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Summary of the Judgment
Summary of the Judgment
Judgment of the Court of First Instance (Second Chamber, extended composition) of 25 June 1998.
British Airways plc, Scandinavian Airlines System Denmark-Norway-Sweden, Koninklijke Luchtvaart Maatschappij NV, Air UK Ltd, Euralair international, TAT European Airlines SA and British Midland Airways Ltd v Commission of the European Communities.
State aid - Air transport - Airline company in a critical financial situation - Authorisation for an increase in capital.
Joined cases T-371/94 and T-394/94.
1 State aid - Planned aid - Examination by the Commission - Inter partes procedure - Rights of concerned parties to participate and to be informed - Restricted - Not at variance with the Commission's obligation to provide reasons for its decision which address the essential complaints raised by concerned parties
(EC Treaty, Arts 93(2), 190 and 214)
2 State aid - Planned aid - Examination by the Commission - Obligation to comply with a fixed period - No such obligation - Obligation to seek assistance from external experts - No such obligation
(EC Treaty, Art. 93(2))
3 Procedure - Intervention - Plea in law not raised by the applicant - Inadmissible
(EC Statute of the Court of Justice, Art. 37, fourth para.; Rules of Procedure of the Court of First Instance, Art. 116(3))
4 State aid - Planned aid - Examination by the Commission - Obligation to forward to the other Member States observations received from the Government of the State seeking authorisation to grant aid - No such obligation
(EC Treaty, Art. 93)
5 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission - Judicial review - Limits - Assessment of legality on the basis of the information available when the decision was adopted
(EC Treaty, Arts 92(3) and 173)
6 Acts of the institutions - Statement of reasons - Obligation - Scope - Commission decision authorising State aid
(EC Treaty, Arts 93(2), 173 and 190)
7 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission
(EC Treaty, Art. 92(3))
8 Commission - Principle of collegiate responsibility - Scope - Statement of reasons for a decision - Amendment following adoption - Unlawful
(EC Treaty, Art. 190; Merger Treaty, Art. 17)
9 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Examination of the restructuring measures envisaged by the undertaking receiving the aid - Comparison with the measures adopted by other undertakings in the same sector - Not relevant
(EC Treaty, Art. 92(3))
10 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Aid intended for the development of a sector of economic activity - Restructuring of one of the three largest European airline companies
(EC Treaty, Art. 92(3)(c))
11 Acts of the institutions - Statement of reasons - Obligation - Scope - Commission decision on whether aid is compatible with the common market
(EC Treaty, Art. 92(1) and (3) and Art. 190)
12 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission - Reference to the Community context - Competence to attach conditions to the decision authorising the aid - Legal and practical utility of those conditions - Non-compliance with the conditions - No bearing on the lawfulness of the decision
(EC Treaty, Art. 92(3)(c))
13 Actions for annulment - Pleas in law - Plea alleging infringement of Article 155 of the Treaty - Inadmissible
(EC Treaty, Arts 155 and 173)
1 Far from enjoying the same rights to a fair hearing as those which individuals against whom a procedure has been instituted are recognised as having, concerned parties, within the meaning of Article 93(2) of the Treaty, have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case.
There may be two reasons for restricting the extent of the right to participate and to be informed which such parties enjoy. First, where a Member State notifies the Commission of planned aid and submits supporting documentation, and the relevant Commission departments subsequently hold a series of meetings with officials from the Member State in question, the amount of information in the Commission's possession may already be relatively extensive, leaving outstanding only a small number of doubts which information supplied by the parties concerned may dispel. In so far as they relate to the details of the planned aid, to the economic, financial and competitive position of the recipient undertaking and to its internal operations, the discussions between the Member State and the Commission will inevitably be more thorough than those conducted with the parties concerned. While providing such parties with general information on the essentials of the planned aid, therefore, the Commission may confine itself to concentrating its communication in the Official Journal on those aspects of the planned aid concerning which it still harbours doubts. Second, the Commission is required, under Article 214 of the Treaty, not to disclose to interested parties information of the kind covered by the obligation of professional secrecy, in particular information relating to the internal operations of the recipient undertaking.
The limited nature of the rights of concerned parties to participate and to be informed, in so far as they relate solely to the administrative procedure, is not at variance with the Commission's duty under Article 190 of the Treaty to provide, in its final decision authorising planned aid, sufficient reasons which must address all the essential complaints which parties directly and individually concerned by that decision have made either on their own initiative or as a result of information supplied by the Commission. Thus, even on the assumption that the Commission may validly prefer to use other sources of information and thereby reduce the significance of the participation of concerned parties, it is not thereby released from its obligation to include an adequate statement of reasons in its decision.
2 There is nothing in the Treaty or in Community legislation requiring decisions on State aid adopted at the conclusion of the procedure under Article 93(2) of the Treaty to comply with a fixed period. On the assumption that the Commission acted with excessive haste and did not give itself sufficient time to examine proposed aid, such conduct could not, by itself, justify annulment of the decision authorising that aid. To entail annulment, such conduct would have to involve a breach of specific rules governing procedure, the duty to provide reasons or the internal legality of the decision in question.
Nor is there anything in the Treaty or in Community legislation which requires the Commission to seek assistance from external experts in order to draft a decision relating to State aid.
3 In view of the fact that interveners must, under Article 116(3) of the Rules of Procedure of the Court of First Instance, accept the case as they find it at the time of their intervention and that their submissions in an application to intervene are, under the fourth paragraph of Article 37 of the EC Statute of the Court of Justice, limited to supporting the submissions of one of the main parties, an intervener is not entitled to raise a plea in law that was not raised by the applicant.
4 The text of Article 93 of the Treaty does not require the Commission to forward to the other Member States observations which it has received from the Government of the State seeking authorisation to grant aid. On the contrary, it follows from the third subparagraph of Article 93(2) of the Treaty that the other Member States may be involved in a specific case of aid only where that case has, at the request of the State concerned, been submitted to the Council.
5 The Commission enjoys a broad discretion in the application of Article 92(3) of the Treaty. Since that discretion involves complex economic and social appraisals, the Court must, in reviewing a decision adopted in that context, confine itself to verifying whether the Commission complied with the rules governing procedure and the statement of reasons, whether the facts on which the contested finding was based have been accurately stated and whether there has been any manifest error in the assessment of those facts or misuse of powers.
In that regard, in the context of an action for annulment under Article 173 of the Treaty, the legality of a Community measure falls to be assessed on the basis of the elements of fact and of law existing at the time when the measure was adopted and cannot depend on retrospective considerations as to its efficacy. In particular, the complex assessments made by the Commission must be examined solely on the basis of the information available to the Commission at the time when those assessments were made.
6 The statement of reasons required by Article 190 of the Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the contested measure in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights and the Community judicature to exercise its supervisory jurisdiction. The question whether the statement of the grounds for a decision meets the requirements of Article 190 of the Treaty must be assessed with regard not only to its wording but also to its context and all the legal rules governing the matter in question. While the Commission, in the statement of reasons for a decision, is not required to discuss all the issues of fact and law raised by interested parties during the administrative procedure, it must none the less take account of all the circumstances and all the relevant factors of the case in question.
In regard to a decision authorising State aid, the persons, undertakings or associations whose interests might be affected by the grant of the aid, in particular competing undertakings and trade associations, are to be regarded as concerned parties within the meaning of Article 93(2) of the Treaty and considered, in that capacity, to be directly and individually concerned by that decision.
Since the requirement of a statement of reasons must be assessed on the basis, in particular, of the interest which those to whom the measure is addressed or other parties to whom it is of direct and individual concern, within the meaning of Article 173 of the Treaty, may have in receiving explanations, it cannot be determined solely on the basis of the interest which the Member State to which that decision is addressed may have in obtaining information. Where a Member State has obtained from the Commission that which it was seeking, namely authorisation for its planned aid, its interest in having a reasoned decision addressed to it may be greatly reduced, in contrast to that of competitors of the beneficiary of the aid, in particular where it has received sufficient information during the negotiations with the Commission through, inter alia, exchange of correspondence with that institution before the authorising decision was taken.
7 Since, according to well-established case-law of the Court of Justice and a consistent administrative practice on the part of the Commission, investment in normal modernisation intended to maintain an undertaking's competitiveness should be carried out using the undertaking's own financial resources, and not through State aid, and investment intended for the renovation and technical modernisation of a production line, which has to be carried out periodically, cannot be regarded as designed to facilitate the development of certain economic activities within the meaning of Article 92(3)(c) of the Treaty, the Commission must, when replying to the observations of concerned parties regarding specific planned aid during the administrative procedure and relating to that case-law and administrative practice, provide precise indications as to whether the criteria established by that case-law and practice can be regarded as having been satisfied or whether it is appropriate, for specific reasons, to derogate from them.
8 The operative part and the statement of reasons of a decision, which must be reasoned under Article 190 of the Treaty, constitute an indivisible whole, with the result that it is for the college of Commissioners alone, in accordance with the principle of collegiate responsibility, to adopt both the one and the other, any alteration to the statement of reasons going beyond simple corrections of spelling or grammar being the exclusive province of that college.
9 In regard to State aid, while there can be no grounds for denying that the Commission is entitled to compare the restructuring measures envisaged by the recipient undertaking with those taken by other undertakings operating in the same economic sector, the fact remains that the restructuring of an undertaking must be targeted at its own specific problems and that the experiences of other undertakings, in different economic and political contexts and at other times, may be irrelevant.
10 The Commission was entitled to form the view that genuine restructuring of one of the three largest European airline companies, which was the recipient of State aid, would have the effect of facilitating the economic development of the European civil aviation sector.
11 Information as to the situation on the markets in question, in particular the position of the undertaking benefiting from the aid and of competing undertakings, constitutes an essential element in the reasoning of a decision relating to the compatibility of planned aid with the common market within the meaning of Article 92 of the Treaty, both where the decision has been taken pursuant to Article 92(1) and where it has been taken pursuant to Article 92(3)(c) of the Treaty and Article 61(3)(c) of the Agreement establishing the European Economic Area in regard to the question whether the aid adversely affects trading conditions to an extent contrary to the common interest.
12 Economic assessments pursuant to Article 92(3)(c) of the Treaty, in respect of which the Commission enjoys a broad discretion, must be made in a Community context. The Commission is for that reason under an obligation to examine the impact of the aid on competition and intra-Community trade.
In order to determine whether aid adversely affects trading conditions to an extent contrary to the common interest, it is necessary to consider, in particular, whether there is an imbalance between the charges imposed on the undertakings concerned on the one hand and the benefits derived from the aid in question on the other. The Commission is under an obligation, when examining the impact of State aid, to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition.
The Commission may in principle make a decision authorising aid under Article 92(3)(c) of the Treaty subject to conditions for ensuring that authorised aid does not alter trading conditions to an extent contrary to the general interest.
The legal and practical utility of such conditions of authorisation lies in the fact that, if the recipient undertaking were to fail to observe them, it would be for the Member State concerned to ensure proper implementation of the authorisation decision and for the Commission to assess whether it was appropriate to demand that the aid be repaid. If the State were not to comply with the conditions imposed by the Commission in a decision approving aid, the Commission would be entitled, under the second subparagraph of Article 93(2) of the Treaty, to refer the matter directly to the Court of Justice by way of derogation from Articles 169 and 170 of the Treaty.
Having regard to the way in which the conditions underlying a decision to authorise aid thus operate, the mere assertion that one of those conditions will not be complied with cannot cast doubt on the legality of that decision. In general, the legality of a Community act cannot depend on the possible existence of opportunities for circumvention or on retrospective considerations as to its efficacy.
13 Since the purpose of Article 155 of the Treaty is to provide a general definition of the Commission's powers, it cannot be argued that each time the Commission infringes a specific Treaty provision such infringement involves an infringement of the general provision of Article 155 of the Treaty.