1 By application lodged at the Court Registry on 21 October 1998, the Commission of the European Communities brought an action pursuant to the second subparagraph of Article 93(2) of the EC Treaty (now the second subparagraph of Article 88(2) EC) for a declaration that, by failing to adopt within the periods prescribed the measures necessary to recover from the beneficiary undertakings the aid provided for under the Maribel bis/ter scheme which was declared unlawful and incompatible with the common market by Commission Decision 97/239/EC of 4 December 1996 concerning aid granted by Belgium under the Maribel bis/ter scheme (OJ 1997 L 95, p. 25), notified to it on 20 December 1996, the Kingdom of Belgium has failed to fulfil its obligations under the fourth paragraph of Article 189 of the EC Treaty (now the fourth paragraph of Article 249 EC) and Articles 2 and 3 of the said decision. Legal and factual background Facts leading up to Decision 97/239
2 In Belgium the Maribel scheme introduced by the Law of 29 June 1981 laying down the general principles of social security for wage earners (Moniteur belge of 2 July 1981, p. 8575) had accorded a reduction in social security contributions to undertakings employing manual workers. Since it was general and automatic, that measure was not deemed to constitute aid falling within the scope of Article 92(1) of the EC Treaty (now, after amendment, Article 87(1) EC).
3 The Royal Decree of 14 June 1993 (Moniteur belge of 7 July 1993, p. 16069) amended that scheme with effect from 1 July 1993, introducing the Maribel bis scheme. This provided that the reduction in social security contributions would be increased where the employer carried on his principal activity in one of the sectors most exposed to international competition.
4 By Royal Decree of 22 February 1994 (Moniteur belge of 18 March 1994, p. 6724), which introduced the Maribel ter scheme, the reduction in social security contributions was again increased, with effect from 1 January 1994. Its scope was also extended, first, with effect from 1 January 1994, to international transport, and second, with effect from 1 April 1994, to air and sea transport and to transport-related activities.
5 Since the Belgian Government did not give the Commission prior notice of the measures which made up the Maribel bis and Maribel ter schemes (Maribel bis/ter scheme), the Commission initiated the procedure provided for in the first paragraph of Article 93(2) of the Treaty. Following that procedure, on 4 December 1996, the Commission adopted Decision 97/239, which it notified to the Kingdom of Belgium on 20 December 1996.
6 In Article 1 of Decision 97/239, the Commission declared the increased reduction in social security contributions in respect of manual workers granted under the Maribel bis/ter scheme to employers who carry on their principal activity in one of the sectors most exposed to international competition incompatible with the common market.
7 Under the first sentence of Article 2 of Decision 97/239, Belgium shall take appropriate measures to terminate forthwith the granting of the increased reductions in social security contributions ... and shall recover the illegal aid from the beneficiary undertakings.
8 Article 3 of Decision 97/239 provides that Belgium shall inform the Commission of the measures it has taken to comply with this Decision within two months of the date of its notification.
9 By application lodged at the Court Registry on 19 February 1997, the Kingdom of Belgium asked the Court to annul Decision 97/239. By judgment of 17 June 1999 in Case C-75/97 Belgium v Commission [1999] ECR I-3671, the Court dismissed that application. The steps taken by the Kingdom of Belgium following Decision 97/239 and the discussions that took place before this action was lodged
10 The Belgian Government informed the Commission that, in order to meet its obligation to terminate the increased reductions in social security contributions imposed in the first part of the first sentence of Article 2 of Decision 97/239, it intended to replace the Maribel bis/ter scheme with a new scheme, Maribel quater, from 1 July 1997. The Commission replied that it regarded the Maribel quater scheme taken as a whole as a general measure and that it would not raise any objection to it on the basis of Article 92(1) of the Treaty.
11 The Kingdom of Belgium did not, however, comply before the lodging of this action with the obligation to recover aid granted under the Maribel bis/ter scheme imposed in the second part of the first sentence of Article 2 of Decision 97/239.
12 In order to surmount the difficulties cited by the Belgian Government to justify its failure to recover that aid, discussions were held with the Commission; these appear to have started with a meeting on 13 January 1997 between representatives of the Belgian Government and Commission staff.
13 The Belgian Government referred to difficulties such as the disappearance or bankruptcy of some undertakings, the merging of the reductions in contributions under the Maribel bis scheme with those under the Maribel ter scheme, the need to take account of the various forms of financing to which the undertakings would have been entitled if they had not benefited from those reductions, the difficulties of calculation linked to the possible deduction of further reductions in contributions provided for under the Maribel quater scheme from the sums to be reimbursed, the large number of beneficiary undertakings for which the reductions would have had to be calculated, for each quarter, on the basis of the number of workers employed and, in substance, the high cost and unacceptable burden of work that such a recovery operation would entail for the competent authorities.
14 The Belgian Government maintained that it was necessary to resort to a flat-rate calculation of the amount of aid to be recovered.
15 It also asked that the de minimis rule be applied, stating that when that rule was applied undertakings with less than 50 employees were excluded from the obligation to repay the aid in question.
16 For its part, the Commission did not in principle exclude either application of the de minimis rule or possible set-off between the amounts to be repaid and the amount of the further reductions provided for under the Maribel quater scheme.
17 However, it asked the Belgian Government several times to give details of its proposed flat-rate payment and to specify how much aid would be recovered under the proposed method. The Commission was concerned by the very vague nature of the flat-rate calculation and excluded any method of calculation which would not take into account the reductions in contributions from which the undertakings had in fact benefited.
18 Since, after months of discussion, the Commission had not received specific proposals for the recovery of aid, by letter of 4 May 1998 it asked the Belgian Government to let it have a specific, detailed and operational recovery plan within 15 working days from the date of the letter.
19 Since it was not satisfied by the Belgian Government's reply, the Commission decided to bring the present action. The continuation of discussions after this action was lodged
20 It is clear from the parties' replies to a question put to them by the Court that the discussions which were interrupted when this action was lodged resumed in January 1999. The Belgian Government then examined with the Commission various versions of a draft protocol proposed by the former in order to resolve the problem of the recovery of aid paid under the Maribel bis/ter scheme.
21 The recovery method proposed in that document was in substance accepted by the Commission, which confined itself to asking for further details from the Belgian Government.
22 Consequently the recovery of aid paid under the Maribel bis/ter scheme was regulated by a Law of 24 December 1999 on social and other provisions (Moniteur belge of 31 December 1999, 3rd edition, p. 50467).
23 Some details of those rules have, however, been contested by the Commission, which indicated to the Belgian Government that changes would be required. Disagreement seemed to persist in particular on one aspect of the application of the de minimis rule and on the allegedly ambiguous nature of the Law inasmuch as it appeared to allow the undertakings concerned a double tax deduction on the sums to be repaid. Substance The relevant date for the purposes of a declaration of infringement
24 The means of redress provided for by the second subparagraph of Article 93(2) of the Treaty is merely a variant of the action for a declaration of failure to fulfil Treaty obligations, specifically adapted to the special problems which State aid poses for competition within the common market (see Case C-301/87 France v Commission (Boussac Saint Frères) [1990] ECR I-307, paragraph 23).
25 In the context of proceedings under Article 169 of the EC Treaty (now Article 226 EC), the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation in the Member State as it stood at the end of the period laid down in the reasoned opinion, and the Court cannot take account of any subsequent changes (see, for instance, Case C-58/99 Commission v Italy [2000] ECR I-3811, paragraph 17).
26 Because the second paragraph of Article 93(2) of the Treaty does not provide for a pre-litigation phase, in contrast to Article 169 of the Treaty, and therefore the Commission does not issue a reasoned opinion allowing Member States a certain period within which to comply with its decision, when the former provision is applied the reference period can only be that provided for in the decision failure to implement which is denied or, where appropriate, that subsequently fixed by the Commission.
27 With regard to the period prescribed in this case, Article 3 of Decision 97/239 allows a period of two months from the date of its notification for the Belgian Government to inform the Commission of the measures taken to comply with that decision, including the measures taken for the purpose of recovering the aid granted. After long discussions between the parties on the difficulties experienced by the Belgian Government, in its letter of 4 May 1998 the Commission fixed a new period expiring a fortnight after the date of that letter.
28 In view of the difficulties in fact encountered and given the case-law concerning the duty imposed on the Member States and the Community institutions to cooperate genuinely with each other (see Case C-261/99 Commission v France [2001] ECR I-2537, paragraph 24), it cannot be disputed that the period fixed in Article 3 of Decision 97/239 was replaced by that which resulted from the letter of 4 May 1998. That latter date must be regarded as the pertinent one and it must be held that initiatives and measures taken by the Belgian authorities after the date when that period expired cannot be taken into consideration. The supposed impossibility of recovering the amounts granted
29 It is not disputed that the Belgian authorities did not recover the aid unlawfully paid under the Maribel bis/ter scheme within the prescribed period, as defined in paragraph 28 of this judgment.
30 According to consistent case-law, the only defence available to a Member State in opposing an application by the Commission under Article 93(2) of the Treaty for a declaration that it has failed to fulfil its Treaty obligations is to plead that it was absolutely impossible for it to implement the decision properly (see Case C-348/93 Commission v Italy [1995] ECR I-673, paragraph 16; Case C-280/95 Commission v Italy [1998] ECR I-259, paragraph 13; and Commission v France, cited above, paragraph 23).
31 The fact that a Member State can only plead in its defence against such an action that implementation was absolutely impossible does not prevent a State which, in giving effect to a Commission decision on State aid, encounters unforeseen and unforeseeable difficulties or becomes aware of consequences overlooked by the Commission, from submitting those problems to the Commission for consideration, together with proposals for suitable amendments to the decision in question. In such cases, the Commission and the Member State must, by virtue of the rule imposing on the Member States and the Community institutions a duty of genuine cooperation which underlies, in particular, Article 5 of the Treaty (now Article 10 EC), work together in good faith with a view to overcoming the difficulties whilst fully observing the Treaty provisions and, in particular, the provisions on aid (see Case 94/87 Commission v Germany [1989] ECR 175, paragraph 9; Commission v Italy, cited above, paragraph 17; Case C-404/97 Commission v Portugal [2000] ECR I-4897, paragraph 40; and Commission v France, cited above, paragraph 24).
32 The condition of absolute impossibility is not satisfied where the defendant government merely informs the Commission of the legal and practical difficulties involved in implementing the decision, without taking any step whatsoever to recover the aid from the undertakings in question, and without proposing to the Commission any alternative arrangements for implementing the decision which would have enabled the alleged difficulties to be overcome (see Commission v Germany, cited above, paragraph 10; Case C-183/91 Commission v Greece [1993] ECR I-3131, paragraph 20; and Commission v Italy, cited above, paragraph 14). The arguments of the parties
33 The Commission complains that the Kingdom of Belgium did not take measures to recover the aid granted under the Maribel bis/ter scheme although it was not absolutely impossible to carry out such recovery. It alleges in that connection that the Kingdom of Belgium took no steps to try to recover that aid from the beneficiary undertakings.
34 It also regrets that the Belgian Government did not propose any alternative means of implementing Decision 97/239 in order to overcome the difficulties encountered in recovering the aid in question. It alleges in particular that it did not provide details, despite repeated requests, of its proposals for a set-off scheme and a flat-rate calculation.
35 In response the Belgian Government states that it was diligent in seeking to recover the aid in question but encountered insurmountable difficulties in calculating exactly - for each quarter - the reductions in contributions from which the undertakings concerned had benefited.
36 It adds that, in the absence of a solution of a general nature to that problem, it could not implement Decision 97/239 vis-à-vis only some of the undertakings in question without infringing the principle of equal treatment.
37 The Belgian Government sets out in detail the difficulties that, it claims, result from two peculiarities of the Belgian social security system. - First, an undertaking which had to repay aid received under the Maribel bis/ter scheme would be in a situation which could only continue for a period of 30 days, failing which the undertaking could no longer benefit from other reductions of social charges subject to different conditions. It is clear that such reimbursement is impossible within a period of 30 days. - Second, since the Maribel schemes constituted an indivisible flat-rate and, prior to 1994, the computer system made no distinction between advantages resulting from the initial Maribel scheme and those resulting from the Maribel bis/ter scheme, it is in any case impossible to make calculations for the period prior to that year.
38 The Belgian Government contends that only a flat-rate calculation of the amount to be recovered would have allowed the difficulties encountered to be overcome, but that that solution was rejected by the Commission.
39 The Belgian Government complains, in this context, that the Commission did not cooperate in a constructive manner in the search for an acceptable solution to the problem of recovering the aid in question. It points out that the duty of genuine cooperation lies on the institutions as well as the Member States. Assessment by the Court
40 It should be borne in mind that the Court held, in paragraph 90 of the Belgium v Commission judgment cited above, that, despite the undeniable existence of difficulties, there was nothing to show that it was absolutely impossible for recovery of the aid in question to be carried out and that that was already the case when the Commission adopted Decision 97/239.
41 In this case, as the Advocate General noted in point 25 of his Opinion, the Belgian authorities in practice confined themselves to raising the difficulties of a technical and administrative nature which such recovery presented; those difficulties resulted essentially from the large number of undertakings concerned and from the need to determine the amount of aid - for each quarter - on the basis of the number of workers actually employed in those undertakings.
42 In connection with that type of difficulty, in a similar case the Court dismissed the argument that the large number of undertakings concerned could result in absolute impossibility (Case C-280/95 Commission v Italy, cited above). The Court pointed out in particular, at paragraph 23 of that judgment, that even if recovery of the tax credit did present difficulties from an administrative point of view, that fact was not such as to enable recovery to be deemed to be technically impossible.
43 Up to the relevant date for a finding of infringement, the Belgian Government had taken no steps towards recovering the aid from the undertakings concerned. It does not, however, appear to have been absolutely impossible to begin by recovering aid from certain undertakings chosen in compliance with the principle of equal treatment, while safeguarding the undertakings concerned from the disadvantages resulting from the particularities of the Belgian social security system.
44 It must also be noted that the Kingdom of Belgium did not cooperate sufficiently with the Commission in order to find a solution to the problem of the recovery of the aid in question.
45 The Belgian Government did, it is true, propose a set-off model based essentially on a flat-rate calculation of the amounts to be paid by each undertaking.
46 Nevertheless, the Commission was well-founded in its observation that the proposal to make a flat-rate calculation of the aid to be recovered was formulated in vague terms.
47 Thus, despite repeated requests from the Commission, the Belgian Government did not provide it with information enabling the nature and exact content of that type of calculation to be clarified; in particular it did not define the components which were to be deemed to be of a flat-rate nature.
48 Moreover, at one point in the negotiations the Belgian Government itself expressed serious doubt as to whether its set-off model was feasible and informed the Commission of its reservations.
49 Consequently, in the absence of more precise information, the Commission could not do otherwise than declare any flat-rate calculation which had not taken account of the amount of the reduction in contributions from which the undertakings had actually benefited unacceptable.
50 As regards the lack of cooperation of which the Belgian Government accused the Commission, it must be pointed out that it is the Member State addressee of a decision ordering it to recover unlawfully paid aid which is required to submit proposals first in cases of difficulty.
51 Given the absence of Community provisions relating to the procedure for recovering undue payments, the recovery of unlawfully paid aid must in principle take place in accordance with the relevant procedural provisions of national law (see Case C-24/95 Alcan Deutschland [1997] ECR I-1591, paragraph 24). The Member State is therefore in the best position to determine the appropriate means for such recovery.
52 In the circumstances, the Commission cannot be said to have failed to cooperate. Moreover, the Commission accepted application of the de minimis rule without any delay and stated on several occasions during the negotiations that it was ready to accept a concrete proposal based on a flat-rate calculation. It therefore applied itself to active cooperation by accepting the few proposals made which were acceptable.
53 It follows from all the foregoing considerations that, by failing to adopt within the period prescribed the measures necessary to recover from the beneficiary undertakings the aid provided for under the Maribel bis/ter scheme which was declared unlawful and incompatible with the common market by Decision 97/239, the Kingdom of Belgium has failed to fulfil its obligations under the fourth paragraph of Article 189 of the EC Treaty and Articles 2 and 3 of the said decision.