Keywords
Summary

Keywords

1. Commission — Composition — One of its Members granted leave of absence — No effect on the legality of decisions adopted by the College in accordance with the provisions of its Rules of Procedure — (Arts 9(1), second subpara., CS and 12, paras 1, 2 and 4 CS; Arts 213(1), second subpara., EC and 215, paras 1, 2 and 4 EC)

2. State aid — Recovery of unlawful aid — Aid granted in breach of the procedural rules in Article 88 EC — Possibility of legitimate expectation on the part of recipients — Protection — Conditions and limits — (Arts 87 EC and 88 EC)

3. ECSC — Steel aid — Planned aid — Examination by the Commission — Preliminary stage — Limited to two months unless the Member State concerned agrees to an extension — (Art. 88(3) EC; General Decision No 2496/96, Art. 6(5) and (6))

4. Acts of the institutions — Statement of reasons — Obligation — Scope — ECSC decision — Commission decision on State aid — (Art. 5, second para., CS and Art. 15, first para., CS; Art. 253 EC)

5. ECSC — Scope of the Treaty — Undertakings engaged in production in the coal and steel industry — Included — (Arts 4(c) CS, 80 CS and 81 CS; Annex I CS)

6. ECSC — Aid — Prohibited — Conditions — Impairment of competition — Excluded — (Art. 4(c) CS)

7. ECSC — Production — Products — Definition — Consequences — (Art. 4(c) CS and 80 CS; Annex I CS)

8. ECSC — Scope of the Treaty — Rules on State aid — Application to all the activities of a steel undertaking — Conditions — (Art. 4(c) CS)

9. ECSC — Steel aid — Authorisation by the Commission — Conditions — Notification — Time-limit not complied with — Effects — (General Decisions Nos 257/80, 3484/85, 3855/91 and 2496/96)

10. State aid — Special system applicable to the activities of the Treuhandanstalt — Scope

11. State aid — Prohibition — Derogations — Aid granted to certain areas affected by the division of Germany — Scope of the derogation — Strict interpretation — Economic disadvantages caused by the isolation created by the frontier established between the two zones — (Art. 87(1) and 2(c) EC)

12. State aid — Definition — Assessment on the basis of the private investor criterion — (Art. 87(1) EC)

Summary

1. It follows from the second subparagraph of Article 213(1) EC, the first, second and fourth paragraphs of Article 215 EC, the second subparagraph of Article 9(1) CS and the first, second and fourth paragraphs of Article 12 CS, first, that the Commission has no power to alter the number of its Members and, second, that where one of them resigns, the Council alone has power to replace that Member or to decide that the vacancy need not be filled.

There is no provision made in either the EC or ECSC Treaties or the Commission's Rules of Procedure for granting "leave of absence" to a Member of the Commission who resigns. None the less, such a decision, taken in the interest of ensuring the continuity of Community action, cannot be regarded as having had any influence on that person's status as a Member of the Commission or as being intended to reduce the number of Members of the Commission. It follows that the composition of the Commission is lawful for the purpose of exercising its decision-making powers.

see paras 20, 25-27

2. In view of the mandatory nature of the review of State aid by the Commission under Article 88 EC, undertakings to which aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in that article. A diligent businessman should normally be able to determine whether that procedure has been followed.

A Member State the authorities of which have granted aid contrary to the procedural rules laid down in Article 88 EC may not plead the legitimate expectations of recipients in order to justify a failure to comply with the obligation to take the steps necessary to implement a Commission decision instructing it to recover the aid. If it could do so, Articles 87 and 88 EC would be deprived of all practical force, since national authorities would thus be able to rely on their own unlawful conduct in order to render decisions taken by the Commission under those provisions of the EC Treaty ineffectual.

It would only be in exceptional circumstances that delay by the Commission in giving a decision on State aid could establish a legitimate expectation on the part of a recipient of aid so as to prevent the Commission from requiring the Member State concerned to order that aid to be repaid.

see paras 41-44

3. In accordance with Article 6(6) of the Sixth Steel Aid Code, if the Commission fails to initiate the formal procedure for examining aid provided for in Article 6(5) thereof or otherwise to make its position known within two months of receiving full notification of a proposal, the planned measures may be put into effect provided that the Member State first informs the Commission of its intention to do so. The fact that the mandatory time-limit allowed to the Commission to react is limited to two months, like that which applies in the context of the application of Article 88(3) EC, implies that, in view of the Member State's interest in obtaining clarification quickly in spheres where there may be an urgent need to take action, the preliminary examination of planned aid must, in principle, be regarded as an urgent matter, unless the Member State concerned expressly agrees to an extension of the time allowed.

see paras 48-50

4. While the reasoning required by the fourth indent of the second paragraph of Article 5 CS, the first paragraph of Article 15 CS, and Article 253 EC must show clearly and unequivocally the reasoning of the Community authority which adopted the contested measure so as to enable the persons concerned to ascertain the reasons for the measure and to enable the Court to exercise its power of review, it is not required to go into every relevant point of fact and law. The question whether a statement of reasons satisfies those requirements must be assessed with reference not only to its wording but also to its context and the whole body of legal rules governing the matter in question.

As regards more particularly a decision concerning State aid, although in certain cases the very circumstances in which the aid has been granted may show that it is liable to affect trade between Member States and to distort or threaten to distort competition, the Commission must at least set out those circumstances in the statement of reasons for its decision.

see paras 58-59

5. By virtue of Articles 80 CS and 81 CS, only undertakings engaged in production in the coal or the steel industry are governed by the rules of the ECSC Treaty; in that connection the expressions "coal" and "steel" cover only those products listed in Annex I CS. It follows that an undertaking is subject to the prohibition of any subsidies or aid granted by States laid down in Article 4(c) CS only in so far as it is engaged in such production.

see paras 77-78

6. Under Article 4(c) CS, unlike Article 87(1) EC, for aid to be considered incompatible with the common market, it is not necessary for it to distort or threaten to distort competition. That provision of the ECSC Treaty prohibits all aid without any restriction, with the result that it cannot contain any de minimis rule.

see para. 80

7. The concept of "production" , for the purposes of Article 80 CS, cannot be interpreted as covering only the manufacture of goods for marketing. Accordingly, the fact that an undertaking does not place that production on the market does not mean that it escapes the scope of the ECSC Treaty and, in particular, Article 4(c) CS.

see paras 81-82

8. Where undertakings manufacture both goods falling within the scope of the ECSC Treaty and goods within the scope of the EC Treaty, the application of the ECSC Treaty to aid intended to support an area of production outside the scope of that treaty may be justified where there is a real risk that aid will be diverted in favour of production activities which do fall within that scope. Having regard, on the one hand, to the special features of the steel sector and, on the other, to the strict and absolute prohibition of State aid laid down in Article 4(c) CS, it would run counter to the aims of the system established by the ECSC Treaty to subject to the less rigorous rules of the EC Treaty the examination of aid which could possibly be used for the benefit of those areas of an undertaking's production which fall within the scope of the ECSC Treaty.

see para. 84

9. Unlike the provisions of the EC Treaty on State aid, which permanently empower the Commission to adopt decisions on its compatibility, the aid codes confer such power on the Commission only for a specified period. Accordingly, where aid which a Member State wishes to authorise under a code is not notified during the period laid down by the code for such notification, the Commission can no longer give a decision on the compatibility of that aid under that code.

see paras 93-94

10. The letters from the Commission to the German Government governing the Treuhandanstalt's activities exclude from the system they establish, because it is a sensitive sector, the "steel sector" and not the "steel covered by the ECSC Treaty sector" .

see para. 107

11. Article 87(2)(c) EC, according to which "aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that division" is compatible with the common market, was not repealed after the reunification of Germany either by the Treaty on European Union or by the Treaty of Amsterdam.

Since, however, it constitutes a derogation from the general principle, laid down in Article 87(1) EC, that State aid is incompatible with the common market, Article 87(2)(c) EC must be construed narrowly. Furthermore, in interpreting it, it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it forms part.

In addition, although, following the reunification of Germany, Article 87(2)(c) EC falls to be applied to the new Länder , such application is conceivable only on the same conditions as those applicable in the old Länder during the period preceding the date of that reunification.

In that connection, since the phrase "division of Germany" refers historically to the establishment of the dividing line between the two occupied zones in 1948, the "economic disadvantages caused by that division" can only mean the economic disadvantages caused in certain areas of Germany by the isolation which the establishment of that physical frontier entailed, such as the breaking of communication links or the loss of markets as a result of the breaking off of commercial relations between the two parts of German territory.

By contrast, the conception according to which Article 87(2)(c) EC permits full compensation for the undeniable economic backwardness suffered by the new Länder disregards both the nature of that provision as a derogation and its context and aims. The economic disadvantages suffered by the new Länder as a whole have not been directly caused by the geographical division of Germany within the meaning of Article 87(2)(c) EC. It follows that the differences in development between the original and the new Länder are explained by causes other than the geographical rift caused by the division of Germany and in particular by the different politico-economic systems set up in each part of Germany.

see paras 115-123

12. In order to establish whether the privatisation of an undertaking for a negative selling price involves elements of State aid, it is necessary to assess whether, in similar circumstances, a private investor of a dimension comparable to that of the bodies managing the public sector could have been prevailed upon to make capital contributions of the same size in connection with the sale of that undertaking or whether it would instead have chosen to wind it up.

In that respect, a distinction must be drawn between the obligations which the State must assume as owner of the share capital of a company and its obligations as a public authority.

see paras 133-134