Case C‑284/21 P

European Commission

v

Anthony Braesch and Others

Judgment of the Court (Grand Chamber), 31 January 2023

(Appeal – State aid – Articles 107 and 108 TFEU – Restructuring aid – Banking sector – Preliminary examination stage – Decision declaring the aid compatible with the internal market – Restructuring plan – Commitments given by the Member State concerned – Burden-sharing measures – Conversion of subordinated debts into equity – Bondholders – Action for annulment – Admissibility – Fourth paragraph of Article 263 TFEU – Locus standi – Natural or legal person directly and individually concerned – Breach of the procedural rights of interested parties – Failure to initiate the formal investigation procedure – Article 108(2) TFEU – Concept of ‘parties concerned’ – Regulation (EU) 2015/1589 – Article 1(h) – Concept of ‘interested party’ – National measures taken into account by the European Commission – Inadmissibility of the action)

1. Action for annulment – Natural or legal persons – Measures of direct and individual concern to them – Commission decision finding State aid compatible with the internal market without opening the formal investigation procedure – Action by parties concerned within the meaning of Article 108(2) TFEU – Admissibility – Conditions

   (Arts 108(2) and 263, fourth para., TFEU; Council Regulation 2015/1589, Art. 1(h))

   (see paragraphs 50-54)

2. State aid – Examination by the Commission – Administrative procedure – Person concerned for the purposes of Article 108(2) TFEU – Concept – Undertaking not in direct competition with the aid recipient – Necessity for that undertaking to demonstrate the specific effect of aid on its situation

   (Art. 108(2) TFEU; Council Regulation 2015/1589, Art. 1(h))

   (see paragraphs 58-60)

3. State aid – Examination by the Commission – Administrative procedure – Person concerned for the purposes of Article 108(2) TFEU – Concept – Applicant alleging a substantial economic loss as a result of commitments proposed by the national authority which notified the aid measures – Commitments which were not imposed by the Commission and which do not form an integral part of the aid measures – Economic loss that does not result from the Commission’s decision declaring the aid measures compatible with the internal market – Applicant not covered by the concept of ‘person concerned’ – Possibility for the latter to bring an action before a national court in order to challenge the compatibility of the commitments at issue with EU law

   (Art. 108(2) and (3) TFEU; Council Regulation 2015/1589, Art. 1(h))

   (see paragraphs 68-81, 103-110)

4. State aid – Aid authorised by the Commission – Misuse by the beneficiary – Concept

   (Art. 108 TFEU; Council Regulation 2015/1589, Arts 1(g) and 20)

   (see paragraphs 84, 85)

5. State aid – Examination by the Commission – Guidelines adopted in exercise of the Commission’s discretion – Legal nature – Indicative rules of conduct implying a self-limitation on the Commission’s discretion – Banking Communication – Not binding on the Member States

   (Arts 107(3)(b) and 108(3) TFEU; Commission Notice 2013/C 216/01)

   (see paragraphs 90-95)

6. State aid – Examination by the Commission – Compatibility of aid with the internal market – Discretion – Observance of the need for consistency between provisions governing State aid and other provisions of EU law – Banking sector – Aid which must comply with the conditions set out in Directive 2014/59 – Obligation limited to the modalities of an aid measure which are indissolubly linked to its object – Examination of the conditions of recapitalisation of a credit institution

   (Arts 106, 107 and 108 TFEU; European Parliament and Council Directive 2014/59, Art. 32)

   (see paragraphs 96-103)

Résumé

In 2008, the Italian bank Banca Monte dei Paschi di Siena (‘BMPS’) undertook a capital increase of EUR 950 million underwritten in full by J.P. Morgan Securities Ltd (‘JPM’), under the terms of contracts concluded between them (‘the FRESH contracts’). JPM obtained the funds necessary to finance that transaction from Mitsubishi UFJ Investor Services & Banking (Luxembourg) SA (‘MUFJ’) which issued the bonds entitled FRESH in an amount of EUR one billion. The bondholders receive, for their part, fees in the form of coupons passed on to them by MUFJ.

At the end of 2016, BMPS requested extraordinary public financial support in the form of a precautionary recapitalisation under Italian legislation. In response to that request, the Italian authorities notified the European Commission of aid for the recapitalisation of BMPS in the amount of EUR 5.4 billion. That aid was to be added to EUR 15 billion of individual liquidity aid to BMPS, which the Commission had temporarily approved by decision of 29 December 2016.

By decision of 4 July 2017, ( 1 ) the Commission approved, following the preliminary examination stage, both the EUR 15 billion of individual liquidity aid to BMPS and the aid for precautionary recapitalisation of BMPS in the amount of EUR 5.4 billion (‘the decision at issue’). Those aid measures, which were accompanied by a restructuring plan for BMPS and commitments offered by the Italian authorities, were considered to constitute State aid compatible with the internal market for reasons of financial stability. ( 2 )

BMPS’s restructuring plan provided, inter alia, for the possibility of cancelling the FRESH contracts concluded between BMPS and JPM. Following the annulment of those contracts, several holders of FRESH bonds brought an action before the General Court seeking annulment of the decision at issue. In support of their actions, those applicants submitted, inter alia, that they had suffered a substantial economic loss as a result of the cancellation of the FRESH contracts and that that annulment stemmed from the restructuring plan accompanying the aid measures notified by the Italian Republic.

Before the General Court, the Commission raised a plea of inadmissibility on the ground that the appellants do not have an interest in bringing proceedings or standing to bring proceedings for the purposes of Article 263 TFEU. Since that objection of inadmissibility was rejected by the General Court, ( 3 ) the Commission brought an appeal before the Court of Justice limited to the question of locus standi. In upholding that appeal, the Grand Chamber of the Court of Justice clarifies the concept of ‘party concerned’ within the meaning of Article 108(2) TFEU, conferring standing to bring proceedings as a person directly and individually concerned, within the meaning of Article 263 TFEU.

Findings of the Court

By its single ground of appeal, the Commission complains, in essence, that the General Court erred in law in holding that, as ‘parties concerned’ within the meaning of Article 108(2) TFEU and ‘interested parties’ within the meaning of Article 1(h) of Regulation 2015/1589, ( 4 ) the appellants have standing to bring an action for annulment, under the fourth paragraph of Article 263 TFEU, ( 5 ) against the decision at issue in order to safeguard their procedural rights under Article 108(2) TFEU.

In that regard, the Court of Justice recalls that it follows from its case-law that a ‘party concerned’, within the meaning of Article 108(2) TFEU, is entitled to bring an action for annulment of a Commission decision not to raise objections to notified State aid, adopted at the end of the preliminary examination stage, provided that that person seeks to safeguard the procedural rights available to him or her under the latter provision. Since the decision at issue was adopted at the conclusion of the preliminary examination stage, without the formal investigation procedure provided for in Article 108(2) TFEU being initiated, and since the appellants are seeking to safeguard their procedural rights under that provision, the General Court was right to examine whether they have the status of ‘parties concerned’ in order to determine whether their action is admissible under the fourth paragraph of Article 263 TFEU.

However, the General Court erred in law in concluding that the appellants have the status of ‘parties concerned’ in the context of the procedure for reviewing notified aid, as conducted by the Commission under Article 108 TFEU.

Regulation 2015/1589 defines the concept of ‘interested party’ – which is analogous to the concept of ‘party concerned’ within the meaning of Article 108(2) TFEU – as any person, undertaking or association of undertakings whose interests might be affected by the granting of aid. Since that concept is interpreted broadly in the case-law, it may encompass any person capable of demonstrating that the grant of State aid is likely to have a specific effect on its situation.

In that regard, the General Court held that the commitments given by the Italian authorities concerning BMPS’s restructuring plan, which accompanied the notified aid measures and which, according to the appellants, entailed a significant economic loss for holders of the FRESH bonds, formed an integral part of the notified aid measures, since the Commission had, by the decision at issue, rendered those measures binding, with the result that that decision concerns both the notified aid measures and the commitments given by the Italian authorities. The General Court inferred from this that the grant of the notified aid and, accordingly, the adoption of the decision at issue had a specific effect on the appellants’ situation, with the result that they must be classified as ‘interested parties’ within the meaning of Article 1(h) of Regulation 2015/1589.

In so ruling, the General Court misconstrued the rules of EU law governing the scope of the decision at issue.

On that point, the Court states that where a notified aid measure incorporates, on a proposal from the Member State concerned, commitments granted by that State, it does not follow that those commitments must be regarded as being imposed as such by the Commission and that any adverse effects they may have on third parties are therefore attributable to the decision adopted by that institution.

By a decision adopted at the conclusion of the preliminary examination stage, the Commission cannot impose or prohibit any action by the Member State concerned, but is only entitled to approve, by a decision not to raise objections, the planned aid as notified by that Member State, declaring that aid compatible with the internal market.

It follows that, by the decision at issue, the Commission merely authorised the Italian Republic to implement the notified State aid while taking note of the factual framework already defined by that Member State in the restructuring plan for BMPS and the commitments which it notified in order to dispel any doubt as to the compatibility of that aid with the internal market, for the purposes of Article 107(3)(b) TFEU. It cannot therefore be considered that the commitments proposed by the Italian Republic in the context of the preliminary examination procedure were imposed by the decision at issue itself, since those commitments result solely from acts adopted by that Member State.

Accordingly, the annulment of the FRESH contracts, when the restructuring plan accompanying the notified aid was implemented, cannot be regarded as a binding effect of the decision at issue, since it does not result from the implementation of that aid as such. Rather, it results from measures – which are indeed linked de facto, but which are legally distinct – adopted by the Member State that notified that aid to the Commission. The fact that those measures were, inter alia, adopted by that Member State with a view to obtaining from the Commission a decision authorising that aid and that they are the subject of commitments taken into account in such a decision of the Commission is irrelevant in that regard.

Thus, contrary to what was held by the General Court, the commitments referred to in the decision at issue were not imposed or rendered binding by the Commission in that decision, but constitute purely national measures notified by the Italian Republic, under Article 108(3) TFEU, under its own responsibility, which were taken into account by the Commission as a factual element in assessing whether the State aid in question could, in the absence of any doubt in that regard, be declared compatible with the internal market at the conclusion of the preliminary examination stage.

In response to the appellants’ argument based on the Commission’s obligation to verify that the aid measures notified by the Italian Republic comply with EU law as a whole, the Court also notes that, according to settled case-law, the procedure provided for in Article 108 TFEU must never produce a result which is contrary to the specific provisions of the Treaty. Accordingly, State aid which, as such or by reason of some modalities thereof, contravenes provisions or general principles of EU law cannot be declared compatible with the internal market. Thus, in accordance with that case-law, the Commission verified, in the decision at issue, that the notified aid complied with Directive 2014/59. ( 6 ) In that context, the Commission verified, inter alia, that the burden-sharing measures provided for in the restructuring plan proposed by the Italian Republic, which led to the annulment of the FRESH contracts, were adequate for the purpose of limiting the amount of aid granted to the strict minimum necessary to achieve the objective of recapitalising BMPS.

However, the Commission was not required to verify whether those burden-sharing measures themselves infringed the rights which the appellants claim to derive from EU law or national law. Such an infringement, even if it were established, would not arise from the aid as such, its object or its indissociable modalities, but rather from the measures taken by the Italian Republic in order to obtain from the Commission a decision authorising that aid at the conclusion of the preliminary examination stage.

In those circumstances, the fact that the burden-sharing measures form part of a restructuring plan requiring the payment of State aid, notified by the Italian Republic to the Commission in order to seek the approval of that aid at the conclusion of the preliminary examination stage, does not confer on the appellants, who consider that they have been affected by those measures, the status of ‘interested party’, within the meaning of Article 1(h) of Regulation 2015/1589, in the context of the procedure conducted by the Commission under Article 108 TFEU. If the appellants consider that, as a result of the adoption of the burden-sharing measures provided for in BMPS’s restructuring plan, the Italian Republic has infringed EU law, they must challenge the legality of those measures before the national court, which has sole jurisdiction in that regard and which has the power, or even the obligation, if it rules at last instance, to make a reference to the Court of Justice for a preliminary ruling under Article 267 TFEU, if necessary, in order to question it as to the interpretation or validity of the relevant provisions of EU law. That is precisely the situation in the present case, since the appellants do not claim to be affected by the aid in question, but claim only to be adversely affected by the burden-sharing measures provided for in the restructuring plan referred to in the decision at issue.

In the light of those clarifications, the Court of Justice upholds the single ground raised by the Commission in its appeal and sets aside the judgment of the General Court. Since the state of the proceedings permits final judgment to be given, the Court also upholds the objection of inadmissibility raised by the Commission at first instance and, accordingly, dismisses the appellants’ action as inadmissible.

( 1 ) Decision C(2017) 4690 final of 4 July 2017 on State Aid SA.47677 (2017/N) – Italy – New aid and amended restructuring plan of Banca Monte dei Paschi di Siena.

( 2 ) Under Article 107(3)(b) TFEU, concerning aid intended to remedy a serious disturbance in the economy of a Member State.

( 3 ) Judgment of 24 February 2021, Braesch and Others v Commission (T‑161/18, EU:T:2021:102).

( 4 ) Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 2015 L 248, p. 9).

( 5 ) The fourth paragraph of Article 263 TFEU provides for two situations in which natural or legal persons are accorded standing to institute annulment proceedings against an EU act which is not addressed to them. First, such proceedings may be instituted if the act is of direct and individual concern to those persons. Secondly, they may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them.

( 6 ) Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ 2014 L 173, p. 190).