Kingdom of Belgium v Commission of the European Communities.
Date: 1986-07-10
13 IT MUST BE OBSERVED THAT BY VIRTUE OF ARTICLE 92 ( 1 ) OF THE TREATY , THE PROVISIONS OF THE TREATY CONCERNING STATE AID APPLY TO AID GRANTED BY A MEMBER STATE OR THROUGH STATE RESOURCES ' IN ANY FORM WHATSOEVER ' . IT FOLLOWS , AS THE COURT HELD IN ITS JUDGMENT OF 14 NOVEMBER 1984 ( CASE 323/82 SA INTERMILLS V COMMISSION ( 1984 ) ECR 3809 ), THAT NO DISTINCTION CAN BE DRAWN BETWEEN AID GRANTED IN THE FORM OF LOANS AND AID GRANTED IN THE FORM OF A SUBSCRIPTION OF THE CAPITAL OF AN UNDERTAKING . AID TAKING EITHER FORM FALLS WITHIN THE PROHIBITION CONTAINED IN ARTICLE 92 , WHERE THE CONDITIONS SET OUT THEREIN ARE FULFILLED .
14 AN APPROPRIATE WAY OF ESTABLISHING WHETHER SUCH A MEASURE IS A STATE AID IS TO APPLY THE CRITERION WHICH WAS MENTIONED IN THE COMMISSION ' S DECISION AND , MOREOVER , WAS NOT CONTESTED BY THE BELGIAN GOVERNMENT , OF DETERMINING TO WHAT EXTENT THE UNDERTAKING WOULD BE ABLE TO OBTAIN THE SUMS IN QUESTION ON THE PRIVATE CAPITAL MARKETS . IN THE CASE OF AN UNDERTAKING WHOSE CAPITAL IS HELD BY THE PUBLIC AUTHORITIES , THE TEST IS , IN PARTICULAR , WHETHER IN SIMILAR CIRCUMSTANCES A PRIVATE SHAREHOLDER , HAVING REGARD TO THE FORESEEABILITY OF OBTAINING A RETURN AND LEAVING ASIDE ALL SOCIAL , REGIONAL-POLICY AND SECTORAL CONSIDERATIONS , WOULD HAVE SUBSCRIBED THE CAPITAL IN QUESTION .
15 AS THE BELGIAN GOVERNMENT HAS OBSERVED , A PRIVATE SHAREHOLDER MAY REASONABLY SUBSCRIBE THE CAPITAL NECESSARY TO SECURE THE SURVIVAL OF AN UNDERTAKING WHICH IS EXPERIENCING TEMPORARY DIFFICULTIES BUT IS CAPABLE OF BECOMING PROFITABLE AGAIN , POSSIBLY AFTER A REORGANIZATION . HOWEVER , IN THIS CASE , AT THE TIME WHEN THE CAPITAL WAS SUBSCRIBED THE UNDERTAKING IN QUESTION HAD FOR SEVERAL YEARS BEEN MAKING VERY SUBSTANTIAL LOSSES RELATIVE TO ITS TURNOVER , ITS SURVIVAL HAD ALREADY NECESSITATED THE RECONSTITUTION OF ITS CAPITAL BY THE PUBLIC AUTHORITIES ON SEVERAL OCCASIONS AFTER IT HAD BEEN COMPLETELY EXHAUSTED , AND ITS PRODUCTS HAD TO BE SOLD ON A MARKET IN WHICH THERE WAS EXCESS CAPACITY .
16 IN SO FAR AS THE BELGIAN GOVERNMENT CONTENDS THAT THE SUBSCRIPTION OF CAPITAL IN QUESTION WAS LINKED TO THE IMPLEMENTATION OF A PLAN FOR REORGANIZING THE UNDERTAKING , IT MUST BE EMPHASIZED THAT THE LEGALITY OF THE CONTESTED DECISION IS TO BE ASSESSED IN THE LIGHT OF THE INFORMATION AVAILABLE TO THE COMMISSION WHEN THE DECISION WAS ADOPTED . ALTHOUGH THE EXISTENCE OF A REORGANIZATION PLAN WAS IN FACT BRIEFLY MENTIONED BY THE BELGIAN AUTHORITIES IN THEIR CORRESPONDENCE WITH THE COMMISSION , THE CONTENT OF THAT PLAN WAS NEVER NOTIFIED TO IT IN THE COURSE OF THE PROCEDURE UNDER ARTICLE 93 OF THE TREATY .
22 DESPITE ITS CONCISE NATURE - WHICH IS DUE IN PART TO LACK OF COOPERATION BY THE BELGIAN GOVERNMENT - THE STATEMENT OF REASONS MAKES IT CLEAR THAT , IN ORDER TO ESTABLISH THAT THE TWO MATERIAL REQUIREMENTS WERE FULFILLED , THE COMMISSION TOOK ACCOUNT OF THE FACT THAT THE UNDERTAKING CONCERNED EXPORTED ABOUT 40% OF ITS OUTPUT TO OTHER MEMBER STATES , OF THE EXCESS PRODUCTION CAPACITY EXISTING IN THE MARKET IN QUESTION AND OF THE FACT THAT , IN THOSE CIRCUMSTANCES , THE AID GRANTED TO THE UNDERTAKING HAD THE EFFECT OF REDUCING ITS FINANCIAL COSTS BY COMPARISON WITH THOSE OF ITS COMPETITORS . IN THE ABSENCE OF ANY INFORMATION TO THE CONTRARY , THOSE FINDINGS ENTITLED THE COMMISSION TO CONCLUDE THAT THE AID IN QUESTION AFFECTED TRADE BETWEEN MEMBER STATES AND DISTORTED , OR THREATENED TO DISTORT , COMPETITION WITHIN THE MEANING OF ARTICLE 92 ( 1 ) OF THE TREATY .
27 IN THAT CONNECTION , IT IS APPROPRIATE TO STRESS THAT , AS THE COURT HELD IN PARTICULAR IN ITS JUDGMENT OF 13 FEBRUARY 1979 IN CASE 85/76 ( HOFFMANN-LA ROCHE V COMMISSION ( 1979 ) ECR 461 ), OBSERVANCE OF THE RIGHT TO BE HEARD IS , IN ALL PROCEEDINGS INITIATED AGAINST A PERSON WHICH ARE LIABLE TO CULMINATE IN A MEASURE ADVERSELY AFFECTING THAT PERSON , A FUNDAMENTAL PRINCIPLE OF COMMUNITY LAW WHICH MUST BE GUARANTEED EVEN IN THE ABSENCE OF ANY RULES GOVERNING THE PROCEDURE IN QUESTION . THE COURT HAS CONSISENTLY HELD THAT , IN ORDER TO RESPECT THE PRINCIPLE OF THE RIGHT TO BE HEARD , THE PERSON AGAINST WHOM AN ADMINISTRATIVE PROCEDURE HAS BEEN INITIATED MUST HAVE BEEN AFFORDED THE OPPORTUNITY , DURING THAT PROCEDURE , TO MAKE KNOWN HIS VIEWS ON THE TRUTH AND RELEVANCE OF THE FACTS AND CIRCUMSTANCES ALLEGED AND ON THE DOCUMENTS USED BY THE COMMISSION TO SUPPORT ITS CLAIM THAT THERE HAS BEEN AN INFRINGEMENT OF COMMUNITY LAW .
28 BY STATING IN ITS DECISION THAT TWO MEMBER STATES AND TWO TRADE ASOCIATIONS IN THE INDUSTRY IN QUESTION SHARED ITS CONCERN ABOUT THE BELGIAN AID , THE COMMISSION IN FACT GAVE THE IMPRESSION THAT IT HAD USED THOSE DOCUMENTS TO SUPPORT ITS FINDING THAT THE AID IN QUESTION WAS INCOMPATIBLE WITH THE COMMON MARKET AND HENCE HAD TO BE ABOLISHED .
29 IN THAT CONNECTION THE COMMISSION CANNOT RELY ON THE EXISTENCE IN THOSE DOCUMENTS OF INFORMATION COVERED BY BUSINESS CONFIDENTIALITY . IN SO FAR AS THE MEMBER STATE CONCERNED WAS NOT AFFORDED AN OPPORTUNITY TO COMMENT ON THAT INFORMATION , THE COMMISSION MAY NOT USE IT IN ITS DECISION WITH REGARD TO THAT STATE .