CELEX: 61993CC0329
Language: en
Date: 1996-03-28 00:00:00
Title: Opinion of Mr Advocate General Cosmas delivered on 28 March 1996. # Federal Republic of Germany, Hanseatische Industrie-Beteiligungen GmbH and Bremer Vulkan Verbund AG v Commission of the European Communities. # State aid - Guarantee given by the public authorities in favour indirectly of a shipbuilding undertaking for the acquisition of an undertaking in another sector - Diversification of the activities of the recipient undertaking - Recovery. # Joined cases C-329/93, C-62/95 and C-63/95.

OPINION OF ADVOCATE GENERAL COSMAS
      delivered on 28 March 1996 (
            *1
         )
      Summary
       
               
                  Introduction
               
             
               
                  I — The facts
               
             
               
                  A — The transaction at issue
               
             
               
                  B — The contested decision
               
             
               
                  II — The pleas in law
               
             
               
                  A — The pleas in law concerning the right to a fair hearing
               
             
               
                  B — The pleas in law concerning the statement of the reasons on which the contested decision was based
               
             
               
                  1. Introductory observations
               
             
               
                  2. The pleas in law relating to the existence of an aid
               
             
               
                  (a) The valuation of the new BV shares
               
             
               
                  (b) Whether the operations at issue would have constituted reasonable practice in the case of a private undertaking
               
             
               
                  3 The pleas in law concerning the undertakings mentioned as recipients of the aid
               
             
               
                  4. The pleas in law concerning compatibility with the common market
               
             
               
                  (a) The conditions of Article 92(1) of the Treaty concerning distortion of competition and impairment of trade between Member States
               
             
               
                  (b) The directive on shipbuilding
               
             
               
                  (c) The Land Bremen guidelines
               
             
               
                  5. The remaining pleas in law concerning the insufficiency of the statement of reasons and the correct determination and appraisal of the facts
               
             
               
                  C — The pleas in law concerning the absence of a notification in due time and its consequences
               
             
               
                  1. The duty of notification
               
             
               
                  2. The consequences of the absence of a notification in due time
               
             
               
                  D — The pleas in law concerning breach of the principle of the protection of legitimate expectation
               
             
               
                  E — The pleas in law concerning the withdrawal of the guarantee
               
             
               
                  1. The impossibility of recovering the aid
               
             
               
                  2. Breach of the principle of proportionality
               
             
               
                  F — The pleas in law concerning the default interest
               
             
               
                  III — Costs
               
             
               
                  IV — Opinion
               
            Introduction
      
               1.
            
            
               These cases concern actions by the Federal Republic of Germany (hereinafter ‘Germany’), by Hanseatische Industrie-Beteiligungen GmbH (hereinafter ‘Hibeg’) and by Bremer Vulkan Verbund AG (hereinafter ‘BV’) for the annulment of a Commission decision of 6 April 1993. (
                     1
                  ) In the contested decision the Commission decided that ‘aid awarded by the German Government to Hibeg and by Hibeg via Krupp GmbH to Bremer Vulkan AG, facilitating the sale of Krupp Atlas Elektronik GmbH from Krupp GmbH to Bremer Vulkan AG’ was unlawful and incompatible with the common market pursuant to Article 92(1).
               These actions were originally brought before the Court of Justice. Two of the cases (namely those of BV and Hibeg) were referred to the Court of First Instance after its jurisdiction had been extended. Later both these cases were referred back to the Court of Justice by an appropriate decision and were joined, by a decision of the President of the Court of Justice of 16 November 1995, to the case brought by the Federal Republic of Germany in view of their connection with that case.
            
         I — The facts
      According to the documents before the Court the facts are as follows:
      A — The transaction at issue
      
               2.
            
            
               At the beginning of 1991 Krupp GmbH (hereinafter ‘Krupp’), which has its registered office in Essen, and BV, whose registered office is in Bremen, entered into negotiations regarding the acquisition by BV of control over Krupp Atlas Elektronik GmbH (hereinafter ‘KAE’). Krupp was the only shareholder in KAE, which operated in the electronics sector. BV intended to amalgamate KAE with its subsidiary company Systemtechnik Nord GmbH (hereinafter ‘STN’), which operated in the same field as KAE.
               On 12 July 1991 the parties signed a memorandum of understanding (hereinafter ‘the Memorandum’), according to which Krupp was to transfer to BV 74.9% of its holding in KAE in the framework of a corresponding increase of BV's capital by an amount to the nominal value of DM140000000 divided into 2800000 shares of a nominal value of DM 50. These new BV shares, which according to the content of the Memorandum had an issue value of 250% (that is, DM 125), were to be issued to Krupp in return for Krupp's transferring the said portion of its capital in KAE, the value of which was estimated in the Memorandum at DM 350 000 000.
            
         
               3.
            
            
               On 17 October 1991 the general meeting of shareholders of BV decided on the increase in the share capital, following which BV's new shares were issued to Krupp in accordance with the Memorandum.
               On 26 November 1991 Krupp and Hibeg, whose sole shareholder is the Land Bremen (Freie Hansestadt Bremen), together founded a Gesellschaft bürgerlichen Rechts (civil law company) (hereinafter ‘the GbR’) with a view to utilization of the new BV shares. Krupp transferred its 2800000 new BV shares to the GbR, whilst Hibeg contributed DM 350000000 in cash. Hibeg's contribution was financed by a bank credit, partly covered by a guarantee of DM 126000000 provided by Land Bremen on 21 November 1991 in favour of Hibeg and partly by the pledging of the new BV shares, the value of which was assessed by the creditor banks at DM 80 per share.
               On the basis of a clause in the agreement establishing the GbR, that company granted Krupp, as an advance on the expected proceeds of the sale of the new BV shares, a loan amounting to DM 350000000. In addition Hibeg received an irrevocable entitlement to sell the BV shares to third persons at a minimum price of DM 125 per share. With the sale of each share the holding of both companies in the GbR, whose dissolution was provided for on 28 February 1994 at the earliest or by 31 December 1994 at the latest, was to be correspondingly reduced. The BV shares remaining after the dissolution of the GbR were to be transferred to Hibeg, whilst Krupp was to retain the remaining balance of the advance. In accordance with the agreement with the creditor banks Hibeg was entitled to repay part of the credit by selling its BV shares to the banks for DM 80 per share.
            
         
               4.
            
            
               By a letter of 17 December 1991 the German Government notified the Commission of the guarantee given by Land Bremen in favour of Hibeg. By a letter of 20 January 1992 (D/00130) the Commission requested supplementary information from the German Government, which replied by a letter of 4 March 1992. On 6 May 1992 the Commission decided to open the procedure provided for in Article 93(2) of the Treaty. The German Government was so informed by a letter of 20 May 1992 (SG [92] D/6699); a corresponding communication was published in the Official Journal of the European Communities. (
                     2
                  ) The communication refers to a State aid in connection with the provision by Land Bremen of a guarantee to support ‘the buying of Krupp Atlas Elektronik GmbH by Bremer Vulkan AG from Krupp GmbH’ and gives the German Government, the other Member States and interested parties one month's notice from the date of publication for the submission of comments to the Commission.
            
         
               5.
            
            
               It should further be stated that Hibeg, as may be seen from its answer to the written questions put to it by the Court, had by the end of February 1994 sold all new BV shares at prices between DM 85.54 and DM 105.06 per share, the average price being DM 97.18 per share. After the sale of the shares was completed the GbR was dissolved on 25 February 1994.
            
         B — The contested decision
      
               6.
            
            
               In the contested decision of 6 April 1993 the Commission stated that the whole of the amount of DM 126000000 secured by the guarantee constituted an aid which, since it was granted in breach of the procedural rules laid down in Article 93(3) of the EEC Treaty, was unlawful and furthermore that it was incompatible with the common market pursuant to Article 92(1) of the EEC Treaty since it did not meet any of the conditions for exemption provided for in Article 92(2) and (3).
               The Commission decision mentions BV and Hibeg as recipients of the aid. It orders the aid to be recovered in accordance with national procedures and provisions, in particular those relating to interest on arrears on State claims, with interest running from the date on which the unlawful aid was granted.
            
         
               7.
            
            
               The Commission decision is based essentially on the following reasons: BV received from Krupp a 74.9% shareholding in KAE in exchange for the 2800000 new shares issued on the basis of the increase in its capital. By the establishment of the GbR Krupp exchanged those shares for a sum of DM 350000000, corresponding to the value of 74.9% of KAE's capital, from Flibeg. At the time of the transaction BV shares were quoted on the stock market at roughly DM 80 per share. On the basis of that price the 2800000 new BV shares were worth a total of DM 224000000. Land Bremen granted Hibeg a guarantee of DM 126000000, which corresponded exactly to the difference between the agreed valuation of the shareholding in KAE and the actual value of the new BV shares. That allowed the sale of KAE to BV to take place. The difference mentioned could not therefore be justified on commercial or other economic considerations, so that the total difference, being equal to the total guarantee, must be regarded as aid.
            
         II — The pleas in law
      A — The pleas in law concerning the right to a fair hearing
      
               8.
            
            
               The applicants claim that their right to a fair hearing was infringed because they were not allowed the necessary time for an effective preparation of their defence against the Commission's complaints.
               In particular the applicants claim that at the hearing on 30 March 1993 attended by representatives of the applicants and the Commission, the Memorandum of 12 July 1991 was cited for the first time and its substance discussed. At that hearing the Commission accepted their proposal to send it the text of the Memorandum together with their comments on it; by a facsimile message of 2 April 1993 however, the Commission then set an extremely short time-limit for sending those documents by requiring them to be despatched by 5 p. m. on the same day. It is true that the German Government protested against the fixing of such a short time-limit, but it nevertheless sent the text of the Memorandum by facsimile on the next working day, 5 April 1993. The fact that the contested decision was adopted on the following day, that is on 6 April 1993, shows, however, that the Commission had not had regard to the content of the Memorandum and that it had not given the applicants, or rather the German Government and BV, the opportunity, as had been agreed at the hearing on 30 March 1993, to make their supplementary comments on the Memorandum and on its significance.
            
         
               9.
            
            
               Observance of the right to be heard is, in all proceedings initialed against a particular person, which arc liable to culminate in an administrative measure adversely affecting that person, a fundamental principle of Community law which must be ensured even in the absence of any rules governing the procedure in question. (
                     3
                  ) In order to respect the principle of the right to be heard, the person against whom the Commission has initiated an administrative procedure must be afforded the opportunity before the administrative decision is adopted to make pertinent comments with regard to the findings of fact and the legal statement of reasons on which the decision is to be based. (
                     4
                  )
            
         
               10.
            
            
               However, as stated in the preceding section, the Commission had published in the Official Journal of the European Communities a communication (
                     5
                  ) in which it gave the German Government and other interested parties notice to submit their comments on the transaction at issue within one month from the date of publication. Thus the German Government and the applicant undertakings, which were mentioned by name in the communication in question, already had at that time the opportunity to prepare their defence and to send the Commission the text of the Memorandum of 12 July 1991 with their observations together with all other documentary evidence which in their opinion was relevant not only within the period prescribed but even after it had expired, since the decision was adopted only on 6 April 1993. However, for reasons which they have not explained, the applicants did not produce the Memorandum in the course of the procedure and referred to it only after the expiry of the prescribed period when the Commission's decision was already on the point of adoption. The applicants' argument that they were given no opportunity to produce the Memorandum or for comments in general is therefore unfounded in accordance with the principle Nemo allegans turpitudinem suam est audiendus because they were themselves responsible.
            
         
               11.
            
            
               In fact the Court has decided that a Member State is itself responsible for prolonging the examination procedure if it has granted an aid contrary to its duty of notification laid down in Article 93(3) of the Treaty and subsequently displays reluctance to provide the Commission with the appropriate information, and that it can therefore base no arguments on the length of this procedure. In this respect the Court stated: ‘If it could do so, Articles 92 and 93 of the Treaty would be set at naught ..., since national authorities would thus be able to rely on their own unlawful conduct in order to deprive decisions taken by the Commission under provisions of the Treaty of their effectiveness.’ (
                     6
                  )
               Similar considerations apply in this case with regard to the right to a fair hearing. If the applicants were entitled to rely on their delay in transmitting the necessary documents to the Commission and to base arguments thereon, they could prevent the procedure under Article 93(2) of the Treat) from following the normal course and nullify the effect of the relevant decisions of the Commission.
            
         
               12.
            
            
               Moreover, such a breach of the right to a fair hearing would lead to annulment of the act at issue only if, but for that breach of rights, the procedure might have led to a different result. (
                     7
                  ) In this case the Memorandum contained no essential data to supplement the information already available to the Commission. In fact, as may be seen from the contested decision, the Commission already had full information with regard to the transactions undertaken, following the signature of the Memorandum, in implementation of what had been agreed therein.
               The content of the agreements made in the Memorandum is reproduced clearly and in detail in the invitation of September 1991 to BV's general meeting; that document also goes into the more general framework of the transaction. The said invitation, giving 17 October 1991 as the date for the general meeting at which inter alia the increase of BV's capital was finally decided upon, was amongst the documents in the Commission's possession. It was from that invitation that the Commission gained in essentials its knowledge of the full content of the agreements made in the Memorandum. Even if it is accepted therefore that the Commission could not evaluate the content of the Memorandum because of the shortness of the period between the sending of the text of the Memorandum and the adoption of the contested decision, such a breach does not justify the annulment of that decision, as the decision could not have been different.
            
         
               13.
            
            
               The applicant BV also claims that the Commission breached its right to a fair hearing because in the course of the procedure the Commission had been obliged to inform the applicant that in its view the applicant had been the recipient of the aid and that the procedure therefore directly concerned it.
               In this connection it must be stated in the first place that under Article 93(2) the Commission makes its decision ‘after giving notice to the parties concerned to submit their comments’. The concept of ‘parties concerned’ stands for an indeterminate number of addressees, as parties concerned within the meaning of this provision are not only the undertaking or undertakings receiving the aid but also the persons, undertakings or associations, particularly competing undertakings and trade or occupational organizations, whose interests may have been adversely affected by the grant of the aid. The Court of Justice has interpreted Article 93(2) as meaning that it ‘does not require individual notice to be given to particular persons. Its sole purpose is to oblige the Commission to take steps to ensure that all persons who may be concerned are notified and given an opportunity of putting forward their arguments. Under those circumstances, the publication in the Official Journal is an appropriate means of informing all the parties concerned that a procedure has been initiated.’ (
                     8
                  )
            
         
               14.
            
            
               In this case the information contained in the said communication concerning ‘aid which is involved in a guarantee given by the Land of Bremen to support the buying of Krupp Atlas Elektronik GmbH by Bremer Vulkan AG from Krupp GmbH’ was specific and comprehensive, so that the applicant, which took an active part in the transaction, was able to recognize that the inquiry concerned it directly and to take the necessary steps for collecting all the documents available to it and in general for preparing its arguments for the purpose of the effective defence of its interests.
               Thus all the pleas in law under consideration in this respect are unfounded and should therefore be rejected.
            
         B — The pleas in law concerning the statement of the reasons on which the contested decision was based
      1. Introductory observations
      
               15.
            
            
               It should be mentioned at the outset that the legality of a decision ‘is to be assessed in the light of the information available to the Commission when the decision was adopted’. (
                     9
                  ) The statement of the reasons on which a decision adversely affecting an undertaking is based must, as the Court has consistently held, ‘be such as to allow the Court to review its legality and to provide the undertaking concerned with the information necessary to enable it to ascertain whether or not the decision is well founded’. (
                     10
                  ) In view of the importance for the purposes of review by the Court of the duty imposed upon the Community institutions in the exercise of their powers to provide a statement of the reasons on which their measures are based the Court will, according to its case-law, examine of its own motion any deficiencies in such a statement which would make such a review more difficult. (
                     11
                  )
            
         
               16.
            
            
               In its judgment in Case 24/62 (
                     12
                  ) the Court decided as follows: ‘In imposing upon the Commission the obligation to state reasons for its decisions, Article 190 is not taking mere formal considerations into account but seeks to give an opportunity to the parties of defending their rights, to the Court of exercising its supervisory functions and to Member States and to all interested nationals of ascertaining the circumstances in which the Commission has applied the Treaty.’ As the Court stated in the judgment in Case C-466/93, ‘the statement of reasons required by Article 190 of the Treaty must be appropriate to the nature of the measure in question’ and ‘the reasoning of the institution which adopted the measure must be stated clearly and unequivocally, so as to inform persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review’. (
                     13
                  ) To attain these objectives ‘it is sufficient for the decision to set out, in a concise but clear and relevant manner, the principal issues of law and of fact upon which it is based and which are necessary in order that the reasoning which has led the Commission to its decision may be understood.’ (
                     14
                  ) In addition the Court stated in the previously cited judgment in Case C-466/93 that ‘the statement of reasons for a measure is not required to detail every relevant point of fact and law, as the question whether the statement of reasons satisfies the requirements of Article 190 of the Treaty must be considered with reference not only to its wording but also to its context and the whole body of legal rules governing the matter in question. Consequently, if the contested measure clearly discloses the essential objective pursued by the institution, it would be excessive to require a specific statement of reasons for each of the technical choices made by the institution.’ (
                     15
                  )
            
         
               17.
            
            
               With regard to measures involving complex economic decisions by the Commission, the Court has however held that its judicial review is to be limited to verifying whether the relevant procedural rules and the duty to provide a statement of the reasons on which the measures are based have been complied with, whether the facts have been accurately stated and whether there has been a manifest misuse of powers or abuse of process. (
                     16
                  )
            
         
               18.
            
            
               In the field of State aid and in particular in the framework of the application of Article 92(3) of the Treaty, where the Commission, according to consistent case-law, enjoys a discretion the exercise of which involves assessments of an economic and social nature which must be made in a Community context, (
                     17
                  ) the Court has held that in its review of legality ‘the Court must restrict itself to determining whether the Commission has exceeded the scope of its discretion by a distortion or manifest error of assessment of the facts or by misuse of powers or abuse of process’. (
                     18
                  )
               In the sphere of competition it has been decided ‘that as a general rule the Court undertakes a comprehensive review of the question whether or not the conditions for the application of Article 85(1) arc met’, but that if the case requires from the Commission an appraisal of complex economic matters, ‘the Court must ... limit its review of such an appraisal to verifying whether the relevant procedural rules have been complied with, whether the statement of the reasons for the decision is adequate, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or a misuse of powers’. (
                     19
                  )
            
         
               19.
            
            
               The Court takes the same view in antidumping cases, in which it has decided that the choice between the different methods of calculating the dumping margin requires an appraisal of complex economic situations and that it must limit ‘its judicial review of such an appraisal to verifying whether the relevant procedural rules have been complied with, whether the facts on which the choice is based have been accurately stated and whether there has been a manifest error of appraisal or a misuse of powers’. (
                     20
                  )
            
         
               20.
            
            
               In the context of the Community's agricultural policy the case-law is to the effect that when, in the implementation of that policy, the Council must ‘evaluate a complex economic situation, the discretion which it has does not apply exclusively to the nature and scope of the measures to be taken but also to some extent to the finding of the basic facts inasmuch as, in particular, it is open to the Council to rely if necessary on general findings. In reviewing the exercise of such a power the Court must confine itself to examining whether it contains a manifest error or constitutes a misuse of power or whether the authority in question did not clearly exceed the bounds of its discretion.’ (
                     21
                  )
            
         2. The pleas in law relating to the existence of an aid
      
               21.
            
            
               The question whether a State intervention constitutes an aid does not depend upon the method used for its implementation. Article 92 of the Treaty refers to any aid granted by a State or through State resources ‘in any form whatsoever’. As the Court has declared, ‘no distinction can be drawn between aid granted in the form of loans and aid granted in the form of a subscription of the capital of an undertaking. Aid taking either form falls within the prohibition contained in Article 92, where the conditions set out therein are fulfilled.’ (
                     22
                  ) The giving of a guarantee can therefore be regarded as an aid in so far as the legal conditions are actually met.
               The objections raised by the plaintiffs to the Commission's description of the contested guarantee as an aid raise two questions: The first concerns the valuation of the new BV shares and the second is whether the actions at issue would have made sense in the case of a private undertaking.
            
         (a) The valuation of the new BV shares
      
               22.
            
            
               The most important point on which the decision at issue is based with regard to the description of the contested guarantee as an aid is the existence of a difference between the value of the 74.9% share of KAE's capital (DM 350000000) and the actual value of the new shares issued by BV in connection with the increase in its share capital (2800000 shares). In the Commission's view this difference arises from the fact that the actual value of the shares was far less than the value of DM 125 per share fixed by the contracting companies. The Commission's view is that that actual value of the new BV shares was DM 80 per share. That is because the average quotation for BV shares at the material time, namely in November and December 1991, when the most important events in the contested transaction took place, was roughly DM 80 per share. On the basis of that quotation the value of the 2800000 new BV shares amounted to DM224000000. The difference of DM 126000000 between that amount and the sum of DM 350000000 paid by Hibeg through the GbR to Krupp corresponded exactly to the amount of the guarantee given by Land Bremen. Accordingly the transaction entered into on the basis of a value of DM 125 per new BV share was, in the Commission's opinion, possible only because a guarantee had been given as security for the difference between the agreed price of DM 125 and the value of a new BV share amounting to DM 80.
            
         
               23.
            
            
               The applicants regard that opinion of the Commission as wrong and claim that the value of the new shares issued by BV corresponded to the value of the contribution in kind made by Krupp in the context of BV's increase in capital, so that there was no aid. The applicants further claim that the Commission valued the new BV shares wrongly because for its valuation it relied on the stock market quotation for the BV shares. According to the contested decision the stock market quotation is the expression of the value of the shares recognized on the market, since it reflects the balance between supply and demand in a public, transparent environment. The applicants question that and claim that in determining the issue price account had to be taken not only of the stock market quotation but also of the situation of the specific undertaking, regard being had both to its present situation and to future developments and expectations. The applicants state in detail that the stock market price for a share does not reflect the situation of the individual company but is influenced also by general national and international economic developments. In the valuation of the shares therefore, in addition to the stock market quotation, which was only a starting point, reference had to be made to other factors such as for example those relating to the value of the specific undertaking. In detail it was a question of (a) the increase in value as a result of concentrating the shares, since a large block of shares is more attractive to an investor than individual shares; (b) the synergy effects resulting from integrating KAE's business establishments in BV; and (c) the rising trend of the shares, the stock market quotation for which on 12 July 1991, when the Memorandum was signed, was DM 101.20. On the basis of those factors the applicants' opinion is that the value of BV shares was at least DM 125 each and not, as the Commission had wrongly assumed, DM 80. To corroborate that argument the applicants point out that the banks had accepted the pledging of the BV shares as security for the credit granted to Hibeg at a level of 50 to 60% of the value of the shares in accordance with banking practice.
            
         
               24.
            
            
               In addition the applicants claim that for the valuation of the shares at issue reference had to be made to the situation in the first half of 1991 when the negotiations which finally led to the conclusion of the Memorandum of 12 July 1991 had been held. The Memorandum contains the final agreement reached between the contracting parties, laying down their obligations and binding the parties as regards the valuation of the new BV shares at DM 125 each. The applicants state that accordingly the Commission ought, in valuing the new BV shares, to have referred to the period before Krupp and BV were bound by the terms of the contract in the Memorandum, that is, to the period from January to July 1991, whereas it had wrongly taken November and December 1991 as its basis. The applicants further state that the quotation for the BV shares listed on the stock market was DM 85 on 8 January 1991 and DM 101.20 on 12 July 1991, the day on which the Memorandum at issue was signed. The Commission doubts the binding nature of the Memorandum and claims that it was only a declaration of intent. In the Commission's view the reference period for the valuation of the new shares was November and December 1991, as that was the time at which the most important operations in the contested transaction took place.
            
         
               25.
            
            
               Some introductory remarks are needed before these objections are examined.
               It may be seen from the judgments previously cited (
                     23
                  ) that when, as in this case, the issue concerns legal measures which relate to multifarious transactions and arc based on complex economic appraisals by the Community institution which adopts them, the Court limits its judicial review to an examination of the question whether the procedural rules have been complied with, whether the statement of the reasons on which the document was based is sufficient, whether the facts have been accurately determined and whether there has been a manifest error of appraisal or a misuse of powers.
               The Court has further stated that in the judicial review of an act it examines only whether the contested decision is vitiated by one of the grounds of unlawfulness listed in Article 173 of the Treaty, and that the Court cannot substitute its own assessment of the facts, especially in the economic sphere, for that of the author of the decision. (
                     24
                  )
            
         
               26.
            
            
               The objections relating to the valuation of the new BV shares by the Commission must be tested in the light of that case-law.
               Whether there actually is an aid depends on the answer to the question of the value of the BV shares, that is to say, if the value of the new shares is less than DM 125 it is possible to regard it as an aid, but otherwise there is no aid. The pica in law based on this question must therefore be examined before the other pleas, which assume the existence of an aid.
            
         
               27.
            
            
               The objections in question raise two subsidiary questions: (aa) The first concerns the question of the period regarded as decisive for the valuation of the shares concerned, (bb) The second concerns the method used for this valuation.
               
                        (aa)
                     
                     
                        The answer to the question of the period to be regarded as decisive for the valuation of the new BV shares in connection with the decision as to the existence of an aid depends essentially on the time of the performance of the acts by which the agreement was implemented and the State intervention manifested itself in the form of the guarantee, since even if it is accepted that the agreed value of DM 125 per share corresponded to the actual value of the new BV shares in the period before the conclusion of the Memorandum, so that at that time there was no need for an aid in the form of a guarantee, such a need may have arisen subsequently if the value of the BV shares had fallen considerably at the time the agreements made according to the Memorandum were implemented. Conversely, it is also true that there can be no question of an aid if any difference between the agreed and the actual value of the BV shares, noted at the time the Memorandum was concluded, had been made up by the time the agreements were implemented because the quotation for the shares had risen significantly.
                        In justification of their view that the period prior to the conclusion of the Memorandum was the most appropriate, the applicants refer to the binding nature of the agreement between Krupp and BV, in particular with regard to the valuation of the shareholding in KAE and of the new BV shares transferred in consideration thereof. But the question arising in this case is not whether the valuation of the new BV shares was binding on the parties, but whether that valuation, whether binding or not, corresponded to the actual value of the new shares. In order to answer this question, for the reason mentioned above account must be taken of the actual circumstances (for example the quotation for BV shares) as they had eventually developed in the period in which the most important operations in implementation of the planned transaction were undertaken, in particular those forming the State intervention now under consideration as aid (establishment of the GbR, raising of a credit in the case of Hibeg, giving of a guarantee by Land Bremen). If for this period a difference emerges between the agreed rate and the actual value of the new BV shares, the State intervention to cover that difference, irrespective of when it arose and which party to the contract benefited from it, may be regarded as an aid.
                        For the sake of completeness I shall also consider whether the agreements contained in the Memorandum were binding. That question, considered in detail by the parties in both the written and the oral procedure, must be examined under German law, which applies in this case to the preliminary agreements and other documents drawn up before the contract was entered into. According to German law the binding nature of the content of preliminary agreements is to be assessed on the basis of the intention of the parties. (
                              25
                           ) Thus in principle a preliminary agreement expressly envisaging the formal conclusion of a contract cannot be assumed to contain binding agreements for the parties since such an express provision presupposes the contrary; if the preliminary document contains no such express provision, German courts examine the circumstances so as to be able to decide in each individual case whether those involved wished to give binding force to what was agreed. (
                              26
                           ) If the preparatory agreement, as in this case, concerns complicated transactions or particularly large sums, the German courts assume, in certain cases, that there is tacit agreement that the creation of mutual rights and duties is to be dependent on the formal conclusion of a contract. (
                              27
                           )
                        It is impossible to infer from the wording of the Memorandum that those involved intended to be bound, either with regard to the transfer of a 74.9% share in KAE's capital or with regard to the increase in BV's nominal capital and the issue price and price of sale of the new shares. Thus it is stated in the preamble to the Memorandum that it is intended to bring in to BV 74.9% of KAE's capital as a contribution in kind against the allocation of new shares to be issued by BV after increasing its capital. (
                              28
                           ) In Point 1 of the Memorandum it is envisaged that after signature Krupp will provide BV with certain documents such as KAE's articles and memorandum of association, its annual accounts and auditors' reports and a list of deliveries and orders received by the company, needed by BV in order to obtain a clear picture of the situation of the undertaking to be acquired before being finally bound. Point 2.3 of the Memorandum envisages that the parties will regularly agree upon the steps which appear advisable to implement effectively the contribution of the share of KAE's capital and the increase in capital. According to Point 5.1 of the Memorandum the agreement as to the contribution of the share in KAE is to be concluded after the increase in BV's nominal capital. Finally Point 11 envisages that the Memorandum will become operative only after the assent of the parties' supervisory boards.
                        Thus the content of the Memorandum is not binding as regards cither the contribution of the share of KAE's capital, or the increase in BV's capital connected therewith, or the valuation of the new shares. That is also confirmed by the fact that no mention was made in the invitation to the general meeting either of the Memorandum or any other commitment entered into by or to Krupp, but that the whole transaction was described therein as a ‘plan’ for the amalgamation of KAE and STN, a subsidiary company of BV.
                        In all those circumstances the applicants' argument as to the decisive time for the valuation of the new BV shares must be rejected.
                     
                  
                        (bb)
                     
                     
                        As concerns the objection with regard to the incorrect valuation of the new BV shares, there is nothing in the documents before the Court to show that that valuation was based on incorrect assessments of facts or documents. The applicants simply claim that by not taking as its basis the criteria specified by them, the Commission had used a wrong method of valuation and had thus reached incorrect conclusions with regard to the existence of an aid. In this connection it should be observed that the question of the valuation of the new BV shares, in view of its fundamental significance, is discussed in detail in the statement of reasons on which the contested decision was based. The decision mentions in detail the points which, in the applicants' view, ought to have formed the basis for determining the value of the new BV shares (section V.1 of the decision, sec Point 23 above). It also gives the reasons why the Commission did not regard these points as appropriate and did not use the method advocated by the plaintiffs. In particular:
                        
                                 (i)
                              
                              
                                 The contested decision first states why the price of DM 80 per share is, in the Commission's opinion, the highest price which could have been demanded in a public issue of new shares on normal market conditions. The Commission states that the stock market price represents a genuine market evaluation of the share value and that the issue price of new shares usually needs to be below the market price of the shares if the issue is not to fail. That means that with a stock market price of roughly DM 80 the issue price of the new shares would have needed to be below DM80.
                              
                           
                                 (ii)
                              
                              
                                 The Commission then rejects the German Government's arguments, repeated by the applicants before the Court, for valuing the new BV shares at more than DM 125 per share and states that the transaction could have taken place at that value only because the difference between DM 80 and DM 125 per share was covered by a guarantee; the German Government had been unable to supply bank analyses or reports to support that valuation. The argument that in 1990 the share price had averaged DM 130.80 did not take account of the fact that since 1981 the share price had been consistently below DM 100 except for the periods between the end of 1985 and the end of 1986 and from the beginning of 1989 until the end of 1990. That had been subsequently confirmed by the fact that from the end of 1991 until February 1993 the price of BV shares had been fluctuating around DM 80. Moreover all market expectations about future profits would be reflected immediately in the share price. The same reasoning applied to the synergy effects supposed to result from the incorporation of KAE into BV. These effects would be taken into account immediately by the stock market. The trend of the BV share price since the end of 1991, which fluctuated around DM 80, did not show any evidence of such synergy effects. As regards the German Government's argument that a big block of shares was more attractive to an investor than single shares, the Commission thinks that it would be hard to imagine that that could explain the difference between a price of DM 80 and DM 125 per share. It should also be borne in mind that a new share issue runs the risk of having the effect of reducing the share price. Finally, as regards the approval of the GbR's balance-sheet by two independent accountants in which the value of the 2800000 new BV shares is, according to the German Government's argument, shown as DM 350000000, the Commission states that accountants, while establishing an opening balance-sheet, have to proceed in such a way that ‘if there is any market value, established for example by a stock exchange, that value is to be referred to. But if, as is the case with the Bremer Vulkan shares, there is a recent established price which differs from the stock market price, accountants are allowed to take that price into account for their valuation. Accordingly, the accountants only referred to the price of DM 350000000 recently paid for the 2800000 Bremer Vulkan share package, which was established by Krupp and Bremer Vulkan in collaboration with the Bremen Senate through Hibeg and the bank consortium, so that one cannot talk in terms of an independent valuation of the accountants. They only mirrored the valuation of the parties involved’(section VI of the decision). Thus the contested decision appears to have given a sufficient statement of the reasons on which it was based, as the Commission has quoted the statements and relevant arguments of those concerned, on the basis of the assessment of which it reached its decision.
                              
                           
                  
         
               28.
            
            
               We still need to consider whether there has possibly been a manifest error on the part of the Commission in its valuation of the BV shares at issue. Anyone alleging such an infringement must adduce arguments and also produce evidence to the effect that the line of reasoning on which the contested appraisal was based was manifestly erroneous. (
                     29
                  ) Thus in Case 166/78 Italy v Commission, in which the applicant had referred to a manifest error in evaluating certain economic factors as grounds for annulment, the Court decided that ‘to prove that the Council has made a serious mistake ... would require evidence more definite and less disputable than that adduced by the Italian Government during the proceedings’. (
                     30
                  ) In addition, the Court decided in Case C-225/91, previously cited, that ‘the arguments put forward by Matra [the applicant] , based on analyses carried out by the latter of the development of the market and the assessment of the regional handicap, are not such as to establish that the Commission based its decision on a manifestly incorrect assessment of the economic data’. (
                     31
                  )
            
         
               29.
            
            
               In the case now before the Court the applicants' arguments are refuted by the later developments leading to the conclusion that the valuation of the new BV shares at DM 125 by the parties concerned represented an overvaluation based on overoptimistic forecasts. On 17 October 1991, when the BV general meeting decided to increase the share capital and issue new shares, the stock market quotation for BV shares was DM 90. That was precisely the value moreover which the BV board of directors quoted in the invitation to the general meeting addressed in September 1991 to the company's shareholders. From the tables produced in this connection, the substance of which has not been challenged, the following picture emerges:
               From September to the end of December 1991 the stock market quotation for BV shares constantly declined (DM 73.50 on 30 December). In 1992 the price of the shares fluctuated below DM98 and fell by 30 December to DM 68. In 1993 the price did not rise above DM 100.80 (20 October) and in 1994 reached a maximum of DM 106.50 on 5 January. In addition the applicant Hibeg stated in answer to questions from the Court that by the end of February 1994 it had sold all its BV shares at an average of DM 97.18 each.
            
         
               30.
            
            
               If the Court regards it as necessary despite the foregoing explanations to examine further, on the basis of the applicants' arguments, the question as to whether the Commission has committed a manifest error in appraising the facts, the most appropriate way to do so in view of the complex nature of the transaction at issue might be to commission an expert's report under Articles 45(2) and 49 of the Rules of Procedure of the Court of Justice, an option used in cases in which the appraisal of the facts was based on specialized technical points and the assessment of complex economic situations requiring special knowledge.
            
         
               31.
            
            
               Thus in Case C-169/84 CdF Chimie which, like this case, concerned a State aid, (
                     32
                  ) the Court decided to obtain an expert's report. The subject of that case was an action for annulment of a Commission decision declaring compatible with the common market a tariff system for natural gas applied by the Netherlands and the firm Gasunie and terminating the procedure initiated against Gasunie under Article 93(2) of the Treaty. The tariff system in question was characterized by a two-level tariff structure for industrial users. Tariff F, lower than Tariff E, was applied to large-scale industrial users. That distinction was, in the Commission's opinion, justified by the difference in costs of supply. The applicants claimed however that that view on the Commission's part was manifestly erroneous as the difference between Tariffs E and F did not correspond to the difference in costs of supply resulting from the level of savings available to Gasunie in the supply of gas to large-scale users.
               The Court decided ‘in view of the contradictory information given by the Commission and the applicants regarding the savings which may be achieved by Gasunie as a result of the conditions laid down for entitlement to Tariff F (volume consumed, load factor, possibility of interrupting supplies and of substituting another quality of gas), ... to obtain the assistance of economic experts independent of the parties.’ (
                     33
                  ) Subsequently, on the basis of the observations contained in the experts' report, the Court reached the view that ‘the Commission committed a manifest error of assessment’ because it had overstated Gasunie's savings ‘by a factor of five in comparison with the estimate contained in the experts' report’. (
                     34
                  )
            
         
               32.
            
            
               In Case 89/85 (Ahlström and Others), (
                     35
                  ) which concerned proceedings for the application of Article 85 of the Treaty, the Court again decided to obtain an experts' report. In that case the Court had asked experts for an opinion as to whether there had been a parallel development of the prices actually applied, which the Commission had taken as its basis in finding the existence of a concerted practice. The Court then decided to obtain a second experts' report. The experts were asked to describe and analyse the characteristics of the wood pulp market at the time to which the decision related and to comment on the extent to which the natural functioning of market mechanisms, regard being had to those characteristics, led to the establishment of a differential or a uniform price structure and whether the characteristics and functioning of the market at that time differed from the characteristics and functioning of the market prior to that period and subsequent to the decision. In the light of those two opinions the Court reached the conclusion that the parallel development of prices, contrary to the observations in the decision then at issue, had been a consequence of the functioning of the mechanisms of the relevant market and not of a concerted practice. On those grounds it declared the Commission decision void.
            
         
               33.
            
            
               In the case now before the Court a detailed investigation and consideration of all features and parameters of the transaction at issue, particularly those of a financial and economic nature or those affecting the stock market, is necessary in order to determine the exact value of the new BV shares (which is of decisive significance not only for determining the existence of an aid but also for checking its amount). If the Court takes the view that in the light of the factors referred to by the plaintiffs it is necessary to give further consideration to the question whether the Commission has committed a manifest error in valuing the new shares, then the assistance of experts would be necessary in view of the extremely technical nature of the question.
            
         
               34.
            
            
               I should like to repeat, however, that the points raised by the applicants are not, according to what has been said above (particularly in Point 29), such as to justify the supposition that there has been a manifest error on the Commission's part in the valuation of the new BV shares.
            
         (b) Whether the operations at issue would have constituted reasonable practice in the case of a private undertaking
      
               35.
            
            
               Hibeg denies that there is any aid, on the ground that in the contested decision the Commission wrongly took the view that the guarantee given by Land Bremen and the investment of capital in the GbR by Hibeg were not normal commercial practice.
               Hibeg claims that in giving the guarantee Land Bremen had acted as a private shareholder and in any case as an undertaking subject to the laws of the market, since the conditions in which the transaction at issue had taken place and in particular the price of the BV shares, whose value at the time had shown a tendency to rise, justified the expectation of profit from the resale of the new BV shares. The same is true of the investment in the GbR. That investment which, as already mentioned, amounted to DM 350000000, corresponded to the actual value of the 2800000 shares, namely DM 125 per share. In this connection Hibeg points to the fact that throughout the first half of 1991 the BV shares showed a tendency to rise and that the stock market quotation for them on 12 July 1991, when the Memorandum was signed, was some DM 101.20 and that it could therefore have expected to obtain a profit. In this respect Hibeg refers to the considerations set out above which, according to the applicants, should be taken into account in calculating the actual value of the new BV shares.
               The Commission contends on the contrary, in view of the average stock market price of BV shares at the material time, namely in November and December, that Land Bremen and Hibeg could not have counted on obtaining a profit from the sale of the new BV shares. Moreover in the framework of the GbR only Hibeg undertook obligations towards the banks, whereas Krupp obtained advantages without accepting any risk.
            
         
               36.
            
            
               The decisive point for assessing whether the relevant actions represented commercial conduct in accordance with market rules is whether they would have been reasonable on the part of a private undertaking. According to consistent case-law that criterion must be applied for deciding whether a participation of public investors in the capital of an undertaking constitutes an aid.
               In the judgment in Case 234/84 Belgium v Commission, previously cited, it was stated that an appropriate way of establishing whether capital aid from a regional public holding company constituted State aid for an undertaking manufacturing equipment for the storage of beer was ‘to apply the criterion ... of determining to what extent the undertaking would be able to obtain the sums in question on the private capital markets’. In particular where the company capital is almost entirely owned by the public authorities, the test is in particular whether in similar circumstances a private shareholder, having regard to the foreseeability of obtaining a return and leaving aside all social considerations or considerations of regional policy, would have subscribed the capital in question. (
                     36
                  )
            
         
               37.
            
            
               The Court has also applied this criterion in two judgments, both Italy v Commission, (
                     37
                  ) which concerned aid in the form of grants of capital made to undertakings in the textile and the motor-vehicle sectors through a State holding company. According to one of those judgments (C-305/89), ‘in order to determine whether such measures are in the nature of State aid, it is necessary to consider whether in similar circumstances a private investor of a size comparable to that of the bodies administering the public sector might have provided capital of such an amount’. (
                     38
                  )
               It was then emphasized in the same judgment that ‘although the conduct of a private investor with which the intervention of the public investor pursuing economic policy aims must be compared need not be the conduct of an ordinary investor laying out capital with a view to realizing a profit in the relatively short term, it must at least be the conduct of a private holding company or a private group of undertakings pursuing a structural policy — whether general or sectoral — and guided by prospects of profitability in the longer term’. (
                     39
                  )
               In the other judgment (C-303/88) the Court stated that: ‘when injections of capital by a public investor disregard any prospect of profitability, even in the long term, such provisions of capital must be regarded as aid within the meaning of Article 92 of the Treaty’. (
                     40
                  )
            
         
               38.
            
            
               Thus with regard to the question of whether an aid exists, the test is whether a private investor or — in general — undertaking (
                     41
                  ) would resort to such intervention (as for example the contribution of capital) in conditions such as were present in the case of the specific State intervention, regard being had to the profits to be expected from such a step.
               According to that criterion therefore an investor, whether private or public, must, to be regarded as having acted reasonably, ensure normal profitability on his invested capital.
            
         
               39.
            
            
               The application of that criterion to this case makes it necessary to check the profitability of the transaction entered into by Hibeg and Krupp in the framework of the GbR. If Hibeg's conduct is justified by the profitability of the transaction, then the giving of the guarantee by Land Bremen is to be regarded as part of a normal commercial line of action. Otherwise it constitutes an aid within the meaning of Article 92 of the Treaty. Thus the problem of determining the actual value of the new BV shares arises again. If, at the time the GbR was established, that value corresponded to the applicant's estimates, then Hibeg, which was committed to Krupp for the price of DM 125 per share, could expect to obtain a profit on the sale of the shares. If however the value of the new shares fluctuated around the level determined by the Commission, it must be assumed that Hibeg did not act as a private investor, as it would then have been guaranteeing Krupp, without consideration, a price per share far above the actual value and could not therefore, in the normal course of events, expect to obtain a profit from the sale of the shares.
            
         
               40.
            
            
               It is not necessary to repeat what I have already said on the question of the determination of the actual value of the new BV shares and the possibility of obtaining an expert's report. The following special observations may however be made on that specific question: First, Hibeg bases its arguments on the rising trend of the stock market price of BV shares in the period before the conclusion of the Memorandum, by which the parties had finally agreed on the valuation of the 74.9% share in KAE's capital and the new BV shares transferred in consideration thereof. However, even if it is accepted that the Memorandum was binding it is, as far as Hibeg was concerned, res inter alios acta and thus does not bind Hibeg. The material time for examining the profitability of the transaction between Krupp and Hibeg is thus the time at which the latter became committed to the former by the establishment of the GbR.
            
         
               41.
            
            
               From the tables produced for this purpose, already discussed (in Point 29), it may be seen that the price of BV shares in November 1991, when the GbR was established, varied during the period before its establishment between DM 85.90 (1 November) and DM 86.30 (20 November). In comparison with the previous months September and October there was even a fall in the average price of BV shares, which had fluctuated in September between DM 102.40 (2 September) and DM 94.10 (30 September) and in October between DM 96.20 (1 October) and DM 86.50 (31 October). It should also be remembered that in the invitation of September 1991 to the general meeting the board of BV had estimated the value of the new BV shares at DM 90 per share. In these circumstances it cannot be assumed that in the normal course of events a private investor could expect that such an investment would prove profitable in the short or even in the medium term.
            
         
               42.
            
            
               I should also like to point out that the formation of a company on the pattern of the GbR, established by Krupp and Hibeg, as the German Government has admitted in answer to a question from the Court during the oral procedure, is a phenomenon which is just as unusual as was the level of the advance payment. In this connection it may be remembered that Hibeg paid Krupp in advance DM 350000000, that is, the amount which, on the basis of the agreed price of DM 125, represented the value of the 2800000 new BV shares.
               Later developments too disprove Hibeg's arguments. As previously explained, the stock market price for BV shares fluctuated in 1992, 1993 and 1994 at a much lower level than DM 125.
               Moreover Hibeg admitted in its answer to questions from the Court in the written procedure that it had sold all 2800000 new BV shares at an average price of DM97.18, which means that the transaction caused it a considerable loss.
               In view of all the foregoing considerations this examination of Hibeg's objections has shown them to be unfounded and they must therefore be rejected.
            
         3. The pleas in law concerning the undertakings mentioned as recipients of the aid
      
               43.
            
            
               Hibeg claims that the Commission regards the guarantee at issue as separate aid independent of the aid granted to BV and that in that respect the contested decision does not comply with the requirements of Article 190 of the Treaty. Hibeg is named in the decision as a recipient of aid without any statement of the reasons leading the Commission to that conclusion. The decision also contains contradictions with regard to this question.
            
         
               44.
            
            
               With regard to these objections it must first be observed that under Article 92(1) of the Treaty aid which distorts or threatens to distort competition by ‘favouring’ certain undertakings is incompatible with the common market. It is therefore possible to speak of an aid only if an advantage is granted directly or indirectly to an undertaking. (
                     42
                  )
               If therefore the Commission names an undertaking as the recipient of an aid, it must state in detail what benefit the undertaking receives from the State intervention, as otherwise the State intervention does not constitute an aid as far as the specific undertaking is concerned.
            
         
               45.
            
            
               In Article 1(2) of the contested decision Hibeg is referred to as the recipient of aid ‘granted by the Land of Bremen ... in the form of a guarantee on DM 126000000’. In Article 1(1) BV is also named as the recipient of ‘aid ... totalling DM 126000000, granted ... through Hibeg’.
               In the statement of the reasons on which the decision is based (Section VI) it is stated that ‘the final recipient of the aid is BV. The total of the transactions and the aid involved made it possible to BV to acquire 74.9% of KAE worth DM 350000000 in exchange not for cash but for 2800000 BV shares worth DM 224000000’; ‘the whole arrangement’ was described ‘as seeking to achieve the diversification of BV’ and ‘it is BV which effectively improves its financial position through the contribution by Hibeg and the related State guarantee and which is therefore the final aid recipient’.
               However, the statement of the reasons on which the decision is based contains no corresponding mention of any benefit received by Hibeg as a recipient of the aid.
               Apart from that, another passage in the same document states: ‘As in previous cases, Hibeg is intervening as the instrument of the Land of Bremen and is supplying economic aid and assistance to a company — Bremer Vulkan’. It is further stated: ‘Under the arrangement chosen, the aid is given by Hibeg’.
               However, in the framework of this transaction through Hibeg, whose only shareholder is Land Bremen, the statement of reasons alleges on the one hand that Hibeg was intervening as the instrument of Land Bremen for the granting of aid, whereas on the other hand it is named in the operative part as one of the recipients of aid.
               As the contested decision thus does not explain how Hibeg is supposed to have benefited and as in addition it contains contradictory statements with regard to Hibeg, the statement of the reasons on which it was based is insufficient. In view of this defect, to which Hibeg has rightly objected, the decision must be declared void, at least in so far as Hibeg is referred to as a recipient of aid.
            
         4. The pleas in law concerning compatibility with the common market
      
               46.
            
            
               The applicants claim that even if the existence of an aid within the meaning of Article 92(1) of the Treaty is assumed, the guarantee at issue is compatible with the common market, contrary to the conclusion reached by the Commission in the contested decision. In support of this view they claim first that the conditions of Article 92(1) of the Treaty are not met; secondly they rely on the directive on aid to shipbuilding and thirdly on Land Bremen's guidelines for the provision of guarantees.
            
         (a) The conditions of Article 92(1) of the Treaty concerning distortion of competition and impairment of trade between Member States
      
               47.
            
            
               The applicants claim that even if the existence of an aid here is accepted, it does not meet the conditions set out in Article 92(1) of the Treaty that competition must be distorted and trade between Member States affected. They claim further that the contested decision states no reasons for such conclusions.
            
         
               48.
            
            
               As may be seen from the wording of Article 92(1) it is sufficient for the application of that provision that the specific aid ‘threatens’ to distort competition.
               A wide significance is attributed in the case-law to the concept of distortion of competition. Thus distortion of competition is assumed if the State intervention produces an artificial alteration of certain elements of an undertaking's production costs and strengthens its position as compared with other undertakings competing in intra-Community trade. (
                     43
                  ) In the Philip Morris judgment the Court decided that the aid granted to the then applicant undertaking ‘was to help to enlarge its production capacity and consequently to increase its capacity to maintain the flow of trade including that between Member States’ and that it ‘is said to have reduced the cost of converting the production facilities and has thereby given the applicant a competitive advantage over manufacturers who have completed or intend to complete at their own expense a similar increase in the production capacity of their plant’. (
                     44
                  ) In another judgment concerning aid granted by the French Republic, the Court stated that ‘the proposed aid would enable the undertakings benefiting from it to reduce their investment costs, thereby strengthening their position as against that of other undertakings competing with them in the Community’. (
                     45
                  ) That condition may also be met if the aid makes it possible for undertakings established in a Member State to retain their production and thus reduces the opportunities for undertakings established in other Member States to export their products to that Member State's market. Thus according to the judgment in Case 102/87 France v Commission (
                     46
                  ) aid to an undertaking may affect trade between the Member States and distort competition where that undertaking competes with products coming from other Member States even if it does not itself export its products. Such a situation may exist even if there is no overcapacity in the sector at issue.
            
         
               49.
            
            
               In addition the Court has decided that in view of the interdependence between the markets on which Community undertakings operate, it is possible that aid might distort competition within the Community even if the undertaking receiving it exports almost all its production outside the Community. (
                     47
                  )
               This case-law confirms the idea expressed by Advocate General Capotorti in his Opinionin the Philip Morris case. (
                     48
                  ) There the Advocate General took the view that ‘the distortion of competition should be a consistent and necessary consequence of the benefit given to certain undertakings or the production of certain goods by means of the State aid. That construction is confirmed by the logical rules of the economy. Interference from outside which is selective in its nature cannot but distort the working of competition. It is permissible therefore to start from the presumption that any public aid granted to an undertaking distorts competition — or threatens to distort it... — unless exceptional circumstances exist ...’
            
         
               50.
            
            
               With regard to the question whether trade between the Member States is affected, it has been decided that when State financial aid strengthens the position of an undertaking compared with other undertakings competing in intra-Community trade, such trade must be deemed to be affected by that aid. (
                     49
                  ) The Court confirmed that basic principle in the judgment in Case 142/87 by stating that ‘the relatively small amount of aid or the relatively small size of the undertaking which receives it does not as such exclude the possibility that intra-Community trade might be affected’. (
                     50
                  ) In the judgment in Case 303/88, (
                     51
                  ) the Court then stated, in reference to the previous judgments cited, that ‘aid may be such as to affect trade between the Member States and distort competition where the recipient undertaking competes with producers in other Member States, even if it does not itself export its products. Where a Member State grants aid to an undertaking, domestic production may thereby be maintained or increased with the result that undertakings established in other Member States have significantly less chance of exporting their products to the market in that Member State. Furthermore, even aid of a relatively small amount is liable to affect trade between Member States where there is strong competition in the sector in question’.
            
         
               51.
            
            
               From the judgments cited it emerges that the Commission is always entitled to come to the conclusion that the condition that trade between Member States must be affected is met when an undertaking receiving an aid is active on a market on which there is actual competition between producers established in different Member States. According to the case-law of the Court such an adverse effect may be present even if there is no overcapacity in the sector concerned. It follows that it is only in respect of products in which there is no cross-frontier trade on account of high transport costs or other special features that it is still possible to conceive of aid which does not affect trade. (
                     52
                  )
            
         
               52.
            
            
               The case-law to which I have referred leads to the conclusion that with aid there is a presumption that it distorts competition and affects intra-Community trade. (
                     53
                  ) That does not mean that the decision as to whether these two conditions are met docs not have to be reasoned under Article 190 of the Treaty. Thus the Court decided in the judgment in Intermills, previously cited, that ‘the relevant paragraphs of the preamble to the [Commission] decision merely note the objections raised by the governments of three Member States, two trade associations and an undertaking in the paper industry. Apart from that reference, the decision gives no concrete indication of the way the aid in question damages competition’. (
                     54
                  ) In its judgment in Joined Cases 296/82 and 318/82 Leeuwarder Papierwarenfabriek the Court declared void a decision which contained no statement of reasons for the view that the contested aid affected trade between Member States and distorted or threatened to distort competition by favouring certain undertakings or the production of certain goods. (
                     55
                  ) The Court stated: ‘The preamble recalls the concern expressed by the Governments of two Member States and by two trade associations in the relevant industry with regard to the distortion of competition resulting from the measure taken by the Netherlands Government ... and then merely repeats the wording of Article 92(1) ... without any indications of fact’. (
                     56
                  ) Even if, in certain cases, the same judgment continued, the very circumstances in which the aid was granted were sufficient to show that it affected trade between Member States and distorted or threatened to distort competition, nevertheless ‘the Commission must at least set out those circumstances in the statement of reasons for its decision. In this case it has failed to do so since the contested decision does not contain the slightest information concerning the situation of the relevant market, the place of Leeuwarder [the recipient of the aid] in that market, the pattern of trade between Member States in the products in question or the undertaking's exports.’ (
                     57
                  )
            
         
               53.
            
            
               It must thus be deduced from the aforementioned judgments that there is a statement of the reasons on which the contested decision is based if the content of the contested decision is pertinent and supports the Commission's conclusion that both the conditions of Article 92(1) are met. (
                     58
                  ) The content of the decision must relate to the undertaking which has received the aid and must examine the situation on the market concerned, the share of the undertaking in that market, intra-Community trade and the undertaking's exports.
            
         
               54.
            
            
               The contested decision contains a description of the fields in which the undertaking transferred, KAE, operates, and details regarding its exports to other Member States; it also explains the circumstances showing the existence of intra-Community trade on the specialized markets on which KAE operates (Section VIII of the decision).
               In the light of the case-law referred to above, these explanations and the finding contained in the preceding observations in the contested decision, to the effect that BV had extended its field of activity by the acquisition of KAE which unequivocally brought about a strengthening of its position as against other competing undertakings, do not suffice, in particular with regard to the decision as to the existence of distortion of competition. For, as may be seen from the foregoing comments, the case-law does not make any particularly stringent demands as regards the reasoning of the decision concerning the existence of distortion of competition or the impairment of intra-Community trade, since it is assumed that the fulfilment of both these requirements may be deduced from the circumstances in which the State intervention took place. However, the specific decision must at least contain all the data which will make it possible to form a clear picture of these circumstances.
            
         
               55.
            
            
               In this case the contested decision neither explains the nature of any past or possible future distortions of competition, nor gives the factual circumstances on the basis of which it has been possible to determine such distortions. Apart from a table concerning trade between the Member States and the details regarding KAE, the contested decision does not contain the data required, according to the case-law referred to above, with regard to BV (or rather STN, with which KAE was to be amalgamated), which is also the final recipient of the aid. Furthermore the contested decision contains no details with regard to Hibeg, which it also names as a recipient of aid.
               The pleas in law put forward are therefore sound and the contested decision must be declared void in so far as it states that the aid at issue is not compatible with the common market.
            
         (b) The directive on shipbuilding
      
               56.
            
            
               The applicants claim, since in accordance with the explanations given above the Commission had assumed the existence of an aid in this case, that it ought to have tested its compatibility with the common market with regard to Article 92(3) of the Treaty in conjunction with the Council Directive of 21 December 1990 on aid to shipbuilding (90/684/EEC) (
                     59
                  ) and in particular with Articles 5 and 6(3) thereof. To put this plea in law into more specific terms they point out that they referred the Commission, in the procedure preceding the adoption of the decision, to the application of that directive but that the Commission had omitted to examine the question and had thereby on the one hand infringed those provisions and on the other hand failed, in breach of Article 190, to state the reasons on which the contested decision was based.
            
         
               57.
            
            
               Since Article 92(3) of the Treaty provides that the aids listed therein ‘may’ be considered to be compatible with the common market, it allows the Commission a wide discretion which it exercises on the basis of economic and social assessments which must be made in a Community context. (
                     60
                  ) The margin of discretion for this appreciation is also decisive for the limits of the review carried out by the Court which, as previously stated (point 18 et seq.) comprises an examination of whether the facts have been accurately stated, whether there has been a manifest error of appraisal or a mistake of law, whether the relevant procedural rules have been complied with and whether there has been a misuse of powers.
            
         
               58.
            
            
               Article 92(3)(d) (now, following the entry into force of the Treaty on European Union, Article 92(3)(e)) of the Treaty empowers the Council, acting by a qualified majority on a proposal from the Commission, to specify, in addition to the categories enumerated in the preceding subparagraphs of Article 92(3), other categories of aid which may be considered to be compatible with the common market.
            
         
               59.
            
            
               In pursuance of those powers the Council issued Directive 90/684/EEC, which has been in force since 1 January 1991. With regard to that directive the Court has pointed out that ‘the Council acted in accordance with the spirit of Article 92(3) when, after establishing that the shipbuilding aid in question was incompatible with the common market, it took account of a series of economic and social requirements which led it to make use of the option, recognized by the Treaty, to regard that aid nevertheless as compatible with the common market provided that it satisfied the criteria for derogations contained in the directive’. (
                     61
                  )
               According to Article 5 of that directive, aid to facilitate the continued operation of shipbuilding companies may be deemed compatible with the common market provided that it does not exceed the ceiling referred to in that provision.
               Article 6 of the directive provides that aid for restructuring and in particular investment aid ‘may be deemed compatible with the common market provided that:
               
                        —
                     
                     
                        the amount and intensity of such aid are justified by the extent of the restructuring involved;
                     
                  
                        —
                     
                     
                        it is limited to supporting expenditure directly related to the investment.’
                     
                  
         
               60.
            
            
               The contested decision neither examines Directive 90/684/EEC nor states why the Commission has not considered the question of applying the directive. The Commission was however under a duty to state the reasons on which this point in its decision was based, since BV which, in the Commission's opinion, is one of the recipients of aid, carries out a considerable part of its industrial activity in the field of shipbuilding, whilst KAE operates in the field of marine electronics, as is moreover stated in the contested decision itself (Section VIII).
            
         
               61.
            
            
               It should further be pointed out that the Commission had already been concerned in earlier proceedings with the financing of BV's shipbuilding activity and in that connection had examined in relation to the sixth directive on aid to shipbuilding, (
                     62
                  ) which was applicable at that time, the obligation assumed by Hibeg towards BV to purchase the BV shares issued in 1987 at the price of DM 90. (
                     63
                  )
            
         
               62.
            
            
               In the proceedings before the Court the Commission explained why it had not applied Directive 90/684/EEC. It stated in detail that shipbuilding amounted to only 42.4% of BV's total activity and those of its operations benefiting from the aid at issue concerned electronics and could not therefore be regarded as shipbuilding. Those activities did not therefore fall within the field of application of the directive, which must be strictly interpreted because it provided for a derogation from the principle laid down in Article 92(1) of the Treaty. The Commission also referred in that respect to the eighth recital in the preamble to the directive, which drew a clear distinction between the shipbuilding industry within the meaning of the directive and the technological supply industries.
            
         
               63.
            
            
               The Commission also claimed that in any event the aid at issue, contrary to the applicants' argument, did not fulfil the requirements of Articles 5 and 6 of the directive, so that in this case they could not have applied. It was further clear from the content of the letter of 17 December 1991 by which the German Government informed it of the guarantee in question, that the guarantee did not relate to shipbuilding but to an extension of BV's field of operations. During the oral procedure the German Government contested that argument.
            
         
               64.
            
            
               If a Commission act is defective by reason of a missing or defective statement of reasons, then that cannot be cured subsequently by explanations or clarifications which arc put forward for the first time in the proceedings before the Court. Otherwise the opportunity for the party concerned by the act to prepare his defence as comprehensively as possible would be decisively restricted, because he would be informed unequivocally and comprehensively only at an extremely late stage of all the legal and factual points on which the act was based. Such a restriction would also essentially limit the Court's opportunity to examine the questions raised effectively and thoroughly. (
                     64
                  )
            
         
               65.
            
            
               Accordingly, the explanations which the Commission has put forward during the proceedings before the Court with regard to the matter at issue here cannot cure the failure to provide a statement of the reasons on which the decision was based as far as this specific point is concerned. Consequently on these grounds, which were quite correctly put forward, the decision must be declared void in so far as it states that the aid at issue is not compatible with the common market.
            
         (c) The Land Bremen guidelines
      
               66.
            
            
               The German Government and Hibeg also rely, in substantiation of their claim that the guarantee at issue is compatible with the common market, on the Land Bremen guidelines for the provision of guarantees, (
                     65
                  ) which the Commission approved by Decision SG (91) D/2046 of 28 October 1991. In the applicants' view the guarantee in question falls within the field of application of those guidelines and should therefore be regarded as an approved and thus an existing aid within the meaning of Article 93(1) of the Treaty.
            
         
               67.
            
            
               When the Commission has to deal with aid alleged to have been granted on the basis of an already approved scheme, it must ‘examine whether the aid is covered by the general scheme and satisfies the conditions laid down in the decision approving it. If it did not do so, the Commission could, whenever it examined an individual aid, go back on its decision approving the aid scheme which already involved an examination in the light of Article 92 of the Treaty. ... If, following the examination thus circumscribed the Commission finds that the individual aid is in conformity with its decision approving the scheme it must be regarded as authorized aid, and thus as existing aid. ... Conversely, where the Commission finds that the individual aid is not covered by its decision approving the scheme, the aid must be regarded as new aid.’ (
                     66
                  ) The reasons on which that finding is based must be stated in accordance with the observations previously made. (
                     67
                  )
            
         
               68.
            
            
               In this case the Commission considered, both in the communication regarding the initiation of the procedure under Article 93(2), published in the Official Journal of the European Communities, (
                        68
                     ) and in the contested decision, whether the aid falls within the Land Bremen guidelines, which it had approved. In giving the reason on which its opinion on that question was based, it first explained in the contested decision (Section V.3) the view taken by the German Government in that regard in the procedure under Article 93(2) of the Treaty.
               That view was as follows:
               
                        1.
                     
                     
                        Section 2.1 of the guidelines in question, (
                              69
                           ) according to which Ausfallbürgschaften (deficiency guarantees) are ‘in principle’ permissible, does not exclude selbstschuldnerische Bürgschaften (absolute guarantees) such as the guarantee at issue. As Hibeg is State-owned, an Ausfallbürgschaft is inappropriate because in that case insolvency proceedings might possibly have to be brought against Hibeg.
                     
                  
                        2.
                     
                     
                        The condition laid down in the guidelines, with regard to whether the proceeds of the investment would in normal conditions be sufficient to service the loan in the framework of the grant in connection with which the guarantee was given, was met since the value of BV shares was DM 125 each. (
                              70
                           )
                     
                  
                        3.
                     
                     
                        It is true that the guidelines required securities and premiums, but in that respect they were not binding as Hibeg is State-owned.
                     
                  
                        4.
                     
                     
                        Finally, the duty of prior notification regarding the giving of the guarantee had also been fulfilled, as the Commission had been informed of the guarantee on 17 December 1991, whilst the guarantee came into effect only when the credit agreement became operative at the end of December.
                     
                  
         
               69.
            
            
               Then the contested decision explains (Sections III and VI) the reasons for the rejection of the views adopted by the German Government. The Commission thinks that the guarantee in question, which is a selbstschuldnerische Bürgschaft, is not covered by the guidelines, not only because its form did not correspond to that envisaged by the guidelines, but in addition because, according to the Commission's information, it was not possible to see any obvious relationship between the proceeds of the investment in the GbR and the funds needed to service the loan, and the securities and premiums required under the guidelines were not demanded from Hibeg. That alone, in the Commission's view, constitutes aid. Finally the Commission contends that it should have been notified of the guarantee before it was given and not only before it came into effect, which was when the German Government had reported it.
            
         
               70.
            
            
               In these circumstances it must be stated that the Commission has given the reasons for its conclusion that the aid at issue did not comply with the Land Bremen guidelines. Moreover the applicants have given no evidence capable of refuting the Commission's views, since during both the written and the oral procedures before the Court they repeated essentially the German Government's arguments which the Commission had already examined in the procedure under Article 93(2) of the Treaty.
            
         
               71.
            
            
               When, however, as in this case, the contested decision contains a clear and detailed statement of the reasons on which it is based, the applicants cannot merely challenge the Commission's specific view without putting forward other arguments in addition to those vwhich the Commission has already considered in that statement. (
                     71
                  )
            
         
               72.
            
            
               Irrespective of all that, however, the guarantee at issue diverges in two respects from the rules contained in the guidelines in question.
            
         
               73.
            
            
               The first point concerns the form of the guarantee. According to Section 2.1 of the guidelines, previously cited (see footnote 69), guarantees given by Land Bremen must ‘in principle’ have the form of Ausfallbürgschaften. Accordingly that provision authorizes Land Bremen exceptionally to give a different type of guarantee. The question therefore arises whether the giving of a selbstschuldnerische Bürgschaft in favour of Hibeg constituted, as the applicants claim, one of those cases in which it may exceptionally be assumed that it complies with the guidelines.
            
         
               74.
            
            
               That type of guarantee differs considerably, as regards the liability of the guarantor, from the form of guarantee expressly mentioned in the guidelines.
               An Ausfallbürgschaft is a less burdensome form of guarantee because the creditor can make a claim on the guarantor only if he proves that he has previously unsuccessfully exhausted all possibilities of satisfying his claim both from the principal debtor and from any third persons who may be liable (for example joint debtors or joint guarantors). (
                     72
                  ) In contrast, the selbstschuldnerische Bürgschaft is a particularly burdensome form of guarantee inasmuch as the guarantor's liability is much greater: he cannot require that the creditor should first proceed against the debtor, (
                     73
                  ) so that the creditor may claim against him without first being required to seek to enforce the claim against the principal debtor. (
                     74
                  )
            
         
               75.
            
            
               That possibility of making a claim direct against the guarantor is however contrary to Section 6 of the guidelines, which concerns the conditions for recourse by the creditor to the guarantee and provides that the creditor must first seek to satisfy his claim by realization of the principal debtor's assets and of the securities provided for the repayment of the credit. That provision requires that the principal debtor must have become insolvent and that significant receipts from the realization of his assets and the securities provided arc not or no longer to be expected within a reasonable time (Section 6.1).
               It is further provided in the same section that the creditor must realize the securities provided for the secured credit following the insolvency of the principal debtor with the same care as with credits granted entirely at the debtor's own risk (Section 6.2). This requirement, the effect of which is that the securities must be realized before an attempt is made to satisfy the claim by recourse to the guarantee, was expressly emphasized by the Commission in the decision approving the guidelines in question. A selbstschuldnerische Bürgschaft cannot therefore be regarded as one of the possible exceptional cases which may be compatible with the Bremen guidelines.
            
         
               76.
            
            
               The second point concerns the requirement to pay the guarantor a premium including the cost of providing the guarantee. As became apparent in the procedure before the Court, that requirement was not met when the guarantee at issue was given. Hibeg admits in its application that it neither paid the premium envisaged nor was requested to do so.
            
         
               77.
            
            
               From these two divergences alone it may be concluded that the aid at issue did not comply with the Bremen guidelines and that the Commission rightly decided that the aid could not be deemed to have been granted in the framework of the said guidelines.
            
         5. The remaining pleas in law concerning the insufficiency of the statement of reasons and the correct determination and appraisal of the facts
      
               78.
            
            
               The applicants claim that the Commission was wrong to take the view that Krupp transferred its share of KAE's capital to BV in exchange for the new BV shares, because the relevant operation essentially involved a contribution in kind by Krupp in the context of the increase in BV's capital, which was undertaken in accordance with the relevant provisions of German company law.
               However, the description of the specific transaction between Krupp and BV played no part in the Commission's decisionmaking. Neither the decision as to the existence of an aid nor the decision as to the distortion of competition and the impairment of intra-Community trade or the compatibility of the aid with the common market was based on that description.
            
         
               79.
            
            
               The applicants further claim that the decision wrongly gave the impression that certain information regarding the ownership of BV had not been supplied to the Commission, whereas in reality no information as to the owners of BV shares could have been supplied as they were not registered shares. The argument with regard to that objection cannot affect the legality of the decision either, as the ownership of BV was not a matter of decisive importance for the decision taken.
            
         
               80.
            
            
               The applicants further claim that the Commission was wrong to assume that Hibeg had provided the creditor banks with no other security over and above the guarantee, because in fact (a) the new BV shares were pledged and (b) the credit balances and other relevant assets which Hibeg had with the banks in question represented additional security. In the decision however the Commission stated that the bank loan of DM 350000000 was partially and not exclusively covered by Land Bremen's contested guarantee, which was given for a sum of DM 126 000 000.
               The decisive fact in this case is that the loan in question was covered, even though only partially, by the guarantee at issue. The question whether the credit received was covered also by the pledging of shares or in other ways is of no significance for the description of the contested guarantee as an aid or for the decision as to its compatibility with the common market. That argument put forward by the applicants must therefore be rejected.
            
         
               81.
            
            
               Finally, the applicants once more raise objections with regard to breach of the right to be heard (Point 8 et seq.). Here they claim that as the Memorandum of 12 July 1991 was not taken into consideration, the statement of the reasons on which the contested decision was based was insufficient. In this respect it is sufficient to recall that the Commission was acquainted with the content of the Memorandum, as may be seen from the contested decision, in essence in the framework of the procedure under Article 93(2), as a result of the steps taken by the parties concerned for its implementation. Here it is those steps which are of interest above all. Moreover I have already staled (Point 12) that the agreements made in the Memorandum were reproduced clearly and in detail in the invitation to BV's general meeting, from which the Commission obtained unequivocal and comprehensive knowledge of the transaction agreed. Consequently any omission to check the wording of the Memorandum itself does not as such constitute any insufficiency in the statement of the reasons on which the contested decision was based. These pleas must therefore be rejected.
            
         C — The pleas in law concerning the absence of a notification in due time and its consequences
      
               82.
            
            
               With reference to the fact that the aid granted to Hibeg and BV had not been reported to it at the proper time, the Commission decided, in Article 1 of the contested decision, that the aid was ‘unlawful, since it was granted in breach of the procedural rules laid down in Article 93(3)’. Article 1 also stated: ‘Furthermore, the aid is also incompatible with the common market pursuant to Article 92(1), since it does not meet any of the conditions for exemption provided for in Article 92(2) and (3).’
               The applicants contest the correctness of the decision regarding the unlawful nature of the aid in question. They claim that there was no duty of notification and that, even if such a duty is assumed, the failure to notify docs not in itself imply that the aid was unlawful.
            
         1. The duty of notification
      
               83.
            
            
               Hibeg claims that in this case there was no requirement to give the Commission prior information with regard to the aid, as it was a matter of a guarantee given in accordance with Land Bremen guidelines which had already been approved by the Commission.
            
         
               84.
            
            
               That argument cannot be upheld, however. As pointed out above, (
                     75
                  ) the guarantee given by Land Bremen diverged in at least two points from the approved rules in the Bremen guidelines. First of all the aid in question took the form of a selbstschuldnerische Bürgschaft, whereas the guidelines in principle permitted only Ausfallbürgschaften, and secondly, contrary to the requirements of the guidelines, no premium had been required. In view not only of these divergences but also of the fact that the declaration of guarantee contained no express provision with regard to compliance with the guidelines, the German Government was obliged to inform the Commission in advance of the guarantee which it was proposed to give to Hibeg, since the Commission, as may be seen from Article 93 of the Treaty, is alone empowered to declare an aid compatible or incompatible with the common market.
            
         
               85.
            
            
               Since Article 93 requires a constant review of State aid, ‘the intention of the Treaty ... is that the finding that aid may be incompatible with the common market is to be arrived at, subject to review by the Court, by means of an appropriate procedure which it is the Commission's responsibility to set in motion’. (
                     76
                  )
               In that respect Article 93(3) provides that the Commission is to be informed ‘in sufficient time’ of any plans to grant or alter aid. The notification of the aid must take place at an appropriate time in the sense that the Commission is enabled to form an opinion before the implementation of the planned aid measure reported to it for a decision.
            
         
               86.
            
            
               It is true that the Commission was informed by a letter from the German Government dated 17 December 1991 of the guarantee at issue. That information was provided however only after the issue of the declaration of guarantee, which was signed on 21 November 1991. The notification of the guarantee, which the German Government was required to provide, accordingly cannot be regarded as appropriately timed in the sense that it would have been possible for the Commission to come to a decision about the measure before it was implemented.
               At any rate, on receipt of the letter of 17 December 1991, the Commission decided, in conformity with the case-law to which reference has been made, and with a statement of reasons, that the guarantee in question was not covered by the said guidelines, since it was to be regarded as new aid and as a result should have been reported to the Commission before it was implemented.
            
         
               87.
            
            
               In this case, therefore, the information was not provided at the proper time. I must now consider the consequences of that omission.
            
         2. The consequences of the absence of a notification in due time
      
               88.
            
            
               The applicants BV and Hibeg complain that the Commission did not apply Article 93(3) correctly and claim that a breach of the procedural rules contained in that provision does not lead to the illegality of the specific aid. With reference to the judgments in Case C-301/87 France v Commission, (
                        77
                     ) in Case C-142/87 Belgium v Commission (
                        78
                     ) and in Case C-354/90 Federation Nationale du Commerce Extérieur (
                     79
                  ) they state that the Commission cannot declare an aid unlawful simply because the Member State concerned has not reported it.
            
         
               89.
            
            
               In order to consider this plea it is appropriate to set out the essential characteristics of the obligations under Article 93(3) of the Treaty and to examine the consequences of failure to comply with them.
            
         
               90.
            
            
               Article 93(3) lays down a system of precautionary monitoring of plans to grant new aids or alter existing aids. It reads as follows: ‘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 92, 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.’
               That provision imposes a double obligation on Member States:
               
                        —
                     
                     
                        to inform the Commission of any plans to grant or alter aid, and
                     
                  
                        —
                     
                     
                        not to implement the proposed measure until the Community procedure for checking the compatibility of the aid with the common market has been completed.
                     
                  
         
               91.
            
            
               That double obligation has been regarded as especially binding. In Case 78/76 Steinike (
                     80
                  ) the Court decided that ‘with regard to new aid which the Member States intend to introduce a special procedure is provided and if it is not followed the aid is not regarded as being regularly introduced’. According to the judgment in Case 120/73 Lorenz,‘the prohibition on implementation [of aid] ... has a direct effect and gives rise to rights in favour of individuals, which national courts are bound to safeguard. ... The direct effect of the prohibition extends to all aid which has been implemented without being notified and, in the event of notification, operates during the preliminary period, and where the Commission sets in motion the contentious procedure, up to the final decision’. (
                     81
                  ) In the judgment in Case C-354/90, previously cited, (
                     82
                  ) the Court stated, in paragraph 12, that ‘the validity of measures giving effect to aid is affected if national authorities act in breach of the last sentence of Article 93(3) of the Treaty’ and that ‘national courts must offer to individuals in a position to rely on such breach the certain prospect that all the necessary inferences will be drawn, in accordance with their national law, as regards the validity of measures giving effect to the aid, the recovery of financial support granted in disregard of that provision and possible interim measures’. Finally, the Court held in Case 310/85 Deufil that ‘where, contrary to the provisions of Article 93(3), the proposed aid has already been granted, that decision may take the form of an order to the national authorities to recover the aid’. (
                     83
                  )
            
         
               92.
            
            
               It should be stressed that breach of the obligations in question has particularly grave consequences because it may result in serious distortions of trade. As the Court decided in the Heineken judgment, (
                     84
                  ) Article 93(3) of the Treaty is ‘essential for ensuring the proper functioning of the common market. The prohibition laid down by that article is intended to ensure that the aid measures do not come into effect before the Commission has had a reasonable period in which to consider the plan in detail and, if necessary, to initiate the procedure provided for in Article 93(2).’
            
         
               93.
            
            
               From the judgments mentioned it may be seen that essential significance is attached to observance of the Community procedure for monitoring of aids and that unless it is observed an aid cannot be regarded as having been lawfully introduced. In Point 7 of his Opinion in Case C-142/87, Advocate General Tesauro stated as follows on this subject: ‘That examination thus constitutes a legal condition of effectiveness of an essential nature [for the aid] , whose importance stems from the fact that the examination relates to the merits of the State intervention, entailing ... assessments of a political and economic nature made on the basis of a wide discretion.’ (
                     85
                  )
            
         
               94.
            
            
               It is true that in the judgments in Case C-301/87 and in Case C-142/87 already referred to (in footnotes 7 and 47), on which the applicants rely, the Court decided that the Commission is not competent to declare aids incompatible with the common market simply because the duty to inform the Commission of them has not been complied with, and that such an omission on the part of the Member State does not release the Commission from the obligation to examine the extent to which the aid was compatible with the common market. It may also be seen from those judgments that the Commission must examine the compatibility with the common market of every planned grant or alteration of an aid which comes to its notice, even if it is irregular because the Member State concerned has, before reporting it, implemented the aid measure in question contrary to Article 93(3) of the Treaty without awaiting the Commission's approval. The fact that the Commission may not regard an aid as incompatible with the common market exclusively because it has been irregularly introduced docs not, however, mean that it is not permissible, in deciding whether or not the aid is compatible with the common market, to take note of this illegality and draw the necessary conclusions therefrom. That may be seen from the fact that, according to the case-law, on the one hand the Commission's duty to examine the substance of any unreported aid docs not prevent the national courts from determining the illegality of the aid or the measures for implementing it, and that on the other hand the Commission's decision with regard to the compatibility of the aid with the common market docs not apply retroactively, so that in the event of the compatibility of the aid with the common market being established, defects of procedure which have already affected the validity of the national measure by which the aid was prematurely brought into force cannot be cured.
            
         
               95.
            
            
               In fact the Court has declared in paragraph 13 of the judgment in Case C-354/90, previously cited, that the finding that the Commission may not declare an aid illegal on the sole ground that the duty to notify has not been complied with ‘has no effect on the obligations of national courts deriving from the direct effect which the prohibition laid down by the last sentence of Article 93(3) of the Treaty has been held to have’. In the same judgment the Court further emphasized, in paragraph 16, that the Commission's final decision by which aid measures are declared compatible with the common market ‘docs not have the effect of regularizing ex post facto the implementing measures which were invalid because they had been taken in breach of the prohibition laid down by the last sentence of Article 93(3) of the Treaty, since otherwise the direct effect of that prohibition would be impaired and the interests of individuals which ... arc to be protected by national courts, would be disregarded. Any other interpretation would have the effect of according a favourable outcome to the nonobservance by the Member State concerned of the last sentence of Article 93(3) and would deprive that provision of its effectiveness.’
            
         
               96.
            
            
               Thus any aid prematurely implemented without notification, irrespective of how its substance is assessed, is and remains unlawful and the Commission (like the national courts in the context of their opportunities for upholding rights provided by domestic law) may, in the decision on whether or not the aid is compatible with the common market, declare it unlawful.
            
         
               97.
            
            
               In view of all those considerations, the Commission made a correct application of Article 93(3) of the Treaty in declaring, in the contested decision, by which moreover it found the aid at issue incompatible with the common market, that it was also illegal. The ‚ applicants’ argument to the contrary is therefore unfounded.
            
         D — The pleas in law concerning breach of the principle of the protection of legitimate expectation
      
               98.
            
            
               The German Government and Hibeg claim that the contested decision, by requiring the abolition and recovery of the aid, is frustrating the legitimate expectation of the creditors and the shareholders of BV, who were under the impression that the increase in BV's capital effected on the basis of the decision of the general meeting of 17 October 1991 by the transfer of the 74.9% share in KAE's capital was wholly lawful and not contrary to Articles 92 and 93 of the Treaty. For BV's shareholders and creditors there was nothing to show that the Commission would later, after the guarantee had been provided at the end of November 1991 and the GbR had been established at the end of December 1991, regard the transaction as aid. Moreover the withdrawal of the guarantee frustrated the legitimate expectation of the banks, which had assumed that the specific guarantee complied with the requirements of the Land Bremen guidelines which had been approved by the Commission.
            
         
               99.
            
            
               In the Court's case-law it is recognized that the principle of the protection of legitimate expectation also applies in the context of the provisions regarding State aid. (
                     86
                  ) It should be pointed out however that according to the case-law of the Court ‘a Member State whose authorities have granted aid contrary to the procedural rules laid down in Article 93 may not rely on the legitimate expectations of recipients in order to justify a failure to comply with the obligation to take the steps necessary to implement a Commission decision instructing it to recover the aid. If it could do so, Articles 92 and 93 of the Treaty would be set at naught, since national authorities would thus be able to rely on their own unlawful conduct in order to deprive decisions taken by the Commission under provisions of the Treaty of their effectiveness’. (
                     87
                  )
            
         
               100.
            
            
               The same considerations apply also to reliance on the legitimate expectation of persons other than the recipient of aid. If the possibility of relying on the legitimate expectation of third persons, for example the undertaking's creditors, were to be recognized, the Member States would then be placed in a position to justify subsequently aid granted in infringement of Community law. Moreover the protection of third persons against unlawful acts of the authorities of the Member State in question may be ensured before the national courts by the use of the appropriate legal remedies on the basis of the national provisions governing the liability of public bodies. (
                     88
                  ) The German Government cannot therefore claim to be relieved of the duty to recover the aid by reliance on the legitimate expectation of third persons.
            
         
               101.
            
            
               In so far as this plea is put forward by Hibeg, reference may again be made to the case-law of the Court to the effect that: ‘in view of the mandatory nature of the supervision of State aid by the Commission under Article 93 of the Treaty, undertakings to which an aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in that article. A diligent businessman should normally be able to determine whether that procedure has been followed.’ (
                     89
                  ) As Advocate General Darmon stated in Point 18 of his Opinion in Case 94/87 Commission v Germany, (
                     90
                  )‘an aid which has not been notified cannot give the recipient of that aid any legitimate expectations. Recipients arc under a duty to be prudent, vigilant and circumspect. Failure by recipients to investigate whether the aid in question has been notified rules out any valid claim to any legitimate expectations.’
            
         
               102.
            
            
               The same applies to reliance on the legitimate expectation of third persons other than the recipient of the aid, as for instance in this case the creditor banks. It was the duty of those banks to exercise the necessary circumspection and care and they were obliged to make the necessary check of the legality of the guarantee. As early as 24 November 1983 the Commission had made it clear in a communication published in the Official Journal of the European Communities (
                     91
                  ) that the recipients of aid not lawfully granted might be required to repay it. The communication stated: ‘The Commission ... wishes to inform potential recipients of State aid of the risk attaching to any aid granted them illegally, in that any recipient of an aid granted illegally, that is, without the Commission having reached a final decision, may have to refund the aid.’
            
         
               103.
            
            
               For the rest, the applicants cite no specific act or omission of the Commission on which the creditor banks might have based a legitimate expectation that the guarantee at issue was covered by the approved Bremen guidelines and was consequently compatible with the common market. Moreover there is nothing in the documents to indicate that the shareholders in question and the creditor banks had formed such an expectation. On the contrary, as regards BV's shareholders, the guarantee at issue is simply not mentioned in the invitation of September 1991 to the general meeting; (
                     92
                  ) as regards the creditor banks, it is not stated in the declaration of guarantee that the guarantee was granted in conformity with the Land Bremen guidelines approved by the Commission.
               My view is therefore that this plea in law should also be rejected.
            
         E — The pleas in law concerning the withdrawal of the guarantee
      
               104.
            
            
               The plaintiffs also contest the validity of the provision of the contested decision regarding the abolition and recovery of the aid. On the one hand they claim that the recovery of the aid is impossible and on the other hand they object that there is a breach of the principle of proportionality.
            
         1. The impossibility of recovering the aid
      
               105.
            
            
               The German Government claims that the reversal of the participation in BV's capital by repaying it to those who had contributed it is legally impossible. It would be contrary both to domestic German law and to Community law, as both are based on the principle that the capital of a limited liability company is to serve inter alia as a security for the company's creditors and thus cannot be diminished to their detriment. In that connection the German Government refers not only to provisions of domestic law but also to the Council Directive of 13 December 1976. (
                     93
                  ) That directive lays down, particularly in Articles 15 et seq. and 32 et seq., measures for the protection of creditors of limited liability companies. Article 15 prohibits distributions to shareholders if the result would be that the net assets would become lower than the amount of the subscribed capital. Under Article 32, in the event of a reduction in the subscribed capital, creditors are entitled to obtain security for claims which have not fallen due; no payment may be made for the benefit of the shareholders until the creditors have obtained satisfaction. In both legal systems, therefore, the principle applies that the nominal capital through which the interests of the company's creditors are to be protected may not be touched.
            
         
               106.
            
            
               The German Government's argument, however, concerns the impossibility of performing the duty of recovery imposed upon it by the contested decision and thus has no bearing on the validity of the contested decision. As the Court has decided, ‘any procedural or other difficulties in regard to the implementation of the contested measure cannot have any influence on the lawfulness of the measure’. (
                     94
                  ) This plea is therefore irrelevant in the context of these proceedings.
            
         
               107.
            
            
               It should however be mentioned that the Court recognizes as a defence against an action for infringement of the second subparagraph of Article 93(2) only the absolute impossibility of implementing the decision requiring the recovery of aid (
                     95
                  ) and that the principle that the nominal capital may not be touched does not result in any such impossibility of implementation. In Case 52/84 Commission v Belgium the Belgian Government, the defendant, had advanced arguments similar to those of the German Government in this case. It claimed inter alia that the reversal of the State's participation in the capital of the undertaking which had received the aid by the repayment of the capital to the investors was legally impossible as being contrary to both domestic and Community law. That line of argument did not convince the Court, which declared in its judgment that Belgium had failed to fulfil its obligations under the Treaty. (
                     96
                  )
               That plea too must therefore be rejected.
            
         2. Breach of the principle of proportionality
      
               108.
            
            
               Hibeg claims that in accordance with the principle of proportionality the Commission ought to have required the alteration of the aid and not its abolition. First it should be pointed out that the case-law with regard to aid granted in infringement of Article 93(3) of the Treaty has acknowledged the Commission's authority, in its decision on the compatibility of the aid with the common market, to require the Member States to abolish the aid and to adopt the necessary measures for its recovery. In the judgment in Case 173/73 Italy v Commission (
                        97
                     ) the Court stated as follows (in paragraph 9): ‘the spirit and general scheme of Article 93 imply that the Commission, when it establishes that an aid has been granted or altered in disregard of paragraph 3, must be able, in particular when it considers that this aid is not compatible with the common market having regard to Article 92, to decide that the State concerned must abolish or alter it, without being bound to fix a period of time for this purpose and with the possibility of referring the matter to the Court if the State in question does not comply with the required speed.’ Furthermore the Court has recently decided that ‘where, contrary to the provisions of Article 93(3), the proposed aid has already been granted, the decision may take the form of an order to the national authorities to recover the aid’. (
                     98
                  )
            
         
               109.
            
            
               The imposition of the requirement to abolish the aid by recovering it has been examined in the judgment in Case 142/87 Belgium v Commission, previously cited (in footnote 47), in relation to the principle of proportionality. In that case the applicant State (Belgium) had claimed that the requirement in the contested decision to abolish the aid by means of recovery was out of proportion to the objectives of Articles 92 and 93 of the Treaty inasmuch as the declaration of the debt by the Belgian State in the composition procedure would cause serious damage to other creditors. The Court rejected that objection on the ground that ‘recovery of unlawful aid is the logical consequence of the finding that it is unlawful. Consequently the recovery of State aid unlawfully granted for the purpose of reestablishing the previously existing situation cannot in principle be regarded as disproportionate to the objectives of the Treaty in regard to State aids.’ (
                     99
                  )
            
         
               110.
            
            
               On the basis of that case-law the abolition of the aid in this case cannot be regarded as a disproportionately oppressive measure.
               As far as concerns aid which, as in this case, has not been lawfully granted because the Member State concerned has neglected to inform the Commission before implementing the measure, the intention is to protect Community legality, as expressed in Articles 92 and 93 of the Treaty, by the abolition and recovery of the aid. It is clear that the fundamental principle laid down in Article 92(1) of the Treaty, of the unlawfulness of aid granted by States, would lose its effectiveness if the Commission were not authorized to require the recovery of aid unlawfully granted. The recovery of aid which is ab initio unlawful is necessary for the restoration of Community legality because the previous state of affairs, in particular in cases of the unlawful grant of aid which in addition is not compatible with the common market, (
                     100
                  ) can thereby be reestablished. As the Court emphasized in the Heineken judgment, Article 93(3) of the Treaty is ‘essential for ensuring the proper functioning of the common market’. (
                     101
                  ) In fact the failure to comply with the obligations imposed by that provision of notifying and suspending implementation of the aid measure has particularly grave consequences in the case of an aid which is incompatible with the common market, as it may result in serious distortions of competition. (
                     102
                  ) The recovery of the aid makes it possible to offset the competitive advantages which an undertaking has unlawfully received as a result of the premature payment of the aid. (
                     103
                  ) An alteration of the aid would not be an appropriate method of achieving that object as it would enable the undertaking which has received the aid to retain, if not entirely at least to some extent, the advantages it has unlawfully received.
               All this leads me to state that the abolition and recovery of the unlawful aid cannot, in view of the grave nature of the infringement and the serious consequences for the operation of the common market, be regarded as a measure which, regard being had to the aim pursued, would be disproportionately oppressive.
            
         
               111.
            
            
               I should like to point out in addition that the Court has recently decided with regard to the duty to state the reasons for requiring the abolition of an aid that ‘the Commission need not supply specific reasons in order to justify the exercise of the power’. (
                     104
                  ) Thus the decision by which the Commission decides as to the unlawful nature of an aid and its compatibility with the common market does not need to contain any especial statement of reasons concerning the abolition and recovery of the aid. The Commission must include a statement of reasons in the decision in so far as it is determined that the aid has been unlawfully granted and — where appropriate — that it is incompatible with the Treaty. (
                     105
                  ) In so far as the decision is lawfully and sufficiently reasoned in that respect the Commission may automatically require the abolition of the aid and its recovery, since the abolition of aid already paid and accordingly its recovery represent the logical consequence of the previously determined unlawful nature of the aid, and the reasons on which they arc based consist in the same considerations as have led to the determination of the illegality of the aid and its incompatibility with the common market.
               In view of all the foregoing considerations my opinion is that the obligation imposed by the contested decision to recover the aid is not disproportionate to the aims pursued by the Treaty provisions on State aid.
            
         F — The pleas in law concerning the default interest
      
               112.
            
            
               Finally, the German Government claims that the requirement contained in the decision for the payment of default interest as from the time at which the unlawful aid was granted finds no support in Community law. In the German Government's opinion it is for the State concerned to decide, in accordance with domestic law, whether and from when default interest is payable.
            
         
               113.
            
            
               Article 93 of the Treaty does not in fact expressly provide that the Commission may require the recovery of unlawful aid. However, in the endeavour to ensure the full effectiveness of the provision in question, the Court has recognized the legality of this Commission practice. According to the case-law the abolition envisaged in Article 93, ‘to be of practical effect ... may include an obligation to require repayment of aid granted in breach of the Treaty’. (
                     106
                  )
               The purpose of the recovery of a State aid unlawfully granted is, according to the case-law, ‘to reestablish the previously existing situation’. (
                     107
                  ) That purpose is achieved ‘once the aid in question, increased where appropriate by default interest, has been repaid by the recipient’. (
                     108
                  ) The obligation imposed on the German Government by the contested decision to demand recovery of the aid together with default interest thus finds support in Article 93(2) and corresponds to the purpose of the abolition envisaged in that provision, namely the reestablishment of the status quo by elimination of the economic advantages resulting from the aid and their consequences.
               In all those circumstances this plea must in my view be rejected.
            
         III — Costs
      
               114.
            
            
               Under Article 69(2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. Under Article 69(3), where each party succeeds on some and fails on other heads the Court may order that the costs be shared or that the parties bear their own costs.
               In Case C-62/95, in which I propose that the contested decision be declared void in so far as Hibeg is described as a recipient of the aid, the Commission, as the unsuccessful party, should be ordered to pay the costs.
               In Cases C-329/93 and C-63/95, in which I propose that the contested decision be declared void in so far as it declares the contested aid incompatible with the common market and that the remainder of the application be dismissed, each party having succeeded on some and failed on other heads, the parties should be ordered to bear their own costs.
            
         IV — Opinion
      
               115.
            
            
               In conclusion, on the basis of the foregoing considerations I propose that:
               
                        —
                     
                     
                        in Case C-62/95: Article 1(2) of Commission Decision 93/412/EEC of 6 April 1993 should be declared void;
                     
                  
                        —
                     
                     
                        in Cases C-329/93 and C-63/95:
                        
                                 1.
                              
                              
                                 Article 1(1) of the said decision should be declared void in so far as the aid granted in favour of Bremer Vulkan Verbund AG is declared incompatible with the common market;
                              
                           
                                 2.
                              
                              
                                 the remainder of the application by the Federal Republic of Germany and of the application by Bremer Vulkan Verbund AG should be dismissed;
                              
                           
                  
                        —
                     
                     
                        in Case C-62/95 the Commission should be ordered to pay the costs;
                     
                  
                        —
                     
                     
                        In Cases C-329/93 and C-63/95 each of the parties should be ordered to bear its own costs.
                     
                  
         (
            *1
         )	Original language: Greek.
      (
            1
         )	Decision 93/412/EEC, OJ 1993 L 185, p. 43.
      (
            2
         )	OJ 1992 C 171, p. 3.
      (
            3
         )	Case 85/76 Hoffmann-La Roche [1979] ECR 461, at paragraph 9, as regards proceedings in competition cases and in Case 234/84 Belgium v Commission [1986] ECR 2263, at paragraph 27, as regards proceedings regarding an aid.
      (
            4
         )	Cf. the Hoffmann-La Roche and Belgium v Commission judgments already cited (footnote 3) and the judgment in Case 264/82 Timex v Council and Commission [1985] ECR 849 (antidumping procedure). See also the judgments in Case 121/76 Moli v Commission [1971] 1977, at paragraph 20, and in Case 17/74 Transocean Marin Paint v Commission [1974] ECR 1063, at paragraph 15.
      (
            5
         )	OJ 1992 C 171, p. 3.
      (
            6
         )	Case C-303/88 Italy v Commission [1991] ECR I-1433, at paragraph 43.
      (
            7
         )	Case 301/87 France v Commission [1990] ECR 307, at para graph 31, and in Belgium v Commission, already cited (footnote 3), at paragraph 30.
      (
            8
         )	Case 323/82 Intermills v Commission [1984] ECR 3809, at paragraph 17.
      (
            9
         )	Belgium v Commission (already referred to in footnote 3), at paragraph 16.
      (
            10
         )	Ibid., at paragraph 21.
      (
            11
         )	Judgments of the Court in Case 18/57 Nold [1959] ECR 41, at p. 52, and in Case 185/85 Usinor [1986] ECR 2079, at paragraph 19. See also the judgments of the Court of First Instance in Case T-4/90 Speybrouck [1992] ECR II-33, at paragraph 89, in Case T-115/89 González Holguera [1990] ECR II-831, at paragraph 37, and in Case T-534/93 Grynberg and Hall [1994] ECRSC II-595, at paragraph 59.
      (
            12
         )	Germany v Commission [1963] ECR 63, at p. 69.
      (
            13
         )	Allania Fruchthandelsgesellschatt [1995] ECR I-3799, at paragraph 16.
      (
            14
         )	Germany v Commission (already cited in footnote 12), at p. 69.
      (
            15
         )	Paragraph 16 of the judgment. Sec also the judgments in Case 250/84 Undama (1986) ECR 117, at paragraphs 37 and 38, in Case C-350/88 Delacre [1990] ECR I-395, at paragraphs 15 and 16, and more recently the judgments in Case C-478/93 Netherlands v Commission [1995] ECR I-3081, at paragraphs 48 and 49, in Case C 122/94 Commission v Council [1996] ECR I-881, at paragraph 29, and in Case C-56/93 Belgium v Commission [1996] ECR I-723, at paragraph 86.
      (
            16
         )	See the cases cited below (footnotes 17 to 21).
      (
            17
         )	Italy v Commission (previously cited in footnote 6), at paragraph 34.
      (
            18
         )	Case C 225/91 Matra [1993] ECR I-3203, at paragraph 25.See also the recent judgment in Case C-56/93 Belgium v Commission (previously cited in footnote 15), at paragraph 11.
      (
            19
         )	Case 42/84 Remia [1985] ECR 2545, at paragraph 34, and in Joined Cases 142/84 and 156/84 BAT and Reynolds [1987] ECR 4487, at paragraph 62.
      (
            20
         )	Case 240/84 Toyo v Council [1987] ECR 1809, at paragraph 19, and in Case 255/84 Nachi Fujikoshi v Coimai [1987] ECR 1861, at paragraph 21. See also the judgment in Case C-174/87 Ricoh [1992] ECR I-1335, at paragraph 68.
      (
            21
         )	Case 138/79 Roquette Frères v Council [1980] ECR 3333, at paragraph 25. See also the judgments in Case 55/75 Balkan-Import-Export [1976] ECR 19, in Case 166/78 Italy v Council [1979] ECR 2575, at paragraph 14, and in Case C-56/93 (previously cited in footnote 18), at paragraphs 18 and 19. Cf. with regard to staff cases the judgments in Joined Cases 35/62 and 16/63 Leroy [1963] ECR 197 and in Case 26/85 Vaysse [1986] ECR 3131 and the decision of the Court of First Instance in Case T-45/91 McAvoy [1993] ECR II-83.
      (
            22
         )	Belgium v Commission (previously cited in footnote 3). (The case concerned the Belgian State's subscription of additional capital of an undertaking.) See also the judgment in Intermills, previously cited (footnote 8).
      (
            23
         )	Sec footnotes 15 to 20 above.
      (
            24
         )	The judgment in Maira (already cited in footnote 18), at paragraph 23.
      (
            25
         )	See Paragraph 133 of the Bürgerliches Gesetzbuch (Civil Code): ‘In interpreting a declaration of intent the true intention shall be sought without regard to the literal meaning of the declaration.’
      (
            26
         )	Sec R.-B. Lake, Letters of Intent: A Comparative Examination under English, US, French and West German Lam, The George Washington Journal of International Law and Economics, 1983/84 (Vol.18), p. 331, especially p. 345, and R.-B. Lake/TJ. Draetta, Letters of Intent and Other Precontractital Documents, Comparative Analysis and Forms, Butterworths, 1994, 2nd Ed., pp. 5, 6 and 83.
      (
            27
         )	Ibid.
      (
            28
         )	The Memorandum uses the expression ‘is intended’ and not ‘is agreed’.
      (
            29
         )	Sec also Point 29 of Advocate General Fennelly's Opinion in Case C 56/93 Briganti v Commission in which the judgment already cited (in footnote 15) was delivered.
      (
            30
         )	[1979] LCR 2575, at paragraph 15.
      (
            31
         )	The judgment in Matra, previously cited (footnote 18), at paragraph 28.
      (
            32
         )	[1990] ECR I-3083, at paragraph 28 et seq.
      (
            33
         )	See paragraph 28 of the judgment in CdF Chimie previously cited (in footnote 32).
      (
            34
         )	See paragraph 31 et seq. of the judgment in CdF Chinue previously cited (in footnote 32).
      (
            35
         )	Joined Cases C-89, C 104, C-114, C-116, C 117 and C 125 to C-129/85 [1993] LCR I-1307.
      (
            36
         )	Paragraph 14 of the judgment in Case C-234/84, previously cited (in footnote 3). See also the judgment in Case 40/85 Belgium v Commission [1986] ECR 2321, at paragraph 13.
      (
            37
         )	Case C-303/88 (previously cited in footnote 6) and Case C 305/89 [1991] ECR I-1603.
      (
            38
         )	Paragraph 19 of the judgment in Case C-305/89.
      (
            39
         )	Paragraph 20 of the judgment in Case C-305/89.
      (
            40
         )	Paragraph 22 of the judgment in Case C-303/88.
      (
            41
         )	In Point 12 of his Opinion in Case 305/89 (previously cited in footnote 37) Advocate General Van Gerven preferred the criterion of the ‘reasonable’ investor to the concept of the ‘private’ investor.
      (
            42
         )	Cf. C. Gavalda/G. Parlcani, Droit des affaires de l'Union Européenne, Paris, Litec, 1995, p. 330 (No 717), and Bellamy and Child, Corninoti Market Law of Competition, 4th Edition, 1993, p. 911, No 18-004.
      (
            43
         )	Case 173/73 Italy v Commission [1974] ECR 709 and in Case 730/79 Philip Morris [1980] ECR 2671.
      (
            44
         )	Philip Morris judgment (previously cited in footnote 43), at paragraph 11.
      (
            45
         )	Case 259/85 France v Commission [1987] ECR 4393, at paragraph 24.
      (
            46
         )	[1988] ECR 4067, at paragraph 19.
      (
            47
         )	Case C-142/87 Belgium v Commission [1990] ECR I-959, at paragraph 35.
      (
            48
         )	Previously cited in footnote 43.
      (
            49
         )	The Philip Morris judgment (previously cited in footnote 43), at paragraph 11.
      (
            50
         )	Paragraph 43 of the judgment (see footnote 47).
      (
            51
         )	Italy v Commission (previously cited in footnote 37), at paragraph 27.
      (
            52
         )	Sec also Point 19 of Advocate General Van Gcrven's Opinion, delivered on II October 1990, in Case C-303/88 referred to in footnote 37.
      (
            53
         )	In this respect sec J. Diancarelli, Le controle de la Cour de Justice des Communautés Européennes en mittlere d'aides publiques in L'actualité juridique — Droit administratif, 1993, p. 412, especially p. 422, and C Blumann, Régime des aides d'Etat: jurisprudence récenle de la Cour de Justice, 1989 1992, in Revue du Marché Commun et de l'Union Européenne, No 361, 1992, p. 726.
      (
            54
         )	Paragraph 38 of the judgment.
      (
            55
         )	(1985) ECR 809.
      (
            56
         )	Paragraph 23 of the judgment previously cited (in footnote 55).
      (
            57
         )	Paragraph 24 of the judgment previously cited (in footnote 55).
      (
            58
         )	See also the judgment in Joined Cases 62/87 and 72/87 Exécutif Régional Wallon v Commission [1988] ECR 1573, at paragraph 18.
      (
            59
         )	OJ 1990 L 380, p. 27.
      (
            60
         )	See the judgments in Philip Morris (previously cited in footnote 43), at paragraph 24, in France v Commission (previously cited in footnote 7), at paragraph 49, and in Case C-303/88 Italy v Commission (previously cited in footnote 6), at paragraph 34.
      (
            61
         )	Case C-400/92 Germany v Commission [1994] ECR I-4701, at paragraph 15.
      (
            62
         )	Council Directive of 26 January 1987 on aid to shipbuilding (87/167/EEC) (OJ 1987 L 69, p. 55).
      (
            63
         )	Commission Communication on Procedure C 18/89 (ex. NN 121/87 63/89). published in OJ 1991 C 45. p. 3.
      (
            64
         )	Cf. the judgments in Case 195/80 Michel [1981] ECR 2861, at paragraph 22, and in Case C-115/92 P Volger [1993] ECR I-6549, at paragraph 23. Cf. finally also the judgment in Joined Cases 64, 71 to 73 and 78/86 Sergio [1988] ECR 1399 (paragraph 52), according to which ‘as a result of the explanations given in the course of the proceedings, the argument that insufficient reasons were given may, in exceptional cases, lose it purpose and cease to justify the annulment of the decision in question’ (my emphasis).
      (
            65
         )	Amtsblatt der Freien Hansestadt Bremen No 35 of 15 June 1992, p. 279.
      (
            66
         )	Case C-47/91 Italy v Commission [1994] ECR I-4635, atparagraphs 24, 25 and 26.
      (
            67
         )	Sec above, Points 15 to 20.
      (
            68
         )	Sec above, Point 4.
      (
            69
         )	That section is to the effect that guarantees given to credit institutions, within the meaning of Paragraph 1 of the Gesetz über das Kreditwesen (Law on credit), are in principle to be Ausfallburgshaften.
      (
            70
         )	For the German Government's arguments on this question sec above. Point 23 et seq.
      (
            71
         )	Case 102/87 France v Commission (previously cited in footnote 46), at paragraph 15, and in Case C-301/87 France v Commission (previously cited in footnote 7), at paragraph 36.
      (
            72
         )	Staudiger/Hom, Kommentar zum BGB, Paragraph 771, point 11.
      (
            73
         )	Paragraphs 771 and 773(1)(1) of the Bürgerliches Gesetzbuch.
      (
            74
         )	Staudingcr/Horn, Paragraph 773, point 2; sec also W. Fihentscher, Schuldrecht, 8th edition, 1992, points 1004 and 1006.
      (
            75
         )	See above, point 72 et seq.
      (
            76
         )	Case C-354/90 fédération Nationale dit Commerce Extérieur [1991] ECR I-5505, at paragraph 9. See also the judgment in Case 78/76 Steinike [1977] ECR 595, at paragraph 9.
      (
            77
         )	Previously cited in footnote 7.
      (
            78
         )	Previously cited in footnote 47.
      (
            79
         )	Previously cited in footnote 76.
      (
            80
         )	Previously cited in footnote 76, at paragraph 9.
      (
            81
         )	[1973] ECR 1471, at paragraph 8. See also the judgments (delivered on the same day) in Case 122/73 Nordsee [1973] ECR 1511, in Case 121/73 Markmann [1973] ECR 1495 and in Case 141/73 Lohrey 1973 ECR 1527.
      (
            82
         )	See above, footnote 76, at paragraph 12.
      (
            83
         )	[1987] ECR 901, at paragraph 24.
      (
            84
         )	Joined Cases 91/83 and 127/83 [1984] ECR 3452, at paragraph 20.
      (
            85
         )	Previously cited in footnote 47.
      (
            86
         )	See inter alia the judgment in Deufil (previously cited in footnote 83) and the judgment in Case C-5/89 Commission v Germany [1990] ECR I-3437.
      (
            87
         )	Case C-5/89 (previously cited in footnote 86), at paragraph 17. Sec also the judgment in Joined Cases C-278/92, C-279/92 and C-280/92 Spain v Commission [1994] ECR I-4103, at paragraph 76.
      (
            88
         )	See in this connection the Opinion of Advocate General Lenz in Case 52/84 Commission v Belgium [1986] ECR 89.
      (
            89
         )	Case C-5/89 (previously cited in footnote 86), at para graph 14.
      (
            90
         )	[1989] LCR 175.
      (
            91
         )	OJ 1983 C 318. p. 3.
      (
            92
         )	See above, Point 12.
      (
            93
         )	Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent (OJ 1977 L 26, p. 1).
      (
            94
         )	Case 142/87 Belgium v Commission (previously cited in footnote 47), at paragraph 63. See also the judgment in Spain v Commission (previously cited in footnote 87), at paragraph 80.
      (
            95
         )	In all other cases in which the implementation of such a decision is difficult for the Member State in question, the Member State must submit ‘those problems for consideration by the Commission, together with proposals for suitable amendments to the decision in question. In such a case the Commission and the Member State concerned must respect the principle underlying Article 5 of the Treaty, which imposes a duty of genuine cooperation on the Member States and the Community institutions, and must work together in good faith with a view to overcoming difficulties whilst fully observing the Treaty provisions, and in particular the provisions on aid.’ See the judgment in Case 94/87 Commission v Germany [1989] ECR 175, at paragraph 9. See also the judgments in Commission v Belgium (previously cited in footnote 88), at paragraph 16, in Italy v Commission (previously cited in footnote 6), at paragraph 56 et seq., and from the more recent case-law the judgments in Case C-349/93 Commission v Italy [1995] ECR I-343, at paragraph 12, in Case C-348/93 Commission v Italy [1995] ECR I-673, at paragraph 16 et seq. and in Case C-350/93 Commission v Italy [1995] ECR I-699 el paragraph 15 et seq.
      (
            96
         )	See also Advocate General Lenz's Opinion in that case (previously cited in footnote 95).
      (
            97
         )	Previously cited in footnote 43.
      (
            98
         )	Spain v Commission (previously cited in footnote 87), at paragraph 78.
      (
            99
         )	Paragraph 66 of the judgment previously cited (in footnote 47). See also the judgments previously cited (in footnotes 83 and 87) in Deufil, at paragraph 24, and in Spain v Commission, at paragraph 75 as well as the two judgments previously cited (in footnote 95) in Case C-348/93, at paragraph 26, and in Case C-350/93, at paragraph 21. Cf. also the judgment in France v Commission (previously cited in footnote 7), at paragraph 59 et seq.
      (
            100
         )	The legality of an aid and its compatibility with the common market arc two questions independent one of another. Thus the recovery of an aid which the same decision declares compatible with the common market is a possibility. There docs not seem to be any case in which the Commission has required the recovery of an aid which is ex nunc compatible with the common market. In his Opinion in Case C 142/87 Belgium v Commission (previously cited in footnote 47), Advocate General Tesauro stated: ‘That perhaps represents excessive prudence since a more vigorous approach might make clearer the precarious nature of aid granted in disregard of the suspensory effect of Article 93(3)’ ( [1990] ECR 959 at p. 988, Point 12).
      (
            101
         )	Previously cited in footnote 84.
      (
            102
         )	The particularly serious nature of this infringement has led the Court to ascribe to the Commission — in an obiler dictum, it is true, but expressly — ‘the power ... to take immediate interim measures’ (Case 70/72 Commission v Germany [1973] UCR 813, at paragraph 20).
      (
            103
         )	Sec the judgments, previously cited (footnote 95), in Case C-348/93, at paragraph 27, and in Case C-350/93, at para grapli 22.
      (
            104
         )	Sec the judgment previously cited (in footnote 87) in Spain v Commission, at paragraph 78.
      (
            105
         )	Sec also the judgment in Commission v Germany previously cited (in footnote J 02), at paragraph 20.
      (
            106
         )	Commission v Germany (previously cited in footnote 102), at paragraphs 11 and 13.
      (
            107
         )	See the judgments referred to above (in footnote 99).
      (
            108
         )	See the judgments previously cited (in footnote 95) in Case C-348/93, at footnote 27, and in Case C-350/93, at paragraph 22.