CELEX: 62001CC0091
Language: en
Date: 2003-09-18 00:00:00
Title: Opinion of Mr Advocate General Jacobs delivered on 18 September 2003. # Italian Republic v Commission of the European Communities. # State aid - Recommendation concerning the definition of small and medium-sized enterprises - Guidelines for State aid to small- and medium-sized enterprises - Independence criterion - Protection of legitimate expectations - Legal certainty. # Case C-91/01.

OPINION OF ADVOCATE GENERALJACOBSdelivered on 18 September 2003(1)
         Case C-91/01ItalyvCommission of the European Communities
            ()
            
      
         
        1.        In this case Italy seeks the annulment of Decision 2001/779/EC of 15 November 2000 (the ‘Decision’) 
         			(2)
         		 by which the Commission declared that the aid which Italy was planning to grant to Solar Tech srl (‘Solar Tech’) was incompatible
      with the common market in so far as its intensity exceeded the maximum allowable in the case at issue.
      
      
        2.        In particular, Italy claims that, by failing to authorise the increase in aid intensity provided for small and medium-sized
      enterprises (‘SMEs’), the Commission infringed Articles 87 and 88 EC, the Community Guidelines on State aid for small and
      medium-sized enterprises (the ‘Guidelines’), 
         			(3)
         		 Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises (the
      ‘Recommendation’), 
         			(4)
         		 and the principles of legitimate expectation and legal certainty.
      
       Legal framework Treaty provisions concerning State aid
        3.        Article 87 EC provides:
      
      ‘1.        Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever
      which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall,
      insofar as it affects trade between Member States, be incompatible with the common market. 
      
      …
      
       3.        The following may be considered to be compatible with the common market:
      
      (a)
         aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious
            underemployment;
         
      
      
            …
               
            
      
      
      
      (c)
         aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely
            affect trading conditions to an extent contrary to the common interest;
         
      
      
      …’
      
      
      
        4.        Article 88 EC provides:
      
      ‘1.        The Commission shall, in cooperation with Member States, keep under constant review all systems of aid existing in those States.
      It shall propose to the latter any appropriate measures required by the progressive development or by the functioning of the
      common market.
      
       2.        If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State
      or through State resources is not compatible with the common market having regard to Article 87, or that such aid is being
      misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined
      by the Commission.
      
      …
      
       3.        The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid.
      If it considers that any such plan is not compatible with the common market having regard to Article 87, it shall without
      delay initiate the procedure provided for in paragraph 2.  The Member State concerned shall not put its proposed measures
      into effect until this procedure has resulted in a final decision.’ 
      
       The Guidelines on State aid for SMEs
        5.        Where aid to SMEs is concerned, a degree of special treatment is considered necessary.  The reasons for this are indicated
      in Point 1.2 of the Guidelines, which notes that ‘… SMEs “play a decisive role in job creation and, more generally, act as
      a factor of social stability and economic drive”.  But it is generally accepted that SMEs suffer from a number of handicaps
      that can slow down their development.  One of the main such handicaps is the difficulty in obtaining capital and credit, the
      chief causes of which are imperfect information, the risk-shy nature of financial markets and the limited guarantees that
      SMEs are in a position to offer; SMEs limited resources also restrict their access to information, notably regarding new technology
      and potential markets.  The introduction of new regulatory arrangements often entails higher costs for SMEs.  The imperfections
      in the market which limit the socially desirable development of SMEs justify the favourable consideration which the Commission
      has traditionally been prepared to give to State aid to SMEs, provided that such aid does not affect trade to a disproportionate
      extent relative to the contribution it makes to the achievement of Community objectives …’ 
      
      
        6.        At the fourth paragraph of point 4.2.1 the Guidelines state:
      ‘… In assisted areas, the Commission may approve aid to SMEs which exceeds the level of regional investment aid it has authorised
      for large enterprises in the area:
      
      …
      
      –
         by 15 percentage points gross in areas covered by [Article 87(3)(a) EC], provided the total does not exceed 75% net.  …’. 
               			(5)
               		
      
      
      
        7.        Point 3.2 of the Guidelines states:  ‘For the purpose of applying the guidelines, an SME is defined in accordance with the
      recommendation concerning the definition of SMEs adopted by the Commission on 3 April 1996’.  The Guidelines then set out
      that definition 
         			(6)
         		 and make it clear that ‘the independence test, according to which a large enterprise must not hold 25% or more of the SME’s
      capital, is based on practice in a number of Member States where this percentage is the threshold at which supervision becomes
      possible’.
      
       The Recommendation concerning the definition of SMEs 
        8.        The Annex to the Recommendation is entitled ‘Definition of small and medium-sized enterprises adopted by the Commission’.
       Article 1 of the annex provides:
      
      ‘1.        Small and medium-sized enterprises, hereinafter referred to as “SMEs”, are defined as enterprises which:
      
      –
         have fewer than 250 employees, and
      
      
      –
         have either,
      
      
            an annual turnover not exceeding ECU 40 million, or
               
            
      
      
      
            an annual balance-sheet total not exceeding ECU 27 million,
               
            
      
      
      
      –
         conform to the criterion of independence as defined in paragraph 3.
      
      … 
      
       3.        Independent enterprises are those which are not owned as to 25% or more of the capital or the voting rights by one enterprise,
      or jointly by several enterprises, falling outside the definition of an SME or a small enterprise, whichever may apply.  This
      threshold may be exceeded in the following two cases:
      
      –
         if the enterprise is held by public investment corporations, venture capital companies or institutional investors, provided
            no control is exercised either individually or jointly,
         
      
      
      –
         if the capital is spread in such a way that it is not possible to determine by whom it is held and if the enterprise declares
            that it can legitimately presume that it is not owned as to 25% or more by one enterprise, or jointly by several enterprises,
            falling outside the definitions of an SME or a small enterprise, whichever may apply.’
         
      
      
      
        9.        Article 1 of the Recommendation itself provides:
      ‘Member States … are invited:
      
        
      –
         to comply with the provisions set out in Article 1 of the Annex for their programmes directed towards “SMEs” …’
      
      
      
      
        10.      Article 2 provides:
      ‘The thresholds specified in Article 1 of the Annex are to be regarded as ceilings.  Member States … may, in certain cases,
      choose to fix lower thresholds.  In implementing certain of their policies, they may choose also to apply only the criterion
      of number of employees, except in fields to which the various rules of State aid apply’.
      
      
        11.      The 18th, 19th and 22nd recitals in the preamble to the Recommendation read as follows:
      ‘Whereas independence is also a basic criterion in that an SME belonging to a large group has access to funds and assistance
      not available to competitors of equal size;  …
       Whereas, in respect of the independence criterion, the Member States, the EIB and the EIF should ensure that the definition
      is not circumvented by those enterprises which, whilst formally meeting this criterion, are in fact controlled by one large
      enterprise or jointly by several large enterprises;
      …
       Whereas, therefore, fairly strict criteria must be laid down for defining SMEs if the measures aimed at them are genuinely
      to benefit the enterprises for which size represents a handicap;
      …’
      
       The Multisectoral framework on regional aid
        12.      The Multisectoral framework on regional aid for large investment projects (the ‘Multisectoral framework’) 
         			(7)
         		 provides for ‘more systematic controls on regional aid to large-scale mobile investment projects’ (point 1.1).
      
      
        13.      Under point 2.1 of the Multisectoral framework Member States are to notify pursuant to Article 88(3) EC any proposal to award
      regional investment aid within the scope of an approved scheme, where either (a) the total project cost is at least ECU 50
      million, and the cumulative aid intensity expressed as a percentage of the eligible investment costs is at least 50% of the
      regional aid ceiling for large companies in the area concerned and aid per job created or safeguarded amounts to at least
      ECU 40 000, or (b) the total aid is at least ECU 50 million.
      
      
        14.      Point 3.1 of the Multisectoral framework states:
      ‘The Commission will determine, in accordance with the calculation formula set out in point 3.10, a maximum allowable aid
      intensity for a proposal to award aid.  It will begin by identifying the maximum aid intensity (regional aid ceiling) which
      a large company could obtain in the assisted area concerned within the context of the authorised regional aid system valid
      at the moment of notification (unless it is ad hoc aid in which case the aid ceiling fixed for the region concerned will be
      applied).  A range of adjustment factors will then be applied to that percentage figure, in accordance with three specific
      assessment factors (see below), in order to calculate a maximum allowable aid intensity for the project in question.’
      
      
        15.      Points 3.2 to 3.10 of the Multisectoral framework define the three factors – competition factor, capital-labour factor, regional
      impact factor – and the formula applicable to them in order to calculate the maximum allowable aid intensity.  According to
      point 3.10(3), no project may receive aid above the regional ceiling.
      
       The procedure before the Commission
        16.      By letter of 24 November 1999 Italy notified the Commission of the aid it planned to grant to Solar Tech.  The measure was
      a non-repayable EUR 42 788 290 grant for the construction of a plant for producing amorphous silicon film and integrated solar
      panels in the Article 87(3)(a) EC area of Manfredonia, Foggia.  The aid was provided for in the Secondo Protocollo Aggiuntivo
      del Contratto d’Area per l’Area di Manfredonia (second additional protocol to the area contract for Manfredonia, the ‘Secondo
      Protocollo’) of 19 March 1999, in the context of the regional aid scheme authorised by the Commission by letter of 30 June
      1997. 
         			(8)
         		  Given the total cost of the project, the combined intensity of the amount of the aid and the ratio of aid per job created,
      the aid had to be notified in accordance with the Multisectoral Framework.
      
      
        17.      Although the intensity of the proposed aid amounted to 50,14% net grant equivalent (nge), 
         			(9)
         		 which was above the maximum aid intensity authorised by the Commission for the area at issue (40% nge), Italy argued that
      the aid should be authorised because Solar Tech qualified as an SME in accordance with the Guidelines and was therefore entitled
      to the 15% gross grant equivalent (gge) 
         			(10)
         		 bonus provided for aid to SMEs in assisted areas.
      
      
        18.      Having doubts as to whether Solar Tech could be classed as an SME in accordance with the Guidelines and whether it suffered
      from the typical handicaps of SMEs, the Commission informed Italy by letter of 4 April 2000 that it had decided to initiate
      proceedings under Article 88(2) EC. 
         			(11)
         		
      
        19.      It appeared to the Commission that, although Solar Tech formally met the criteria of the definition of an SME in the Guidelines,
      several factors indicated that it was in fact part of the large industrial group Permasteelisa, which specialises in curtain
      walls and other cladding materials for large civil infrastructure projects.  Whereas only 24% of the shares in Solar Tech
      were held by the main trading company of the group, Permasteelisa SpA, the remaining 76% were owned by three individuals who
      all held management positions in the Permasteelisa group and had a controlling interest in the group holding company.  It
      also emerged that Solar Tech was (at least partly) integrated into the group:  its products supplemented or formed part of
      the group’s product range and Permasteelisa apparently provided logistical (distribution) and financial support to the company.
       The Commission therefore considered that ‘the legal arrangements applying to Solar Tech may circumvent the definition of
      an SME, thus allowing a large enterprise to receive the aid intensity reserved for SMEs’.
      
       The Decision of 15 November 2000
        20.      On 15 November 2000, the Commission adopted the Decision under review.
      
      
        21.      In the statement of reasons it observed that:
      
      ‘(34)
         Point 1.2 of the SME guidelines states that SMEs play a decisive role in job creation but suffer from a number of handicaps
            that can slow down their development.  Those handicaps include the difficulty in obtaining capital and credit, the difficulty
            in gaining access to information, new technology and potential markets, and the costs of complying with new regulatory requirements.
         
      
      
      (35)
         The bonus, or increase in the amount of aid allowable, for SMEs is therefore justified not only by the contribution which
            they make to objectives in the common interest, but also by the need to compensate for the handicaps they face, given the
            positive role they play.  It is necessary, however, to make sure that the bonus is indeed granted to enterprises suffering
            from such handicaps.  In particular, the SME definition used has to circumscribe the concept of a small or medium-sized enterprise
            so as to include therein only those enterprises which generate the positive externalities envisaged and suffer from the abovementioned
            handicaps.  It should not therefore extend to the many larger firms which do not necessarily produce the positive external
            effects or suffer from the handicaps typical of SMEs.  Aid granted to such firms is liable to result in further distortion
            of competition and intra-Community trade.
         
      
      
            That principle is set out in the 22nd recital to the Commission recommendation, which reads as follows:
               
            
      
      
      
            “Whereas, therefore, fairly strict criteria must be laid down for defining SMEs if the measures aimed at them are genuinely
                  to benefit the enterprises for which size represents a handicap.”
               
               
            
      
      
      
      (36)
         It is consequently in the light of those principles that the Commission has to determine whether Solar Tech falls within the
            scope of the definition of SMEs.  Solar Tech does not fulfil the necessary conditions to qualify for the bonus for SMEs.
         
      
      
            This is because, from an economic standpoint, Solar Tech has to be regarded as belonging to the Permasteelisa Group, a large
                  firm, despite the fact that the latter holds only 24% of its shares.  Thanks to the economic, financial and organisational
                  links between the two companies, Solar Tech does not have to contend to any great extent with the handicaps from which SMEs
                  usually suffer and which constitute a fundamental justification for the increase in the maximum amount of aid allowable for
                  such enterprises.’
               
               
            
      
      
      
      
        22.      According to the Commission, therefore, Solar Tech was to be regarded as belonging to the Permasteelisa group.  In that regard
      it referred to the close links between the group and Solar Tech that emerge from the composition of the latter’s share ownership.
       It also mentioned that, in the notification, Italy acknowledged that ‘the reasons for the investment lie in the fact that
      the Permasteelisa Group, a world leader in the production and installation of innovative cladding materials for large civil
      infrastructure works, wishes through this project to extend its range of products to include solar technology’.  The Commission
      thus found that, due to the extremely close ties with Permasteelisa described above, Solar Tech was not likely to suffer from
      the typical handicaps facing SMEs, in particular with respect to gaining access to sources of finance and to overcoming entry
      barriers of a technological and distributive nature.  The Decision thus concluded that ‘Solar Tech does not qualify for the
      bonus for SMEs because, thanks to its economic, financial and organisational links with Permasteelisa, it does not suffer
      from the typical handicaps of SMEs to which the SME guidelines refer.  Consequently, the bonus of 15% gge for SMEs cannot
      be applied in the case in point’.  The Commission then applied the formula provided in the Multisectoral framework and found
      that the intensity of the planned aid (45%) was, contrary to point 3.10(3) of the framework, above the regional ceiling (40%).
      
      
        23.      Accordingly, Article 1 of the Decision provides:
      ‘The State aid which Italy is planning to grant to Solar Tech srl, amounting to EUR 42 788 290, is incompatible with the common
      market in so far as its intensity exceeds the maximum allowable in the case in point (40 % nge).
       The aid may accordingly not be implemented by Italy to the extent that it exceeds an intensity of 40 % nge.’
      
       The action for annulment
        24.      In its application of 19 February 2001 Italy raises a single plea comprising three parts.  It claims that, by not applying
      the increased aid intensity for SMEs, the Commission infringed:
      
        
      –
         Article 87 EC, the Recommendation and the Guidelines;
      
      
        
      –
         Article 88(1) EC;
      
      
        
      –
         the principles of legitimate expectation and legal certainty.
      
      
      
      
        25.      Italy therefore asks the Court to annul the Decision and order the Commission to pay the costs.  The Commission asks the Court
      to dismiss the application and order Italy to pay the costs.
      
       The alleged breach of Article 87 EC, the Recommendation and the Guidelines
        26.      Italy claims first that the Commission did not apply the Recommendation and the Guidelines correctly and thus infringed both
      those instruments themselves and Article 87 EC.
      
      
        27.      Italy contends that the Commission based its Decision on a definition of an SME different from that in the Recommendation
      and the Guidelines.  Solar Tech clearly fulfilled the requirements of the Community definition of an SME, and in particular
      the independence criterion.  The Commission was bound by its own Guidelines and should have confined itself to applying the
      precise criteria therein.  It did not enjoy any discretion in the matter and, since the clear requirements of the regime were
      satisfied, it could not take other factors into account or make other assessments.  Moreover, the fourth paragraph of point
      4.2.1 of the Guidelines did not confer any power to assess whether an undertaking qualifying as an SME under the definition
      given did in fact suffer from the disadvantages typical of SMEs.  Since Solar Tech came within the definition of an SME, those
      disadvantages were to be presumed.  That being so, the Commission was under a duty to authorise aid up to the increased maximum
      intensity for SMEs.
      
      
        28.      I am not convinced by those arguments.
      
      
        29.      The two issues of the definition of an SME and of the power to authorise increased aid intensity are strictly linked and are
      largely dealt with together in the Decision;  for the sake of clarity, however, I will analyse them separately.
      
       The definition of an SME in the Recommendation and the Guidelines
        30.      The Commission acknowledged that Solar Tech formally satisfied the definition of an SME.  It considered however that, owing
      to the extremely close ties with Permasteelisa, it had to be regarded as part of the Permasteelisa group and consequently
      did not suffer from the typical handicaps facing SMEs.
      
      
        31.      It may be noted first that the facts on which the Commission based the Decision are not disputed, inasmuch as it was clear
      from the notification itself that all the shares in Solar Tech were owned either by Permasteelisa SpA or by three individuals
      who were influential shareholders and executives in the Permasteelisa group, that the purpose of setting up Solar Tech was
      to enable Permasteelisa to extend its range of products, that Solar Tech would supply a significant part of its production
      directly to the group and that it was in a position to benefit from the technological know-how, commercial contacts and financial
      standing of the Permasteelisa group.
      
      
        32.      The question is whether when determining Solar Tech’s compliance with the criterion of independence in the definition of an
      SME the Commission was entitled to take those factors into account or whether it was, on the contrary, precluded from examining
      any aspect other than strict formal compliance with the rule that no more than 25% of the capital or voting rights may be
      held by one or more enterprises which are not SMEs.
      
      
        33.      In my view, the Commission was entitled to interpret and apply the criterion of independence in accordance with its underlying
      rationale, as expressed both in the Guidelines and in the preamble to the Recommendation, namely the need to ensure that the
      more generous limits on aid for SMEs genuinely benefit enterprises for which size is a handicap and not those which belong
      to a large group and thus have access to resources not available to competitors of similar size or those which, whilst formally
      independent, are in fact controlled by larger enterprises.  In that context, care must be taken to ensure that the definition
      is not circumvented on formal grounds. 
         			(12)
         		
      
        34.      Bearing that rationale in mind, I consider it quite proper for the Commission to look behind the form to the substance of
      an undertaking.  In that light, the relationship between Solar Tech and the Permasteelisa group is clearly of a different
      nature from that which is usual between separate, independent businesses.  It may thus be considered not a ‘true’ SME but
      an undertaking fully integrated in a large group and, because of that integration, free from the handicaps targeted by the
      SME regime.
      
      
        35.      It is true that the Recommendation and the Guidelines indicate a precise shareholding threshold for determining whether an
      undertaking is independent.  However, it can hardly be denied that, even below that threshold, other significant circumstances
      may sometimes indicate that an enterprise is in fact not truly independent.  Italy implicitly recognised as much at the hearing
      when it accepted that control does not necessarily depend on a specific shareholding.  The agent for the Italian Government
      cited the Merger Regulation 
         			(13)
         		 as an example in which the control criterion is drafted so widely that it covers all situations where there is any possibility
      of exercising decisive influence. 
         			(14)
         		  Unlike Italy, however, I do not consider that the wording in the Recommendation and the Guidelines precludes the Commission
      from adopting a similar approach when that is demanded by the need to interpret those instruments consistently with their
      purpose and hence to avoid incongruous decisions. 
         			(15)
         		
      
        36.      Italy further argues that the Recommendation expressly provides for those cases where the 25% threshold may be exceeded or
      reduced. 
         			(16)
         		  In my view, however, the definition of the two cases in which that threshold may be exceeded rather reinforces the view
      that an undertaking may be classed as an SME, with concomitant entitlement to favourable treatment, only when the circumstances
      show that it is effectively independent from large companies.  The same is true for Article 2 of the operative part of the
      Recommendation which provides that Member States may, ‘in certain cases’, choose to fix thresholds lower than those specified
      in Article 1 of the Annex.  Clearly, the rationale of that power is to ensure that the undertaking seeking the preferential
      treatment for SMEs is really an SME.
      
      
        37.      Finally, I do not agree with Italy that the Commission acted inconsistently with Article 87 EC.
      
      
        38.      The adoption of guidelines, or other forms of ‘soft law’, setting out for purposes of information and simplification the criteria
      the Commission intends to apply when examining whether planned aid is compatible with the common market, cannot derogate from
      Article 87 in any circumstances, 
         			(17)
         		 and does not release the Commission from the obligation to assess each case against the criteria laid down in that provision.
       If circumstances require, the Commission may well repeal or amend those guidelines. 
         			(18)
         		  The Commission’s discretion cannot be fettered once and for all by adopting such documents. 
         			(19)
         		  Accordingly, it may even derogate from them if their application in a given case would run counter to Article 87 EC.
      
      
        39.      As I have explained above however, I am in any event of the view that, in this case, the Commission did not derogate from
      the Guidelines but simply construed the definition of an SME therein in line with their underlying purpose.  In denying that
      an undertaking which is part of a large group can be regarded as an SME, it cannot be considered to have infringed Article
      87 EC.  Further, by according different treatment to different situations – those of large companies and SMEs – it also ensured
      respect for the principle of equality. 
         			(20)
         		
       The power to authorise the increase in maximum allowable aid intensity
        40.      In the previous section I have concluded that the Commission was entitled to find that Solar Tech was not an SME.
      
      
        41.      I am however of the view that, even if Solar Tech had been considered to be an SME, it would still not have been automatically
      entitled to the increase in maximum allowable aid intensity for SMEs.
      
      
        42.      The fourth paragraph of point 4.2.1 of the Guidelines states that ‘the Commission may approve aid to SMEs which exceeds the level of regional investment aid it has authorised for large enterprises in the area’ 
         			(21)
         		 by different percentages according to area and, in particular, by 15% in the region at issue.  It is clear from that wording
      that the Commission is not obliged to authorise any particular increase but may do so.
      
      
        43.      Further, contrary to what Italy argues, that text does not distinguish between the types of circumstances to be taken into
      account in its assessment.  Neither, most crucially, does it limit that assessment to market conditions, precluding any analysis
      by the Commission of the situation of the undertaking.  The Commission was thus entitled to take account of the fact that,
      owing to its integration in the Permasteelisa group, Solar Tech did not face the handicaps typical of SMEs.  In its words,
      ‘purely formal compliance with the Community rules does not constitute sufficient justification for allowing the bonus for
      SMEs, which, as stated earlier, should be reserved exclusively for enterprises which suffer from handicaps on account of their
      size.  Thanks to its links with Permasteelisa, Solar Tech does not suffer from such handicaps’. 
         			(22)
         		  Finally, as the Commission points out, there are good reasons for insisting on more limited aid to companies that in fact
      are not SMEs because such aid may produce more severe distortions of the market.
      
      
        44.      I am therefore satisfied that, in the exercise of the discretion it enjoys under the fourth paragraph of point 4.2.1 of the
      Guidelines, the Commission was entitled to refuse the increase in aid intensity on the basis of that consideration.
      
      
        45.      The Commission did not therefore misinterpret or misapply the criteria for allowing increased aid intensity by ensuring that
      they did not benefit an undertaking integrated in a large group that did not face the handicaps typical of SMEs.  For the
      above reasons, the first part of the plea must therefore be rejected.
      
      
        46.      A final remark is however necessary.
      
      
        47.      In its written submissions and at the hearing, the Commission also raised the argument that in Solar Tech’s case the conditions
      in which increased aid intensity could be allowed were created artificially, and that such conduct amounted to an ‘abuse of
      right’.
      
      
        48.      Although doubts as to a possible circumvention of the definition of SME were raised in the decision opening the Article 88(2)
      EC procedure, it does not appear that the Decision under review is based on a finding to that effect.  That argument cannot
      therefore be raised by the Commission in these proceedings and it is accordingly not necessary to deal with it.
      
       The alleged breach of Article 88 EC
        49.      Italy alleges, secondly, an infringement of Article 88(1) EC under which the Commission, in cooperation with Member States,
      must keep under constant review all systems of aid existing in the Member States and propose to the latter any appropriate
      measures required by the progressive development or by the functioning of the common market.
      
      
        50.      The assumption underlying that claim is that the Commission breached those duties by derogating from the Recommendation and
      the Guidelines.  However, as I have explained above, the Commission did not, in my view, derogate from those instruments.
      
      
        51.      This claim must therefore also be rejected.
      
       The alleged breach of the principles of legitimate expectations and of legal certainty
        52.      Finally, Italy claims that the Decision breaches Solar Tech’s legitimate expectations and infringes the principle of legal
      certainty.
      
      
        53.      In Italy’s submission, Solar Tech was entitled to rely on the precise requirements of the Recommendation and the Guidelines
      and to organise its legal arrangements accordingly.  It could thus reasonably expect that, by fulfilling those requirements,
      it would be entitled to the increase in aid intensity.  The Commission’s novel interpretation has breached those expectations
      and created uncertainty as to the conditions for the application of the Community regime relating to SMEs.
      
      
        54.      I do not agree.
      
      
        55.      There is admittedly some force in the argument that in general an undertaking which satisfies the requirements and conditions
      laid down in guidelines adopted by the Commission may reasonably consider that it is entitled to the benefit in question.
      
      
        56.      However, in the context of the present case, and in particular in view of the various links between the Permasteelisa group
      and Solar Tech, it is difficult to see how the latter could legitimately have supposed that it met the substantive criteria
      applicable, in that it was clearly integrated in that group and did not face the handicaps for which the Community regime
      for SMEs seeks to compensate.  On the contrary, it was clear that allowing increased aid intensity to Solar Tech would be
      likely to defeat the established purpose of the policy underpinning the Recommendation and the Guidelines.
      
      
        57.      Moreover the claims that Solar Tech could legitimately expect to be entitled to the increased aid intensity, and that legal
      certainty has been breached, are open to a further objection.
      
      
        58.      Even if Solar Tech qualified as an SME under the Community regime, the planned aid would still have to be notified to the
      Commission so as to be reviewed in accordance with the Multisectoral framework, as is expressly recognised by the Italian
      Government in the Secondo Protocollo granting the aid to Solar Tech. 
         			(23)
         		  Even if they concern aid granted in the context of a regional aid regime already notified and authorised by the Commission,
      projects covered by the Multisectoral framework are subject to fresh notification and thorough control.  The stated purpose
      of that framework is to limit the adverse effects on competition that can more easily be produced by regional aid for large
      investment to usually large companies.
      
      
        59.      It was thus not possible to count on a favourable outcome of the Commission’s review, particularly as regards the increase
      of the maximum allowable aid intensity for SMEs under the Guidelines.  Even if an undertaking is classed as an SME, the Commission
      is not required to approve that increase but is merely authorised to do so.  Given the purpose of the Multisectoral framework
      and the characteristics of Solar Tech, it was, in my view, entirely predictable that the Commission would refuse authorisation.
      
      
        60.      This claim must therefore also be rejected.
      
        Conclusion
        61.      Accordingly the Court should in my opinion:
      
      (1)        dismiss the application;
      
      (2)        order Italy to pay the costs.
      
      
       1 –
         
         Original language: English.
      
      2 –
         
         OJ 2001 L 292, p. 45.
            
         
      
      3 –
         
         OJ 1996 C 213, p. 4.
            
         
      
      4 –
         
         OJ 1996 L 107, p. 4.
            
         
      
      5 –
         
         Assisted areas are those which are eligible for regional aid under Article 87(3)(a) EC (and Article 87(3)(c) EC).  Each Member
            State has its own regional aid map which identifies the assisted areas as well as the ceilings on the intensity of aid.  Regional
            aid maps are authorised by the Commission.
            
         
      
      6 –
         
         See paragraph 8 below.
            
         
      
      7 –
         
         OJ 1998 C 107, p. 7.
            
         
      
      8 –
         
         Aid N 27/A/97, Commission letter SG(97) D/4949 of 30 June 1997.  Although the aid was granted before the notification, the
            decision granting it makes the payment to the recipient subject to the Commission's approval so that the aid cannot be classed
            as un-notified aid.
            
         
      
      9 –
         
         Annex I to the Guidelines on national regional aid (OJ 1998 C 74, p. 9) explains:  ‘the calculation of net grant equivalent
            (NGE) consists in reducing all the forms of aid connected with an investment … to a common measure irrespective of the country
            concerned, i.e. the net intensity, for the purposes of comparing them with each other or with a predetermined ceiling’ (page
            19).
            
         
      
      10 –
         
         The nominal (before-tax) value of grants as a proportion of the investment cost.
            
         
      
      11 –
         
         OJ 2000 C 142, p. 11.
            
         
      
      12 –
         
         See point 1.2 of the Guidelines, cited above in paragraph 5, and the recitals in the preamble to the Recommendation, cited
            above in paragraph 11.
            
         
      
      13 –
         
         Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings, OJ 1989 L 395,
            p. 1.
            
         
      
      14 –
         
         Article 3 of the Merger Regulation provides, inter alia:
            ‘3.	For the purposes of this Regulation, control shall be constituted by rights, contracts or any other means which, either
            separately or jointly and having regard to the considerations of fact or law involved, confer the possibility of exercising
            decisive influence on an undertaking, in particular by: 
            (a)	ownership or the right to use all or part of the assets of an undertaking;
            (b)	rights or contracts which confer decisive influence on the composition, voting or decisions of the organs of an undertaking.
             4.		Control is acquired by persons or undertakings which:
            (a)	are holders of the rights or entitled to rights under the contracts concerned, or
            (b)	while not being holders of such rights or entitled to rights under such contracts, have the power to exercise the rights
            deriving therefrom.’
            
         
      
      15 –
         
         It may be worth adding that the Recommendation has recently been replaced by the Commission Recommendation of 6 May 2003 concerning
            the definition of micro, small and medium-sized enterprises 2003/361/EC, OJ 2003 L 124, p. 36, which provides a more elaborate
            definition of an autonomous enterprise (see, in particular, Article 3 of the Annex).  If that new document had applied in
            this case, Solar Tech would clearly not have qualified as an SME.
            
         
      
      16 –
         
         See the second part of paragraph 3 of Article 1 of the Annex to the Recommendation (in the Guidelines the corresponding provision
            is the second paragraph of point 3.2), and Article 2 of the operative part of the Recommendation.
            
         
      
      17 –
         
         See Case 310/85 Deufil  v Commission [1987] ECR 901, paragraph 22 of the judgment;  Case C-351/98 Spain  v Commission [2002] ECR I-8031, paragraph 53;  Case T-380/94 AIUFFASS and AKT  v Commission [1996] ECR II-2169, paragraph 57;  Case T-149/95 Ducros v Commission [1997] ECR II-2031, paragraph 61;  Case T-214/95 Het Vlaamse Gewest  v Commission [1998] ECR II-717, paragraph 79.
            
         
      
      18 –
         
         .Het Vlaamse Gewest, cited in note 17, paragraph 89 of the judgment.
            
         
      
      19 –
         
         Compare the Opinion of Advocate General Warner in Case 81/72 Commission  v Council [1973] ECR 575, at p. 592.
            
         
      
      20 –
         
         .Het Vlaamse Gewest, cited in note 17, paragraph 89 of the judgment.
            
         
      
      21 –
         
         Emphasis added.
            
         
      
      22 –
         
         Paragraph 44 of the Decision.
            
         
      
      23 –
         
         See paragraph 16 above.