European Commission v Kingdom of Spain and Others.
Date: 2018-07-25
31


Since Lico Leasing and PYMAR dispute the admissibility of the first complaint in the first part of the Commission’s first ground of appeal alleging an error of law in the identification of the beneficiaries of the advantages arising from the tax measures at issue on the ground that it is a question of fact, it is true that the assessment of facts and evidence does not constitute, save where the clear sense of the facts and evidence has been distorted, a question of law which is subject, as such, to review by the Court of Justice in the context of an appeal. However, when the General Court has established or assessed the facts, the Court of Justice has jurisdiction under Article 256 TFEU to review the legal characterisation of those facts and the legal conclusions which have been drawn from them (judgments of 6 April 2006, General Motors v Commission, C‑551/03 P, EU:C:2006:229, paragraph 51; of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 96, and of 20 December 2017, Comunidad Autónoma del País Vasco and Others v Commission, C‑66/16 P to C‑69/16 P, EU:C:2017:999, paragraph 97).
34


As regards the substance, it must be recalled that EU competition law and, in particular, the prohibition under Article 107(1) TFEU apply to the activities of undertakings. The term ‘undertaking’, in this context, covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed. Any activity consisting in offering goods or services on a given market is an economic activity (see, to that effect, judgment of 27 June 2017, Congregación de Escuelas Pías Provincia Betania, C‑74/16, EU:C:2017:496, paragraphs 39, 41 and 45 and the case-law cited).
35


According to the settled case-law of the Court of Justice, classification of a national measure as ‘State aid’ for the purposes of Article 107(1) TFEU requires that all the conditions set out in that provision are fulfilled. First, there must be an intervention by the State or through State resources. Second, the intervention must be liable to affect trade between Member States. Third, it must confer a selective advantage on the recipient. Fourth, it must distort or threaten to distort competition (judgments of 10 June 2010, Fallimento Traghetti del Mediterraneo, C‑140/09, EU:C:2010:335, paragraph 31 and the case-law cited; of 21 December 2016, Commission v Hansestadt Lübeck, C‑524/14 P, EU:C:2016:971, paragraph 40, and of 21 December 2016, Commission v World Duty Free Group and Others, C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 53).
36


As regards the condition relating to the existence of a selective advantage, in accordance with settled case-law interventions which, in any form whatsoever, are liable to favour undertakings directly or indirectly, or which must be regarded as economic advantages which the recipient undertaking would not have obtained under normal market conditions, are considered to be State aid. Thus, measures which, in various forms, mitigate the charges that are normally included in the budget of an undertaking and which therefore, without being subsidies in the strict meaning of the word, are similar in character and have the same effect are considered to constitute aid (judgment of 27 June 2017, Congregación de Escuelas Pías Provincia Betania, C‑74/16, EU:C:2017:496, paragraphs 65 and 66 and the case-law cited). Article 107(1) TFEU does not distinguish between measures of State intervention by reference to their causes or their aims, but defines them on the basis of their effects, and thus independently of the techniques used (see, to that effect, judgments of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraphs 87, 92 and 93, and of 28 June 2018, Andres (liquidator in the insolvency of Heitkamp BauHolding) v Commission, C‑203/16 P, EU:C:2018:505, paragraph 91).
37


As regards, in particular, national measures that confer a tax advantage, it must be recalled that a measure of that nature which, although not involving the transfer of State resources, places the recipients in a more favourable position than other taxpayers is capable of procuring a selective advantage for the recipients and, consequently, constitutes State aid, within the meaning of Article 107(1) TFEU. On the other hand, a tax advantage resulting from a general measure applicable without distinction to all economic operators does not constitute such aid (see, to that effect, judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraphs 72 and 73 and the case-law cited; see, also, judgments of 21 December 2016, Commission v World Duty Free Group and Others, C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 56, and of 28 June 2018, Andres (liquidator in the insolvency of Heitkamp BauHolding) v Commission, C‑203/16 P, EU:C:2018:505, paragraph 85). Similarly, the term ‘State aid’ does not refer to State measures which differentiate between undertakings and which are, therefore, prima facie selective where that differentiation arises from the nature or the overall structure of the system of which they form part (judgments of 21 December 2016, Commission v Hansestadt Lübeck, C‑524/14 P, EU:C:2016:971, paragraph 41, and of 28 June 2018, Andres (liquidator in the insolvency of Heitkamp BauHolding) v Commission, C‑203/16 P, EU:C:2018:505, paragraph 87).
55


It must be recalled that, in order to establish the selective nature of a tax advantage, it is not necessary for the competent national authorities to have the discretionary power to grant the benefit of that measure. However, the existence of such a discretion may be such as to enable those authorities to favour certain undertakings or the production of certain goods to the detriment of others and therefore establish the existence of aid, within the meaning of Article 107(1) TFEU (see, to that effect, judgment of 15 July 2004, Spain v Commission, C‑501/00, EU:C:2004:438, paragraph 121). That is so, in particular, where the competent authorities have a discretionary power to determine the beneficiaries and the conditions of the measure granted on the basis of criteria unrelated to the tax system. On the other hand, the application of an authorisation system in which the competent authorities only have a latitude limited by objective criteria which are not unrelated to the tax system established by the legislation in question could not, in principle, be regarded as selective (see, to that effect, judgment of 18 July 2013, P, C‑6/12, EU:C:2013:525, paragraphs 26 and 27).
82


As the General Court recalled in paragraph 185 of the judgment under appeal, according to settled case-law, the statement of reasons required by Article 296 TFEU 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 of the European Union to exercise its power of 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 296 TFEU 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, judgments of 6 September 2006, Portugal v Commission, C‑88/03, EU:C:2006:511, paragraph 88, and of 2 December 2009, Commission v Ireland and Others, C‑89/08 P, EU:C:2009:742, paragraph 77).
83


Applied to the classification of a measure as aid, that principle requires a statement of the reasons for which the Commission considers that the measure concerned falls within the scope of Article 107(1) TFEU. Even where the very circumstances in which the aid has been granted show that it is liable to affect trade between Member States and to distort or threaten to distort competition, the Commission must at least set out those circumstances in the statement of reasons for its decision (judgments of 6 September 2006, Portugal v Commission, C‑88/03, EU:C:2006:511, paragraph 89, and of 30 April 2009, Commission v Italy and Wam, C‑494/06 P, EU:C:2009:272, paragraph 49).
84


With regard to the condition concerning distortion of competition, as recalled by the General Court in paragraph 188 of the judgment under appeal, it is clear from the case-law of the Court of Justice that, in principle, aid intended to release an undertaking from costs which it would normally have to bear in its day-to-day management or normal activities distorts the conditions of competition (judgments of 19 September 2000, Germany v Commission, C‑156/98, EU:C:2000:467, paragraph 30, and of 3 March 2005, Heiser, C‑172/03, EU:C:2005:130, paragraph 55).
85


As regards the criterion of trade being affected, as the General Court recalled in paragraph 191 of the judgment under appeal, it follows from the case-law of the Court of Justice that the grant of aid by a Member State, in the form of a tax relief, to some of its taxable persons must be regarded as likely to have an effect on trade and, consequently, as fulfilling that criterion, where those taxable persons perform an economic activity in the field of such trade or it is conceivable that they are in competition with operators established in other Member States (judgments of 3 March 2005, Heiser, C‑172/03, EU:C:2005:130, paragraph 35, and of 30 April 2009, Commission v Italy and Wam, C‑494/06 P, EU:C:2009:272, paragraph 51). Furthermore, when aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in trade within the European Union, those undertakings must be regarded as affected by that aid (judgment of 10 January 2006, Cassa di Risparmio di Firenze and Others, C‑222/04, EU:C:2006:8, paragraph 141).
86


It is also settled case-law that, for the purpose of categorising a national measure as ‘State aid’, it is not necessary to demonstrate that the aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition (judgment of 10 January 2006, Cassa di Risparmio di Firenze and Others, C‑222/04, EU:C:2006:8, paragraph 140 and the case-law cited).