Viasat Broadcasting UK Ltd v TV2/Danmark A/S and Kingdom of Denmark.
Date: 2020-11-24
As a preliminary point, it must be recalled that the application of the European Union rules on State aid is based on an obligation of sincere cooperation between, on the one hand, the national courts and, on the other, the Commission and the Courts of the European Union, in the context of which each acts on the basis of the role assigned to it by the FEU Treaty (judgment of 15 September 2016, PGE, C‑574/14, EU:C:2016:686, paragraph 33 and the case-law cited), their respective roles being complementary but separate (judgment of 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraph 27 and the case-law cited).
Whilst an assessment of the compatibility of aid measures with the internal market falls within the exclusive competence of the Commission, subject to review by the Courts of the European Union, it is for the national courts to ensure the safeguarding, until the final decision of the Commission, of the rights of individuals faced with a possible breach by State authorities of the prohibition laid down by Article 108(3) TFEU (judgment of 21 November 2013, Deutsche Lufthansa, C‑284/12, EU:C:2013:755, paragraph 28 and the case-law cited).
The aim of prior control of plans to grant new aid established by that provision is that only aid compatible with the internal market should be implemented. In order to achieve that aim, the implementation of planned aid is to be deferred until doubt as to its compatibility is resolved by the Commission’s final decision (judgments of 3 March 2020, Vodafone Magyarország, C‑75/18, EU:C:2020:139, paragraph 19, and of 3 March 2020, Tesco-Global Áruházak, C‑323/18, EU:C:2020:140, paragraph 31 and the case-law cited).
In that regard, the notification requirement is one of the fundamental features of the system of control put in place by the FEU Treaty in the field of State aid. Within that system, Member States are under an obligation, first, to notify to the Commission each measure intended to grant new aid or to alter aid within the meaning of Article 107(1) TFEU and, second, not to implement such a measure, in accordance with Article 108(3) TFEU, until that EU institution has taken a final decision on that measure (judgment of 5 March 2019, Eesti Pagar, C‑349/17, EU:C:2019:172, paragraph 56 and the case-law cited).
The prohibition laid down by Article 108(3) TFEU is designed to ensure that an aid cannot become operational before the Commission has had a reasonable period in which to study the proposed measures in detail and, if necessary, to initiate the procedure provided for in Article 108(2) TFEU (judgment of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraph 36).
In a situation where the Commission has, in relation to aid implemented in breach of Article 108(3) TFEU, adopted a final decision finding that that aid is compatible with the internal market pursuant to Article 107 TFEU, the Court has held that the Commission’s final decision does not have the effect of regularising, retrospectively, implementing measures which were invalid because they had been taken in disregard of the prohibition on implementation laid down by the last sentence of Article 108(3) TFEU. Any other interpretation would have the effect of according a favourable outcome to the non‑observance, by the Member State concerned, of that provision and would deprive it of its effectiveness (see, to that effect, judgment of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraph 40).
In such a situation, EU law requires the national courts to order the measures that are appropriate effectively to remedy the consequences of the unlawfulness (see, to that effect, judgment of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraph 46).
Indeed, if, for any particular proposed aid, whether compatible with the internal market or not, failure to comply with Article 108(3) TFEU carried no greater risk or penalty than compliance, the incentive for Member States to notify and await a decision on compatibility would be greatly diminished – as would, consequently, the scope of the Commission’s control (judgment of 5 October 2006, Transalpine Ölleitung in Österreich, C‑368/04, EU:C:2006:644, paragraph 42).
First, as regards recovery of unlawful aid, premature payment of unlawful aid does not contradict the aim of ensuring that incompatible aid is never implemented, upon which Article 108(3) TFEU is based, where the Commission adopts a final decision finding that aid to be compatible with the internal market (see, to that effect, judgment of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraphs 46 to 49). Therefore, the national courts are not bound to order recovery of that aid (judgment of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraph 55).
Second, the national courts are bound, under EU law, to order the aid recipient to pay interest in respect of the period of unlawfulness of that aid (judgments of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraphs 52 and 55, and of 5 March 2019, Eesti Pagar, C‑349/17, EU:C:2019:172, paragraph 134).
That obligation, which is incumbent on the national courts, stems from the fact that the implementation of aid in breach of Article 108(3) TFEU gives the aid recipient an undue advantage consisting, first, in the non-payment of the interest which it would have paid on the amount in question of the compatible aid, had it had to borrow that amount on the market pending the Commission’s final decision, and, second, in the improvement of its competitive position as against the other operators in the market while the aid concerned is unlawful  (judgments of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraph 51, and of 5 March 2019, Eesti Pagar, C‑349/17, EU:C:2019:172, paragraph 132). The unlawfulness of that aid will, first, expose those operators to the risk, in the result unrealised, of the implementation of incompatible aid, and, second, make them suffer,  earlier than they would have had to, in competition terms, the effects of compatible aid (judgment of 12 February 2008, CELF and Ministre de la Culture et de la Communication, C‑199/06, EU:C:2008:79, paragraph 50).
That provision, which seeks to reconcile the Member States’ interests in using certain undertakings as an instrument of economic or social policy with the European Union’s interest in ensuring compliance with the rules on competition and the preservation of the unity of the internal market (judgments of 20 April 2010, Federutility and Others, C‑265/08, EU:C:2010:205, paragraph 28, and of 8 March 2017, Viasat Broadcasting UK v Commission, C‑660/15 P, EU:C:2017:178, paragraph 31), must be interpreted taking account of the clarifications in Protocol (No 26) on Services of General Interest (OJ 2016 C 202, p. 307) and, having regard to the field at issue in the present case, in Protocol (No 29) on the System of Public Broadcasting in the Member States (OJ 2016 C 202, p. 311) (judgment of 8 March 2017, Viasat Broadcasting UK v Commission, C‑660/15 P, EU:C:2017:178, paragraph 36).
In that regard, first, Article 1 of Protocol (No 26) on Services of General Interest states that the Member States enjoy a ‘wide discretion’ in providing, commissioning and organising services of general economic interest that are tailored as closely as possible to the needs of users (judgment of 7 November 2018, Commission v Hungary, C‑171/17, EU:C:2018:881, paragraph 48).
Accordingly, Member States are entitled, while complying with EU law, to define the scope and the organisation of their services of general economic interest, in particular the public broadcasting service, taking particular account of objectives pertaining to their national policy. In that respect, Member States enjoy a wide discretion, which can be called into question by the Commission only in the event of a manifest error (see, to that effect, judgment of 7 November 2018, Commission v Hungary, C‑171/17, EU:C:2018:881, paragraph 49 and the case-law cited).
However, the Member States’ power to define services of general economic interest must, in any event, be exercised in accordance with EU law (judgments 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 71, and of 3 September 2020, Vereniging tot Behoud van Natuurmonumenten in Nederland and Others v Commission, C‑817/18 P, EU:C:2020:637, paragraph 95).
The question whether a measure must be categorised as State aid arises upstream of the question which involves examining, where necessary, if incompatible aid, within the meaning of in Article 107 TFEU, is nevertheless necessary to the performance of the tasks assigned to the beneficiary of the measure at issue, under Article 106(2) TFEU (see, to that effect, judgment of 8 March 2017, Viasat Broadcasting UK v Commission, C‑660/15 P, EU:C:2017:178, paragraph 34). Therefore, the Commission must, before any consideration of a measure under that provision, be in a position to review whether that measure constitutes State aid, which requires prior notification of the intended measure to that EU institution, in accordance with the first sentence of Article 108(3) TFEU.
Furthermore, any exception to the general rule that notification is required, which is binding on the Member States under the Treaties and is one of the fundamental features of the system of monitoring in the field of State aid, must be explicitly provided for (see, to that effect, judgment of 5 March 2019, Eesti Pagar, C‑349/17, EU:C:2019:172, paragraphs 59 and 60).
In that regard, in accordance with Article 109 TFEU, the Council of the European Union is permitted to make any appropriate regulations for the application of Article 107 TFEU and Article 108 TFEU and may in particular determine the conditions in which Article 108(3) TFEU is to apply and the categories of aid exempt from the procedure provided for in that provision. In that connection, according to Article 108(4) TFEU, the Commission may adopt regulations relating to the categories of State aid that the Council has, pursuant to Article 109 TFEU, determined may be exempt from the procedure provided for in Article 108(3) TFEU (judgment of 5 March 2019, Eesti Pagar, C‑349/17, EU:C:2019:172, paragraph 57 and the case-law cited).
Thus, Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles [107 and 108 TFEU] to certain categories of horizontal State aid (OJ 1998 L 142, p. 1)  – in accordance with which Commission Regulation (EC)  No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles [107 and 108] TFEU (General block exemption Regulation) (OJ 2008 L 214, p. 3) was subsequently  adopted, and then Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 [TFEU] (OJ 2014 L 187, p. 1)  – had been adopted pursuant to Article 94 of the EC Treaty (subsequently Article 89 EC and now Article 109 TFEU) (see, to that effect, judgment of 5 March 2019, Eesti Pagar, C‑349/17, EU:C:2019:172, paragraph 58 and the case-law cited).
Accordingly, as is recalled in recital 7 of each of Regulation No 800/2008 and No 651/2014, State aid, within the meaning of Article 107(1) TFEU, which is not covered by those regulations remains subject to the notification requirement laid down in Article 108(3) TFEU (see, to that effect, judgment of 5 March 2019, Eesti Pagar, C‑349/17, EU:C:2019:172, paragraph 59 and the case-law cited).
In addition, it is clear from the wording of Article 106(2) TFEU that exemptions to the FEU Treaty rules are permitted under that provision solely where they are necessary for performance of the particular tasks assigned to an undertaking entrusted with the operation of a service of general economic interest (judgments of 8 March 2017, Viasat Broadcasting UK v Commission, C‑660/15 P, EU:C:2017:178, paragraph 29, and of 3 September 2020, Vereniging tot Behoud van Natuurmonumenten in Nederland and Others v Commission, C‑817/18 P, EU:C:2020:637, paragraph 97), which, in the field of State aid, must, as necessary, by reviewed by the Commission before such aid is implemented. As held in paragraph 35 of the present judgment, that review may be conducted only after the intended aid has been notified to that EU institution, in accordance with the first sentence of Article 108(3) TFEU, to enable it to review whether that measure constitutes State aid.  Therefore, the performance of the tasks as an undertaking entrusted with the operation of a service of general economic interest cannot, in itself, justify an exemption from the notification requirement laid down in that provision.
Finally, it must also be pointed out that, in accordance with settled case-law, in view of the mandatory nature of the supervision of State aid by the Commission pursuant to Article 108 TFEU, undertakings to which aid has been granted may not, 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, and furthermore, an economic operator exercising due care should normally be able to determine whether that procedure has been followed. In particular, where aid is implemented without prior notification to the Commission, with the result that it is unlawful under Article 108(3) TFEU, the recipient of the aid cannot have at that time either a legitimate expectation that the grant of that aid is lawful (judgment of 5 March 2019, Eesti Pagar, C‑349/17, EU:C:2019:172, paragraph 98 and the case-law cited), or, consequently, a legitimate expectation that the advantage it derives from the non-payment of interest, due in respect of the period during which the aid is unlawful, is itself lawful.
It follows that, in order to ensure the effectiveness of the notification requirement, laid down in that provision, as well as proper and full consideration of State aid by the Commission, national courts are bound to draw all the consequences from a breach of that obligation and to adopt the measures that are appropriate to remedy them, which, as set out in paragraph 26 of the present judgment, includes the obligation, for the recipient of unlawful aid, to pay illegality interest in respect of that aid, even if the recipient is an undertaking entrusted with the operation of a service of general economic interest in accordance with Article 106(2) TFEU.