Kingdom of Spain v Commission of the European Communities.
Date: 2004-07-15
50. It is clear, however, from the judgment in Case C-5/01 Belgium  v Commission [2002] ECR I-11991, paragraph 60, that that period cannot be regarded as a mandatory time‑limit subject to withdrawal of competence, the expiry of which would prevent the Commission from deciding on the compatibility of the proposed aid measure with the Treaty.
51. Having regard to the general context in which the three‑month period is placed and its objective, were a decision not to be taken by the Commission within that period the Member State concerned would be prevented from implementing that aid measure and could not obtain an authorisation decision to that effect from the Commission under the procedure initiated by the latter. Such a situation would be contrary to the orderly functioning of the rules on State aid, since the Commission’s authorisation could be obtained only as a result of a new procedure initiated in accordance with the Steel Aid Code, which would delay the Commission’s decision without offering any additional safeguard to the Member State concerned (Case C-5/01 Belgium  v Commission , paragraphs 58 and 59).
52. It is true that, having initiated the investigation procedure in April 1996, the Commission had a duty, in accordance with the principle of sound administration, to adopt a definitive decision within a reasonable period from receipt of the observations of the Member State concerned, any interested parties and possibly other Member States. If the duration of the investigation procedure is excessive it is likely to make it more difficult for the Member State concerned to refute the Commission’s arguments, thus infringing the rights of the defence (see, in particular, in relation to the pre-litigation procedure provided for in Article 226 EC, Case C-207/97 Commission  v Belgium  [1999] ECR I-275, paragraph 25).
53. It follows from the case-law that the reasonableness of such a period must be appraised in the light of the circumstances specific to each case and, in particular, its context, the various procedural stages followed by the Commission, the conduct of the parties in the course of the procedure, the complexity of the case and its importance for the various parties involved (see SCK and FNK  v Commission , paragraph 57, and, by analogy, with regard to judicial proceedings, Case C‑185/95 P Baustahlgewebe  v Commission  [1998] ECR I-8417, paragraph 29).
68. The Steel Aid Code, adopted on the basis of Article 95 CS, nevertheless authorises aid to be granted to the steel industry in cases exhaustively listed and in accordance with procedures it prescribes. Article 6(4) of that code provides, inter alia, that proposed measures may be put into effect only with the Commission’s approval. Article 6(6) expressly derogates from that rule, providing that those measures may be put into effect if the Commission has failed to initiate the procedure provided for in Article 6(5) or otherwise to make its position known within two months of receiving notification of a proposal, provided that the Member State has first informed the Commission of that intention (Case C-5/01 Belgium  v Commission , paragraph 54).
69. The cases in which aid to the steel industry may be granted therefore constitute an exception to the rule according to which such aids are prohibited and can in principle be granted only pursuant to a formal Commission decision (Case C-5/01 Belgium  v Commission , paragraph 55).
73. According to settled case-law relating to Article 253 EC and applicable to Article 15 CS, the statement of reasons required by that provision must be appropriate to the act at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the Court to carry out its review. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see inter alia Case C-56/93 Belgium  v Commission  [1996] ECR I-723, paragraph 86; Case C-367/95 P Commission v Sytraval and Brink’s France  [1998] ECR I-1719, paragraph 63; Case C-310/99 Italy  v Commission  [2002] ECR I-2289, paragraph 48; and Case C-5/01 Belgium  v Commission , cited above, paragraph 68).
89. It is settled case-law that for the purposes of Article 4(c) CS ‘aid’ is to be interpreted in accordance with what the Court has held in respect of Article 87 EC (see, in particular, Ecotrade , paragraph 35, and Case C-390/98 Banks  [2001] ECR I-6117, paragraph 33).
90. The definition of aid is thus more general than that of a subsidy because it includes not only positive benefits, such as subsidies themselves, but also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which thus, without being subsidies in the strict sense of the word, are similar in character and have the same effect ( Steenkolenmijnen v High Authority , p. 19; Case C-387/92 Banco Exterior de España  [1994] ECR I-877, paragraph 13; Ecotrade , paragraph 34; Case C-143/99 Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke  [2001] ECR I‑8365, paragraph 38; and Case C-5/01 Belgium  v Commission , paragraph 32).
91. Furthermore, the term ‘aid’, within the meaning of Article 4(c) CS, necessarily implies advantages granted directly or indirectly through State funds or constituting an additional charge for the State or for bodies designated or established for that purpose (see, in particular, Case 82/77 Van Tiggele  [1978] ECR 25, paragraphs 23 to 25; Joined Cases C-72/91 and C-73/91 Sloman Neptun  [1993] ECR I-887, paragraphs 19 and 21; Joined Cases C-52/97 to C-54/97 Viscido and Others  [1998] ECR I-2629, paragraph 13; Ecotrade , paragraph 35; and Case C-5/01 Belgium  v Commission , paragraph 33).
116. It follows that a measure by which the public authorities grant to certain undertakings a tax exemption which places the recipients in a more favourable financial position than that of other taxpayers constitutes State aid within the meaning of Article 4(c) CS (see, by way of analogy, Banco Exterior de España , paragraph 14).
120. The tax deduction introduced by Law No 43/1995 can benefit only one category of undertaking, namely undertakings which have export activities and make certain investments referred to by the contested measures. Such a finding is sufficient to show that that tax deduction fulfils the condition of specificity which is one of the characteristics of the definition of State aid, that is, the selective nature of the advantage in question (see, with respect to a preferential rediscount rate for exports granted by a State in favour only of exported domestic products, Commission v France , paragraphs 20 and 21; with respect to interest rate rebates on loans for export, Case 57/86 Greece v Commission  [1988] ECR 2855, paragraph 8; with respect to a system relating to insolvency derogating from the ordinary rules for large undertakings in difficulties which owe particularly large debts to certain, mainly public, classes of creditors, Ecotrade , paragraph 38).
121. In order to establish the selective nature of the contested measures, it is not necessary for the competent national authorities to have a discretionary power in the application of the tax deduction at issue (see Case C-75/97 Belgium  v Commission , paragraph 27) even if the existence of such a power may enable the public authorities to favour certain undertakings or productions to the detriment of others and, therefore, to establish the existence of aid within the meaning of Articles 4(c) CS or 87 EC.
123. It must be recalled that as Community law stands at present, direct taxation falls within the competence of the Member States, although it is settled case‑law that they must exercise that competence consistently with Community law (see, in particular, Case C-391/97 Gschwind  [1999] ECR I-5451, paragraph 20) and therefore avoid taking, in that context, any measures capable of constituting State aid incompatible with the common market.
125. Furthermore, it is settled case-law that measures of State intervention are not characterised by reference to their causes or aims, but must be defined in relation to their effects (see, in particular, Case C-5/01 Belgium  v Commission , paragraph 45). The fact that the contested measures pursue a commercial or industry policy objective, such as the promotion of international trade by supporting foreign investment, is thus not sufficient to take them outside the classification of ‘aid’ within the meaning of Article 4(c) CS.
129. Furthermore, in order to take the view that the contested measures fell within the prohibition provided for in Article 4(c) CS, the Commission was not obliged to show that they had an effect on trade between Member States on or competition, as would be required, by contrast, under the EC Treaty (Joined Cases C-280/99 P to C-282/99 P Moccia Irme and Others  v Commission  [2001] ECR I-4717, paragraphs 32 and 33; Joined Cases C-74/00 P and C-75/00 P Falck and Acciaierie di Bolzano  v Commission [2002] ECR I-7869, paragraph 102; and Case C‑5/01 Belgium  v Commission , paragraph 75).
155. As the Court has already held, the Commission exercises that power when it considers that the aid in question is necessary for the purpose of attaining the objectives of the Treaty. Furthermore, the logic inherent in that system of authorisation requires, in the case of an individual decision by the Commission, that the Member State concerned ask the Commission to initiate the procedure laid down in Article 95 CS before the Commission considers whether aid is needed in order to attain the Treaty’s objectives (Case C-5/01 Belgium  v Commission , paragraphs 84 and 85).