianluca Barrese, Andrea De
    solely on those factors in order to infer that the               Sanctis and SaS Riviera, (7) Questore, Pavia v. Giovanni
    Commission's assessment in respect of the entire                 Giacchetto and (8) Questore, Savona v. Francesco Amato
    period after 1 January 1989 was erroneous. In this               on the following question:
    respect also the judgment of the Court of First
    Instance is vitiated by flawed reasoning and by an               Do the Treaty provisions on the provision of services
    inadequate statement of grounds.                                 preclude rules such as the Italian betting legislation in
                                                                     view of the social policy concerns and of the concern to
(B) Recovery of aid which is incompatible with the                   prevent fraud that justify it?
    common market
    Since the Commission found in its Decision that the
    PMU's exemption from the housing levy as from
    1989 was incompatible with the Treaty, but that the
    recipient was required to repay amounts involved
    only with effect from the date when the procedure                Action brought on 7 April 1998 by the Republic of
    was opened in 1991, by reason of the fact that it                      Austria against the Commission of the European
    could legitimately have entertained expectations                                           Communities
    based on the earlier decision of the Conseil d'EÂtat,                                    (Case C-99/98)
    the Court of First Instance essentially held that the                                     (98/C 209/31)
    Commission could not itself take into account the
    recipient's legitimate expectations, as relied upon by
    the Member State, in order to dismiss the                        An action against the Commission of the European
    requirement to repay aid which it deemed                         Communities was brought before the Court of Justice of
    incompatible with the common market.                             the European Communities on 7 April 1998 by the
                                                                     Republic of Austria, represented by Dr. Wolf Okresek,
    The French Government believes that the judgment                 Head of Section, Director of the Constitutional Section of
    of the Court of First Instance is also vitiated in this          the Office of the Federal Chancellor of the Republic of
    respect by an error of law and that when the                     Austria, with an address for service in Luxembourg at the
    Commission is advised by a Member State of                       office of Dr. Josef Magerl, Ambassador, Austrian Embassy,
    legitimate expectations on the part of the recipient of          3 Rue des Bains.