Case T‑121/15

Fortischem a.s.

v

European Commission

Judgment of the General Court (Sixth Chamber), 24 September 2019

(State aid — Chemical industry — Decision declaring the aid incompatible with the internal market — Concept of State aid — State resources — Advantage — Recovery — Economic continuity — Principle of sound administration — Obligation to state reasons)

1. State aid — Concept — Grant attributable to the State of an advantage by means of State resources — No transfer of State resources — Irrelevant — Intervention having the effect of mitigating the charges of an undertaking — Included

   (Arts 107(1) and 108 TFEU)

   (see paragraphs 58-61)

2. State aid — Concept — Legal nature — Interpretation on the basis of objective factors — Judicial review — Scope — Complex evaluation of economic matters — Establishing whether the evidence is factually accurate, reliable and consistent — Establishing whether the relevant information is complete

   (Art. 107(1) TFEU)

   (see paragraphs 62-64)

3. State aid — Concept — Grant of an advantage to the beneficiaries — Application of rules derogating from the normal insolvency rules to strategic insolvent companies — Included — Conditions — Obligation on the insolvency administrator to continue to operate the undertaking, irrespective of its economic situation, and to prevent unjustified collective dismissals — Included

   (Art. 107(1) TFEU)

   (see paragraphs 72, 75-79)

4. State aid — Concept — Assessment by the private creditor test — Application of rules derogating from the normal insolvency rules to strategic insolvent companies — State acting as a public authority — Precluded

   (Art. 107(1) TFEU)

   (see paragraphs 85, 86, 150)

5. State aid — Administrative procedure — Obligations of the Commission — Diligent and impartial examination — Account taken of the most complete and reliable information possible — Scope of the obligation — Possibility to adopt a decision on the basis of the information available — Conditions

   (Art. 4(3) TEU; Arts 107(1) and 108(2) TFEU)

   (see paragraphs 157, 158)

6. State aid — Commission decision finding aid incompatible with the common market and ordering its recovery — Possible for the Commission to leave to national authorities the task of calculating the exact amount to be recovered

   (Art. 108(2) TFEU)

   (see paragraphs 167-169)

7. State aid — Commission decision finding aid incompatible with the common market and ordering its abolition — Determination of the obligations of the Member State — Obligation of recovery — Scope — Restoration of the prior situation

   (Art. 108(2) TFEU)

   (see paragraphs 180, 181)

8. State aid — Recovery of unlawful aid — Determination of the debtor where assets transferred — Undertaking in receipt of aid becoming insolvent — Constitution of a new undertaking to carry on its business — Repayment incumbent on the new undertaking — Conditions — ‘Economic continuity’ criterion between undertakings — Elements to be taken into consideration — Enjoyment of a competitive advantage — Obligation to take account of all possibly relevant factors — None

   (Art. 108(2) TFEU)

   (see paragraphs 205-212)

Résumé

In the judgment in Fortischem v Commission (T‑121/15), delivered on 24 September 2019, the General Court dismissed the action for annulment brought by the company Fortischem against Commission Decision 2015/1826 of 15 October 2014 on State aid granted by Slovakia to the company Novácké chemické závody, a.s. (‘NCHZ’). ( 1 )

NCHZ was a chemical producer with three divisions, which operated a chemical plant located in the Trenčín region (Slovakia). Having declared its inability to continue its operations, and its insolvency, that company became the subject, in October 2009, of insolvency proceedings. Initially, from 2 December 2009 to 31 December 2010, NCHZ, pursuant to the Law on Strategic Companies, ( 2 ) was classified by the Slovak authorities as a strategic company and was subject to the application of rules derogating from the normal insolvency rules, which required the insolvency administrator to continue the company’s operation and to prevent unjustified collective dismissals. Subsequently, NCHZ became subject to the Law on Insolvency. After the creditors had decided, on 26 January 2011, that NCHZ’s operations were to be continued, the Trenčín Court, on 7 June 2011, issued an order calling on the insolvency administrator to initiate a tender procedure with a view to the sale of NCHZ. That procedure led to the sale of NCHZ to the company Via Chem Slovakia a.s., finalised on 31 July 2012. On 1 August 2012, Via Chem Slovakia sold the chemical division of NCHZ to the applicant, Fortischem, with the exception of the immovable assets (buildings and land), which were made available to the applicant under a lease contract.

By Decision 2015/1826, the Commission found that aid in the amount of EUR 4783 424.10 had been granted by Slovakia to NCHZ, on account of its having been granted strategic company status, that that aid had been unlawfully put into effect and was incompatible with the internal market and that it should therefore be recovered from NCHZ and Fortischem, which had acquired that company.

In its action, the applicant essentially argued, first of all, that the grant of strategic company status to NCHZ could not be classified as State aid, since there was no transfer of State resources and no economic advantage conferred. Pointing out that, in accordance with the judgment of 1 December 1998, Ecotrade, ( 3 ) the application to an undertaking of rules derogating from the normal insolvency rules must be regarded as giving rise to the grant of State aid where, inter alia, that undertaking has been permitted to continue trading in circumstances in which it would not have been permitted to do so if the normal insolvency rules had been applied, the General Court held that that had occurred in the present case. It found that the application of the Law on Strategic Companies led to NCHZ being required, first, to continue to operate, irrespective of any consideration of its economic situation and its capacity to honour its debts, in particular public debts, and, secondly, to retain its staff, on account of the barrier to collective dismissals. It was thereby allowed to continue to operate with an assurance provided to its customers and suppliers that it would do so until the end of 2010. At the same time, the application of that law imposed the risk on some of its creditors, in particular the public creditors, that their claims would increase during the first insolvency period, a risk which moreover materialised. In circumstances corresponding to normal market conditions, NCHZ could not have obtained the same advantage as that from which it benefited, through State resources.

The applicant also submitted that the obligation to recover the State aid could not be extended to it, since there was no economic continuity between it and NCHZ. In this connection, the General Court first pointed out that, where the undertaking which received the unlawful aid is insolvent and a company has been created to continue some of its activities, the pursuit of those activities may, where the unlawful aid is not recovered, prolong the distortion of competition brought about by the competitive advantage which that company enjoyed in the market as compared with its competitors. That is the case, in particular, where the acquisition of the assets of the company in liquidation is carried out without the market price being paid in return or where it is established that the effect of that company’s creation is circumvention of the obligation to repay the aid, it being nevertheless stated that the presence of an intentional element is not necessary to find that the obligation to repay aid has been evaded by the transfer of assets. The General Court inferred from this that the fact that the transfer price is consistent with market conditions does not in itself rule out the existence of economic continuity and does not prevent, in some circumstances, extension of the recovery obligation, due to the result of circumvention, with no need for the intention to circumvent to be present.

In the present case, following an analysis of the various factors characterising the acquisition by the applicant of NCHZ, the General Court held that the Commission had not erred in taking the view that, first, both the scope of the transaction and its economic logic could constitute evidence of the existence of economic continuity and, secondly, it could not be regarded as certain that the two successive sales had been made at market price. The Commission had therefore been fully entitled to uphold the extension to the applicant of the recovery obligation, irrespective of any finding of an intention to circumvent recovery.

( 1 ) Commission Decision (EU) 2015/1826 of 15 October 2014 on the State aid SA.33797 — (2013/C) (ex 2013/NN) (ex 2011/CP) implemented by Slovakia for NCHZ (OJ 2015 L 269, p. 71).

( 2 ) Law No 493/2009 on certain measures regarding strategic companies and on the amendment of certain laws.

( 3 ) Judgment of the Court of 1 December 1998, Ecotrade (C-200/97, EU:C:1998:579, paragraph 45).