Case T-565/08
Corsica Ferries France SAS
v
European Commission
‛State aid — Maritime cabotage sector — Service of general economic interest — Private investor in a market economy test — Social policy of the Member States — Restructuring aid — Effects of a judgment annulling a decision’
Summary — Judgment of the General Court (Fourth Chamber), 11 September 2012
Acts of the institutions — Statement of reasons — Obligation — Scope
(Art. 253 EC)
Acts of the institutions — Statement of reasons — Obligation — Scope — Commission decision on State aid — Relationship between the obligation to state reasons and observation of professional secrecy
(Arts 253 EC and 287 EC)
Proceedings — Application initiating proceedings — Formal requirements — Brief summary of the pleas in law on which the application is based
(Rules of Procedure of the General Court, Art. 44(1))
State aid — Administrative procedure — Obligation on the Commission to put the parties concerned on notice to submit their observations — Exclusion of the interested parties from the benefit of defence rights
(Arts 88(2) EC and 253 EC)
Competition — Undertakings entrusted with the operation of services of general economic interest — Definition of services of general economic interest — Member States’ discretion — Limits — Review by the Commission only in the event of manifest error
(Art. 86(2) EC)
EC Treaty — Systems of property ownership — Freedom of the Member States to undertake economic activities — Relationship with the provisions on State aid
(Arts 87(1) EC and 295 EC)
State aid — Concept — Assessment according to the criterion of the private investor — Requirement to compare the conduct of a public investor with that of a private holding company or group of undertakings guided by prospects of profitability in the long term
(Art. 87(1) EC)
State aid — Concept — Assessment according to the criterion of the private investor — Account taken of an investor’s social responsibility and the entrepreneurial context — Additional redundancy payments — Criteria for assessment
(Art. 87(1) EC)
State aid — Concept — Assessment according to the criterion of the private investor — Commission’s obligation to define precisely the economic activities of the State, in order to be able to define the reference private investors — Error in law if there is no such definition
(Art. 87(1) EC)
State aid — Concept — Legal nature — Interpretation on the basis of objective factors — Judicial review
(Art. 87(1) EC)
State aid — Concept — Private investor test — Capital contribution — Capital contributions of private and public investors made at the same time — Criteria for assessment
(Art. 87(1) EC)
State aid — Concept — State intervention mitigating the burdens normally included in the budget of an undertaking — Included — Current account advance agreed to by a State entity in favour of staff made redundant by a company intending to finance the cost of future additional payments — Included
(Art. 87(1) EC)
See the text of the decision.
(see para. 42)
Article 287 EC obliges the members, officials and agents of the institutions of the Community not to disclose information which by its nature is covered by the obligation of professional secrecy. However, as regards the obligation to provide reasoning for measures of the institutions required by Article 253 EC, the obligation laid down in Article 287 EC to preserve professional secrecy cannot be invoked as justification for deficiencies in the statement of reasons. The obligation to respect professional secrecy cannot therefore be given so wide an interpretation that the obligation to provide a statement of reasons is deprived of its essential content, thus making it difficult for the Member States and the interested parties to prepare their defence. In particular, the requirement to provide reasons for a decision taken in regard to State aid 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 what 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.
(see para. 43)
See the text of the decision.
(see para. 44)
See the text of the decision.
(see para. 50)
See the text of the decision.
(see paras 56, 65)
Investment by public authorities in the capital of undertakings, in whatever form, may constitute State aid. However, according to Article 295 thereof, the EC Treaty does not influence the rules in Member States governing the system of property ownership. Accordingly, the Member States are free to undertake, directly or indirectly, economic activities in the same way as private companies. That principle of equal treatment between the public and private sectors implies that the Member States may invest in economic activities and that the capital placed directly or indirectly at the disposal of an undertaking by the State in circumstances which correspond to normal market conditions cannot be regarded as State aid.
(see paras 76-77)
With a view to applying the private investor test, as far as concerns State aid, a distinction has to be drawn between the obligations which the State must assume in its capacity as a company exercising an economic activity and its obligations as a public authority. When an investment by a State occurs in the course of the exercise by the State of its public authority, the conduct of the State can never be compared to that of an operator or private investor in a market economy.
However, in making that distinction between economic activities, on the one hand, and public authority intervention, on the other hand, it is necessary to take account of the fact that the conduct of a private investor, with which the intervention of a public investor must be compared, need not necessarily be the conduct of an ordinary investor laying out capital with a view to realising a profit in the relatively short term. That conduct must, at least, be the conduct of a private holding company or a private group of undertakings pursuing a structural policy whether general or sectoral and guided by prospects of profitability in the longer term.
(see paras 79-80)
It is necessary that the monitoring of State aid should reflect the development of both the content of national social legislation and the practice of social relations within large groups of undertakings, as regards both the investments made by private companies and those made by the State, in accordance with the principle of equal treatment and without altering its effectiveness.
In a social market economy, a reasonable private investor would not disregard, first, its responsibility towards all the stakeholders in the company and, second, the development of the social, economic and environmental context in which it continues to develop. The challenges relating to social responsibility and the entrepreneurial context are, in actual fact, capable of having a major impact on the specific decisions and strategic planning of a reasonable private investor. The long-term economic rationale of a reasonable private entrepreneur’s conduct cannot therefore be assessed without taking account of such concerns.
For that purpose, the payment by a private investor of additional redundancy payments is, in principle, capable of constituting a legitimate and appropriate practice, depending on the circumstances of the case, with a view to fostering a calm social dialogue and maintaining the brand image of a company or group of companies. The cost of additional redundancy payments is to be distinguished from the cost of social protection, which is necessarily a matter for the State in the event that a company goes into liquidation. Under the principle of equal treatment, the option of making additional redundancy payments is also open to the Member States in the event that a public company goes into liquidation, even though their obligations cannot in principle exceed the strict minimum under statutory obligations and obligations under agreements.
None the less, the assumption of the burden of those additional costs, because of legitimate concerns, cannot follow an exclusively social, even political, objective, as it would otherwise go beyond the framework of the private investor test. In the absence of any economic rationale, even in the long term, the assumption of the burden of costs which exceeds the strict statutory obligations and obligations under agreements must therefore be considered to be State aid within the meaning of Article 87(1) EC.
In that regard, the protection of the brand image of a Member State as a global investor in the market economy cannot constitute, other than under specific circumstances and without a particularly cogent reason, sufficient justification to demonstrate the long-term economic rationale of the assumption of additional costs such as additional redundancy payments. To enable the Commission to refer summarily to the brand image of a Member State, as a global player, in order to support the finding that there is no aid within the meaning of Article 87(1) EC is such, first, as to distort the conditions of competition on the common market in favour of undertakings operating in Member States in which the public economic sector is relatively more developed, or in which social dialogue has been adversely affected to a particular degree, and, second, as to reduce improperly the effectiveness of the Community rules on aid.
(see paras 81-85)
In the context of the private investor test, it is for the Commission, in its broad discretion, to define the economic activities of the State, in particular at the geographic and sectoral level, in relation to which the long-term economic rationale of that Member State’s conduct has to be assessed.
Without a sufficiently precise definition of the economic activities concerned, the Commission cannot be in a position, first, to define reference private investors and, therefore, to determine, on the basis of objective and verifiable factors, whether there is a sufficiently well-established practice amongst those investors. Second, in the absence of such a comparator, the definition of the economic activities concerned is also necessary in order to make it possible to establish the existence of a reasonable and sufficiently substantiated probability that the Member State will obtain an indirect material benefit, even in the long term, from the conduct at issue.
In the absence of such a definition, it is, as a matter of principle, impossible for the Court to monitor the long-term economic rationale of the measure at issue. In that respect alone, it must be held that the Commission erred in law.
(see paras 86-87, 94)
State aid, as defined in the Treaty, is a legal concept and must be interpreted on the basis of objective factors. For that reason, the European Union courts must in principle, having regard both to the specific features of the case before them and to the technical or complex nature of the Commission’s assessments, carry out a comprehensive review as to whether a measure falls within the scope of Article 87(1) EC. The European Union Courts must, inter alia, establish not only whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the relevant information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it.
(see para. 88)
In order to determine whether a contribution of public origin includes elements of State aid within the meaning of Article 87(1) EC, it is necessary to consider whether a private investor, in comparable circumstances, would have made such a contribution. Where the capital placed directly or indirectly at the disposal of an undertaking by the State was so made available in circumstances which correspond to normal market conditions, it cannot be regarded as State aid, by virtue of the principle of equal treatment between the public and private sectors. A capital contribution from public funds must therefore be regarded as satisfying the private investor criterion, and not involving the grant of State aid, if, inter alia, that contribution was made at the same time as a significant capital contribution on the part of a private investor effected in comparable circumstances.
The simultaneity of the contributions from private and public investors is, at most, however, in itself, an indication which suggests that there is no aid for the purposes of Article 87(1) EC. Those contributions must have been made in comparable circumstances. As the objective of the private investor test is to compare the conduct of the State with that of a hypothetical private investor, it cannot be denied that the existence of investors prepared to invest significantly and concurrently is liable to facilitate the validation of such a test. However, all the relevant facts and points of law must be taken into account in order to evaluate the lawfulness of the contributions concerned in the light of the Community rules on State aid. Therefore, the temporal aspect is naturally important, but simultaneity cannot be regarded, as a matter of principle, as being sufficient in itself.
Consequently, in so far as simultaneity must be considered only as an indicator suggesting that there is no aid within the meaning of Article 87(1) EC, it cannot reasonably be determined in a strict manner.
(see paras 115, 117-118)
As regards State aid, the mere fact that a measure has a social purpose is not sufficient to prevent it from the outset from being categorised as aid within the meaning of Article 87 EC. Paragraph 1 of that article does not distinguish between the causes or the objectives of State measures, but defines them in relation to their effect. The concept of aid includes public aid, which, in various forms, mitigates the burdens normally included in the budget of an undertaking.
The concept of aid does not necessarily mean that a legal obligation is borne, but rather that costs which are normally included in the budget of an undertaking are mitigated. The definition of what constitutes a cost coming within the day-to-day management of the undertaking cannot, therefore, by definition, be limited to statutory obligations and obligations under agreements. Similarly, the fact that the direct beneficiaries of the aid to individuals are employees is not sufficient to demonstrate that no aid had been provided to their employer.
As regards a measure comprising a current account advance agreed to by a State entity in favour of staff made redundant by a company, which is intended to finance the cost of future additional payments of a potential plan to reduce staff implemented by the purchaser, the fact that that measure at issue does not result from the strict statutory obligations and obligations under agreements is not, in principle, liable to have the result that the aid is not in the nature of State aid within the meaning of Article 87(1) EC.
In addition, the existence of an escrow account, into which aid to individuals is placed, is such as to create an inducement for the employees of the undertaking to leave it or, at least, to leave it without negotiating their departure, particularly in view of the possible grant of additional redundancy payments, all of which created an indirect economic advantage for that undertaking.
Therefore, the Commission commits a manifest error of assessment in categorising that aid to individuals, as being measures not constituting aid within the meaning of Article 87(1) EC.
(see paras 136-137, 139, 143-144, 147)
Case T-565/08
Corsica Ferries France SAS
v
European Commission
‛State aid — Maritime cabotage sector — Service of general economic interest — Private investor in a market economy test — Social policy of the Member States — Restructuring aid — Effects of a judgment annulling a decision’
Summary — Judgment of the General Court (Fourth Chamber), 11 September 2012
Acts of the institutions — Statement of reasons — Obligation — Scope
(Art. 253 EC)
Acts of the institutions — Statement of reasons — Obligation — Scope — Commission decision on State aid — Relationship between the obligation to state reasons and observation of professional secrecy
(Arts 253 EC and 287 EC)
Proceedings — Application initiating proceedings — Formal requirements — Brief summary of the pleas in law on which the application is based
(Rules of Procedure of the General Court, Art. 44(1))
State aid — Administrative procedure — Obligation on the Commission to put the parties concerned on notice to submit their observations — Exclusion of the interested parties from the benefit of defence rights
(Arts 88(2) EC and 253 EC)
Competition — Undertakings entrusted with the operation of services of general economic interest — Definition of services of general economic interest — Member States’ discretion — Limits — Review by the Commission only in the event of manifest error
(Art. 86(2) EC)
EC Treaty — Systems of property ownership — Freedom of the Member States to undertake economic activities — Relationship with the provisions on State aid
(Arts 87(1) EC and 295 EC)
State aid — Concept — Assessment according to the criterion of the private investor — Requirement to compare the conduct of a public investor with that of a private holding company or group of undertakings guided by prospects of profitability in the long term
(Art. 87(1) EC)
State aid — Concept — Assessment according to the criterion of the private investor — Account taken of an investor’s social responsibility and the entrepreneurial context — Additional redundancy payments — Criteria for assessment
(Art. 87(1) EC)
State aid — Concept — Assessment according to the criterion of the private investor — Commission’s obligation to define precisely the economic activities of the State, in order to be able to define the reference private investors — Error in law if there is no such definition
(Art. 87(1) EC)
State aid — Concept — Legal nature — Interpretation on the basis of objective factors — Judicial review
(Art. 87(1) EC)
State aid — Concept — Private investor test — Capital contribution — Capital contributions of private and public investors made at the same time — Criteria for assessment
(Art. 87(1) EC)
State aid — Concept — State intervention mitigating the burdens normally included in the budget of an undertaking — Included — Current account advance agreed to by a State entity in favour of staff made redundant by a company intending to finance the cost of future additional payments — Included
(Art. 87(1) EC)
See the text of the decision.
(see para. 42)
Article 287 EC obliges the members, officials and agents of the institutions of the Community not to disclose information which by its nature is covered by the obligation of professional secrecy. However, as regards the obligation to provide reasoning for measures of the institutions required by Article 253 EC, the obligation laid down in Article 287 EC to preserve professional secrecy cannot be invoked as justification for deficiencies in the statement of reasons. The obligation to respect professional secrecy cannot therefore be given so wide an interpretation that the obligation to provide a statement of reasons is deprived of its essential content, thus making it difficult for the Member States and the interested parties to prepare their defence. In particular, the requirement to provide reasons for a decision taken in regard to State aid 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 what 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.
(see para. 43)
See the text of the decision.
(see para. 44)
See the text of the decision.
(see para. 50)
See the text of the decision.
(see paras 56, 65)
Investment by public authorities in the capital of undertakings, in whatever form, may constitute State aid. However, according to Article 295 thereof, the EC Treaty does not influence the rules in Member States governing the system of property ownership. Accordingly, the Member States are free to undertake, directly or indirectly, economic activities in the same way as private companies. That principle of equal treatment between the public and private sectors implies that the Member States may invest in economic activities and that the capital placed directly or indirectly at the disposal of an undertaking by the State in circumstances which correspond to normal market conditions cannot be regarded as State aid.
(see paras 76-77)
With a view to applying the private investor test, as far as concerns State aid, a distinction has to be drawn between the obligations which the State must assume in its capacity as a company exercising an economic activity and its obligations as a public authority. When an investment by a State occurs in the course of the exercise by the State of its public authority, the conduct of the State can never be compared to that of an operator or private investor in a market economy.
However, in making that distinction between economic activities, on the one hand, and public authority intervention, on the other hand, it is necessary to take account of the fact that the conduct of a private investor, with which the intervention of a public investor must be compared, need not necessarily be the conduct of an ordinary investor laying out capital with a view to realising a profit in the relatively short term. That conduct must, at least, be the conduct of a private holding company or a private group of undertakings pursuing a structural policy whether general or sectoral and guided by prospects of profitability in the longer term.
(see paras 79-80)
It is necessary that the monitoring of State aid should reflect the development of both the content of national social legislation and the practice of social relations within large groups of undertakings, as regards both the investments made by private companies and those made by the State, in accordance with the principle of equal treatment and without altering its effectiveness.
In a social market economy, a reasonable private investor would not disregard, first, its responsibility towards all the stakeholders in the company and, second, the development of the social, economic and environmental context in which it continues to develop. The challenges relating to social responsibility and the entrepreneurial context are, in actual fact, capable of having a major impact on the specific decisions and strategic planning of a reasonable private investor. The long-term economic rationale of a reasonable private entrepreneur’s conduct cannot therefore be assessed without taking account of such concerns.
For that purpose, the payment by a private investor of additional redundancy payments is, in principle, capable of constituting a legitimate and appropriate practice, depending on the circumstances of the case, with a view to fostering a calm social dialogue and maintaining the brand image of a company or group of companies. The cost of additional redundancy payments is to be distinguished from the cost of social protection, which is necessarily a matter for the State in the event that a company goes into liquidation. Under the principle of equal treatment, the option of making additional redundancy payments is also open to the Member States in the event that a public company goes into liquidation, even though their obligations cannot in principle exceed the strict minimum under statutory obligations and obligations under agreements.
None the less, the assumption of the burden of those additional costs, because of legitimate concerns, cannot follow an exclusively social, even political, objective, as it would otherwise go beyond the framework of the private investor test. In the absence of any economic rationale, even in the long term, the assumption of the burden of costs which exceeds the strict statutory obligations and obligations under agreements must therefore be considered to be State aid within the meaning of Article 87(1) EC.
In that regard, the protection of the brand image of a Member State as a global investor in the market economy cannot constitute, other than under specific circumstances and without a particularly cogent reason, sufficient justification to demonstrate the long-term economic rationale of the assumption of additional costs such as additional redundancy payments. To enable the Commission to refer summarily to the brand image of a Member State, as a global player, in order to support the finding that there is no aid within the meaning of Article 87(1) EC is such, first, as to distort the conditions of competition on the common market in favour of undertakings operating in Member States in which the public economic sector is relatively more developed, or in which social dialogue has been adversely affected to a particular degree, and, second, as to reduce improperly the effectiveness of the Community rules on aid.
(see paras 81-85)
In the context of the private investor test, it is for the Commission, in its broad discretion, to define the economic activities of the State, in particular at the geographic and sectoral level, in relation to which the long-term economic rationale of that Member State’s conduct has to be assessed.
Without a sufficiently precise definition of the economic activities concerned, the Commission cannot be in a position, first, to define reference private investors and, therefore, to determine, on the basis of objective and verifiable factors, whether there is a sufficiently well-established practice amongst those investors. Second, in the absence of such a comparator, the definition of the economic activities concerned is also necessary in order to make it possible to establish the existence of a reasonable and sufficiently substantiated probability that the Member State will obtain an indirect material benefit, even in the long term, from the conduct at issue.
In the absence of such a definition, it is, as a matter of principle, impossible for the Court to monitor the long-term economic rationale of the measure at issue. In that respect alone, it must be held that the Commission erred in law.
(see paras 86-87, 94)
State aid, as defined in the Treaty, is a legal concept and must be interpreted on the basis of objective factors. For that reason, the European Union courts must in principle, having regard both to the specific features of the case before them and to the technical or complex nature of the Commission’s assessments, carry out a comprehensive review as to whether a measure falls within the scope of Article 87(1) EC. The European Union Courts must, inter alia, establish not only whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the relevant information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it.
(see para. 88)
In order to determine whether a contribution of public origin includes elements of State aid within the meaning of Article 87(1) EC, it is necessary to consider whether a private investor, in comparable circumstances, would have made such a contribution. Where the capital placed directly or indirectly at the disposal of an undertaking by the State was so made available in circumstances which correspond to normal market conditions, it cannot be regarded as State aid, by virtue of the principle of equal treatment between the public and private sectors. A capital contribution from public funds must therefore be regarded as satisfying the private investor criterion, and not involving the grant of State aid, if, inter alia, that contribution was made at the same time as a significant capital contribution on the part of a private investor effected in comparable circumstances.
The simultaneity of the contributions from private and public investors is, at most, however, in itself, an indication which suggests that there is no aid for the purposes of Article 87(1) EC. Those contributions must have been made in comparable circumstances. As the objective of the private investor test is to compare the conduct of the State with that of a hypothetical private investor, it cannot be denied that the existence of investors prepared to invest significantly and concurrently is liable to facilitate the validation of such a test. However, all the relevant facts and points of law must be taken into account in order to evaluate the lawfulness of the contributions concerned in the light of the Community rules on State aid. Therefore, the temporal aspect is naturally important, but simultaneity cannot be regarded, as a matter of principle, as being sufficient in itself.
Consequently, in so far as simultaneity must be considered only as an indicator suggesting that there is no aid within the meaning of Article 87(1) EC, it cannot reasonably be determined in a strict manner.
(see paras 115, 117-118)
As regards State aid, the mere fact that a measure has a social purpose is not sufficient to prevent it from the outset from being categorised as aid within the meaning of Article 87 EC. Paragraph 1 of that article does not distinguish between the causes or the objectives of State measures, but defines them in relation to their effect. The concept of aid includes public aid, which, in various forms, mitigates the burdens normally included in the budget of an undertaking.
The concept of aid does not necessarily mean that a legal obligation is borne, but rather that costs which are normally included in the budget of an undertaking are mitigated. The definition of what constitutes a cost coming within the day-to-day management of the undertaking cannot, therefore, by definition, be limited to statutory obligations and obligations under agreements. Similarly, the fact that the direct beneficiaries of the aid to individuals are employees is not sufficient to demonstrate that no aid had been provided to their employer.
As regards a measure comprising a current account advance agreed to by a State entity in favour of staff made redundant by a company, which is intended to finance the cost of future additional payments of a potential plan to reduce staff implemented by the purchaser, the fact that that measure at issue does not result from the strict statutory obligations and obligations under agreements is not, in principle, liable to have the result that the aid is not in the nature of State aid within the meaning of Article 87(1) EC.
In addition, the existence of an escrow account, into which aid to individuals is placed, is such as to create an inducement for the employees of the undertaking to leave it or, at least, to leave it without negotiating their departure, particularly in view of the possible grant of additional redundancy payments, all of which created an indirect economic advantage for that undertaking.
Therefore, the Commission commits a manifest error of assessment in categorising that aid to individuals, as being measures not constituting aid within the meaning of Article 87(1) EC.
(see paras 136-137, 139, 143-144, 147)