Kingdom of Spain v Commission of the European Communities.
Date: 1997-01-14
15 As the Court has held, a programme of regional aid may fall within one of the derogations in Article 92(3)(a) and (c).  In that respect the use of the words `abnormally' and `serious' in the derogation contained in Article 92(3)(a) shows that it concerns only areas where the economic situation is extremely unfavourable in relation to the Community as a whole.  The derogation in Article 92(3)(c), on the other hand, is  wider in scope inasmuch as it permits the development of certain areas in a Member State which are less favoured in relation to the national average without being restricted by the economic conditions laid down in Article 92(3)(a), provided such aid `does not adversely affect trading conditions to an extent contrary to the common interest' (see Case 248/84 Germany v Commission [1987] ECR 4013, paragraph 19).
16 Conversely, the absence of that condition in the derogation under Article 92(3)(a) implies greater latitude in granting aid to undertakings in regions which do meet the criteria laid down in that derogation.
18 It has consistently been held that Article 92(3) gives the Commission a discretion the exercise of which involves economic and social assessments which must be made in a Community context (see, in particular, Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraph 24, and Case 310/85 Deufil v Commission [1987] ECR 901, paragraph 18).
24 Moreover, as noted in paragraph 6 above, the Commission's initial decision to raise no objections to the aid in issue was based on two grounds, one of which was specifically that there were no problems of overcapacity. When the Court said, at paragraph 38 of its judgment in Cook, that the Commission should have initiated the procedure under Article 93(2) of the Treaty in order to ascertain, after obtaining all the requisite opinions, whether its assessment in that regard was correct, that was an implicit acceptance that such assessment might relate to such a problem.
34 It must be borne in mind first of all that, where the Commission enjoys a significant freedom of assessment, as is the case when it is applying Article 92 of the Treaty, the Courts, when examining the lawfulness of the exercise of such freedom, cannot substitute their own assessment of the matter for that of the competent authority but must restrict themselves to examining whether the assessment of the competent authority contains a manifest error or constitutes a misuse of power (see, in particular, Case 57/72 Westzucker v Einfuhr- und Vorratsstelle für Zucker [1973] ECR 321, paragraph 14).
47 It must be borne in mind first of all that abolishing unlawful aid by means of recovery is the logical consequence of a finding that it is unlawful. Consequently, the recovery of State aid unlawfully granted, for the purpose of restoring the previously existing situation, cannot in principle be regarded as disproportionate to the objectives of the Treaty in regard to State aids (Case C-142/87 Belgium v Commission [1990] ECR I-959, paragraph 66).  The same applies to the charging of interest in respect of the period between the payment of the aid and its actual repayment.
48 Moreover, 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 the recipient undertaking 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 of their effectiveness decisions taken by the Commission under provisions of the Treaty (Case C-5/89 Commission v Germany [1990] ECR I-3437, paragraph 17).
49 It is true that the Spanish Government's plea alleging frustration of the recipient undertaking's legitimate expectations is submitted not so much in order to avoid the obligation entailed in implementing the Commission's decision as to challenge the validity of that decision before the Court.
50 In the light of the circumstances of the case, however, such a plea is unfounded.
51 As the Court held at paragraph 14 of its judgment in Commission v Germany, cited above, 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 cannot, 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 operator should normally be able to determine whether that procedure has been followed.
52 In this case, it is not contested that, contrary to the obligations imposed on the Member States by Article 93(3) of the Treaty, the aid in question was granted without prior notification.
53 The fact that the Commission initially decided not to raise any objections to the aid in issue cannot be regarded as capable of having caused the recipient undertaking to entertain any legitimate expectation since that decision was challenged in due time before the Court, which annulled it.  However regrettable it may be, the Commission's error cannot erase the consequences of the unlawful conduct of the Kingdom of Spain.
54 The contested decision cannot therefore be regarded, either in so far as it requires repayment of the aid in issue or in so far as it requires payment of interest thereon, as frustrating the legitimate expectations of the recipient undertaking.