Keywords
Summary

Keywords

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1. Aid granted by States - Concept - Aid granted through a body controlled by the State - Included

(EEC Treaty, Art. 92(1) )

2. Aid granted by States - Concept - Financial support granted by a Member State to an undertaking - Criterion for assessment - Reasonableness of the transaction for a private investor pursuing a medium or long-term policy

(EEC Treaty, Art. 92(1) )

3. Aid granted by States - Effect on trade between Member States - Distortion of competition - Aid granted to an undertaking whose operations are restricted to the domestic market - Aid of a small amount in a sector in which there is vigorous competition

(EEC Treaty, Art. 92(1) )

4. Aid granted by States - Prohibition - Derogations - Aid which may be considered to be compatible with the common market - Discretion of the Commission - Reference to the Community context

(EEC Treaty, Art. 92(3) )

5. Aid granted by States - Aid granted contrary to the procedural rules laid down in Article 93 of the Treaty - Legitimate expectation on the part of the Member State granting the aid - Not permissible

(EEC Treaty, Arts 92 and 93)

6. Aid granted by States - Plans to grant aid - Failure to notify - Implementation before the final decision of the Commission - Commission' s power to make an interim order - Refusal to comply - Consequences

(EEC Treaty, Art. 93(2) and (3) )

7. Aid granted by States - Commission decision that the aid is incompatible with the common market - Difficulty of implementation - Obligation of the Commission and the Member State to cooperate in finding a solution which is consistent with the Treaty

(EEC Treaty, Arts 5 and 93(2), first paragraph)

Summary

1. In order to determine whether aid may be regarded as State aid for the purposes of Article 92(1) of the Treaty no distinction should be drawn between cases where aid is granted directly by the State and cases where it is granted by public or private bodies established or appointed by the State to administer the aid.

2. Capital placed by the State, directly or indirectly, at the disposal of an undertaking in circumstances which correspond to normal market conditions cannot be regarded as State aid.

A private shareholder who subscribes the capital necessary to secure the survival of an undertaking which is experiencing temporary difficulties but is capable of becoming profitable again, possibly after a reorganization, or a parent company which, for a limited period, bears the losses of one of its subsidiaries in order to enable the latter to close down its operations under the best possible conditions remains within those confines. Such decisions may be motivated not solely by the likelihood of an indirect material profit but also by other considerations, such as a desire to protect the group' s image or to redirect its activities.

However, when injections of capital by a public investor disregard any prospect of profitability, even in the long term, such provision of capital must be regarded as aid within the meaning of Article 92 of the Treaty.

3. Aid to an undertaking may be such as to affect trade between the Member States and distort competition even where the recipient undertaking does not itself export its products, so long as it competes with producers in other Member States. Where a Member State grants aid to an undertaking, domestic production may thereby be maintained or increased with the result that undertakings established in other Member States have significantly less chance of exporting their products to the market in that Member State. Furthermore, even aid of a relatively small amount is liable to affect trade between Member States where there is vigorous competition in the sector in which the recipient undertaking operates.

4. In relation to Article 92(3) of the Treaty the Commission enjoys a wide discretion, the exercise of which involves assessments of an economic and social nature which must be made within a Community context.

5. When a Member State grants aid contrary to the duty of notification laid down in Article 93(3) of the Treaty and subsequently displays reluctance to provide the appropriate information to the Commission, it is itself responsible for prolonging the examination procedure and cannot therefore rely on the length of that procedure as a ground for a legitimate expectation regarding the compatibility of the aid in question with the common market. If it could do so, Articles 92 and 93 of the Treaty would be set at naught, since national authorities would thus be able to rely on their own unlawful conduct in order to deprive decisions taken by the Commission under provisions of the Treaty of their effectiveness.

6. Where the Commission has established that aid has been granted without notification, it has the power to make an order. After giving the Member State in question an opportunity to submit its comments on the matter, it may issue an interim decision requiring it to suspend immediately the payment of the aid pending the outcome of the examination of the aid and to provide the Commission, within such period as it may specify, with all such documentation, information and data as are necessary in order to examine the compatibility of the aid with the common market.

Where the Member State complies in full with the Commission' s order, the Commission is obliged to examine the compatibility of the aid with the common market in accordance with the procedure laid down in Article 93(2) and (3) of the Treaty. However, if the Member State, notwithstanding the Commission' s order, fails to provide the information requested, the Commission is empowered to terminate the procedure and make its decision on the basis of the information available to it on the question whether or not the aid is compatible with the common market.

If the Member State fails to suspend payment of the aid, notwithstanding the Commission' s order, the Commission is entitled, while carrying out the examination on the substance of the matter, to bring the matter directly before the Court by applying for a declaration that such payment constitutes an infringement of the Treaty.

7. A Member State which encounters unforeseen difficulties in implementing a decision finding aid to be incompatible with the common market and ordering its recovery may submit those problems for consideration by the Commission. In such a case the Commission and the Member State concerned must, in accordance with the duty of genuine cooperation between Member States and the Community institutions stated in particular in Article 5 of the Treaty, work together in good faith with a view to overcoming the difficulties whilst fully observing the Treaty provisions, in particular the provisions on aid.