Keywords
Summary

Keywords

1. State aid – Plans to grant aid – Examination by the Commission – Plans for schemes of assistance for the rescue or restructuring of small and medium-sized enterprises or small agricultural enterprises – Guidelines on State aid for rescuing and restructuring firms in difficulty – Usual period of two months – Period applicable for an ‘authorisation’ occurring at the end of the preliminary examination phase

(Art. 88(2), first para., and (3) EC; Guidelines on State aid for rescuing and restructuring firms in difficulty, point 4.1, first para.)

2. State aid – Plans to grant aid – Examination by the Commission – Preliminary phase – Duration – Extension by the Commission by means of questions unnecessary for the review of the aid – Not allowed – Possibility of engaging in a dialogue with the Member State to enable it to complete an incomplete notification

(Art. 88(3) EC)

3. State aid – Existing aid and new aid – Conversion of new aid into existing aid – Conditions – Possibility for the Commission to initiate the formal investigation procedure in the absence of prior notice by the Member State of implementation of its plan

4. State aid – Plans to grant aid – Examination by the Commission – Preliminary review and main review – Duty to act within a reasonable time – Assessment of actual situation

(Art. 88(2) and (3) EC)

5. State aid – Compatibility of the aid with the common market – Possible legitimate expectation of the persons concerned – Protection – Conditions and limits

(Art. 88(2), first para., EC; Council Regulation No 659/1999, Art. 7(1) and (3))

6. State aid – Commission decision finding non-notified aid to be incompatible with the common market – Duty to state reasons – Information required

(Art. 253 EC)

7. State aid – Effect on trade between Member States – Adverse effect on competition – Criteria for assessment – Aid of limited individual importance but spent in a sector characterised by intense competition and a large number of small enterprises

(Art. 87(1) EC)

8. State aid – Prohibition – Derogations – Aid which may be considered compatible with the common market – Discretion of the Commission – Possibility of adopting guidelines – Complex economic assessment – Judicial review – Limits

(Art. 87(3) EC)

9. State aid – Examination by the Commission – Approval of a general aid scheme – Condition – Implementation not capable of leading to the grant of individual aid which is not necessary to fulfil one of the objectives laid down by Article 87(3)(a) to (d) EC

(Art. 87(3)(a) to (d) EC)

10. State aid – Prohibition – Derogations – Aid which may be considered compatible with the common market – Aid for restructuring firms in difficulty – Identification of firms in difficulty

(Art. 87(3)(c) EC; Guidelines on State aid for rescuing and restructuring firms in difficulty, point 2.1, first para.)

11. State aid – Prohibition – Derogations – Aid which may be considered compatible with the common market – Aid for restructuring firms in difficulty – Taking into account the location of firms in an assisted area – Limits

(Art. 87(3)(a) and (c) EC; Guidelines on State aid for rescuing and restructuring firms in difficulty, points 2.4, second para., and 3.2.1 to 3.2.3)

12. State aid – Prohibition – Derogations – Aid which may be considered compatible with the common market – Aid for restructuring firms in difficulty – Conditions – Cumulative conditions – Consequence – Possibility for the Commission to prohibit the payment of aid in the absence of adequate information on the fulfilment of one of the conditions

(Art. 87(3)(c) EC; Guidelines on State aid for rescuing and restructuring firms in difficulty, point 3.2.2)

13. Procedure – Interveners – Pleas different from those of the supported main party – Admissibility – Condition – Connection with the subject-matter of the case – Admissibility not to be narrowly assessed in relation to potential beneficiaries of an aid scheme intervening on the side of the dispensing body

(Statute of the Court of Justice, Art. 40, fourth para.; Rules of Procedure of the Court of First Instance, Art. 116(4))

14. Procedure – Interveners – Disputed admissibility of a plea relied on by an intervener taking into account its dubious connection with the subject-matter of the case – Plea having, in any event, to be rejected on another ground or as unfounded – Possibility for the Court to dismiss without ruling on its admissibility

15. State aid – Prohibition – Derogations – Scope of the derogation – Restrictive interpretation – Economic disadvantages caused directly by natural disasters or exceptional occurrences

(Art. 87(1) and (2)(b) EC)

16. State aid – Prohibition – Derogations – Aid which may be considered compatible with the common market – Aid for restructuring firms in difficulty located in an assisted area – Conditions under which applicable – Examination by the Commission

(Art. 87(3)(c) EC)

17. State aid – Prohibition – Derogations – Aid which may be considered compatible with the common market – Assessment in the light of Article 87 EC – Taking an earlier practice into account – Not included

(Art. 87(3)(c) EC)

18. Procedure – Presentation of pleas – Plea expressed in abstract terms, not clarified by sufficiently clear and precise information – Inadmissible

(Rules of Procedure of the Court of First Instance, Art. 116(4)(b))

Summary

1. The first paragraph of point 4.1 of the Guidelines on State aid for rescuing and restructuring firms in difficulty states, in particular, that the Commission ‘will be prepared to authorise’ plans for schemes of assistance for the rescue or restructuring of small and medium-sized enterprises (SMEs) or small agricultural enterprises (SAEs) and ‘will do so within the usual period of two months from the receipt of complete information, unless the scheme qualifies for the accelerated clearance procedure, in which case the Commission is allowed 20 working days’.

Those terms must be construed in the context of the procedural provisions laid down in the Treaty for the monitoring of State aid. The guidelines which the Commission may adopt in order to clarify the practice that it intends to follow in that area cannot depart from the provisions of the Treaty.

It follows that a planned aid scheme for restructuring SMEs can be authorised by the Commission within the period referred to in the first paragraph of point 4.1 of the Guidelines only if, at the end of the ‘usual period of two months’, that is, the period allowed for its preliminary examination laid down in Article 88(3) EC, the Commission forms the view either that the measures envisaged do not constitute aid, or that they constitute aid which is undoubtedly compatible with the common market. If, on the other hand, the Commission is unable to reach such a conclusion, it is obliged to initiate the formal investigation procedure under the first subparagraph of Article 88(2) EC.

(see paras 28-29, 33)

2. The preliminary examination phase of planned aid schemes, laid down in Article 88(3) EC, is subject to a mandatory two-month period that runs from the receipt by the Commission of complete notification. In order for a notification to be regarded as complete it is sufficient for it to contain, either in its original form or once the Member State concerned has replied to the Commission’s requests, the information needed to enable the Commission to form a prima facie opinion of the compatibility of the project which has been notified to it. It follows that, whilst the Commission cannot prevent the two-month period from running its course while it demands information which is not needed to enable it to form a prima facie opinion, it is, on the other hand, pursuant to the purpose of Article 88(3) EC, entitled to engage in a dialogue with the Member State concerned with a view to enabling the latter to complete its notification if the necessary information does not appear in it.

(see paras 40-41)

3. The conversion of new aid into existing aid is subject to two conditions which are sufficient and necessary; the first is that the Commission must not initiate the formal investigation procedure within two months of receipt of the complete notification, and the second is that the Member State concerned must give the Commission prior notice of implementation of its plan. Where no notice of implementation of a scheme is notified to the Commission by the Member State, with the result that one of the two conditions required for the conversion of new aid into existing aid is lacking, the Commission may legitimately decide to initiate the formal investigation procedure in relation thereto.

(see paras 48-49)

4. It is a general principle of Community law that the conduct of an administrative procedure should be of reasonable duration. Further, the fundamental requirement of legal certainty, which precludes the Commission from being able to postpone the exercise of its powers indefinitely, means that the Court has to assess whether the progress of the administrative procedure indicates excessively belated action on the part of that institution.

Whilst, in the context of the formal investigation procedure laid down in Article 88(2) EC, a Member State has an interest in complying with the deadlines imposed to submit its comments or provide the additional information requested by the Commission, without however being bound to do so, time elapsing as a result of its conduct leading to a failure to respect those deadlines nevertheless remains its responsibility.

(see paras 53, 59)

5. In principle, and save in exceptional circumstances, a legitimate expectation that aid is lawful cannot be invoked unless that aid has been granted in compliance with the procedure laid down in Article 88 EC. In order for aid to have been granted in compliance with the procedure laid down in Article 88 EC, that procedure, which is suspensory in nature, must have been brought to a close. Consequently, where the formal investigation procedure has been initiated in accordance with the first subparagraph of Article 88(2) EC, it must subsequently have been closed by means of a positive decision in accordance with Article 7(1) and (3) of Regulation No 659/1999. Therefore, it is only once such a decision has been adopted by the Commission, and the period for bringing an action against that decision has expired, that a legitimate expectation as to the lawfulness of the aid concerned can be pleaded.

(see paras 64-65)

6. The statement of reasons for a measure must be appropriate to that measure and must disclose clearly the reasoning followed by the institution which adopted it in such a way as to enable the persons concerned to understand the basis for it and the court to review the justification for it, without being required to go into all the relevant facts and points of law, since the question of compliance with Article 253 EC is assessed by taking the wording of that measure into account as much as its legal and factual context.

Where a decision is adopted by the Commission in relation to the monitoring of State aid, even if the very circumstances in which aid is granted are sufficient to show that the aid is capable of affecting trade between Member States and of distorting or threatening to distort competition, the Commission must at least set out those circumstances in the statement of reasons for that decision.

(see paras 73-74)

7. In its classification of planned aid or of an aid scheme in the light of Article 87(1) EC, the Commission is not required to determine the actual effect but only to examine whether the project is liable to affect trade between Member States and distort or threaten to distort competition.

Neither the relatively small amount of aid envisaged nor the modest size of the eligible firms in itself precludes a planned aid scheme from being liable to affect trade between Member States and to distort or threaten to distort competition. The same applies to the limited scale of the economic sector concerned. Other factors can also be taken into account, such as the particular degree of exposure to competition in the economic sector. Such is the case of a sector which is exposed to intense competition and, in particular, whose structure, which is characterised by a large number of small-scale operators, is such that the creation of an aid scheme that is available to a large number of them can have an impact on competition even where individual grants of aid under that scheme are small.

(see paras 84-87)

8. Under Article 87(3) EC the Commission has a wide discretion. None the less, in order to exercise that discretion, it may adopt rules of guidance such as the Community Guidelines on State aid for rescuing and restructuring firms in difficulty, so long as those rules do not depart from the provisions of the Treaty. Where such a measure has been adopted, the Commission is governed by it. It is therefore for the Court to check that the Commission has observed the rules which it adopted.

However, since the wide discretion conferred upon the Commission, clarified, where appropriate, by the guidance rules adopted, involves complex economic and social appraisals having to be carried out in a Community context, the Court has limited control over these. It confines its review to determining whether the rules governing procedure and the requirement for a statement of reasons have been complied with, whether the facts are accurately stated and whether there has been any manifest error of assessment or any misuse of powers.

(see paras 94-97)

9. The opportunity which is given to the Member State concerned to give notice of a planned aid scheme and, once the Commission has approved it after examining its general characteristics, to dispense with notification of individual aid measures granted pursuant to that scheme, subject, where appropriate, to conditions and obligations imposed in that respect, cannot, therefore, justify the grant of individual aid measures which would have been declared incompatible if they had been the subject of an individual notification without negating the effect of the principle of incompatibility of aid set out in Article 87 EC. In particular, it cannot lead to individual aid measures being granted which, although consistent with one of the objectives of Article 87(3)(a) to (d) EC, are nevertheless not necessary in order for that objective to be met.

The Commission must therefore check that planned aid schemes submitted for its examination are set up in such a way as to ensure that the individual aid measures to be granted according to their provisions will be limited to firms which are actually eligible for them. If that proves not to be the case, it is for the Commission, in the exercise of its wide discretion, to take that into account and to assess whether it is appropriate to adopt a conditional or negative decision, in so far as it can do so from the information available to it.

(see paras 103-105)

10. The first paragraph of point 2.1 of the Guidelines on State aid for rescuing and restructuring firms in difficulty makes it clear that the Commission regards as being in difficulty a firm which is unable to recover through its own resources or by raising the funds it needs from shareholders or borrowing. It puts forward various trend indicators for assessing how much a firm’s situation is worsening, together with va rious specific indicators for assessing the particular gravity of that situation in certain cases.

The first paragraph of point 2.1 of those Guidelines indicates that the importance which the Commission attaches to trend indicators does not necessarily make other kinds of indicator unsuitable, such as those based on an average. However, such indicators will, in any event, be suitable only if it is thereby possible to identify the genuine and demonstrable difficulties which the eligible firms have encountered. Failing that, the aid cannot be regarded as being required by those firms or necessary in order to meet the objective of Article 87(3)(c) EC.

(see paras 108, 111)

11. The second paragraph of point 2.4 of the Guidelines on State aid for rescuing and restructuring firms in difficulty states, in particular, that where the firms involved in a plan for restructuring aid are located in an assisted area, the Commission will take regional considerations under subparagraphs (a) and (c) of Article 87(3) EC into account as stated in point 3.2.3 of the Guidelines. The latter, headed ‘Conditions for restructuring aid in assisted areas’, states, in particular, that where a proposed aid scheme for restructuring firms in difficulty concerns an assisted or less-favoured area, the Commission is required to take that into account and, to that end, is authorised, notwithstanding structural overcapacity in the sector concerned, to apply flexibly the rule as to capacity reduction laid down in the Guidelines, if regional development needs justify it.

By contrast, it does not in any way follow that where the sector affected by a new aid plan appears not to be suffering overcapacity, and the Commission therefore waives the requirement of a capacity reduction by eligible firms, that plan should, for that reason alone, be regarded as being compatible with the common market.

On the contrary, the project must still satisfy the principle laid down in point 3.2.1 of the Guidelines on State aid for rescuing and restructuring firms in difficulty, according to which a new aid plan for restructuring can be granted only in circumstances in which it can be demonstrated that the approval of restructuring aid is in the Community interest and, therefore, that it fulfils the conditions as to restoration of viability, avoidance of undue distortions of competition and proportionality which are set out in point 3.2.2 of the Guidelines. Although the Commission can show ‘flexibility’ in that respect, it cannot be ‘wholly permissive’, according to point 3.2.3 of the Guidelines.

(see paras 115-117)

12. In order to be declared compatible with the common market in application of Article 87(3)(c) EC, a restructuring aid plan for a firm in difficulty must be linked to a restructuring programme designed to reduce or redirect its activities.

Point 3.2.2 of the Guidelines on State aid for rescuing and restructuring firms in difficulty, which lays down that requirement, stipulates, in particular, that the restructuring plan should fulfil three material conditions. It is essential, first of all, that it should restore the viability of the beneficiary firm within a reasonable timescale and on the basis of realistic assumptions (point 3.2.2(i)), secondly, that it should avoid undue distortions of competition (point 3.2.2(ii)) and, thirdly, that it should be in proportion to the restructuring costs and benefits (point 3.2.2(iii)). As those conditions are cumulative, the Commission must declare a restructuring aid plan to be incompatible if even one of those conditions has not been satisfied. Furthermore, in order to fulfil its duty to cooperate with the Commission, the Member State concerned must provide all the information necessary to enable the Commission to verify that those conditions are satisfied.

Therefore, as it clearly could not base its assessment on a mere claim when the Member State continued to fail to provide the information enabling the Commission to satisfy itself that the project met one of the cumulative conditions laid down at point 3.2.2 of the Guidelines, in spite of repeated requests by that institution, the Commission was entitled to consider that the information available to it did not allow it to conclude that the project satisfied that condition and, therefore, to adopt a decision that the project was incompatible with the common market, without it being necessary to consider the other conditions laid down by that point.

(see paras 126-129, 137, 142-143, 149)

13. The fourth paragraph of Article 40 of the Statute of the Court of Justice and Article 116(4) of the Rules of Procedure of the Court of First Instance give the intervener the right to set out arguments as well as pleas independently, in so far as they support the form of order sought by one of the main parties and are not entirely unconnected with the issues underlying the dispute, as established by the applicant and defendant, as that would change the subject-matter of the dispute.

It is thus for the Court, when determining the admissibility of the pleas put forward by an intervener, to determine whether they are connected with the subject-matter of the dispute, as defined by the main parties.

As regards proceedings initiated by a regional authority concerning the compatibility with the common market of an aid scheme for the restructuring of an economic sector that has been proposed by that authority, there can be no question that the firms liable to benefit from that scheme and their representatives are by their nature in a position in which they can usefully complement the applicant authority’s case, particularly in regard to the difficulties which the aid is intended to resolve and the effect which it may have. The connection of their pleas to the subject-matter of the dispute must not therefore be narrowly assessed.

(see paras 151-154, 193, 195)

14. It is for the Court, when determining the admissibility of the pleas put forward by an intervener, to determine whether they are connected with the subject-matter of the dispute, as defined by the main parties.

In those circumstances, where it appears that a plea of dubious connection to the subject-matter of the dispute is in any event to be dismissed as inadmissible for another reason or because it is unfounded, it is open to the Court to dismiss that plea without ruling on the issue whether the intervener went beyond the parameters of its role in support of the form of order sought by one of the main parties.

(see paras 153, 188)

15. Article 87(2)(b) EC is an exception to the general principle of the incompatibility of aid with the common market and must, as such, be strictly interpreted, with the result that only damage caused directly by natural disasters or exceptional occurrences can justify application of that provision. Furthermore, the Court must assess the legality of a Commission decision concerning State aid in the light of the information available, or which could have been available, to the Commission when the decision was adopted.

The Commission cannot therefore be criticised for having taken the view that the project was not proposing to grant aid under Article 87(2)(b) EC and, consequently, for having ruled out the application of that provision, when an examination of the correspondence exchanged in the course of the administrative procedure shows that the national authorities never stated, let alone demonstrated, to the Commission that the project set up aid designed to make good the damage referred to in Article 87(2)(b) EC.

(see paras 165-166, 168)

16. The Commission is obliged to take Article 158 EC into account as described in the second paragraph of point 1.3 and in point 3.2.3 of the Guidelines on State aid for rescuing and restructuring firms in difficulty when deciding whether a plan for new aid for restructuring firms in difficulty confined to an assisted or less-favoured area, may be declared to be compatible with the common market in accordance with the exemption in Article 87(3)(c) EC.

However, the mere fact that a plan for new aid aims to meet the objectives of a Treaty provision other than the exemption in Article 87(3) EC being relied upon by the Member State concerned does not in itself mean that the plan satisfies the conditions for that derogation to apply.

(see paras 172, 175)

17. The legality of a Commission decision declaring that new aid does not fulfil the conditions under which the exemption in Article 87(3)(c) EC applies must be assessed solely in the context of that article. Therefore, the reliance on an earlier decision-making practice, assuming that is established, is to be dismissed as irrelevant.

(see para. 177)

18. A plea of illegality, which can be interpreted as a plea in support, must, in accordance with Article 116(4)(b) of the Rules of Procedure of the Court of First Instance, be made by its author. An abstract statement, which is not clarified by sufficiently clear and precise information to enable the other parties to respond to it and the Court to exercise its authority, does not fulfil that minimum presentational requirement laid down by the Rules of Procedure and must, therefore, be dismissed as inadmissible.

(see paras 186, 188)