Philip Morris Holland BV v Commission of the European Communities.
Date: 1980-09-17
11 WHEN STATE FINANCIAL AID STRENGTHENS THE POSITION OF AN UNDERTAKING COMPARED WITH OTHER UNDERTAKINGS COMPETING IN INTRA-COMMUNITY TRADE THE     LATTER MUST BE REGARDED AS AFFECTED BY THAT AID . IN THIS CASE THE AID WHICH THE NETHERLANDS GOVERNMENT PROPOSED TO GRANT WAS FOR AN UNDERTAKING ORGANIZED FOR INTERNATIONAL TRADE AND THIS IS PROVED BY THE HIGH PERCENTAGE OF ITS PRODUCTION WHICH IT INTENDS TO EXPORT TO OTHER MEMBER STATES . THE AID IN QUESTION 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 . ON THE OTHER HAND THE AID 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 .
12 THESE CIRCUMSTANCES , WHICH HAVE BEEN MENTIONED IN THE RECITALS IN THE PREAMBLE TO THE DISPUTED DECISION AND WHICH THE APPLICANT HAS NOT CHALLENGED , JUSTIFY THE COMMISSION ' S DECIDING THAT THE PROPOSED AID WOULD BE LIKELY TO AFFECT TRADE BETWEEN MEMBER STATES AND WOULD THREATEN TO DISTORT COMPETITION BETWEEN UNDERTAKINGS ESTABLISHED IN DIFFERENT MEMBER STATES .
16 ACCORDING TO THE APPLICANT IT IS WRONG FOR THE COMMISSION TO LAY DOWN AS A GENERAL PRINCIPLE THAT AID GRANTED BY A MEMBER STATE TO UNDERTAKINGS ONLY FALLS WITHIN THE DEROGATING PROVISIONS OF ARTICLE 92 ( 3 ) IF THE COMMISSION CAN ESTABLISH THAT THE AID WILL CONTRIBUTE TO THE ATTAINMENT OF ONE OF THE OBJECTIVES SPECIFIED IN THE DEROGATIONS , WHICH UNDER NORMAL MARKET CONDITIONS THE RECIPIENT FIRMS WOULD NOT ATTAIN BY THEIR OWN ACTIONS . AID IS ONLY PERMISSIBLE UNDER ARTICLE 92 ( 3 ) OF THE TREATY IF THE INVESTMENT PLAN UNDER CONSIDERATION IS IN CONFORMITY WITH THE OBJECTIVES MENTIONED IN SUBPARAGRAPHS ( A ), ( B ) AND ( C ).
17 THIS ARGUMENT CANNOT BE UPHELD . ON THE ONE HAND IT DISREGARDS THE FACT THAT ARTICLE 92 ( 3 ), UNLIKE ARTICLE 92 ( 2 ), GIVES THE COMMISSION A DISCRETION BY PROVIDING THAT THE AID WHICH IT SPECIFIES ' ' MAY ' '  BE CONSIDERED TO BE COMPATIBLE WITH THE COMMON MARKET . ON THE OTHER HAND IT WOULD RESULT IN MEMBER STATES '  BEING PERMITTED TO MAKE PAYMENTS WHICH WOULD IMPROVE THE FINANCIAL SITUATION OF THE RECIPIENT UNDERTAKING ALTHOUGH THEY WERE NOT NECESSARY FOR THE ATTAINMENT OF THE OBJECTIVES SPECIFIED IN ARTICLE 92 ( 3 ).
24 THESE ARGUMENTS PUT FORWARD BY THE APPLICANT CANNOT BE UPHELD . IT SHOULD BE BORNE IN MIND THAT THE COMMISSION HAS A DISCRETION THE EXERCISE OF WHICH INVOLVES ECONOMIC AND SOCIAL ASSESSMENTS WHICH MUST BE MADE IN A COMMUNITY CONTEXT .
26 AS FAR AS CONCERNS ARTICLE 92 ( 3 ) ( C ) OF THE TREATY THE ARGUMENTS SUBMITTED BY THE APPLICANT ARE NOT RELEVANT . THE COMPATIBILITY WITH THE TREATY OF THE AID IN QUESTION MUST BE DETERMINED IN THE CONTEXT OF THE COMMUNITY AND NOT OF A SINGLE MEMBER STATE . THE COMMISSION ' S ASSESSMENT IS BASED FOR THE MOST PART ON THE FINDING THAT THE INCREASE IN THE PRODUCTION OF CIGARETTES ENVISAGED WOULD BE EXPORTED TO THE OTHER MEMBER STATES , IN A SITUATION WHERE THE GROWTH OF CONSUMPTION HAS SLACKENED AND THIS DID NOT PERMIT THE VIEW THAT TRADING CONDITIONS WOULD REMAIN UNAFFECTED BY THIS AID TO AN EXTENT CONTRARY TO THE COMMON INTEREST . THIS ASSESSMENT IS JUSTIFIED . THE FINDING THAT MARKET CONDITIONS IN THE CIGARETTE MANUFACTURING INDUSTRY SEEM APT , WITHOUT STATE INTERVENTION , TO ENSURE A NORMAL DEVELOPMENT , AND THAT THE AID CANNOT THEREFORE BE REGARDED AS ' ' FACILITATING ' '  THE DEVELOPMENT IS ALSO JUSTIFIED WHEN THE NEED FOR AID IS ASSESSED FROM THE STANDPOINT OF THE COMMUNITY RATHER THAN OF A SINGLE MEMBER STATE .