European Commission v Kingdom of Spain.
Date: 2012-12-11
45. It should be borne in mind in that regard that, according to the settled case-law of the Court, procedural rules are generally held to apply on the date on which they enter into force (Case C-334/08 Commission  v Italy  [2010] ECR I-6869, paragraph 60; Joined Cases C-201/09 P and C-216/09 P ArcelorMittal Luxembourg  v Commission  and Commission v ArcelorMittal Luxembourg and Others  [2011] ECR I-2239, paragraph 75 and the case-law cited; Case C-352/09 P ThyssenKrupp Nirosta  v Commission  [2011] ECR I-2359, paragraph 88; and Case C-17/10 Toshiba Corporation and Others  [2012] ECR, paragraph 47).
47. Consequently, the rules governing the conduct of the pre-litigation procedure, set out in Article 260(2) TFEU, are procedural rules applicable, as such, from the entry into force of that provision. It follows that those rules apply to any action for failure to fulfil obligations brought after the date on which they entered into force, notwithstanding the fact that the pre-litigation procedure was initiated before that date.
51. By the same token, as regards the principles of the non-retroactivity of more severe penalties and of the legality of criminal offences and penalties, it is sufficient to state that the FEU Treaty has not made any change concerning either the obligation upon Member States to adopt the measures to comply with a judgment of the Court finding that there has been a failure to fulfil obligations or the penalties which Member States risk if they breach that obligation.
66. It should be noted at the outset that, according to the settled case-law of the Court concerning Article 228(2) EC, the reference date for assessing whether there has been a failure to fulfil obligations under that provision is the date of expiry of the period prescribed in the reasoned opinion issued under that provision (see Case C-304/02 Commission  v France  [2005] ECR I-6263, paragraph 30, and Case C-369/07 Commission  v Greece  [2009] ECR I-5703, paragraph 43).
67. As Article 260(2) TFEU removed from infringement proceedings the stage relating to the issuing of a reasoned opinion, as has been pointed out in paragraph 43 above, the reference date which must be used for assessing whether there has been a failure to fulfil obligations is that of the expiry of the period prescribed in the letter of formal notice issued under that provision.
71. If the aid unlawfully paid has to be recovered from an undertaking which is insolvent or subject to insolvency proceedings the purpose of which is to realise the assets and clear the liabilities, it is settled case-law that the fact that that undertaking is in difficulty or insolvent does not affect the obligation of recovery (see, inter alia, Case C-280/05 Commission  v Italy , paragraph 28 and the case-law cited).
72. It is also settled case-law that the restoration of the previous situation and the elimination of the distortion of competition resulting from the unlawfully paid aid may in principle be achieved through registration of the liability relating to the repayment of the aid in question in the schedule of liabilities (see, to that effect, Case 52/84 Commission  v Belgium [1986] ECR 89, paragraph 14; Case C-142/87 Belgium v Commission , [1990] ECR I-959, ‘ Tubemeuse ’, paragraphs 60 to 62; Case C-277/00 Germany  v Commission  [2004] ECR I-3925, paragraph 85; and Case C-331/09 Commission  v Poland  [2011] ECR I-2933, paragraph 60).
73. In the present case, it is common ground that the Autonomous Community of the Basque Country did not submit an application for registration of the liability relating to the repayment of the unlawful aid in question in the schedule of liabilities in the CMD insolvency proceedings until 10 June 2010, it being stated that that application related only to a minimal part of the aid in respect of which repayment had been required by Decision 91/1. That application subsequently underwent a number of corrections, the last of which was submitted on 7 December 2011. All those steps took place after the expiry of the period prescribed in the supplementary letter of formal notice.
74. It must thus be held that, as of 22 May 2010 – the date on which the period prescribed in the supplementary letter of formal notice expired – the liability relating to the repayment of the unlawful aid in question had not been registered in the schedule of liabilities in the CMD insolvency proceedings.
75. In those circumstances, the Kingdom of Spain cannot claim that, within the prescribed period, it took all the measures necessary to comply with the judgment in Commission  v Spain .
96. Having held that the Kingdom of Spain failed, within the period prescribed in the supplementary letter of formal notice, to comply with the judgment in Commission  v Spain , the Court may impose on that Member State the payment of a penalty payment if the failure to fulfil obligations continues up to the time of the Court’s examination of the facts (Case C-369/07 Commission  v Greece , paragraph 59 and the case-law cited).
103. However, and contrary to the assertions made by the Kingdom of Spain, that fact is not in itself sufficient to mean that the obligation to comply with the judgment in Commission v Spain has been met.
104. As the Court has ruled on numerous occasions, registration of the liability relating to the repayment of the aid in question in the schedule of liabilities can meet the recovery obligation only if, where the State authorities are unable to recover the full amount of aid, the insolvency proceedings result in the winding up of the undertaking which received the unlawful aid, that is to say, in the definitive cessation of its activities (see, to that effect, Commission  v Belgium , paragraphs 14 and 15; Commission  v Poland , paragraphs 63 to 65; and Case C-454/09 Commission  v Italy  [2011] ECR, paragraph 36).
105. It is important to bear in mind, in that regard, that the purpose underlying the recovery of aid declared incompatible with the common market is to remove the distortion of competition caused by the competitive advantage which the recipient of the aid has enjoyed in the market as compared with its competitors, thereby restoring the situation which existed before the aid was paid (see, to that effect, Case C-348/93 Commission  v Italy  [1995] ECR I-673, paragraph 27, and Commission  v Poland , paragraph 56).
114. In those circumstances, the Court considers that an order imposing a penalty payment on the Kingdom of Spain is an appropriate financial means by which to encourage the Kingdom of Spain to take the measures necessary to put an end to the infringement established and to ensure full compliance with Decision 91/1 and the judgment in Commission  v Spain .
c) The amount of the penalty payment
i) Initial observations
115. It is for the Court to assess in each case, in the light of the circumstances of the case, the financial penalties to be imposed (see Case C-304/02 Commission v France , paragraph 86, and Case C-177/04 Commission  v France  [2006] ECR I-2461, paragraph 58).
116. For those purposes, the Commission’s suggestions cannot bind the Court and merely constitute a useful point of reference. Similarly, guidelines such as those contained in the communications of the Commission are not binding on the Court but contribute to ensuring that the Commission’s actions are transparent, foreseeable and consistent with legal certainty (see Case C-70/06 Commission  v Portugal  [2008] ECR I-1, paragraph 34, and Case C-369/07 Commission  v Greece , paragraph 112).
117. As regards the imposition of a penalty payment, the Court has held that such a penalty must be decided upon according to the degree of pressure needed in order to persuade the defaulting Member State to comply with a judgment establishing a failure to fulfil obligations and to alter its conduct in order to bring to an end the infringement complained of (see, to that effect, Case C-304/02 Commission  v France , paragraph 91).
118. In exercising its discretion, it is for the Court to set the penalty payment at a level that is both appropriate to the circumstances and proportionate to the infringement established and to the ability to pay of the Member State concerned (see Case C-304/02 Commission  v France , paragraph 103, and Case C-177/04 Commission  v France , paragraph 61).
119. Accordingly, in the assessment carried out by the Court, the criteria which must be taken into account in order to ensure that penalty payments have coercive force and that European Union law is applied uniformly and effectively are, in principle, the duration of the infringement, its degree of seriousness and the ability of the Member State concerned to pay. In applying those criteria, the Court is required to have regard, in particular, to the effects on public and private interests of failure to comply and to the urgency with which the Member State concerned must be induced to fulfil its obligations (see Case C-304/02 Commission  v France , paragraph 104; Case C-177/04 Commission  v France , paragraph 62; and Commission  v Portugal , paragraph 39).
ii) The duration of the infringement
120. The duration of the infringement must be assessed by reference to the time when the Court assesses the facts, not the time at which the case is brought before it by the Commission (see Case C-177/04 Commission  v France , paragraph 71, and Commission  v Portugal , paragraph 45).
125. As regards the seriousness of the infringement, the vital nature of the rules of the FEU Treaty on State aid must be borne in mind (Case C-369/07 Commission  v Greece , paragraph 118).
126. The rules on which both Decision 91/1 and the judgment in Commission  v Spain  are based are the expression of one of the essential tasks with which the European Union is entrusted under Article 3(3) TEU – namely the establishment of an internal market – and under Protocol No 27 on the internal market and competition, which, pursuant to Article 51 TEU, forms an integral part of the Treaties and under which the internal market is to include a system ensuring that competition is not distorted (see Case C-496/09 Commission  v Italy , paragraph 60).
127. The importance of the European Union rules infringed in a case such as this is reflected, in particular, in the fact that repayment of aid declared unlawful and incompatible with the common market eliminates the distortion of competition caused by the competitive advantage afforded by the aid and that, by repaying the aid, the recipient forfeits the advantage which it had enjoyed over its competitors on the market (see, to that effect, Case C-350/93 Commission  v Italy  [1995] ECR I-699, paragraph 22, and Germany  v Commission , paragraph 75).
131. As regards the Kingdom of Spain’s ability to pay, it is necessary to take into account recent trends in inflation and the GDP of that Member State at the time of the Court’s examination of the facts.
132. In that regard, the Kingdom of Spain’s argument that the ability to pay must, in the present case, reflect that of the Autonomous Community of the Basque Country and not that of the Member State itself cannot be accepted. It is sufficient to recall in that respect that the fact that a Member State has conferred on its regions responsibility for the recovery of aid which is unlawful and incompatible with the common market cannot have any bearing on the application of Article 260 TFEU. While each Member State may freely allocate internal central and regional powers as it sees fit, the fact remains that the Member State alone is responsible towards the European Union under Article 260 TFEU for compliance with obligations arising under European Union law (see, in connection with Article 226 EC, Case C-87/02 Commission  v Italy  [2004] ECR I-5975, paragraph 38).
v) The frequency of the penalty payment
140. It should be noted at the outset that, in exercising the discretion conferred on it in such matters, the Court is empowered to impose a penalty payment and a lump sum payment cumulatively (Case C-369/07 Commission  v Greece , paragraph 143).
141. The decision whether to impose a lump sum payment must, in each individual case, depend on all the relevant factors pertaining both to the particular nature of the infringement established and to the individual conduct of the Member State involved in the procedure initiated pursuant to Article 260 TFEU. That provision confers a wide discretion upon the Court in deciding whether or not to impose such penalties (see, to that effect, Case C-369/07 Commission  v Greece , paragraph 144).
142. In the present case, all the legal and factual circumstances culminating in the breach of obligations established indicate that, if the future repetition of similar infringements of European Union law is to be effectively prevented, a dissuasive measure must be adopted, such as a lump sum payment.
143. Accordingly, it is for the Court, in exercising its discretion, to determine the amount of the lump sum payment in a manner that is appropriate to the circumstances and proportionate both to the breach that has been established and the ability to pay of the Member State concerned (Case C-369/07 Commission  v Greece , paragraph 146).
144. Relevant considerations in this respect include factors such as the length of time for which the breach of obligations complained of has persisted since the judgment establishing it was delivered, and the seriousness of the infringement (see Case C-496/09 Commission  v Italy , paragraph 94).