1 By their appeal, the appellants ask the Court to set aside the judgment of the General Court of the European Union of 15 October 2018, Vereniging Gelijkberechtiging Grondbezitters and Others v Commission (T‑79/16, not published, EU:T:2018:680; ‘the judgment under appeal’), by which that court annulled Commission Decision C(2015) 5929 final of 2 September 2015 on State aid SA.27301 (2015/NN) - Netherlands in connection with the subsidised acquisition or free granting of nature land, a summary of which was published in the Official Journal of the European Union (OJ 2016 C 9, p. 1; ‘the decision at issue’).
2 Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1), which was in force at the date of adoption of the decision at issue, defined, in Article 1(h), the concept of ‘interested party’ as follows: ‘any Member State and any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, in particular the beneficiary of the aid, competing undertakings and trade associations.’
3 Under Article 4(1) to (4) of that regulation: ‘1. The [European] Commission shall examine the notification as soon as it is received. Without prejudice to Article 8, the Commission shall take a decision pursuant to paragraphs 2, 3 or 4. 2. Where the Commission, after a preliminary examination, finds that the notified measure does not constitute aid, it shall record that finding by way of a decision. 3. Where the Commission, after a preliminary examination, finds that no doubts are raised as to the compatibility with the common market of a notified measure, in so far as it falls within the scope of Article [107(1) TFEU], it shall decide that the measure is compatible with the common market … The decision shall specify which exception under the Treaty has been applied. 4. Where the Commission, after a preliminary examination, finds that doubts are raised as to the compatibility with the common market of a notified measure, it shall decide to initiate proceedings pursuant to Article [108(2) TFEU] …’
4 Paragraph 3 of the communication from the Commission entitled ‘European Union framework for State aid in the form of public service compensation (2011)’ (OJ 2012 C 8, p. 15; ‘the PSC framework’) states, inter alia, that ‘to the extent the general criteria for the applicability of Article 107(1) [TFEU] are satisfied, [public service compensation] constitutes State aid and is subject to Articles 106, 107 and 108 [TFEU].’
5 Paragraph 11 of the PSC framework provides, inter alia: ‘… State aid … may be declared compatible with Article 106(2) [TFEU] if it is necessary for the operation of the service of general economic interest concerned and does not affect the development of trade to such an extent as to be contrary to the interests of the Union. The conditions set out in sections 2.2 to 2.10 must be met in order to achieve that balance.’
6 In section 2.2 of that framework, paragraph 12 provides that ‘the aid must be granted for a genuine and correctly defined service of general economic interest as referred to in Article 106(2) [TFEU]’.
7 Paragraph 13 of that framework, which appears in the same section, states, inter alia: ‘… In particular, Member States cannot attach specific public service obligations to services that are already provided or can be provided satisfactorily and under conditions, such as price, objective quality characteristics, continuity and access to the service, consistent with the public interest, as defined by the State, by undertakings operating under normal market conditions. …’
8 Paragraph 21 of the PSC framework, which appears in section 2.8, provides: ‘The amount of compensation must not exceed what is necessary to cover the net cost … of discharging the public service obligations, including a reasonable profit.’
9 In the same section, paragraph 44 of that framework states as follows: ‘Where an undertaking carries out activities falling both inside and outside the scope of the [service of general economic interest (SGEI)], the internal accounts must show separately the costs and revenues associated with the SGEI and those of the other services … Where an undertaking is entrusted with the operation of several SGEIs because the granting authority or the nature of the SGEI is different, the undertaking’s internal accounts must make it possible to verify whether there has been any overcompensation at the level of each SGEI.’
10 Paragraph 46 of the same framework, which also appears in section 2.8, adds the following: ‘The Member State may decide that the profits accruing from other activities outside the scope of the SGEI, in particular those activities which rely on the infrastructure necessary to provide the SGEI, must be allocated in whole or in part to the financing of the SGEI.’
11 Paragraph 47 of the same framework, which appears in section 2.8, provides: ‘Overcompensation should be understood as compensation that the undertaking receives in excess of the amount of aid as defined in paragraph [21] for the whole duration of the contract. …’
12 In that same section 2.8, paragraph 48 of the PSC framework provides: ‘Since overcompensation is not necessary for the operation of the SGEI, it constitutes incompatible State aid.’
13 The establishment by the Kingdom of the Netherlands of a main national ecological structure and Natura 2000 network included the setting-up of the Regeling bijdragen particuliere terreinbeherende natuurbeschermingsorganisaties (subsidy scheme for private environmental protection and land management organisations; ‘the PNB scheme’), which allowed 13 land management organisations (‘the LMOs’), being the appellants in the present proceedings, to acquire nature land.
14 The costs eligible for subsidies under that scheme were the purchase price of the land, other acquisition costs and the costs of terminating tenancies encumbering the land. If the revenue exceeded the management costs, it was to be reinvested in nature conservation or paid to the Netherlands Government. Although that obligation was not explicitly provided for by the PNB scheme, it was implicitly inferred from the statutes of the LMOs, which had to be submitted for approval by the Netherlands authorities before the subsidies in question could be awarded. In addition, the LMOs were not permitted to change the use to which the land acquired under the scheme was put or to use it in a manner contrary to the purpose of nature conservation without the express consent of the authorities granting the subsidies in question. Similarly, the land could not be leased or re-sold without the express consent of the Netherlands authorities.
15 On 23 December 2008, the Commission received a complaint from two private non-profit-making foundations under Netherlands law, namely Stichting het Nationale Park De Hoge Veluwe (‘the NPDHV’) and Stichting Linschoten, which manage land and carry out nature conservation activities, activities relating to the management of cultural heritage and economic activities such as the leasing of land, agriculture, forestry and tourism. In 2009, the complainants were replaced in the administrative procedure in question by the Vereniging Gelijkberechtiging Grondbezitters (Association for the equal rights of private landowners, Netherlands; ‘the VGG’), a body whose object is, inter alia, to ensure equal rights for all private landowners in the context of the subsidised acquisition of land.
16 The scheme initially in force from 1993 to 2012 was replaced by a new aid scheme, approved by the Commission by a decision of 13 July 2011. Subsequently, by communications of 26 August, 14 and 28 September 2011, the VGG asked the Commission to take a position on its complaint and demand the recovery of the illegal aid.
17 By the decision at issue, the Commission declared the scheme for the acquisition of nature land compatible with the internal market under Article 106(2) TFEU.
18 The Commission found, first of all, that the subsidy scheme constituted State aid within the meaning of Article 107(1) TFEU. The decision at issue stated that the main task of LMOs, being organisations that protect and conserve nature, is non-economic. Nevertheless, the LMOs also carry out certain secondary activities such as the sale of wood and reeds, hunting and fishing leases and tourist activities, which are of an economic nature. In relation to those activities, the Commission found that the LMOs must, for the purposes of the competition rules, be regarded as ‘undertakings’. In that regard, the Commission relied on the judgment of 12 September 2013, Germany v Commission (T‑347/09, not published, EU:T:2013:418), in which the Court held that, although the goods and services offered by environmental protection organisations benefiting from an aid scheme similar to the PNB scheme in the context of their secondary activities arose from their main activity of protecting the environment, they were not rendered necessary by their main activity since the secondary activities were economic in nature.
19 In particular, the Commission found that making land available free of charge or awarding subsidies to acquire and manage land conferred an initial economic advantage on the LMOs. The Commission also observed that it could not be excluded that the LMOs would receive a second advantage by way of capital gains made when they resold the land acquired. According to the Commission, the PNB scheme did not fulfil the conditions identified by the Court in its judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg (C‑280/00, EU:C:2003:415) for SGEIs, since the compensation for the beneficiaries of the PNB scheme had not been determined in accordance with an appropriate procedure.
20 Since the Commission considered that the nature conservation organisations had been entrusted with a public service obligation of nature conservation under the aid measure, it proceeded to examine the question of whether the subsidy scheme met the criteria of the PSC framework. The Commission found that it did and so declared the PNB scheme compatible with the internal market.
21 By application lodged at the Registry of the General Court on 19 February 2016, the VGG and the other applicants at first instance (‘VGG and Others’) brought an action for the annulment of the decision at issue.
22 By document lodged at the Registry of the General Court on 17 May 2016, the LMOs sought leave to intervene in support of the form of order sought by the Commission. By order of 6 April 2017, the President of the Second Chamber of the General Court granted the LMOs leave to intervene.
23 In support of their action, VGG and Others put forward four pleas in law, alleging, first, infringement of their procedural rights under Article 108(2) TFEU, secondly, breach of the principles of non-retroactivity and legal certainty, thirdly, in the alternative, an error of law and a failure to state reasons in the application of the PSC framework and, fourthly, infringement of Article 106(2) TFEU.
24 The Commission and the intervening parties in the action for annulment challenged the status of VGG and Others as ‘interested parties’ and the admissibility of the second and fourth pleas in law put forward in that action.
25 By the judgment under appeal, the Court declared the action admissible, upheld the first plea in law and, consequently, annulled the decision at issue without examining the other pleas in law raised in that action.
26 The LMOs claim that the Court should: - set aside the judgment under appeal, and - primarily, order the applicants at first instance to pay the costs, or - in the alternative, refer the case back to the General Court and reserve the costs.
27 The Commission claims that the Court should: - set aside the judgment under appeal, and - dismiss the action.
28 VGG and Others contend that the Court should: - dismiss the appeal, and - order the LMOs to pay the costs.
29 In support of their appeal, the LMOs put forward two grounds of appeal, the first alleging an error of law in the assessment of the admissibility of the action at first instance and the second alleging an error of law in that the judgment under appeal acknowledges the existence of serious difficulties.
30 By their first ground of appeal, the LMOs submit that the Court committed an error of law in holding, in the judgment under appeal, that VGG and Others were ‘interested parties’ within the meaning of Article 108(2) TFEU. That ground of appeal is divided into two parts, the first part being the principal ground and the second being raised in the alternative.
31 By the first part of this ground of appeal, the LMOs submit that there is no competitive relationship between them and the members of the VGG, since the main activity of the LMOs is non-economic and that, even in so far as their secondary activities could be classified as ‘economic’, they are not active in the same market as the members of the VGG. The description of the respective activities of the LMOs and the members of the VGG, as set out in paragraph 63 of the judgment under appeal, shows that the activities are different and that they are carried out on separate markets.
32 In particular, the use of the generic term ‘tourism’, in paragraph 66 of the judgment under appeal, to describe one of the activities of the NPDHV is not sufficient evidence of a competitive relationship between the activities of members of the VGG and the activities of the LMOs. First, that overly general reference obscures the actual differences between the tourist activities of the LMOs, which are offered free of charge, and those of the members of the VGG which are money-making activities. Secondly, that reference does not take into account the direct link between the essential mission of the LMOs to protect and conserve nature and their tourist activities.
33 Finally, it is not apparent from the judgment under appeal that the Court took into account the market for the sale of wood in finding that there was a competitive relationship between the activities of the LMOs and those of the members of the VGG. What is more, the evidence in the judgment under appeal is not, in any event, sufficient to establish a competitive relationship with the members of the VGG on such a market.
34 By the second part of their first ground of appeal, the LMOs submit that the aid in question had no specific effect on the competitive position of the members of the VGG and, in any event, did not distort their competitive relationship.
35 First of all, the LMOs claim that the Court used an erroneous criterion in paragraph 68 of the judgment under appeal, namely the effect on trade between Member States, rather than the specific effect on competitive relationships with the members of the VGG. Next, they claim that it was in the absence of any concrete evidence that the Court concluded that there was a risk of the aid having a specific effect on the competitive position of the members of the VGG. Finally, the LMOs maintain that the allegation that the members of the VGG were systematically prevented from acquiring land and thus hampered in their expansion is not relevant, since there is not a market for the management of natural spaces.
36 The Netherlands Government supports the LMOs’ arguments.
37 The Commission, for its part, argues, first, that the reasoning in paragraphs 63 and 64 of the judgment under appeal is incomprehensible, since it is apparent from the decision at issue that the economic activities of the LMOs are not the same as the activities of the members of the VGG, the only overlap between the two being in relation to tourist sector activities. In that sector, the LMOs’ activity is, however, limited to allowing free access to the nature land it manages, so it is not a matter of offering services on a market.
38 Next, the Commission also maintains that the Court distorted the facts by deducing from paragraph 27 of the decision at issue a description of the activities of members of the VGG, whereas that paragraph described only the activity of the NPDHV.
39 Finally, the Commission supports the LMOs’ argument that the Court confused the criterion relating to an effect on trade with the criterion relating to a specific effect on the competitive position of the members of the VGG and failed to verify that second criterion. In paragraph 71 of the judgment under appeal, the Court merely assumed that the criterion relating to a specific effect on the competitive position of the VGG was met. In fact, according to the case-law, it was for the VGG to adduce evidence of the specific effect of the aid granted to the LMOs on the competitive position of its members.
40 VGG and Others contend, primarily, that the LMOs’ argument that the facts should be reassessed is inadmissible. In the alternative, VGG and Others dispute the substance of the LMOs’ arguments.
41 It must be observed from the outset that the Court held, in paragraph 76 of the judgment under appeal, that at least one of the members of the VGG, namely the NPDHV, must be regarded as an ‘interested party’ within the meaning of Article 108(2) TFEU and Article 1(h) of Regulation No 659/1999.
42 In support of that finding, the Court stated, in paragraph 53 of that judgment, that an indirect competitor of the beneficiary of aid can be regarded as an ‘interested party’ provided that it demonstrates that its interests could be affected by the grant of the aid, and that it establishes, to the requisite legal standard, that the aid is likely to have a specific effect on its situation. In paragraph 54 of the same judgment, the Court specified, with regard to competing undertakings, that, in order to be regarded as an ‘interested party’, the applicant must, first, show that it is in a competitive relationship with the beneficiaries of the aid and, secondly, prove that the aid is likely to have a specific effect on its situation, distorting the competitive relationship in question.
43 In the light of those criteria, the Court held, in paragraphs 61 to 67 of the judgment under appeal, that a competitive relationship existed between the members of the VGG, in particular the NPDHV, and the LMOs and, in paragraphs 68 to 75 thereof, it examined whether a whether the actual effects of granting the contested aid on the situation of the members of the VGG, distorting the competitive relationship between them and the beneficiaries of the aid measure in question were established.
44 In the first place, it must be observed that the LMOs dispute the competitive relationship found by the Court, contending, in essence, that the reference to the generic term ‘tourism’ in paragraph 66 of the judgment under appeal is too general, that the market for the sale of wood was not taken into account and that the factors relied on are not generally sufficient to establish a competitive relationship between the LMOs and the members of the VGG.
45 In that regard, it is sufficient to note that, in putting forward such an argument, the LMOs, while not claiming that there has been a distortion of the evidence, are in essence disputing the absolute discretion of the Court to assess the facts in paragraphs 63 to 67 of the judgment under appeal.
46 However, according to the settled case-law of the Court of Justice, the appraisal of the facts by the General Court does not, save where the clear sense of the evidence produced before it is distorted, constitute a question of law which is subject, as such, to review by the Court of Justice (judgments of 30 September 2003, Freistaat Sachsen and Others v Commission, C‑57/00 P and C‑61/00 P, EU:C:2003:510, paragraph 102, and of 26 March 2020, Larko v Commission, C‑244/18 P, EU:C:2020:238, paragraph 25).
47 As regards the argument put forward by the Commission in its response, in support of the first part of the first ground of appeal, alleging a distortion of the facts by the General Court, it must be recalled that, under Article 174 of the Rules of Procedure of the Court of Justice, a response seeks to have the appeal allowed or dismissed, in whole or in part. Furthermore, under Articles 172 and 176 of those rules, parties authorised to lodge a response may submit, by a document separate from the response, a cross-appeal, which, in accordance with Article 178(1) and (3), second sentence, of the rules, must seek to have set aside, in whole or in part, the decision of the General Court on the basis of pleas in law and arguments separate from those relied on in the response.
48 It is apparent from those provisions, read together, that the response may not seek the annulment of the decision of the Court on the basis of distinct and independent grounds from those raised in the appeal, since such grounds may only be raised as part of a cross-appeal (judgments of 10 November 2016, DTS Distribuidora de Televisión Digital v Commission, C‑449/14 P, EU:C:2016:848, paragraphs 99 to 101; of 30 May 2017, Safa Nicu Sepahan v Council, C‑45/15 P, EU:C:2017:402, paragraph 20; and of 28 February 2019, Council v Growth Energy and Renewable Fuels Association, C‑465/16 P, EU:C:2019:155, paragraph 57).
49 Therefore, since the LMOs have not raised any ground of appeal alleging distortion of the facts by the Court in its assessment of the existence of a competitive relationship between the members of the VGG and the LMOs, such an argument put forward by the Commission in its response cannot be admissible.
50 In the second place, as the Advocate General noted in point 38 of his Opinion, the Court has already held that, with regard to the definition contained in Article 1(h) of Regulation No 659/1999, an undertaking competing with the beneficiaries of an aid measure is without doubt an ‘interested party’ within the meaning of Article 108(2) TFEU (judgment of 18 November 2010, NDSHT v Commission, C‑322/09 P, EU:C:2010:701, paragraph 59).
51 It follows that, in so far as the Court found that a competitive relationship existed between at least one of the members of the VGG and the LMOs, it did not commit an error of law in holding that the VGG was an ‘interested party’ within the meaning of Article 108(2) TFEU.
52 In the third place, it follows from the foregoing that the arguments put forward by the LMOs and the Commission in the context of the second part of the first ground of appeal, seeking to dispute the existence of a specific effect of the PNB scheme on the situation of the members of the VGG, are ineffective, since the classification of the members of the VGG as interested parties results directly from their status as competitors of the LMOs.
53 In the light of the foregoing, the first ground of appeal must be dismissed.
54 By their second ground of appeal, the LMOs submit that the Court was wrong to find that the Commission encountered ‘serious difficulties’ when adopting the decision at issue. That ground of appeal is divided into three parts, the first part relating to the Commission’s reference to a ‘wider’ or ‘atypical’ SGEI in the decision at issue when defining the activities of the LMOs, the second part relating to evidence of a lack of separate accounting and the third part relating to evidence of the lack of a mechanism for avoiding overcompensation.
55 By the first part of this ground of appeal, the LMOs first submit that, in paragraph 117 of the judgment under appeal, the Court determined that VGG and Others had claimed that the classification of the aid measure in question as a ‘wider’ or ‘atypical’ SGEI was contradictory, although no such claim had in fact been made by those parties.
56 Secondly, the LMOs submit that there was no contradiction in the decision at issue, paragraph 50 of which related to the beneficiaries of the aid measures being regarded as undertakings within the meaning of Article 107(1) TFEU, while paragraph 93 dealt with the question of the extent to which the secondary activities of the LMOs formed an integral part of the SGEI entrusted to them.
57 Thirdly, the LMOs consider that, contrary to the Court’s findings in paragraph 128 of the judgment under appeal, it is clear both from the decision at issue and from the answers given by the Commission to the questions put by the Court, that the Commission had sufficient evidence to find that the secondary activities of the LMOs formed an integral part of the SGEI entrusted to them.
58 Fourthly, according to the LMOs, the Court disregarded the fact that paragraph 41 of its own judgment of 12 September 2013, Germany v Commission (T‑347/09, not published, EU:T:2013:418), is not relevant when assessing whether or not the secondary activities of the LMOs formed an integral part of the SGEI entrusted to them.
59 Fifthly, the LMOs claim that, in paragraph 128 of the judgment under appeal, the Court misinterpreted paragraph 11 of the PSC framework, according to which State aid granted must be necessary for the operation of the SGEI. However, the Court did examine whether the Commission had the evidence to enable it to determine whether the secondary activities were necessary for the operation of the SGEI.
60 Finally, in their reply, the LMOs dispute that the length of the preliminary examination procedure in the present case is indicative of serious difficulties.
61 By the second part of the second ground of appeal, the LMOs submit that the Court was wrong to conclude that the fact that they did not use separate accounting for their secondary activities was indicative of serious difficulties, since that criterion is only relevant in cases where those activities do not themselves fall within the SGEI, something which the Commission nevertheless dismissed in the decision at issue in relation to the LMOs’ secondary activities.
62 Similarly, according to the LMOs, nothing can be inferred from the fact that the Commission waited for delivery of the judgment of 12 September 2013, Germany v Commission (T‑347/09, not published, EU:T:2013:418), as that judgment was concerned with the question of the existence of State aid rather than whether the aid was compatible with the internal market. The Commission did not, in fact, rely on that judgment in its examination of the PNB scheme and referred to it only by way of confirmation that revenue from those activities could serve as compensation for the SGEI entrusted.
63 In any event, the fact that, in the case giving rise to that judgment, the German organisations in question used separate accounting for their secondary economic activities does not preclude the Commission from finding, in the present case, that separate accounting was unnecessary due to the fact that the LMOs’ secondary activities formed an integral part of the SGEI.
64 By the third part of the second ground of appeal, the LMOs claim that the Court’s assessment that the lack of a pre-established mechanism for avoiding overcompensation was also indicative of the existence of serious difficulties stems from a distortion of the facts involving a substitution of the grounds for the decision at issue. It is clear from paragraphs 94, 95 and 97 of the decision at issue that a pre-established mechanism for preventing overcompensation was in fact provided for. Under the PNB scheme, investment and management subsidies cannot be combined to cover similar costs, revenue from the land must always be deducted from the calculation of management subsidies, the land cannot be sold without the formal consent of the authorities awarding the subsidies and the LMOs are obliged to repay any unfair advantage derived from the sale of land.
65 The Netherlands Government supports the arguments put forward by the LMOs.
66 The Commission submits, in relation to the first part of the second ground of appeal, first, that the Court erred in law in finding that the length of the preliminary examination procedure was indicative of the existence of serious difficulties. Although that procedure was indeed abnormally long, the explanation given by the Commission is that it was awaiting both the outcome of negotiations between the parties and the delivery of the judgment of 12 September 2013, Germany v Commission (T‑347/09, not published, EU:T:2013:418), before adopting the decision at issue.
67 Secondly, the Commission submits that the reasoning appearing in paragraphs 126 to 129 of the judgment under appeal is incomprehensible, in that it confuses the question of the economic nature of the secondary activities of the LMOs with the question of whether those activities belong to the SGEI entrusted to those bodies.
68 Thirdly, according to the Commission, that reasoning is based on a distortion of the facts, in that it was assumed that the Commission had concluded that those secondary activities were necessary for the operation of the SGEI, whereas the Commission regarded those activities as forming an integral part of the SGEI entrusted to the LMOs. It is clear from the decision at issue that the SGEI entrusted to the LMOs relates both to nature conservation and to the secondary activities.
69 Fourthly, the Commission maintains that, in paragraph 128 of the judgment under appeal, the Court established a manifestly incorrect criterion in finding that the Commission regarded secondary activities of an economic nature to be necessary for the operation of the SGEI, within the meaning of paragraph 11 of the PSC framework.
70 Fifthly, the Commission submits, for the sake of completeness, that VGG and Others did not raise the question of the accuracy of the definition given to the SGEI by the Kingdom of the Netherlands, but merely claimed that the atypical nature of the SGEI itself gave rise to the existence of serious difficulties.
71 With regard to the second part of the second ground of appeal, the Commission also submits that, since the secondary activities of the LMOs form an integral part of the SGEI entrusted to them, the lack of separate accounting is not relevant to establishing the presence of serious difficulties.
72 With regard to the third part of the second ground of appeal, the Commission takes the view that, for the reasons put forward by the LMOs, the Court distorted the facts and adds that nature management is a loss-making activity, so that it would be impossible for income from secondary activities to exceed the nature management costs. Furthermore, the Court failed to take account of the fact that the secondary activities of the LMOs form an integral part of the SGEI entrusted to them when examining the failure to assess the existence of a mechanism for preventing overcompensation, with the inevitable result that it erroneously concluded, in that regard, that the Commission did not have sufficient information to adopt the decision at issue.
73 VGG and Others plead primarily and from the outset that the second ground of appeal is ineffective, since the LMOs do not dispute the Court’s findings that the excessively long duration of the preliminary examination procedure, the fact that the Commission waited for the Court to deliver its judgment of 12 September 2013, Germany v Commission (T‑347/09, not published, EU:T:2013:418), and the unprecedented classification of the SGEI entrusted to the LMOs as ‘wider’ or ‘atypical’ are all indicative of the existence of serious difficulties. Those factors are sufficient in themselves to demonstrate such difficulties.
74 In the alternative, VGG and Others also challenge the arguments put forward by the LMOs under each of the three parts of the second ground of appeal, while stating that, even if the Court of Justice were to accept one or other of those parts, that would not, in the light of the body of evidence found by the General Court, be sufficient to justify setting aside the judgment under appeal.
75 According to settled case-law, the procedure under Article 108(2) TFEU is essential whenever the Commission has serious difficulties in determining whether aid is compatible with the internal market. Therefore, the Commission may restrict itself to the preliminary examination under Article 108(3) TFEU when taking a decision in favour of aid only if it is able to satisfy itself, after an initial examination, that the aid is compatible with the internal market (see, to that effect, judgment of 24 January 2013, 3F v Commission, C‑646/11 P, not published, EU:C:2013:36, paragraph 28 and the case-law cited).
76 If, by contrast, the initial examination leads the Commission to the opposite conclusion, or even if it does not enable it to resolve all the difficulties involved in determining whether the aid is compatible with the internal market, the Commission is under a duty to carry out all the requisite consultations and for that purpose to initiate the procedure under Article 108(2) TFEU (see, to that effect, judgment of 21 December 2016, Club Hotel Loutraki and Others v Commission, C‑131/15 P, EU:C:2016:989, paragraph 30 and the case-law cited).
77 According to settled case-law, where the procedure under Article 108(3) TFEU does not enable it to overcome all the difficulties involved in determining whether the measure in question is compatible with the internal market, the Commission is under a duty to initiate the procedure under Article 108(2) TFEU, without having any discretion in that regard (see, to that effect, judgment of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 113 and the case-law cited).
78 Thus, in accordance with the objective of Article 108(3) TFEU and its duty of sound administration, the Commission must, in an endeavour to overcome, during the preliminary procedure, any difficulties encountered, employ the measures and verifications necessary to remove any doubts as to the compatibility of the measure in question with the internal market (see, to that effect, judgment of 21 December 2016, Club Hotel Loutraki and Others v Commission, C‑131/15 P, EU:C:2016:989, paragraphs 34 and 35 and the case-law cited).
79 As the criterion of serious difficulties is objective in nature, the existence of such difficulties must be looked for not only in the circumstances in which the Commission’s decision was adopted after the preliminary investigation but also in the assessments upon which the Commission relied (see, to that effect, judgment of 21 December 2016, Club Hotel Loutraki and Others v Commission, C‑131/15 P, EU:C:2016:989, paragraph 31 and the case-law cited).
80 It follows that the lawfulness of a decision not to raise objections, based on Article 4(3) of Regulation No 659/1999, depends on the question whether the assessment of the information and evidence which the Commission had at its disposal during the preliminary investigation phase of the measure notified should objectively have raised doubts as to the compatibility of that measure with the internal market, given that such doubts must lead to the initiation of a formal investigation procedure in which the interested parties referred to in Article 1(h) of that regulation may participate (see, to that effect, judgment of 21 December 2016, Club Hotel Loutraki and Others v Commission, C‑131/15 P, EU:C:2016:989, paragraph 32 and the case-law cited).
81 When an applicant seeks the annulment of a decision not to raise objections, it essentially contests the fact that the Commission adopted the decision in relation to the aid at issue without initiating the formal investigation procedure, thereby infringing the applicant’s procedural rights. In order to have its action for annulment upheld, the applicant may invoke any plea to show that the assessment of the information and evidence which the Commission had at its disposal during the preliminary investigation phase of the measure notified should have raised doubts as to the compatibility of that measure with the internal market. The use of such arguments does nothing, however, to bring about a change in the subject matter of the action or in the conditions for its admissibility. On the contrary, the existence of doubts concerning that compatibility is precisely the evidence which must be adduced in order to show that the Commission was required to initiate the formal investigation procedure under Article 108(2) TFEU (see, to that effect, judgments of 24 May 2011, Commission v Kronoply and Kronotex, C‑83/09 P, EU:C:2011:341, paragraph 59, and of 21 December 2016, Club Hotel Loutraki and Others v Commission, C‑131/15 P, EU:C:2016:989, paragraph 45 and the case-law cited).
82 Proof of the existence of doubts as to the compatibility of the aid in question with the internal market, which requires investigation of both the circumstances in which the decision not to raise objections was adopted and its content, must be furnished by the applicant seeking the annulment of that decision, by reference to a body of consistent evidence (see, to that effect, judgment of 24 January 2013, 3F v Commission, C‑646/11 P, not published, EU:C:2013:36, paragraphs 30 and 31 and the case-law cited).
83 In the present case, in order to determine whether or not there were serious difficulties warranting the initiation of a formal examination procedure, the Court examined the body of evidence put forward by VGG and Others, which it set out in paragraphs 107, 130, 132 and 137 of the judgment under appeal.
84 In particular, in paragraphs 115 and 116 of the judgment under appeal, the Court stated that, in order to rule on the plea raised by VGG and Others relating to the existence of serious difficulties that the Commission apparently encountered during the preliminary examination of the aid scheme in question, since it classified the SGEI as ‘wider’ or ‘atypical’, it needed to analyse the degree to which the secondary economic activities of the LMOs were connected to their principal activity.
85 In that regard, the Court first observed, in paragraph 126 of that judgment, that, in paragraph 50 of the decision at issue, the Commission had accepted that, even if the goods and services offered by environmental protection organisations in the context of their secondary activities resulted from their main activity of protecting the environment, they were not rendered necessary by that main activity. In addition, the Court noted that the Commission had not examined whether the LMOs’ secondary activities of an economic nature could be properly carried out under market conditions or were of public interest.
86 The Court then noted, in paragraph 127 of the same judgment, that, where the examination carried out by the Commission during the preliminary examination procedure is insufficient or incomplete, this is indicative of the existence of serious difficulties.
87 In paragraph 128 of the judgment under appeal, the Court found that, although the revenue generated by secondary activities was intended to cover part of the costs of the main activity of nature conservation and was closely linked to the task of public interest of that main activity, the evidence the Commission had at its disposal did not enable it, on that basis alone, to conclude that the secondary activities of the LMOs were necessary for the operation of the SGEI, within the meaning of paragraph 11 of the PSC framework or that those activities were of general economic interest.
88 In paragraph 129 of that judgment, the Court stated that ‘although an undertaking to which an SGEI is entrusted may carry out other economic activities linked to the task of public interest entrusted to it, that does not automatically mean that those activities form an integral part of the SGEI’ and that ‘it follows, on the other hand, that such an undertaking must comply with the obligations of financial transparency and keeping separate accounts in order to avoid any risk of overcompensation’.
89 In paragraph 130 of the same judgment, the Court concluded that ‘the Commission’s classification of the aid measure in question as a “wider” or “atypical” SGEI demonstrates the existence of a serious difficulty’.
90 In the first place, it follows from the foregoing that, even though, in paragraph 117 of the judgment under appeal, the Court observed that, in its view, VGG and Others had raised a contradiction between paragraphs 50 and 93 of the decision at issue, its finding of the existence of serious difficulties indicated by the classification of the LMOs’ activities as a ‘wider’ or ‘atypical’ SGEI was not based on any such contradiction. As the Advocate General noted in points 71 and 72 of his Opinion, rather than focussing on a specific contradiction affecting the analysis contained in the decision at issue, the Court based its findings on the fact that the evidence that the Commission had at its disposal at the end of the preliminary examination procedure in relation to the activities carried on by the LMOs was insufficient and incomplete.
91 Therefore, the arguments of the LMOs and the Commission alleging that the Court wrongly relied on contradictory assertions by the Commission cannot succeed.
92 In the second place, with regard to the evidence that the Commission had at its disposal at the end of that preliminary procedure, the LMOs and the Commission consider that the Court was wrong to hold that that evidence was insufficient to support a finding that the LMOs’ secondary activities formed an integral part of the SGEI entrusted to them. It is apparent from the Court’s findings in paragraphs 119 to 121 of the judgment under appeal that, in order to conclude that those secondary activities fell within the ‘wider SGEI’, the Commission relied solely on the fact that the costs and revenues of those activities, of an economic nature, were attributed to the costs of their main activity of nature conservation.
93 In particular, in paragraphs 120 and 121 of the judgment under appeal, the Court stated that, in response to its questions concerning the connection between the LMOs’ secondary, economic, activities and the SGEI entrusted to them, the Commission had, in essence, merely claimed, first, that those secondary activities were closely linked to the main activity of nature conservation, in that they helped to finance it, and, secondly, that the fact that the secondary activities were not necessary in order to attain the objectives of nature conservation did not mean that they could not form part of an SGEI consisting of the main, non-economic, activity of nature conservation.
94 It was on the basis of those findings that the Court held, in paragraph 128 of the judgment under appeal, that the mere fact that the revenue generated by the secondary activities was intended to cover part of the costs of the main activity of nature conservation, and that it was therefore closely linked to the task of public interest of that main activity, was not sufficient to enable the Commission to conclude that the secondary activities were necessary for the operation of the SGEI, within the meaning of paragraph 11 of the PSC framework, or that the secondary activities were of general economic interest within the meaning of the case-law.
95 In that regard, it must be recalled from the outset that, although the Member States are entitled to define the scope and organisation of their SGEIs, and may take into account, in particular, objectives pertaining to their national policy and that, in that respect, the Member States enjoy a wide discretion, which may be called into question by the Commission only in the event of a manifest error, that discretion is not unlimited and must, in any event, be exercised in compliance with EU law (judgments of 26 April 2018, Cellnex Telecom and Telecom Castilla-La Mancha v Commission, C‑91/17 P and C‑92/17 P, not published, EU:C:2018:284, paragraphs 41 to 43, and of 15 May 2019, Achema and Others, C‑706/17, EU:C:2019:407, paragraph 104).
96 Article 106(2) TFEU provides, on one hand, that undertakings entrusted with the operation of SGEIs are subject to the rules on competition in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them and, on the other hand, that the development of trade must not be affected to such an extent as would be contrary to the interests of the European Union.
97 Thus, the wording of Article 106(2) TFEU itself shows that exemptions to the Treaty rules are permitted provided that they are necessary for performance of the particular tasks assigned to an undertaking entrusted with the operation of an SGEI (judgment of 8 March 2017, Viasat Broadcasting UK v Commission, C‑660/15 P, EU:C:2017:178, paragraph 29).
98 Accordingly, as stated in paragraph 3 of the PSC framework, to the extent that a measure benefiting an undertaking entrusted with the operation of an SGEI satisfies the general criteria for the applicability of Article 107(1) TFEU, it constitutes State aid and is subject to the provisions of Articles 106 to 108 TFEU.
99 With regard to the assessment of the compatibility of aid measures with the internal market, under Article 107(3) TFEU, it is settled case-law of the Court that this falls within the exclusive competence of the Commission, subject to review by the EU courts, that the Commission enjoys wide discretion in that regard, the exercise of which involves complex economic and social assessments and that, in the exercise of that discretion, the Commission may adopt guidelines in order to establish the criteria on the basis of which it proposes to assess the compatibility, with the internal market, of aid measures envisaged by the Member States (judgments of 8 March 2016, Greece v Commission, C‑431/14 P, EU:C:2016:145, paragraph 68, and of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraphs 37 to 39).
100 In accordance with settled case-law, in adopting such guidelines and announcing by publishing them that they will apply to the cases to which they relate, the Commission imposes a limit on the exercise of that discretion and cannot, as a general rule, depart from those guidelines, at the risk of being found to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations (judgments of 8 March 2016, Greece v Commission, C‑431/14 P, EU:C:2016:145, paragraph 69, and of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 40).
101 Therefore, in the area of State aid, the Commission is bound by the guidelines that it issues, to the extent that they do not depart from the rules in the TFEU and to the extent that their application is not in breach of general principles of law, such as equal treatment (judgment of 8 March 2016, Greece v Commission, C‑431/14 P, EU:C:2016:145, paragraph 70).
102 In the present case, it has not been argued before either the General Court or the Court of Justice that the PSC framework departs from the rules in the TFEU or that it breaches a general principle of EU law. On the other hand, the LMOs, supported by the Commission, claim that the Court misinterpreted paragraph 11 of that framework when it held, in paragraph 128 of the judgment under appeal, that the evidence that the Commission had at its disposal did not enable it to conclude that the secondary activities of the LMOs were necessary, within the meaning of that provision, for the operation of the SGEI entrusted to them.
103 Paragraph 11 of the PSC framework indicates that public service compensation constitutes State aid which may be declared compatible with Article 106(2) TFEU if it is necessary for the operation of the SGEI concerned and does not affect the development of trade to such an extent as to be contrary to the interests of the European Union. That paragraph also specifies that such a balance can only be achieved where the conditions set out in sections 2.2 to 2.10 of that framework are met, those sections comprising paragraphs 12 to 60 of the framework.
104 According to paragraphs 12 and 13 of the PSC framework, the aid granted, which is intended to compensate for the costs arising from the assumption of public service obligations, must relate to a genuine SGEI, excluding services that are already provided or can be provided satisfactorily and under conditions consistent with the public interest by undertakings operating under normal market conditions.
105 The Commission was correct, in adopting those two provisions, to consider that the broad discretion enjoyed by Member States when defining the scope of an SGEI, in accordance with the case-law referred to in paragraph 95 of the present judgment, is subject to the limits referred to in paragraphs 96 and 97 of the present judgment and cannot, therefore, be intended so widely as to enable Member States to classify as an SGEI autonomous services that could be provided by undertakings operating under normal market conditions.
106 Furthermore, under paragraphs 21, 47 and 48 of the PSC framework, the amount of compensation must not exceed what is necessary to cover the net cost of discharging the public service obligations, meaning that overcompensation, which is not necessary for the operation of the SGEI, constitutes State aid.
107 Paragraph 44 of the PSC framework provides that, where an undertaking carries out activities falling both inside and outside the scope of the SGEI, the internal accounts must show separately the costs and revenues associated with the SGEI and those of the other services. Paragraph 46 of that framework states that the Member State may decide that the profits accruing from other activities outside the scope of the SGEI, in particular those activities which rely on the infrastructure necessary to provide the SGEI, must be allocated in whole or in part to the financing of the SGEI.
108 It follows from all of the above points, first of all, that secondary activities which do not themselves fall within the scope of the SGEI cannot be considered as necessary to the SGEI merely because the profits accruing are allocated to the financing of the SGEI, secondly, that only secondary activities necessary to the SGEI can be regarded as forming part of it, and, finally, that compensation granted for secondary activities not necessary for the operation of the SGEI gives rise, by way of overcompensation, to State aid.
109 Therefore, the Court did not commit any error of law by requiring that the Commission have additional evidence showing that the secondary economic activities of the LMOs were necessary for the operation of the SGEI, within the meaning of paragraph 11 of the PSC framework, or that those activities themselves fell within the scope of the SGEI.
110 In the light of that evidence, it also necessary to dismiss the LMOs’ argument that the Court incorrectly took into account paragraph 41 of the judgment of 12 September 2013, Germany v Commission (T‑347/09, not published, EU:T:2013:418), from which it concluded that the fact that the secondary activities at issue in the present case derived, in the Commission’s view, from the main activity of environmental protection did not mean that they were made necessary by the main activity, since the LMOs’ activities do not form an indivisible whole.
111 In fact, having noted the Commission’s reference in the contested decision to paragraph 41, the Court was able to rely, first of all, on that information to understand the Commission’s analysis of the connection between the LMOs’ secondary activities and their main activity, next, to conclude, as a result, that the Commission had adopted the reasoning set out in paragraph 41 and had incorporated it, by analogy, into its own analysis of the present case, and, finally, to conclude that that analysis was based on insufficient evidence.
112 It follows from all the foregoing considerations that the General Court did not err in law when it held that the Commission’s classification of the LTOs’ activities as a ‘wider’ or ‘atypical’ SGEI was indicative of the serious difficulties which the Commission encountered during the preliminary examination phase of the PNB scheme.
113 In the third place, the Commission’s arguments alleging a distortion of the facts with regard to the necessity of the LMOs’ secondary activities must be dismissed as inadmissible, for the same reasons as those set out in paragraphs 47 to 49 of the present judgment.
114 In the fourth place, it is common ground that, in their appeal, the LMOs did not challenge the evidence relied on by the Court, in paragraph 107 of the judgment under appeal, concerning the duration of the preliminary examination procedure or the impact of the judgment of 12 September 2013, Germany v Commission (T‑347/09, not published, EU:T:2013:418).
115 According to settled case-law, it follows from the second subparagraph of Article 256(1) TFEU, the first paragraph of Article 58 of the Statute of the Court of Justice and Articles 168(1)(d) and 169(2) of the Rules of Procedure that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal (see, to that effect, judgment of 24 January 2013, 3F v Commission, C‑646/11 P, not published, EU:C:2013:36, paragraph 51 and the case-law cited).
116 On the other hand, in so far as that evidence was challenged by the LMOs in their reply, it is sufficient to note that, under Article 127(1) of the Rules of Procedure, which is applicable to the appeal procedure pursuant to Article 190(1) thereof, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. However, it does not appear from the present proceedings that the arguments put forward by the LMOs in that respect in their reply are based on matters of law or of fact which were unavailable to them at the date when they lodged their appeal. Accordingly, the LMOs’ arguments challenging the evidence relied on by the Court in paragraph 107 of the judgment under appeal must be declared inadmissible.
117 Similarly, the Commission’s arguments in that regard must be dismissed as inadmissible, for the same reasons as those set out in paragraphs 47 to 49 of the present judgment.
118 In the fifth place, as the Court was able to find several circumstantial factors indicative of serious difficulties concerning the procedure, its duration and the content of the decision at issue, it must be held that the arguments put forward in the second and third parts of the second ground of appeal are ineffective, as is rightly submitted by VGG and Others.
119 In view of those indicative factors and the case-law referred to in paragraph 82 of the present judgment, the Court was entitled to hold that VGG and Others had adduced proof of the existence of doubts as to the compatibility of the aid in question with the internal market.
120 In the light of the foregoing considerations, the second ground of appeal must be dismissed and the appeal must be dismissed in its entirety.
121 Under Article 138(1) of the Rules of Procedure, which applies to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
122 Since VGG and Others have applied for costs and the LMOs have been unsuccessful, the latter must be ordered to pay the costs.
123 Pursuant to Article 140(1) of the Rules of Procedure, the Commission and the Kingdom of the Netherlands are to bear their own costs.