CELEX: 62002CC0183
Language: en
Date: 2004-05-06 00:00:00
Title: Joined opinion of Advocate General Kokott delivered on 6 May 2004. # Daewoo Electronics Manufacturing España SA (Demesa) (C-183/02 P) and Territorio Histórico de Álava - Diputación Foral de Álava (C-187/02 P) v Commission of the European Communities. # Appeal - State aid - Tax measures - Legitimate expectations - New pleas in law. # Joined cases C-183/02 P and C-187/02 P. # Ramondín SA and Ramondín Cápsulas SA (C-186/02 P) and Territorio Histórico de Álava - Diputación Foral de Álava (C-188/02 P) v Commission of the European Communities. # Appeal - State aid - Tax measures - Misuse of powers - Statement of reasons - New pleas in law. # Joined cases C-186/02 P and C-188/02 P.

OPINION OF ADVOCATE GENERALKOKOTTdelivered on 6 May 2004(1)
         Case C-183/02 PDaewoo Electronics Manufacturing España SAvCommission of the European CommunitiesCase C-186/02 P  Ramondín SA and Ramondín Cápsulas SAvCommission of the European CommunitiesCase C-187/02 PTerritorio Histórico de Álava – Diputación Foral de ÁlavavCommission of the European CommunitiesCase C-188/02 PTerritorio Histórico de Álava – Diputación Foral de ÁlavavCommission of the European Communities
            (Appeal  –  State aid  –  Tax measures  –  Selective nature  –  Misuse of powers  –  Legitimate expectations)
            
      
         
      I –  Introduction
        1.        In the 1990s the Comunidad Autónoma del País Vasco (‘the Basque Country’) and the Territorio Histório de Álava, a regional
      authority in the Basque Country with legislative powers in the field of taxation (‘Álava’), provided support in the form of
      subsidies and tax concessions to two undertakings which located their businesses in Álava.
      
      
        2.        First, Daewoo Electronics Manufacturing España SA (Demesa) constructed a refrigerator factory in Álava. Secondly, Ramondín
      SA and Ramondín Cápsulas SA 
         			(2)
         		 established their plant manufacturing sealing capsules for bottles of wine and sparkling wine in that same region.
      
      
        3.        In both cases the Commission considered the assistance measures to be unlawful State aid and ordered its recovery. 
         			(3)
         		 By judgment of 6 March 2002, 
         			(4)
         		 the Court of First Instance annulled in part the Commission Decision concerning advantages granted to Demesa. In a further
      judgment of the same date, 
         			(5)
         		 it dismissed the actions for annulment of the decision concerning measures in favour of Ramondín.
      
      
        4.        By the present four appeals, the beneficiary undertakings and Álava appeal against the judgments at first instance in so far
      as the Court of First Instance did not annul the decisions. In all four proceedings the assessment of a tax credit granted
      by Álava of 45% of the sum invested in establishing the new plant is contested. In Cases C-186/02 P and C-188/02 P, concerning
      the aid for Ramondín, the lawfulness of a reduction in the tax base in favour of newly-established undertakings is at issue.
      
      
        5.        Although the proceedings before the Court have not thus far been joined, it is appropriate to examine the appeals together
      in one Opinion, since to a large extent the same questions of law arise in all the proceedings. Above all, they essentially
      raise questions of whether the Commission and the Court of First Instance correctly characterised the tax advantage granted
      by Álava as State aid, whether the Commission misused its powers and whether it failed to respect the principle of legitimate
      expectations.
      
      
      II –  The contested tax concessions
        6.        At paragraph 8 of its judgment in Demesa and at paragraph 4 of its judgment in Ramondín, the Court of First Instance sets out the provisions applicable in Álava concerning the tax credit of 45% of the cost of
      investment:
      ‘The Sixth Additional Provision of Norma Foral 22/1994 of 20 December 1994 (regional regulations) implementing the 1995 budget
      of the Territorio Histórico de Álava [Boletín Oficial del Territorio Histórico de Álava (hereinafter “BOTHA”) No 5, of 13 January 1995] reads as follows:
       Investments in new fixed assets made between 1 January and 31 December 1995, which exceed ESP 2 500 million, in accordance
      with the Diputación Foral de Álava agreement, will receive a tax credit of 45% of the cost of investment determined by the
      Diputación Foral de Álava, to be applied to the definitive amount of tax payable.
       Any tax credit not used up because it exceeds the amount of tax liability may be applied in the nine years following the year
      during which the Diputación Foral de Álava agreement was concluded.
       The Diputación Foral de Álava agreement will lay down the time-limits, and any restrictions applicable in each case.
       The advantages granted under this provision will be incompatible with any other tax advantage in respect of the same investment.
       The Diputación Foral de Álava will also determine the length of the investment process, which may include investments made
      during the preparation of the project which is at the root of the investment.’
      
      
        7.        Article 26 of the Norma Foral 24/1996 of 5 July 1996 (BOTHA No 90 of 9 August 1996) further provides, under certain conditions,
      for a progressively decreasing reduction, applicable over a number of years, in the basis of assessment. 
         			(6)
         		
      
      III –  Facts and procedure in Cases C-183/02 P and C-187/02 P (Demesa)
       A – Facts, administrative procedure and Commission Decision
        8.        The facts and procedure leading to the adoption of the Commission Decision – to the extent relevant for the appeals – may
      be summarised as follows. 
         			(7)
         		
      
        9.        On 13 March 1996, the Basque authorities and Daewoo Electronics Co. Ltd (‘Daewoo Electronics’), the parent company of Demesa,
      concluded a Cooperation Agreement whereby Daewoo Electronics undertook to construct a refrigerator manufacturing plant in
      the Basque Country and the Basque regional authorities undertook in return to support the investment by providing a number
      of grants. Investments amounting to ESP 11 835 600 000 (approximately EUR 71 million) were to be made and 745 jobs were to
      be created. Demesa began constructing the manufacturing plant in November 1996.
      
      
        10.      In addition to the grants provided by the Basque Country, which are no longer relevant in the context of the appeal, Álava,
      by Decision No 737/1997 of 21 October 1997, granted Demesa a tax credit of 45% of the cost of the investment, in accordance
      with Norma Foral 24/1996.
      
      
        11.      After having received in June 1996 complaints from several associations of domestic appliance manufacturers, the Commission
      initiated an administrative procedure, which was closed on 24 February 1999 when the Commission adopted Decision 1999/718. 
         			(8)
         		
      
        12.      The Commission concluded in Article 1(d) of the decision that the tax credit of 45% is State aid incompatible with the common
      market. Under Article 2(1)(b) of the decision Spain is to take the necessary measures to withdraw from the beneficiary company
      the benefits deriving from the tax credit.
      
      
       B – Judgment of the Court of First Instance
        13.      At paragraphs 144 to 170 of its judgment in Demesa, the Court of First Instance rejects the pleas challenging the abovementioned provisions of the decision. In particular,
      it finds that the Commission correctly categorised the measure as selective, since the Álava authorities enjoy a certain discretion
      in deciding whether or not to grant the tax credit and since the measure only benefited large undertakings, capable of making
      investments of at least ESP 2 500 million. Moreover the Court of First Instance rejects the argument that the measure is justified
      by the nature and overall structure of the tax system.
      
      
        14.      The Court of First Instance concludes at paragraphs 233 to 239 that as regards the tax credit the beneficiary companies cannot
      successfully rely on the principle of legitimate expectations.
      
      
       C – Appeal and procedure before the Court of Justice 
        15.      On 16 May 2002, Demesa (Case C-183/02 P) and Álava (Case C-187/02 P) both lodged appeals against the judgment of the Court
      of First Instance. By order of 23 October 2003 the Court granted the Basque Country leave to intervene in support of the form
      of order sought by Álava in Case C-187/02 P. The appellants claim in Cases C‑183/02 P and C-187/02 P that the Court should:
      (1)     set aside the judgment of the Court of First Instance of 6 March 2002 in Joined Cases T-127/99, T-129/99 and T-148/99;
      (2)     in accordance with the form of order sought at first instance, decide, in particular, to annul Article 1(d) and Article 2
      of the Commission Decision of 24 February 1999;
      (3)     in the alternative, refer the case back to the Court of First Instance for judgment;
      (4)     order the Commission to pay the costs of the proceedings.
      
      
        16.      The Basque Country claims in Case C-187/02 P that the Court should:
      (1)     set aside the judgment of the Court of First Instance of 6 March 2002 in so far as it finds that the tax credit corresponding
      to 45% of the investment costs under Norma Foral of Álava 22/1994 constitutes State aid within the meaning of Article 87 EC;
      (2)     order the Commission to pay the costs of the proceedings.
      
      
        17.      The Commission claims in Cases C-183/02 P and C-187/02 P that the Court should:
      (1)     dismiss the appeals;
      (2)     order the appellants to pay the costs of the proceedings.
      
      
        18.      Demesa initially put forward three grounds of appeal: (1) error of law in characterising the tax credit as State aid; (2)
      error of law in characterising it as new aid; and (3) error of law in refusing to apply the principle of protection of legitimate
      expectations. By letter of 20 February 2004, Demesa withdrew the first ground of appeal in part and the second ground of appeal
      in full.
      
      
        19.     Álava also initially criticised the errors of law alleged by Demesa in its first and second grounds of appeal; however, by
      letter of 20 February 2004 it withdrew those grounds of appeal to the same extent as Demesa. In the meantime, Álava bases
      its appeal on a failure to state the grounds of the judgment where the Court of First Instance examines the alleged misuse
      of powers by the Commission.
      
      
      IV –  Facts and procedure in Cases C-186/02 P and C-188/02 P (Ramondín)
       A – Facts, administrative procedure and Commission Decision 
         			(9)
         		
        20.      In 1997, Ramondín decided to transfer its industrial plant for the manufacture of capsules used for sealing bottles from Logroño
      (Comunidad Autónoma de La Rioja; ‘La Rioja’) to Laguardia in Álava. By Decision No 738/1997 Álava granted Ramondín a tax credit
      corresponding to 45% of the amount of the investment involved in locating in Álava. In addition, as a newly-established undertaking,
      Ramondín also benefited from the reduction in the tax base.
      
      
        21.      Following a complaint from La Rioja concerning those support measures, the Commission carried out an administrative procedure,
      which was closed on 22 December 1999 when the Commission adopted Decision 2000/795. 
         			(10)
         		
      
        22.      In Article 2(a) and (b) of the decision, the Commission declared the aid in favour of Ramondín in the form of a reduction
      in the tax base and – in part – the tax credit corresponding to 45% of the cost of the investment incompatible with the common
      market. Under Article 3(1) of the decision, Spain is required to recover the aid.
      
      
       B – Judgment of the Court of First Instance
        23.      The Court of First Instance dismissed the actions brought by Ramondín and Álava. By way of grounds, it states at paragraphs
      23 to 65 of the judgment, as in the passage from the judgment in Demesa referred to earlier, that the Commission correctly characterised the tax credit as a measure of a selective nature which
      cannot be justified by the nature and the overall structure of the tax system.
      
      
        24.      Further, the Court of First Instance rejects the plea that the Commission misused its powers in investigating the measure
      within the framework of its review of State aid instead of proposing harmonisation measures on the basis of Articles 96 EC
      and 97 EC (paragraphs 84 and 85 of the judgment).
      
      
       C – Appeal and procedure before the Court
        25.      Ramondín (Case C-186/02 P) and Álava (Case C-188/02 P) lodged appeals against the judgment of the Court of First Instance
      on 15 and 16 May 2002 respectively. By order of 6 March 2003, the Court granted La Rioja leave to intervene in support of
      the form of orders sought by the Commission in Cases C‑186/02 P and C-188/02 P. The appellants claim in Cases C-186/02 P and
      C‑188/02 P that the Court should:
      (1)     set aside the judgment of the Court of First Instance of 6 March 2002 in Joined Cases T-92/00 and T-103/00;
      (2)     annul the Commission Decision of 22 December 1999 in so far as it declares the tax concessions provided for by Normas Forales
      22/1994 and 24/1996 in favour of Ramondín SA and Ramondín Cápsulas SA incompatible with the common market and requires Spain
      to recover them;
      (3)     order the Commission to pay the costs of the proceedings.
      
      
        26.      The Commission contends in Cases C-186/02 P and C-188/02 P, as does La Rioja,  that the Court should:
      (1)     dismiss the appeals; and
      (2)     order the appellants to pay the costs of the proceedings.
      
      
        27.      By letter of 18 February 2004, Ramondín withdrew three of its four initial grounds of appeal. Ramondín continues to pursue
      only the complaint that the Commission allegedly misused its powers by bringing about de facto harmonisation of tax law within
      the framework of the review of aid.
      
      
        28.      Following a partial withdrawal, communicated by letter of 20 February 2004, Álava based its appeal in Case C-188/02 P on the
      same grounds as it maintains in Case C-187/02 P.
      
      
      V –  Legal assessment
       A – Breach of Article 87 EC
       1. Arguments of the parties
      
        29.      In the three Cases C-183/02 P, C-187/02 P and C-188/02 P it is contended on the basis of the same arguments that the Commission
      and the Court of First Instance erred in law in characterising the tax credit and – in Cases C-186/02 P and C-188/02 P – also
      the reduction in the tax base as State aid within the meaning of Article 87(1) EC.
      
      
        30.      In that context, the appellants originally challenged the findings of the Court of First Instance as to the selective nature
      of the measures and as to their justification by reason of the nature and the overall structure of the tax system.
      
      
        31.      In their notice of withdrawal they are agreed that the ground of appeal is withdrawn in part. The reason for that partial
      withdrawal is that following the decisions at issue in these proceedings the Commission adopted two further decisions in which
      it characterised the provisions concerning the tax credit 
         			(11)
         		 and the reduction in the tax base 
         			(12)
         		 as constituting in themselves State aid. Four actions against those decisions (brought inter alia by Álava) are currently
      pending before the Court of First Instance. 
         			(13)
         		 The appellants’ intention in withdrawing their pleas in law in part was to prevent the Court of Justice from considering,
      on the occasion of the present proceedings in respect of specific individual aid, whether the aid schemes infringe Article
      87 EC. Rather, they wish the Court of First Instance first to consider the contested tax provisions in those cases in which
      they are directly in issue.
      
      
        32.      The appellants state that the ground of appeal is being maintained only in so far as an incorrect application of Article 87
      EC is alleged, albeit at an earlier stage than that of the characterisation of the measures as aid. The Court should consider
      whether, as tax provisions whereby industrial policy objectives are pursued, the measures even fall within the scope of Article
      87 EC.
      
      
        33.      It is indeed the case that the Court of First Instance found that those circumstances did not deprive the measures of their
      nature as aid. However in the appellants’ view, by applying the test of Article 87 EC the Court of First Instance approached
      the argument from an incorrect perspective, namely within the framework of the conditions of application of Article 87 EC.
      Priority must be given to the question whether before the adoption of the Conclusions of the Ecofin Council of 1 December
      1997 
         			(14)
         		 and the Commission Notice of 10 December 1998 on the application of the State aid rules to measures relating to direct business
      taxation 
         			(15)
         		 the law on State aid was applicable to such tax provisions.
      
      
        34.      In their response to the partial withdrawal, the Commission and La Rioja take the view that the appellants have merely reformulated
      their original arguments. They emphasise that it is not necessary for the Court of First Instance first to decide on the characterisation
      of the aid scheme. The appellants are seeking to postpone for as long as possible a decision on the central question. The
      Court should now resolve the substantive issue so that its interpretation of the law can be taken into account in the proceedings
      before the Court of First Instance which have been suspended pending the judgment of the Court in the present cases.
      
      
       2. Assessment
      
        35.      The appellants’ arguments concerning their partial withdrawal are anything but clear – this applies in particular to the additional
      remarks of Álava’s representative at the hearings. In so far as may be ascertained, however, they no longer contest the finding
      of the Court of First Instance that the tax credit and the reduction of the tax base constitute selective measures and are
      therefore measures favouring certain undertakings or the production of certain goods within the meaning of Article 87(1) EC
      which are not justified by the nature or overall scheme of the tax system.
      
      
        36.      Nevertheless, during the oral procedure Álava’s representative referred on each occasion to a passage in the appeal which
      relates to the arguments concerning the measure’s selective nature. It is stated in that passage that the minimum level of
      investment, which is a condition for the grant of the tax credit, constitutes an objective criterion reflecting a specific
      economic policy choice. That argument is however placed in a completely new context by the notice of partial withdrawal. It
      is now supposed to demonstrate that tax provisions which pursue an economic policy objective fall from the outset outside
      the scope of Article 87 EC.
      
      
        37.      The appellants’ intention that the question of the selectivity of the aid provisions should no longer be raised in the present
      cases is also expressed by their reference to the supposed logical priority of assessing the conformity of the aid regime
      with Article 87 EC in the cases before the Court of First Instance which directly deal with this matter.
      
      
        38.      The Court is bound by the parties’ intentions and in the present cases can no longer consider whether the Court of First Instance
      in its judgments or the Commission in its decisions made errors of law in their characterisation of the measures as selective.
      
      
        39.      From the point of view of procedural economy it may be regrettable that that question of law, which is a preliminary issue
      in numerous proceedings pending before the Court of First Instance cannot be conclusively resolved at this stage. However,
      the procedural rules do not allow the Court any discretion in allowing the withdrawal of an appeal. Rather, pursuant to Article
      118 read with Article 78 of the Rules of Procedure, the withdrawal (in full) of an appeal automatically results in the case
      being removed from the register. It therefore follows, when those provisions are applied to a partial withdrawal, that the
      Court is likewise unable to make a determination in respect of the parts which have been withdrawn. That is after all an expression
      of the parties’ freedom of action.
      
      
        40.      It must be pointed out, merely for the sake of completeness, that that procedural amendment will not delay the application
      of Community law on aid, as suggested by the Commission. If none of the other grounds of appeal is successful, then once the
      Court has delivered judgment the decisions which are contested in these cases will be enforceable in so far as they were not
      annulled by the Court of First Instance. The aid covered by those decisions must therefore definitively be repaid even if
      it emerges as a result of other cases before the Court of First Instance that the tax provisions applied do not in fact constitute
      aid. 
         			(16)
         		 Since actions in the Community Courts do not have suspensory effect, all decisions in which the Commission orders recovery
      of aid must, irrespective of the lodging of an action, be immediately enforced in any event if suspension of enforcement has
      not been ordered by the Court.
      
      
        41.      It remains to be resolved whether the part of that ground of appeal which according to their partial withdrawal the appellants
      wish to maintain was in fact raised before the Court of First Instance or whether it constitutes an inadmissible new plea
      in law.
      
      
        42.      According to consistent case-law, in an appeal the Court’s jurisdiction is confined to a review of the findings of law on
      the pleas argued before the Court of First Instance. 
         			(17)
         		 To allow a party to put forward for the first time before the Court of Justice a plea in law which it has not raised before
      the Court of First Instance would be to allow it to bring before the Court a case of wider ambit than that which came before
      the Court of First Instance.
      
      
        43.      It is true that the appellants argued at first instance that the contested provisions constitute tax measures reflecting an
      economic policy choice. They further argued that the provisions are in any event justified by the nature and the overall structure
      of the tax system.
      
      
        44.      The Court of First Instance considers in each of the judgments under appeal the economic policy considerations which are said
      to be the basis for the measures adopted by Álava. However, it evaluates those objectives – in accordance with the applicant’s
      arguments – for the purposes of determining the selectivity of the provisions (paragraph 51 of the judgment in Ramondín) and their justification by reason of the nature or overall structure of the tax system (paragraphs 167 and 168 of the judgment
      in Demesa).
      
      
        45.      However, the applicants did not allege in any of the proceedings at first instance that the tax measures were excluded as
      such from the scope of the law on State aid. Also, the argument that Article 87 EC has applied to tax measures only since
      the Ecofin Conclusions of 1 December 1997 and since publication of the abovementioned Commission Notice was not raised before
      the Court of First Instance, but appeared for the first time in the notices of partial withdrawal of the appeals.
      
      
        46.      Thus, by means of their notices of withdrawal the appellants do not confine their appeal to specific aspects of the plea concerning
      a breach of Article 87 EC which have been already argued. Rather, they are raising a new plea in law before the Court.
      
      
        47.      The ground of appeal concerning the breach of Article 87 EC, as amended by the notices of withdrawal, must therefore be rejected
      as inadmissible. 
      
      
        48.      Only in the alternative must it be noted that even if the ground of appeal were to be admissible it would in substance be
      unsuccessful.
      
      
        49.      According to consistent case-law, the expression ‘State aid’ includes not only positive benefits, that is to say subsidies,
      but also measures which in various forms reduce the burdens which an undertaking usually has to bear. 
         			(18)
         		
      
        50.      Such State subsidies are not excluded from the outset from the scope of the provisions on aid simply because they are classified
      as economic policy 
         			(19)
         		 or tax law measures. The Court, in particular in its judgment in Banco Exterior de España, 
         			(20)
         		 delivered in 1994, that is to say, before the tax concessions were granted to Demesa and Ramondín, has established beyond
      doubt that tax measures can constitute State aid. In that judgment, it observes:
      ‘that a measure by which the public authorities grant to certain undertakings a tax exemption which, although not involving
      a transfer of State resources, places the persons to whom the tax exemption applies in a more favourable financial situation
      than other taxpayers constitutes State aid within the meaning of Article 92(1) of the Treaty [now Article 87 EC].’
      
      
        51.      For the purpose of applying Article 87 EC to national tax provisions, there was no need for the Council or the Commission
      to take any further measures. The fact that the Commission may have only embarked upon a systematic investigation of tax measures
      with regard to infringement of Article 87 EC at a particular time does not also preclude tax concessions granted before that
      time from being measured against the yardstick of the provisions on aid. 
         			(21)
         		
      
       B – Misuse of powers
       1. Admissibility 
      
        52.      Ramondín bases its appeal (Case C-186/02 P) on the submission that the Court of First Instance erred in law in rejecting its
      plea alleging misuse of powers. Álava advances that ground of appeal both in Case C-187/02 P and in Case C‑188/02 P and in
      that context it further contests the failure to state sufficient grounds in the judgments of the Court of First Instance.
      
      
      
        53.      It must be noted at the outset that Álava did not put forward those arguments in Case T-127/99 at first instance and that
      the Court of First Instance therefore did not consider them in its judgment in Demesa. Accordingly, the corresponding ground of appeal in Case C-187/02 P must be rejected as inadmissible, for the reasons set
      out at point 42 above. 
      
      
        54.      In Case T-92/00, Álava put forward the corresponding plea for the first time only in its reply. However, Ramondín based its
      action (Case T-103/00) from the outset on the argument of misuse of powers and the Court of First Instance dealt with that
      plea in its judgment in Ramondín  after the two cases had been joined. Therefore, in its appeal in Case C-188/02 P, which is directly against the judgment in
      Joined Cases T-92/00 and T-103/00, Álava is able to challenge the findings of the Court of First Instance with regard to that
      plea without the scope of the case being extended by reference to the proceedings at first instance. 
      
      
       2. Arguments of the parties 
      
        55.      In Cases C-186/02 P and C-188/02 P, the appellants allege that the Commission is not in fact concerned with removing a distortion
      of competition between undertakings. Rather, it is seeking to harmonise the differences between national tax systems. However,
      the relevant legal basis for tax harmonisation in Articles 96 EC and 97 EC presupposes action by the Council, which the Council
      is clearly not prepared to undertake. At paragraph 85 of its judgment in Ramondín, the Court of First Instance was wrong to find that the applicants had provided no evidence that the Commission was in fact
      pursuing an unlawful aim by its decision. The pleas put forward by Álava alleging misuse of powers were considered only superficially.
      
      
      
        56.      The Commission, supported by La Rioja, contends that the appellants have not put forward any objective evidence to show that
      the Commission used its powers in order to pursue aims other than those stated. The appellants’ arguments are pure speculation.
      Nor is it clear in what way the Commission Decision aims to harmonise the tax systems. 
      
      
       3. Assessment
      
        57.      As the Court of First Instance correctly established at paragraph 84 of its judgment in Ramondín, a decision may amount to a misuse of powers only if it appears, on the basis of objective, relevant and consistent evidence,
      to have been taken with the sole, or at least decisive, aim of achieving purposes other than those stated. 
         			(22)
         		
      
        58.      Ultimately, the appellants do not dispute that legal view. They submit, however, that – contrary to the findings of the Court
      of First Instance – they did in fact adduce such evidence. However, whether or not evidence of misuse of powers was adduced
      at first instance is a question relating to the establishment of the facts, which, according to Article 225 EC and to Article
      58(1) of the Statute of the Court, the Court is not permitted to review.
         			(23)
         		 As a result that part of the plea must be rejected as inadmissible.
      
      
        59.     Álava also contends that the judgment in Ramondín failed to state adequate grounds. The Court of First Instance dealt only superficially with the grounds on which the Commission
      relied inter alia in its Decision 93/337/EEC of 10 May 1993 
         			(24)
         		 (‘Decision 93/337’) and in the proceedings in Joined Cases C‑400/97, C-401/97 and C-402/97. 
         			(25)
         		
      
        60.      The Court of First Instance however gave at paragraph 87 of its judgment in Ramondín  stated adequate grounds for rejecting that argument. It was not in any event required to give more detailed grounds, since
      the Commission’s motives to which Álava refers have no direct bearing on the adoption of the decision at issue here. Rather,
      Decision 93/337 was concerned with Basque tax aid provisions. It was those provisions that were also the subject-matter of
      the reference for a preliminary ruling in Joined Cases C-400/97, C-401/97 and C-402/97.
      
      
        61.      Consequently, the ground of appeal alleging an error in the assessment of misuse of powers must be rejected in its entirety.
      
      
       C – Legitimate expectations 
        62.      In Case C-183/02 P, Demesa maintains that the Court of First Instance was wrong to reject its plea alleging breach of the
      principle of legitimate expectations. It is aware of the consistent case-law that a recipient of aid cannot plead legitimate
      expectation if the aid was not notified to the Commission in accordance with Article 88 EC. In the present case, however,
      it must be taken into account that even a prudent trade could not have foreseen that the tax credit would be classified as
      State aid. That is apparent first, from the fact that the question of the selectivity of the measure was highly contested.
      Second, the Commission based Decision 93/337 concerning the Basque aid provisions 
         			(26)
         		 primarily on a breach of the principle of freedom of establishment and not on an infringement of Article 87 EC. Moreover,
      the Commission remained inactive thereafter even though it was aware of the tax provisions at issue. 
      
      
        63.      The Commission, however, takes the view that there were numerous indications that the provisions at issue would be classified
      as selective measures. Similar provisions were thus classified as unlawful State aid in Decision 93/337. Its alleged inactivity
      is of no consequence in cases of non-notified aid. 
      
      
        64.      As the Court of First Instance correctly held a recipient of aid can only rely on its lawfulness when that has been established
      through application of the procedure provided for under Article 88 EC. 
         			(27)
         		
      
        65.      The very purpose of the duty to notify aid provided for by Article 88(3) EC is to remove any possible doubts as to the characterisation
      of a measure as aid. If a Member State fails to fulfil its duty to notify, then a recipient of aid which is required to repay
      unlawful State aid cannot rely on legitimate expectations based upon its misinterpretation of Article 87 EC. 
      
      
        66.      Expectations deserving of protection can at best arise if the recipient company was entitled to assume on the basis of specific
      facts or Commission assurances that a benefit accorded to it by public authorities was not to be regarded as aid. 
         			(28)
         		
      
        67.      The findings of the Commission in Decision 93/337 do not constitute such circumstances. First of all, the subject-matter of
      the decision was not directly concerned with the provisions adopted by Álava. Second, in that decision the Commission concluded
      that the Basque provisions contained measures constituting State aid within the meaning of Article 87 EC, as the Court of
      First Instance correctly held at paragraph 237 of its judgment in Demesa.
      
      
        68.      Nor, finally, can the alleged inactivity on the part of the Commission give rise to any legitimate expectation. In that regard,
      it is sufficient to observe that the provisions at issue here were only introduced by Norma Foral 22/1994 of 20 December 1994
      (published on 13 January 1995). The decision which Álava took on the basis of that measure to grant Demesa a tax credit was
      adopted on 21 October 1997. The Commission adopted the contested decision on 24 February 1999. Demesa has not shown during
      which of those periods the Commission, despite being aware of the aid, remained inactive for a disproportionately long time.
      
      
      
        69.      The ground of appeal alleging breach of the principle of legitimate expectations must therefore be rejected. 
      
      
      VI –  Costs 
        70.      Under Article 69(2) of the Rules of Procedure, which is applicable to appeals by virtue of Article 118, the unsuccessful party
      is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the appellants have
      been unsuccessful, they must be ordered to pay the costs. 
      
      
        71.      Under the third subparagraph of Article 69(4) of the Rules of Procedure, which is applicable to appeals by virtue of Article
      118, the Court may order interveners other than Member States or institutions to bear their own costs. Accordingly the Basque
      Country in Case C‑187/02 P, and La Rioja, in Cases C‑186/02 P and C-188/02 P, must be ordered to bear their own costs. 
      
       
      VII –  Conclusion 
        72.      In conclusion, I propose that the Court should decide as follows: 
      
        
      –
         in Case C-183/02 P (Demesa v Commission)
         
      
      
      (1)     dismiss the appeal; 
      (2)     order Daewoo Electronics Manufacturing España SA to pay the costs of the proceedings.
      
        
      –
         in Case C-186/02 P (Ramondín and Others v Commission) 
         
      
      
      (1)     dismiss the appeal; 
      
      
         
            (2)
               order Ramondín SA and Ramondín Cápsulas SA to pay the costs of the proceedings,
            
      
      (3)     order the Comunidad Autónoma de La Rioja to bear its own costs. 
      
        
      –
         in Case C-187/02 P (Territorio Histórico de Álava – Diputación Foral de Álava v Commission)
         
      
      
      (1)     dismiss the appeal;
      (2)     order the Territorio Histórico de Álava – Diputación Foral de Álava to pay the costs of the proceedings;
      (3)     order the Comunidad Autónoma del País Vasco to bear its own costs. 
      
        
      –
         in Case C-188/02 P (Territorio Histórico de Álava – Diputación Foral de Álava  v Commission)
         
      
      
      (1)     dismiss the appeal;
      (2)     order the Territorio Histórico de Álava – Diputación Foral de Álava to pay the costs of the proceedings;
      (3)     order the Comunidad Autónoma de La Rioja to bear its own costs.
      
      
       1 –
         
         Original language: German.
      
      2 –
         
         Ramondín SA, which was originally established in the Comunidad Autónoma La Rioja, founded Ramondín Cápsulas SA with its head
            office in Laguardia (Álava) and transferred its activities to this company. These two parties will hereinafter be referred
            to together as ‘Ramondín’.
            
         
      
      3 –
         
         Commission Decision 1999/718/EC of 24 February 1999 concerning State aid granted by Spain to Daewoo Electronics Manufacturing
            España SA (Demesa) (OJ 1999 L 292, p. 1), and Commission Decision 2000/795/EC of 22 December 1999 on the State aid implemented
            by Spain for Ramondín SA and Ramondín Cápsulas SA (OJ 2000 L 318, p. 36).
            
         
      
      4 –
         
         Joined Cases T-127/99, T-129/99 and T-148/99 Diputación Foral de Álava and Others v Commission [2002] ECR II-1275 (‘Demesa’).
            
         
      
      5 –
         
         Joined Cases T-92/00 and T-103/00 Diputación Foral de Álava and Others v Commission [2002] ECR II-1385 (‘Ramondín’).
            
         
      
      6 –
         
         On that provision, see further paragraph 6 of the judgment.
            
         
      
      7 –
         
         For detail, see paragraphs 11 to 29 of the judgment in Demesa (cited in footnote 4).
            
         
      
      8 –
         
         Cited in footnote 3.
            
         
      
      9 –
         
         For detail, see also paragraphs 7 to 13 of the judgment in Ramondín (cited in footnote 5).
            
         
      
      10 –
         
         Cited in footnote 3.
            
         
      
      11 –
         
         Commission Decision 2002/820/EC of 11 July 2001 on the State aid scheme implemented by Spain for firms in Álava in the form
            of a tax credit amounting to 45% of investments (notified under document number C(2001) 1759) (OJ 2002 L 296, p. 1).
            
         
      
      12 –
         
         Commission Decision 2002/892/EC of 11 July 2001 on the State aid scheme applied by Spain to certain newly established firms
            in Álava (notified under document number C(2001) 1760) (OJ 2002 L 314, p. 1).
            
         
      
      13 –
         
         Cases T-227/01 Diputación Foral de Álava and Others v Commission and T-265/01 Confederación Empresarial Vasca v Commission concerning Decision C(2001)1759 and Cases T-230/01 Diputación Foral de Álava and Others v Commission and T-267/01 Confederación Empresarial Vasca v Commission concerning Decision C(2001)1760. In addition, numerous other cases are pending concerning the corresponding provisions in
            other Spanish regions. Furthermore the Commission has brought actions before the Court of Justice under Article 226 EC against
            Spain in respect of its failure to implement Decisions C(2001) 1759 and C(2001) 1760 (Cases C-485/03 and C‑488/03). 
            
         
      
      14 –
         
         Conclusions of the Ecofin Council Meeting on 1 December 1997 concerning taxation policy – Resolution of the Council and the
            Representatives of the Governments of the Member States, meeting within the Council of 1 December 1997 on a code of conduct
            for business taxation – Taxation of saving (OJ 1998 C 2, p. 1). See, in particular, paragraph J of the code of conduct for
            business taxation set out in Annex 1 to the resolution.
            
         
      
      15 –
         
         OJ 1998 C 384, p. 3.
            
         
      
      16 –
         
         Thus the strategy underlying the partial withdrawal of the appeal appears barely comprehensible.
            
         
      
      17 –
         
         See, inter alia, Case C-136/92 P Commission v Brazelli Lualdi [1994] ECR I-1981, paragraph 59, Case C-7/95 P John Deere v Commission [1998] ECR I-3111, paragraph 62, and Joined Cases C-24/01 P and C-25/01 P Glencore Grain and Others v Commission [2002] ECR I-10119, paragraph 62.
            
         
      
      18 –
         
         Case 30/59 De Gezamenlijke Steenkolenmijnen in Limburg v High Authority [1961] ECR 1, 19 Case C-200/97 Ecotrade [1998] ECR I-7907, paragraph 34, and Case C-143/99 Adria-Wien Pipeline und Wietersdorfer & Peggauer Zementwerke [2001] ECR I-8365, paragraph 38. 
            
         
      
      19 –
         
         Case 310/85 Deufil v Commission [1987] ECR 901, paragraph 8.
            
         
      
      20 –
         
         Case C-387/92 Banco Exterior de España [1994] ECR I-877, paragraph 14, subsequently confirmed in Case C-6/97 Italy v Commission [1999] ECR I-2981, paragraph 16.
            
         
      
      21 –
         
         In any event, the Commission took the view as early as 1963 in its reply to a parliamentary question asked by Member of the
            Assembly, Mr Burgbacher, that exemption from taxes and charges potentially constitutes aid (Journal Officiel 1963 125, p.
            2235).
            
         
      
      22 –
         
         Case 69/83 Luxembourg v Court of Auditors [1984] ECR 2447, paragraph 30, and Case C‑110/97 Netherlands v Council [2001] ECR I-8763, paragraph 137.
            
         
      
      23 –
         
         Case C-185/95 P Baustahlgewebe v Commission [1998] ECR I-8417, paragraph 24, and Glencore Grain and Others, cited in footnote 17, paragraph 65.
            
         
      
      24 –
         
         Decision of 10 May 1993 concerning a scheme of tax concessions for investment in the Basque country (OJ 1993 L 134, p. 25).
            
         
      
      25 –
         
         See the Opinion of Advocate General Saggio in those cases ([2000] ECR I-1073, at I‑1074). The Court did not give judgment,
            since the reference for a preliminary ruling was withdrawn following the withdrawal of the action in the main proceedings.
            
         
      
      26 –
         
         Cited in footnote 24.
            
         
      
      27 –
         
         Case C-5/89 Commission v Germany [1990] ECR I-3437, paragraph 14, Case C-169/95 Spain v Commission [1997] ECR I-135, paragraph 51, and Case C-24/95 Alcan Deutschland [1997] ECR I-1591, paragraph 25.
            
         
      
      28 –
         
         Contrast the exceptional circumstances which underlay the judgment in Case 223/85 RSV v Commission [1987] ECR 4617.