European Commission v Scott SA.
Date: 2010-09-02
5. Scott Paper Company is an American company engaged in the manufacture of paper for sanitary and household use. To enable the construction of a manufacturing plant in France, Bouton Brochard Scott SA – of which Scott SA (‘Scott’), a French subsidiary of the American company, is the successor in title – acting together with the Departément du Loiret and the City of Orléans in accordance with an agreement dated 12 September 1987, entrusted the task of carrying out all the studies and work necessary for the development of the land required for that factory (a plot of approximately 68 hectares) to the Société d’économie mixte pour l’équipement du Loiret (‘Sempel’).
6. The land in question had been sold to Sempel, for the nominal figure of FRF 1, by the City of Orléans, which had itself acquired the land earlier through three transactions: 30 hectares in 1975, 32.5 hectares in 1984 and 5.5 hectares in 1987. The City of Orléans and the departément of Le Loiret undertook to cover the costs of developing the site up to a maximum of FRF 80 million.
7. At the end of 1987, Sempel sold Scott a parcel of the developed land – 48 hectares out of the 68 hectares available – for the sum of FRF 31 million (approximately EUR 4.7 million), in accordance with an agreement concluded on 31 August 1987 between the City of Orléans, the departément of Le Loiret and Scott (‘the Scott agreement’).
8. That sale was not notified to the Commission under the rules on State aid.
9. In January 1996, Scott’s shares were purchased by Kimberly-Clark Corp, which announced the closure of the manufacturing plant in January 1998. The plant’s assets – namely, the site and its improvements – were purchased by Procter & Gamble in June 1998.
10. Following a report by the French Cour des comptes (Court of Auditors) for 1996 which commented on the sale of the parcel of land to Scott, the Commission received a complaint. In May 1998, it decided to initiate the procedure provided for under Article 88(2) EC, which led to the adoption of the contested decision.
11. The contested decision, as amended by the corrigendum of 2 March 2001, declared incompatible with the common market the State aid implemented in favour of Scott in the form of a preferential purchase price for 48 hectares of land – worth an amount assessed at FRF 39.588 million (approximately EUR 6.03 million) or, at present-day values, FRF 80.77 million (EUR 12.3 million) – and the application of the water treatment levy at a preferential rate, the value of which is to be determined by the French authorities. Article 2 of that decision required repayment of the amounts already unlawfully made available in that way.
The procedure before the Commission
25. After deducting from that amount, inter alia, Sempel’s borrowing costs and the price of FRF 31 million paid by Scott for the land at issue, the Commission found that the public aid paid to Scott amounted to FRF 39.588 million.
26. Accordingly, the enacting terms of the contested decision were worded as follows:
‘Article 1
The state aid in the form of a preferential land price and a preferential rate of water treatment levy granted by France to Scott and amounting, in the case of the land price, to FRF 39.58 million (EUR 6.03 million) or, at present value, FRF 80.77 million (EUR 12.3 million) and, in the case of the second advantage, to a value which the French authorities will have to calculate using a method worked out by the Commission is incompatible with the common market.
Article 2
1. France shall take all necessary measures to recover from the beneficiary the aid referred to in Article 1 and already made available to it unlawfully.
2. Recovery shall be effected without delay and in accordance with the procedures of national law, provided that they allow the immediate and effective execution of this Decision. The aid to be recovered shall include interest from the date on which it was made available to the beneficiary until the date of its recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant equivalent of regional aid.
Article 3
France shall inform the Commission, within two months of notification of this decision, of the measures taken to comply with it.
Article 4
This Decision is addressed to the French Republic.’
The procedure before the General Court and the judgment under appeal
62. First of all, it should be noted that the question whether the General Court was fully entitled to conclude, on the basis of the facts before it for assessment, that the Community institutions had, or had not, failed in their duty to act diligently is a question of law which is subject to review by the Court of Justice on appeal (see Case C‑535/06 P Moser Baer India  v Council  [2009] ECR I‑0000, paragraph 34).
64. As regards the merits of those grounds of appeal, it should be noted that although, in the area of State aid, the Commission enjoys a broad discretion the exercise of which involves economic assessments which must be made in a European Union context, that does not imply that the European Union judicature must refrain from reviewing the Commission’s interpretation of economic data.
65. According to the case-law of the Court, not only must the European Union judicature, inter alia, establish whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the relevant information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it (Case C‑12/03 P Commission  v Tetra Laval  [2005] ECR I‑987, paragraph 39).
66. However, when conducting such a review, the European Union judicature must not substitute its own economic assessment for that of the Commission (Case C‑525/04 P Spain v Lenzing  [2007] ECR I‑9947, paragraph 57). The review by the European Union judicature of the complex economic assessments made by the Commission is necessarily limited and confined to verifying whether the rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or misuse of powers (see Joined Cases C‑501/06 P, C‑513/06 P, C‑515/06 P and C‑519/06 P GlaxoSmithKline Services and Others v Commission and Others  [2009] ECR I‑0000, paragraph 163).
68. First of all, as was observed by the Advocate General in points 138 and 139 of his Opinion, in order to determine whether the sale of land by the public authorities to a private individual constitutes State aid, the Commission must apply the private investor test, to determine whether the price paid by the presumed recipient of the aid corresponds to the selling price which a private investor, operating in normal competitive conditions, would be likely to have fixed. As a rule, the application of that test requires the Commission to make a complex economic assessment (see, to that effect, Case C-56/93 Belgium  v Commission  [1996] ECR-I 723, paragraphs 10 and 11, and Joined Cases C‑328/99 and C‑399/00 Italy and SIM 2 Multimedia v Commission  [2003] ECR I‑4035, paragraphs 38 and 39).
90. As was pointed out by the General Court in paragraphs 56 and 95 of the judgment under appeal, the Commission is required, in the interests of sound administration of the fundamental rules of the EC Treaty relating to State aid, to conduct a diligent and impartial examination of the contested measures, so that it has at its disposal, when adopting the final decision, the most complete and reliable information possible for that purpose (see, to that effect, Case C‑367/95 P Commission  v Sytraval and Brink’s France  [1998] ECR I‑1719, paragraph 62).
91. It should also be borne in mind that the lawfulness of a decision concerning State aid falls to be assessed by the European Union judicature in the light of the information available to the Commission at the time when the decision was adopted (Case C‑390/06 Nuova Agricast  [2008] ECR I‑2577, paragraph 54).