Kingdom of Belgium v Commission of the European Communities.
Date: 1999-06-17
23 First of all, it must be borne in mind that Article 92(1) of the Treaty provides that any aid granted by a Member State, or through State resources in any form whatsoever, which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is incompatible with the common market.  In particular, measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, without therefore being subsidies in the strict meaning of the word, are similar in character and have the same effect are considered to constitute aid (Case C-200/97 Ecotrade [1998] ECR I-7907, paragraph 34).
25 The social character of such State measures is not sufficient to exclude them outright from classification as aid for the purposes of Article 92 of the Treaty (Case C-241/94 France v Commission [1996] ECR I-4551, paragraph 21, and Case C-342/96 Spain v Commission [1999] ECR I-2459, paragraph 23).  Article 92(1) of the Treaty does not distinguish between measures of State intervention by reference to their causes or their aims but defines them in relation to their effects (Case C-56/93 Belgium v Commission [1996] ECR I-723, paragraph 79, and Case C-241/94 France v Commission, cited above, paragraph 20).
26 According to established case-law, it is necessary to determine whether the increased reductions under the Maribel bis/ter scheme entail advantages accruing exclusively to certain undertakings or certain sectors and do not therefore fulfil the condition of specificity which constitutes one of the characteristics of the concept of State aid namely the selective character of the measures in question (see, to this effect, the judgment in France v Commission, cited above, paragraph 24, and Ecotrade, cited above, paragraph 40).
27 As the Belgian Government rightly pointed out at the hearing, it cannot be contended that the measures in question constitute State aid on the ground that the competent national authorities have a discretionary power in the application of the increased reduction of social charges (see France v Commission, cited above, paragraph 23).  In this instance, the conditions for the grant of the increased reductions in question are laid down by the Belgian legislature, in the aforementioned royal decrees, and leave the competent authorities no latitude, in particular in the choice of recipient undertakings or sectors.
28 Nor can it be contested, as both the Belgian Government and the Commission accept, that the restriction of the measures in question to manual workers and only to those manual workers whose working time exceeds a certain number of hours is not sufficient to support the conclusion that aid within the meaning of Article 92 of the Treaty exists.
29 However, as the Belgian Government acknowledges, the increased reductions are granted only to undertakings belonging to certain sectors of the processing industry defined in Article 1 of the Royal Decree of 14 June 1993 by reference to the statistical classification laid down in Regulation No 3037/90 and to the sectors defined in Articles 2 and 3 of the Royal Decree of 22 February 1994 and Article 1 of the Royal Decree of 21 June 1994.
30 The Belgian Government accepts that undertakings belonging to other sectors marked by the employment of manual labour are thus excluded from the benefit of the increased reductions.  These include undertakings belonging to the sectors of the processing industry not referred to in the royal decrees and undertakings in the tertiary sector and the building sector.
31 Having regard to the exclusion of those sectors, which, like those covered by the Maribel bis/ter scheme, employ manual workers, the Commission rightly found, in section V of the grounds of the contested decision, that the limitation of the increased reductions to certain sectors rendered those reduction measures selective, so that they fulfilled the condition of specificity.
The derogating character of the increased reductions
32 Neither the high number of benefiting undertakings nor the diversity and importance of the industrial sectors to which those undertakings belong warrant the conclusion that the Maribel bis/ter scheme constitutes a general measure of economic policy, as the Belgian Government claims.
33 According to the case-law of the Court, aid in the form of an aid programme may concern a whole economic sector and still be covered by Article 92(1) of the Treaty (Case 248/84 Germany v Commission [1987] ECR 4013, paragraph 18) and a measure designed to give the undertakings of a particular industrial sector a partial reduction of the financial charges arising from the normal application of the general social security system, without there being any justification for this exemption on the basis of the nature or general scheme of this system, must be regarded as aid (Case 173/73 Italy v Commission [1974] ECR 709, paragraph 33).
37 Moreover, as Community law stands at present, the Member States retain their powers to organise their social security systems (Case C-238/94 García and Others [1996] ECR I-1673, paragraph 15).  They may therefore pursue objectives of employment policy, such as those relied on by the Kingdom of Belgium, amongst which are, in particular, the maintenance of a high level of employment amongst manual workers and the maintenance of an industrial sector in order to balance the Belgian economy.  As regards social welfare costs, the Member States have even been urged by the Commission to reduce labour costs, as appears in particular from point 1 of its 1997 Communication, and from the `Guidelines on aid to employment' published in 1995 by the Commission (OJ 1995 C 334, p. 4, hereinafter `the Guidelines').
41 Even when a Member State states that it intends ultimately to extend to its entire economy measures initially restricted to certain sectors of activity and thereby generalise them, such a declared intention cannot be taken into account for avoiding application of Article 92(1) of the Treaty since, according to the case-law of the Court of Justice referred to in paragraph 25 above, such measures must be assessed solely in relation to their effects.
47 As regards the effects of the Maribel bis/ter scheme on intra-Community trade, it must be recalled that, according to the case-law of the Court, when State aid strengthens the position of an undertaking compared with other undertakings competing in intra-Community trade, the latter must be regarded as affected by the aid, even if the beneficiary undertaking is itself not involved in exporting.  Where a Member State grants aid to an undertaking, domestic production may for that reason be maintained or increased, with the result that undertakings established in other Member States have less chance of exporting their products to the market in that Member State (Joined Cases C-278/92 to C-280/92 Spain v Commission [1994] ECR I-4103, paragraph 40).
48 In the case of an aid programme, the Commission may confine its examination to the characteristics of the programme in question in order to determine whether it gives an appreciable advantage to the recipients in relation to their competitors and is likely to benefit essentially undertakings engaged in trade between Member States (Germany v Commission, cited above, paragraph 18). Moreover, in the case of unnotified aid, it is not necessary for the reasoning on which the Commission decision is based to contain an up-to-date assessment of the effect of the aid on competition and on trade between Member States (Case 301/87 France v Commission [1990] ECR I-307, paragraph 33).
52 Moreover, according to the case-law of the Court referred to in paragraphs 47 and 48 above, the Commission cannot be criticised, in these circumstances, for not providing sufficient reasoning to satisfy the requirements of Article 253 EC.
55 According to established case-law, in the application of Article 92(3) of the Treaty the Commission enjoys a wide discretion, the exercise of which involves assessments of an economic and social nature which must be made within a Community context (Case C-303/88 Italy v Commission [1991] ECR I-1433, paragraph 34).
64 It must be borne in mind first of all that the removal of unlawful State aid by means of recovery is the logical consequence of a finding that it is unlawful (Case C-142/87 Belgium v Commission [1990] ECR I-959, paragraph 66) and that the aim of obliging the State concerned to abolish aid found by the Commission to be incompatible with the common market is to restore the previous situation (Case C-350/93 Commission v Italy [1995] ECR I-699, paragraph 21). Furthermore, the Belgian Government has recognised that this is the function of repayment of amounts granted by way of unlawful aid.
65 By repaying the aid, the recipient forfeits the advantage which it had enjoyed over its competitors on the market, and the situation prior to payment of the aid is restored (Case C-350/93 Commission v Italy, cited above, paragraph 22).  Since repayment of the aid is meant only to restore the prior legal situation, it cannot in principle be regarded as a sanction.
66 It also follows from that function of repayment of aid that, as a general rule, save in exceptional circumstances, the Commission will not exceed the bounds of its discretion, recognised by the case-law of the Court (Case 310/85 Deufil v Commission [1987] ECR 901, paragraph 24), if it asks the Member State to recover the sums granted by way of unlawful aid since it is only restoring the previous situation.
68 As regards the contention that the requirement to recover the aid is disproportionate in relation to the breach of obligations of which the Kingdom of Belgium is accused, it must be borne in mind that, according to the case-law of the Court, the recovery of State aid unlawfully granted, for the purpose of restoring the situation existing previously, cannot in principle be regarded as disproportionate to the objectives of the provisions of the Treaty on State aid (Case C-142/87 Belgium v Commission, cited above, paragraph 66, and Joined Cases C-278/92 to C-280/92 Spain v Commission, cited above, paragraph 75).
72 As regards the Commission's practice, it must have been known, and it cannot be denied, that, before the Maribel bis/ter scheme was introduced, the Commission was accustomed to order recovery when it found that aid was incompatible with the rules of the Treaty on State aid (see, in this regard, Case 102/87 France v Commission [1988] ECR 4067, paragraph 9; Case C-301/87 France v Commission, cited above, paragraph 6; Case C-142/87 Belgium v Commission, cited above, paragraph 8; Case C-303/88 Italy v Commission, cited above, paragraph 2; and Case C-183/91 Commission v Greece [1993] ECR I-3131, paragraph 3).
Suspension of the increased reductions during the examination stage
76 Moreover, before directing the Belgian Government to suspend the Maribel bis/ter scheme, the Commission would have been obliged, under the case-law of the Court, to give the Kingdom of Belgium an opportunity to submit its comments on such a measure (Case C-303/88 Italy v Commission, cited above, paragraph 46, and Case C-39/94 SFEI and Others [1996] ECR I-3547, paragraph 43), which would have necessarily delayed suspension of the aid.
Lack of information as to the Commission's intentions
79 Thus, the Communication did not lead the Belgian Government to believe that it might decide against demanding repayment of the amounts granted under the Maribel bis/ter scheme.  Consequently, the Belgian Government must have been aware of the possibility that the unlawful aid would be required to be recovered and its claims of breach of the principle of legal certainty and of the rights of the defence must be dismissed.
Failure to state reasons
81 According to the case-law of the Court, in principle the requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the need which the addressee may have in receiving explanations (Joined Cases 296/82 and 318/82 Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985] ECR 809, paragraph 19, and Joined Cases C-329/93, C-62/95 and C-63/95 Germany and Others v Commission [1996] ECR I-5151, paragraph 31).
82 However, in the matter of State aid, where, contrary to the provisions of Article 88(3) EC, the proposed aid has already been granted, the Commission, which has the power to require the national authorities to order its repayment, is not obliged to provide specific reasons in order to justify the exercise of that power (Joined Cases C-278/92 to C-280/92 Spain v Commission, cited above, paragraph 78).
86 The Commission, which claims that this plea is inadmissible, rightly points out that the alleged absolute impossibility cannot invalidate the contested decision where it emerges only at the stage of implementation. According to the case-law of the Court, any procedural or other difficulties in regard to the implementation of the contested measure cannot have any influence on the lawfulness of the measure (Joined Cases C-278/92 to C-280/92 Spain v Commission, cited above, paragraph 80). However, the Commission may not impose, by a decision such as the contested decision, which would then be invalid, an obligation whose implementation would, from the beginning, be impossible in objective and absolute terms. Consequently, the Belgian Government's plea could be accepted only if recovery could never objectively have been carried out.
87 After the period for bringing an action for annulment against a Commission decision ordering a Member State to recover unlawful aid has expired, the argument that it is absolutely impossible to carry out such an order is the only defence which the Member State concerned may still advance in proceedings brought by the Commission on the basis of the second paragraph of Article 88(2) EC (Case 52/84 Commission v Belgium [1986] ECR 89, paragraphs 13 and 14; Case 94/87 Commission v Germany [1989] ECR 175, paragraph 8; Commission v Greece, cited above, paragraph 10, and Case C-280/95 Commission v Italy [1998] ECR I-259, paragraph 13).
88 In addition, a Member State which, in giving effect to a Commission decision on State aid, encounters unforeseen and unforeseeable difficulties or becomes aware of consequences overlooked by the Commission, must submit those problems to the Commission for consideration, together with proposals for suitable amendments to the decision in question.  In such cases, the Commission and the Member State must, by virtue of the rule imposing on the Member States and the Community institutions a duty of genuine cooperation which underlies, in particular, Article 10 EC, work together in good faith with a view to overcoming the difficulties whilst fully observing the Treaty provisions and, in particular, the provisions on aid (Case C-348/93 Commission v Italy [1995] ECR I-673, paragraph 17).  In view of those considerations, the arguments put forward by the Belgian Government in support of this plea must be examined having due regard for the limits set on this action for annulment.
90 As regards the administrative and practical difficulties which will incontestably arise owing to the large number of undertakings involved, as was made clear in Case C-280/95 Commission v Italy, cited above, these also do not warrant regarding recovery as technically impossible.  Despite the incontestable existence of the difficulties referred to by the Belgian Government at the time when the Commission ordered the aid to be recovered, there is nothing to prove that it is absolutely impossible for recovery to be carried out and that such absolute impossibility already existed when the Commission took its contested decision.  To hold, in those circumstances, that recovery is impossible would undermine the effectiveness of Community law in the matter of State aid, which cannot be allowed.