31995Y1028(02)

Framework for State aid in the motor vehicle sector (95/C 284/03)

(Text with EEA relevance)

By the first of the following letters the Commission informed the Member States of its decision of 5 July 1995 to prolong retroactively from 1 January 1995 the original framework for State aid in the motor vehicle industry. By the second following letter it proposes to the Member States to reintroduce the framework as an appropriate measure pursuant to Article 93 (1) of the EC Treaty with some changes specified in the letter.

'I have the honour to inform you that at its meeting of 5 July 1995 the Commission decided to propose, in the light of the judgment of the Court of Justice of 29 June 1995 in Case C-135/93, Spain v. Commission to reintroduce the Community framework for State aid in the motor vehicle industry and to introduce some minor changes to it where necessary as an appropriate measure within the meaning of Article 93 (1) of the EC Treaty.

With the help of this appropriate measure, the Commission intends to monitor for a period of two years all different types of aid in favour of the various motor vehicle and motor vehicle engine manufacturers and this in accordance with the notification rules and guidelines for appreciation of aid cases included in the framework (¹).

The changes set out below bring the text of the framework up to date in line with the development of the Community. Furthermore, the threshold for aid given under approved schemes has been revised upwards to ECU 17 million. This reflects developments of prices since 1989.

The new version of the framework which was discussed at the multilateral meeting of 4 July 1995 holds the following changes compared to the 1989 version:

- Replace "EEC" everywhere by "EC".

- Point 1, paragraph 3, first sentence: "The Commission's future aid policy must be in line with the conditions of a single market without internal frontiers that has been in operation since end 1992."

- Point 1, paragraph 6: "Having completed its examination, the Commission decided to propose to the Member States under Article 93 (1) of the EC Treaty that they notify in advance, in accordance with the rules set out below, significant cases of aid to the motor vehicle sector."

- Point 2.2, paragraph 1, first sentence: "All aid measures to be granted by public authorities within the scope of an approved scheme to (an) undertaking(s) operating in the motor vehicle sector as defined above, where the cost of the project to be aided exceeds ECU 17 million are subject to prior notification on the basis of Article 93 (3) of the EC Treaty."

- Point 2.5, first and second sentences: "The appropriate measures shall enter into force when all Member States have signalled their agreement or at the latest by 1 January 1996. All aid projects, which have not yet received a final approval by the competent public authority by that date, shall be subject to prior notification."

As the economic situation of the motor vehicle industry and the high level of State aid to this sector has not changed, the framework for State aid in the motor vehicle industry is still required.

The Commission also wishes to inform your Government that it reserves the right to reexamine and possibly revise or abolish this framework after two years taking account, inter alia, of developments concerning the possible introduction of the planned horizontal system of aid control. The Commission would organize in advance a multilateral meeting with Member States representatives to discuss any such proposed changes.

The Commission requests your Government to inform it within 30 working days of the date of this letter that your Government agrees to the points set out above. Should your authorities fail to signify their agreement within 30 working days from the date of this letter, the Commission would be obliged to open the procedure provided for under Article 93 (2) of the EC Treaty on all approved aid schemes which may benefit the motor vehicle industry.

(¹) OJ No L 231, 3. 9. 1994 and OJ No C 123, 18. 5. 1989.

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'The judgment delivered by the Court of Justice on 29 June 1995 in Case C-135/93 means that the Commission Decision of 23 December 1992 must be interpreted as having extended the Community framework on State aid to the motor vehicle industry only until the date on which it was next due to be reviewed, this being, as in previous instances, at the end of a further two-year application period, i.e. 31 December 1994.

The Commission hereby informs you that, in the Community interest, it has decided to extend its decision with retroactive effect from 1 January 1995. The framework thus remains in force without interruption.

This extension is provisional in nature and will apply only until the procedure provided for in Article 93 (1) of the Treaty, which the Commission has decided to initiate simultaneously (followed, if necessary, by proceedings under Article 93 (2)), has been completed, this being for a maximum period of one year, i.e. until 31 December 1995.

This decision is justified by an overriding Community interest. If undistorted competition is to be maintained in the motor vehicle industry, significant cases of State aid must be submitted for prior Commission approval, so as to ensure that the sectoral effect of the aid is taken into account, even where it is granted under existing aid schemes.

The Commission takes the view that this decision is the only way of avoiding effects that would be contrary to the common interest and would have an irreversible impact on the market structure of the motor vehicle industry.

This measure is merely an extension, pursuant to Article 93 (1) of the Treaty, for a limited period, of the original framework agreed to by the Member States. It was put to the Member States for discussion at the multilateral meeting held on 4 July 1995.

Consequently, in accordance with the duty of cooperation provided for in the Treaty, and in particular Article 5 thereof, this decision means that the Member States must abstain from granting any aid to the motor vehicle industry without notifying the Commission in advance or without awaiting its final decision in accordance with the rules laid down in the framework.

The Commission believes that the retroactive application of this decision as from 1 January 1995 is justified. Although, as a general rule, the principle of legal certainty means that the point in time from which a Community act starts to run must not be set at a date before that on which it was adopted, an exception to this rule may arise where the objective to be attained so requires and where the legitimate expectations of the parties concerned are duly respected.

In this particular instance, the fact that the Court delivered its judgment after the date on which the framework should have been reviewed gives rise to such exceptional circumstances. In addition, as stated above, the objective of maintaining undistorted competition in the motor vehicle industry can be achieved only by maintaining uninterrupted the notification rules provided for in the framework on State aid to the motor vehicle industry, such rules being the only means of preventing the irreversible effects that would be caused by granting aid without taking account of its sectoral impact, in a particularly sensitive industry in which there is a major need for investment despite the current production overcapacity. Lastly, the presumption that the Commission Decision of 23 December 1992 was valid prevented the creation of legitimate expectations on the part of the parties concerned; the Member States and undertakings have, moreover, considered that the framework was in force.`