Federal Republic of Germany v Commission of the European Communities.
Date: 1994-10-05
12 By its first plea, the German Government argues that the provisions of the Directive alone apply to the proposed aid, on the ground that the Directive takes precedence over the general provisions of Article 92(3)(a), (b) and (c) of the Treaty. Article 4(7) of the Directive, which sets out the specific criteria which must be satisfied so that in each case the aid may be regarded as compatible with the common market, does not mention the criterion of the necessity of the aid, included by the Commission in its statement of reasons, and provides only for a procedure of simple verification designed to establish whether the proposed aid meets the OECD criteria.
13 As the Court pointed out in its judgment in Joined Cases C-356/90 and C-180/91 Belgium v Commission [1993] ECR I-2323, at paragraphs 25 and 26, it follows from the structure and purpose of Article 92 that paragraph 3 of that article introduces the possibility of derogating, in certain specified cases, from the prohibition of aid which would otherwise be incompatible. Moreover, Article 92(3)(d) allows the Council, acting by a qualified majority on a proposal from the Commission, to increase the range of categories of aid which may be regarded as compatible with the common market over and above those set out in subheadings (a), (b) and (c).
15 As the Court has already pointed out in its judgment in Belgium v Commission, cited above, with regard to the sixth directive ° Directive 87/167/EEC of 26 January 1987 on aid to shipbuilding (OJ 1987 L 69, p. 55) ° 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 (paragraph 30).
20 First, by providing that the aid in question "may" be deemed compatible with the common market if it complies with the provisions of the abovementioned OECD Agreement, Article 4(7) confers a discretion on the Commission. Second, according to the second subparagraph of Article 4(7) the Commission is required not only to satisfy itself that the aid complies with the OECD criteria but also to verify the particular development content of the proposed aid.
21 It is precisely the examination of this particular content which enables the Commission to ensure that aid based on Article 4(7) and intended to reduce the cost of vessels for certain developing countries pursues, in the light of the specific conditions of its application, a genuine development objective and does not, despite the fact that it complies with the OECD criteria, constitute aid in favour of a shipyard in a Member State which must be subject to the ceiling as specified in the preceding paragraphs of Article 4 in respect of production aid in favour of shipbuilding and ship conversion. Consequently, if this discretion were to be denied to the Commission, Member States could make payments exceeding the ceiling in question in order to improve the financial position of their shipyards, even though such aid would not be necessary to secure the objective of development set out in Article 4(7).