Keywords
Summary

Keywords

1. State aid - Definition - Selective nature of the measure - National legislation establishing a tax credit - General measure conferring on the administration discretion in granting tax concessions - Whether included

(Art. 87(1) EC)

2. State aid - Definition - Selective nature of the measure - Measure pursuing an economic or industrial policy objective - Irrelevant

(Art. 87(1) EC)

3. 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

(Art. 88(3) EC)

4. State aid - Definition - Aid granted by regional or local entities - Whether included

(Art. 87(1) EC)

5. State aid - Definition - Selective nature of the measure - Objective criteria for application - Irrelevant

(Art. 87(1) EC)

6. State aid - Definition - Specific tax measure - Selective nature of the measure - Justification based on the nature or overall structure of the tax system - Excluded

(Art. 87(1) EC)

7. State aid - Commission decision declaring unnotified aid to be incompatible with the common market - Obligation to state reasons - Scope

(Arts 87 EC, 88(3) EC and 253 EC)

8. State aid - Commission decision declaring aid to be incompatible with the common market - Knowledge by the Commission of the identity of other undertakings receiving the same aid - Breach of the principle of equal treatment - None

(Art. 87 EC)

Summary

1. Article 87(1) EC requires that, in order to be classified as State aid, a measure must favour certain undertakings or the production of certain goods. The specific or selective nature of a measure therefore constitutes one of the characteristics of State aid.

Measures of purely general application do not fall within the ambit of Article 87(1) EC. However, interventions which, prima facie, apply to undertakings in general may be to a certain extent selective and, accordingly, be regarded as measures designed to favour certain undertakings or the production of certain goods. That is the case, in particular, where the administration called upon to apply a general rule has a discretionary power so far as concerns the application of the measure.

In order to preclude the characterisation of national legislation establishing a tax credit for investments as a general measure, it is not necessary to determine whether the conduct of the administration granting the tax concession is arbitrary. It need only be established that the administration has a discretionary power enabling it to vary the amount of, or the conditions for granting, the tax concession according to the characteristics of the investment project submitted for its assessment.

( see paras 23, 31, 35 )

2. If it were to be considered that a selective State measure avoided application of Article 87(1) EC if it pursued an economic or industrial policy objective, such as the promotion of investment, that provision would have no practical effect. The objective pursued by such a measure cannot therefore enable it to avoid being characterised as State aid within the meaning of Article 87(1) EC.

( see para. 51 )

3. Alleged inaction of the Commission cannot cause the undertakings receiving State aid to entertain legitimate expectations where a national measure, such as a reduction in the tax base, is introduced without prior notification, in breach of Article 88(3) EC. Acknowledgment of a legitimate expectation presupposes that the aid was granted in accordance with the provisions of Article 88 EC.

( see para. 54 )

4. The fact that an intra-state entity has an autonomy in taxation matters which is recognised and protected by the Constitution of a Member State does not exempt it from complying with the provisions of the Treaty concerning State aid. Article 87(1) EC, by referring to aid granted by a Member State or through state resources in any form whatsoever, is directed at all aid financed from public resources. It follows that measures adopted by intra-state entities (decentralised, federated, regional or other) of the Member States, whatever their status and description, fall, in the same way as measures taken by the federal or central authority, within the ambit of Article 87(1) EC, if the conditions of that provision are satisfied.

( see para. 57 )

5. Even if a selective State measure determines its scope on the basis of objective criteria, it remains selective in nature and may therefore be classified as State aid within the meaning of Article 87(1) EC.

( see para. 58 )

6. As regards the assessment of whether a State measure constitutes State aid, the selective nature of the measure may, in certain circumstances, be justified by the nature or overall structure of the system. If that is the case, the measure avoids application of Article 87(1) EC. Thus, a specific tax measure which is justified by the internal logic of the tax system - such as the progressiveness of the tax which is justified by the system's aim of redistribution - will avoid application of Article 87(1) EC.

( see paras 59-60 )

7. Only State aid which affects trade between Member States and which distorts or threatens to distort competition falls within the scope of Article 87(1) EC. 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.

Nevertheless, in decisions on unnotified aid, the Commission is not required to demonstrate the real effect which the aid has had on competition and trade between Member States. If the Commission were required in its decision to demonstrate the real effect of aid which had already been granted, that would ultimately favour those Member States which grant aid in breach of the duty to notify laid down in Article 88(3) EC, to the detriment of those which do notify aid at the planning stage.

( see paras 69, 77 )

8. There is no breach of the principle of equal treatment even if it is shown that the Commission knew, when it adopted a decision declaring State aid granted to an undertaking to be incompatible with the common market, the identity of other undertakings benefiting from the same aid, this plea could not succeed. Such a finding would not make it possible to disregard the fact that the aid granted to the recipient undertaking is unlawful and incompatible with the common market.

( see para. 95 )