Conclusions
OPINION OF ADVOCATE GENERAL
GEELHOED
delivered on 25 September 2003(1)
Case C-278/00
Hellenic Republic
v
Commission of the European Communities
(Annulment of Commission Decision C(2000) 686 of 1 March 2002 on the aid schemes implemented by Greece in favour of the settlement
of debts by the agricultural cooperatives in 1992 and 1994 including the aids for reorganisation of the dairy cooperative
AGNO)
I – Introduction
1.
In this case the Greek Government has applied to the Court to annul in its entirety the decision of the Commission of the
European Communities on the aid schemes implemented by Greece in favour of the settlement of debts by the agricultural cooperatives
in 1992 and 1994 including the aids for reorganisation of the dairy cooperative AGNO
(2)
(hereinafter ‘the decision’), the schemes implemented by Greece in 1992 and 1994 to settle the debts of a number of agricultural
cooperatives having been declared incompatible with the common market. In the alternative, the Greek Government has applied
for the annulment of Article 2 of the aforementioned decision, in which Greece is instructed to recover, with interest, the
aid declared unlawful.
II – Facts of the case and legislative background
2.
As is evident from the application and the contested Commission decision, the agricultural cooperatives at issue are legal
persons governed by private law whose members are jointly liable for any debts. The members are for the most part producers
of primary agricultural products. They operate together in the cooperative to cultivate, process and market their products.
3.
These cooperatives are governed by a special legal arrangement. They are required, for example, to take all their members’
produce, and they are used by the Greek Government as intermediaries in the achievement of the objectives of its social and
other policies. The Greek legislation referred to below – in paragraphs 6 and 7 – reveals that the agricultural cooperatives
may act as instruments of policy over a wide area.
4.
The cooperatives’ intervention in support of the Greek Government’s socio-economic policy has obviously had adverse implications
for their financial situation, since the Greek Government has twice had to resort to reorganisation measures.
5.
The first of these measures is covered by Greek Law No 2008/92; the core provisions relevant in the present case are to be
found in Article 32(2) and (3) of that law.
6.
Article 32(2) of the aforementioned law establishes that the Greek State may assume and settle debts to the Agricultural Bank
of Greece (hereinafter ‘ABG’) incurred by primary, secondary and other tertiary cooperative associations, cooperatives and
undertakings between the years 1982 and 1989, provided and to the extent that they were incurred owing to the implementation
of social or some other intervention policy on the instructions and on behalf of the State.
7.
Article 32(3) of the law establishes that the assumption and settlement of the said debts shall be subject to the essential
prerequisite that the cooperative association, cooperative or company shall be deemed viable.
8.
To explain this scheme, the Greek authorities pointed out in their letter of 7 June 1993 to the Commission (see paragraphs 23
and 24 below) that the debts to be settled were the consequence of the fall in retail prices, which had benefited the consumer.
The amounts concerned could not therefore be recovered. Furthermore, debts incurred for other reasons, e.g. within the framework
of marketing measures, for investments, because of a lack of capital and because of losses caused by exceptional occurrences,
had also qualified for settlement.
9.
The same letter reveals that the Greek Government, in applying this provision, entered into a commitment to compensate the
ABG for some of the outstanding payments for 61 agricultural cooperatives, the amount being GRD 91.769 billion out of a total
of GRD 266.126 billion.
10.
The second Greek statutory arrangement of interest here concerns Article 5 of Law No 2234/94. This law was passed to implement
Council Regulation (EEC) No 2079/92 of 30 June 1992 instituting a Community aid scheme for early retirement from farming.
(3)
It includes a number of provisions concerning the debts of agricultural cooperatives. According to Article 5 of this law,
the ABG may, within specified parameters, assist agricultural cooperatives with the payment of outstanding debts. Article 5
applies to any debt outstanding at 31 December 1993 which is attributable to ‘objective and external circumstances’.
11.
The scheme further provides for no interest to be paid on the rescheduled loan for the first half of its term, whereafter
interest is chargeable at a rate of 50% of the normal market rate for such loans. The term of the loan is established at 10
years. However, in exceptional cases where the deficits are particularly large, the ABG has the option of extending the repayment
period to 15 years, with a grace period of three years, or of reducing the rate to less than 50% of the current market rate.
12.
According to the aforementioned law, assistance to cooperatives is subject to the previous submission of a development/modernisation
feasibility study, demonstrating that the cooperatives are able to repay the rescheduled debts. Furthermore, debt rescheduling
may be conditional on the fulfilment of certain conditions, such as the modernisation of organisation, the reduction of personnel
and the disposal of own capital.
13.
In the C OJ 1992 L 215, p. 91.ommission decision contested by the Greek Government Act No 1620 of the Governor of the Bank
of Greece of 5 October 1989 also plays a part. This act authorises credit institutions in Greece to regularise their debts
pursuant to any type of loans in GRD or foreign currencies. The same act allows the banks to convert loans into equity. This
provision applies to all banks, both public and commercial.
14.
In 1992, Act No 2091 of the Governor of the Bank of Greece of 11 June 1992 introduced minimum interest rates for this consolidation:
18% for short-term loans and 17% for medium- and long-term loans. These limits were subsequently abolished by Act No 2326
of the Governor of the Bank of Greece of 4 August 1994.
III – The contested decision
15.
In its decision, of which the Greek Permanent Representative was notified on 5 May 2000, the Commission ruled
inter alia that Article 32(2) of Law No 2008/1992 constituted State aid which was incompatible with the common market. It also ruled
that Article 5 of Law No 2237/1994 constituted State aid which did not satisfy the conditions of the rules governing ‘restructuring
aid’. With a view, in part, to refuting the arguments advanced by the Greek authorities, the Commission investigated the individual
case of the settlement of the debts of the AGNO cooperative. This investigation confirmed the Commission’s assessment of the
two aforementioned aid schemes (Article 1 of the decision). Prompted by these findings, the Commission invited the Greek authorities
to take all the measures necessary to recover the aids unlawfully made available, within two months of the notification of
the decision in accordance with the procedures of Greek law. The sums to be recovered were to bear interest from the date
on which they were made available to the recipients until their actual recovery (Article 2 of the decision).
16.
Finally, the Commission invited the Greek Government to inform it, within two months following notification of the decision,
of the measures taken to comply with it. To this end, the Greek Government was requested to submit a full list of beneficiaries
of the schemes concerned, the amounts to be recovered and the interest due. The Commission also requested further information
on the ABG’s monitoring of AGNO, on the relations between the Greek State and the ABG and on all debt decisions taken by the
ABG pursuant to Act No 1620 of the Governor of the Bank of Greece of 5 October 1989 (Article 3 of the decision).
IV – The procedure
17.
On 13 July 2000 the Greek Government applied for the annulment of the decision under Article 230 EC. In its application it
requests the Court to annul the decision in its entirety or, in the alternative, Article 2 of the decision.
18.
On 13 July 2000 the Greek Government also applied under Article 242 EC for the suspension of the operation of the decision
in its entirety or, in the alternative, of Article 2 of the decision. By order of 12 October 2000 the President of the Court
dismissed the application in summary proceedings.
19.
The Commission applied for the dismissal of the application as unfounded and for the applicant to be ordered to pay the costs
of the proceedings.
20.
The Greek Government and the Commission explained their positions at the Court’s sitting of 17 October 2002.
V – Preliminary observations
21.
In its detailed decision the Commission discusses three separate procedures initiated pursuant to Article 88(2) EC.
22.
First, by letter SG (97) D/10773 dated 19 December 1997, the Commission informed Greece of its decision to initiate a procedure
in respect of the settlement of debts of cooperatives on the basis of Article 32(2) of Law No 2008/92.
23.
By letter of 7 June 1993 the Greek Minister for Agriculture had already informed the Commission of the intention to apply
the aforementioned provisions of Law No 2008/92 to write off the debts of several types of cooperatives to the ABG.
24.
Initially, the Commission regarded this letter as a notification within the meaning of Article 88(3) EC. However, when the
Commission was subsequently informed that aid provided for in Article 32(2) of Law No 2008/92 had already been granted, at
least to the dairy cooperative AGNO, without its prior approval, it decided to register these legal provisions as non-notified
aids.
25.
The Commission initiated a second procedure by letter SG (97) D/10775 dated 19 December 1997 in connection with a complaint
about the dairy cooperative AGNO in northern Greece.
26.
From the investigation prompted by this complaint it emerged that AGNO had benefited from the following aid, all provided
by the ABG:
- –
- GRD 851 million under Article 32(2) of Law No 2008/92 and GRD 529.89 million under Article 19(1) of – non-notified – Law No 2198/94
as compensation for losses due to the Chernobyl nuclear disaster;
- –
- GRD 10.145 billion under Article 5 of – non-notified – Law No 2237/94 in the form of a consolidation loan linked to a debt
due to considerable delays in the implementation of an investment project;
- –
- GRD 1.899 billion under the – non-notified – Act of the Governor of the Bank of Greece of 5 October 1989 allowing public and
private banks to consolidate loans to clients.
27.
By letter SG (98) D/4020 of 20 May 1998, the Commission initiated a third procedure in relation to Articles 14 to 17c of Law
No 2538/97 of 1 December 1997, which allows the Greek State to write off the debts of over 200 cooperatives and unions thereof
and of undertakings and farmers through the intervention of the ABG. The overall amount of debt to be written off was established
at GRD 163 billion.
28.
Subsequently, Greece made a request to the Council to agree to the last of these measures pursuant to the third subparagraph of
Article 88(2). By decision of 15 December 1998, the Council agreed to this request.
(4)
In paragraph 10 of its contested decision the Commission states that Articles 14 to 17c of Law No 2538/97 are ‘consequently’
not covered by its decision. In the application here at issue, however, the Greek Government derives arguments from the Council’s
decision of 15 December 1998. Even though it is not covered by the contested decision, the third procedure therefore retains
some relevance to the assessment of the application.
29.
In the contested decision the Commission focuses on the compatibility of the generic provisions of Article 32(2) of Law No 2008/92
and Article 5 of Law No 2237/94 with Article 87 EC. It also investigates and assesses the aid which AGNO, among others, has
received under these provisions.
30.
As a result of this approach, the structure of the analyses and the arrival at a ruling in the decision are intricate and
not always transparent.
31.
The latter aspect is reflected in the very comprehensive application submitted by the Greek Government, in which numerous
pleas are presented to contest almost every aspect of the decision.
32.
As an aid to the clarity of this Opinion, the pleas presented are grouped and assessed below as follows:
- –
- the pleas directed against the Commission’s ruling on Article 32(2) of Law No 2008/92 (VI);
- –
- the pleas directed against the Commission’s ruling on Article 5 of Law No 2237/94 (VII);
- –
- the pleas directed against the Commission’s ruling on the aid granted to AGNO (VIII);
- –
- various other pleas, such as those directed against the obligation imposed in Article 3 of the decision to recover the aid
granted (IX).
VI – Article 32(2) of Law No 2008/92
33.
The Greek Government has essentially presented four pleas against the Commission’s ruling that Article 32(2) of Law No 2008/92
is incompatible with Article 87 EC and that State aid granted under that provision should be recovered:
- –
- the Commission was wrong to regard the scheme concerned as a generic aid scheme and omitted to assess the information forwarded
by the Greek Government on the individualised application of the scheme;
- –
- the Commission was wrong to take the view that the application of the scheme could not be justified under Article 87(2)(b)
EC;
- –
- the Commission’s view that the aid granted under the scheme could not be regarded as compatible with the common market was
equally untenable;
- –
- finally, having been exceedingly slow to act in this matter, the Commission could no longer require the recovery of the aid
granted under the scheme.
34.
The Greek Government’s pleas are directed in particular against the following recitals of the decision:
- ‘(a)
- As regards the applicability of Article 87(2)(b) EC
- (139)
- Firstly, the Commission took note of the fact that Article 32(2) of Greek law No 2008/92 is primarily intended to write off
debt of agricultural cooperatives incurred by the execution of the social and intervention policy on behalf of the Greek State.
Although Greece argues that the interventions from the Greek State resulted from the damage caused by a list of 24 natural
disasters that affected Greece between 1982 and 1989, Greece fails to demonstrate a causal link between these natural disasters
and State intervention concerning the formation of sales prices for products. For example, the link between compensation for
damage caused by the exporting of oranges, marketing of apricots, construction of a fridge unit, storage of table olives and
any type of natural disasters falling under Article 87(2)(b) is, at least, unclear.
- (140)
- Secondly, an analysis of the 116 evaluation sheets indicating the reasons for debt write-offs for individual cooperatives
sent by the Greek authorities shows that in none of the cases is the damage caused by natural disasters or adverse climatic
conditions. Only six cooperatives (including the dairy cooperative AGNO) benefited from write-offs linked to the nuclear disaster
at Chernobyl.
- (141)
- Thirdly, the Commission notes that the Greek State compensated the cooperatives, after 1992, for damage supposedly caused
to agricultural production by natural disasters and exceptional occurrences which occurred between 1982 and 1989. Consequently,
in some situations, compensation may have occurred up to ten years after the event.
- (142)
- According to its existent practice, the Commission considers that, where aid is paid only several years after the occurrence
of the event in question, there is a real danger that the payment of such aid will produce the same economic effects as operating
aid. Therefore, in the absence of a specific justification, resulting for example from the nature and extent of the event,
or the delayed or continuing nature of the damage, the Commission does not approve national aids which are submitted more
than three years after the occurrence of the event. The existing practice has recently been codified in point 11.1.2 of the
Community guidelines for State aid in the agriculture sector. The administrative difficulties invoked by the Greek authorities
cannot be considered an acceptable justification, since the law, adopted in 1992, foresees already the settlement of damage
predating to 1982.
- (b)
- As regards the applicability of Article 87(3) EC
- (145)
- ... It is therefore necessary to consider whether the application of the measures provided for may benefit from a derogation
under either Article 87(3)(a) of the Treaty, or Article 87(3)(c).
- (146)
- The debt write-offs undertaken in the framework of Article 32(2) of Greek law No 2008/92 are made to the extent that the debts
were incurred due to the implementation of social or intervention policy on instructions of the Greek State. Although the
Commission, in opening the procedure provided for in Article 88(2) of the Treaty, called upon the Greek authorities to transmit
all details in relation to these social and intervention policies, including an assessment of these national policies in the
light of the common agricultural policy, the Greek authorities have failed to transmit the requested information.
- (147)
- From an analysis of the text of the draft law and the 116 cases where a debt write-off has actually been agreed, it can be
concluded that all the causes related to the write-off of debt resulting from expenditure incurred by the cooperatives for
the execution of certain functions. All the causes for debt write-offs (production aids, collection and marketing of agricultural
products, storage of agricultural products, acquisition of material needed for the production process, current operating costs,
management of pesticides and animal feed, debts to ABG, damage caused by price fixing, compensation for administrative actions,
compensation for damage caused by the Chernobyl accident and investments) are considered by the Commission as operating aids
which therefore cannot be approved by the Commission under Article 87(3)(c) of the Treaty.
- (148)
- In particular, the aids for compensating the damages caused by the Chernobyl accident must be considered as operating aids
because they do not fulfil the conditions of Article 87(2)(b) of the Treaty. Equally, aids compensating cooperatives for the
realisation of investments must be considered operating aids since, as compensation is paid retroactively, these aids simply
improve the financial situation of cooperatives after the execution of the investment without having any incentive for the
realisation of investments and, thus, the development of the sector.
- (149)
- The remarks of the Greek authorities confirm that the objective of the measure is to relieve the beneficiaries of their debt
burden, and that there is no reciprocity on the part of the beneficiaries which might be considered to benefit the development
of certain economic activities or certain regions. To this extent, a mere statement of the “viability” of the cooperative
cannot be considered as reciprocity. The fact that cooperatives are statutorily bound to take up the entire production of
their members is not liable to modify this conclusion, as acceptance of a cooperative statute is not mandatory. Having regard
to the principles laid down in the case-law, the Commission is therefore bound to conclude that the measure cannot benefit
from the derogation under Article 87(3)(c) of the Treaty.
- (150)
- Although Article 87(3)(a) of the Treaty has not been explicitly invoked by the Greek authorities, the latter argued that the
measures had a regional scope, due to the fact that cooperatives represent the interest of large groups of farmers active
in mountain, hill and less-favoured areas.
- (151)
- The Commission communication of 1988 on the method for the application of Article 87(3)(a) and (c) to regional aid provides
in point I.6 that in recognition of their special difficulties the Commission may, by way of derogation, authorise certain
operating aid in these regions under specific conditions which are enumerated in sub-points (i) to (v). Sub-point (ii) of
these conditions specifies that “the aid should be designed to promote a durable and balanced development of economic activity
and not give rise to sectoral overcapacity at the Community level such that the resulting Community sectoral problem produced
is more serious that the original regional problem; in this context, a sectoral approach is required and in particular the
Community rules, directives and guidelines applicable to certain industrial (steel, shipbuilding, synthetic fibres, textiles
and clothing) and agricultural sectors, and those concerning the industrial enterprises involving the transformation of agricultural
products are to be observed.”
- (152)
- In the agriculture sector, which covers the production, processing and marketing of Annex I products, it has been constant
Commission policy for many years to prohibit the payment of operating aid in all regions, including regions which fall under
Article 87(3)(a) of the Treaty. ...’
A –
The first plea: the nature of the scheme provided for in Article 32(2) of Law No 2008/92
1. Arguments of the parties
35.
The Greek Government accuses the Commission of wrongly regarding Article 32(2) of Law No 2008/92 as providing for a general
aid scheme. When, in 1997, the Commission had finally investigated the matter, the application of Article 32 had already been
concluded in individual cases. Article 32 concerned the granting of aid intended to compensate for damage resulting from events
which had occurred at various times before the adoption of Law No 2008/92. It was therefore aware of the number and identity
of the undertakings which had received aid.
36.
The Commission had, moreover, used the information on the various cooperatives which had been forwarded to it by the Greek
Government by letter of 9 June 1997. This was evident from paragraphs 147 to 160 of the contested decision. The statements
made therein were obviously based on a study of the 116 evaluation sheets which had also been forwarded.
37.
In addition, the Greek Government continues, if the Commission had believed that the information provided by Greece was insufficient
for a detailed assessment of the aid granted in each case, it could have asked for supplementary data and information, taking
advantage of the authority recognised by the Court to request from the Member States all necessary information in connection
with any State aid awarded. The Commission had, however, refrained from doing so.
38.
The Commission contends that Article 32(2) of Law No 2008/92 concerns not the granting of aid in individual cases but a general
aid scheme. The authority to assess, approve or prohibit general aid schemes had been explicitly recognised by the Court.
As a regime, the provisions of Article 32(2) made for a general or abstract scheme with an indeterminate number of beneficiaries.
Given the general nature of the scheme, the Commission’s decision could concern only that scheme. It did not therefore concern
the individual cases in which Article 32(2) had been applied. The Commission goes on to say that a general aid scheme can
be regarded as compatible with the EC Treaty only if it is sufficiently certain that its application in individual cases is
also compatible with the EC Treaty. Approving aid schemes which were not transparent in terms of the number of beneficiaries,
the scale and intensity of the aid and the objectives would be tantamount to giving a blank cheque to the Member States concerned
and might diminish the effectiveness of Articles 87 and 88 EC.
39.
The Commission refers to paragraph 139 of its decision. This showed that it had taken account of the general purport of Article 32(2)
of Law No 2008/92: ‘... that Article 32(2) of Greek law No 2008/92 is primarily intended to write off debt of agricultural
cooperatives incurred by the execution of the social and intervention policy on behalf of the Greek State’. The discretion
to which the Commission was entitled when taking decisions of a general nature could not be affected by the fact that, at
the time when it took such decisions, the national schemes concerned had already been launched and their beneficiaries were
known. This was confirmed by the Court’s case-law.
40.
The applicant’s view that each case in which the scheme was applied should be assessed would result in the Commission’s relevant
services being overburdened and paralysed. This did not rule out the possibility of individual instances of application being
notified and assessed, but in that hypothesis such instances would have to be notified separately. This followed from the
case-law on Article 88(3) EC, which had now been incorporated in Regulation (EC) No 659/1999.
(5)
In the present case, however, the Commission took the view that the procedure concerned the assessment of the aid scheme
as such.
2. Assessment
41.
The question whether it was permissible for the Commission to regard and assess Article 32(2) of Law No 2008/92 as a generic
aid scheme should, it seems to me, be answered in the affirmative.
42.
It has been undisputed since the Court’s judgment in
Italgrani
(6)
that the Commission has the power to assess generic aid schemes as such. The use of this power has meanwhile become established
policy practice. As the Commission rightly comments, it is also necessary policy practice. It is the only way in which it
is able to monitor the application of national aid schemes as the Treaty requires.
43.
In the present case the question which then arises is whether the Commission could regard Article 32(2) of Law No 2008/92
as a generic aid scheme. Given the wording and purport of this scheme, there is no doubt about this:
- –
- its scope in terms of beneficiaries is generic (primary, secondary or tertiary cooperatives, associations or undertakings
having in common the fact that they are in debt to the ABG);
- –
- its material effect is generic (the debts may be assumed by the Greek State provided and to the extent that they have been
incurred in the implementation of social measures or intervention measures on behalf of the Greek State);
- –
- the condition defined in Article 32(3) of Law No 2008/92 is also generic in nature (the cooperative, association or undertaking
must be viable).
44.
The final question to be answered is whether the Commission could have assessed the contested scheme as being incompatible
with the Treaty.
45.
It should be noted in this context that, before the Commission can arrive at a substantive assessment of State aid granted
by virtue of a generic scheme, the scale and intensity of the aid, the material grounds justifying it, the number of potential
beneficiaries and the administrative practice by which it is applied must be sufficiently clear from the notified scheme.
The scheme must be, in other words, transparent and ‘water-tight’.
46.
Only if a notified generic aid scheme meets this requirement is the Commission able to examine it for compatibility with Community
law. Only then can the Commission, if the outcome of the examination is favourable, be sure that the application of the scheme
in individual cases continues to be consistent with Community law. I agree with the Commission’s contention that approving
a national scheme which does not satisfy the requirements of transparency and accuracy would be tantamount to issuing a ‘blank
cheque’.
47.
It is undeniably clear from the contested decision (paragraphs 19 to 24) that Article 32(2) of Law No 2008/92 has been applied
in a wide variety of individual cases in which debt has been incurred for very different reasons (from price measures benefiting
the consumer to the disaster at the Chernobyl nuclear power station). The same variety is to be seen in the economic activities
to which this aid scheme has been applied: production, operation, export, storage and investment.
48.
On the basis of this information alone, which it received partly as early as 1993 and partly later, in 1997, the Commission
could have arrived at the conclusion that the scheme provided for in Article 32(2) of Law No 2008/92 was not, as such, capable
of being approved as a generic aid scheme.
B –
The second plea: the compatibility of the aid with Article 87(2)(b) EC
1. Arguments of the parties
49.
The Greek Government essentially advances three arguments in support of this plea.
50.
Firstly, the Commission had assessed the data and information forwarded by the Greek Government incorrectly in paragraphs 139
and 140 of the contested decision in that it had ruled that there was no causal link between the natural disasters which had
affected Greece and State intervention concerning the formation of sales prices for products. The action taken by the Greek
State had indeed been linked to those events, its aim being namely to prevent them from having disastrous consequences for
producers, cooperatives and consumers.
51.
Secondly, the applicant continues, the Commission had wrongly found that there were no causal links between the rescheduling
of the cooperatives’ debts and damage caused by unusually adverse climatic conditions. According to the applicant, such links
did indeed exist where the Greek State had required the cooperatives to take action to the benefit of primary producers in
such cases. The applicant explains these links by referring to the action taken by the AGNO cooperative after the Chernobyl
nuclear disaster. AGNO had at that time supported the prices which the producers received for their milk because the market
for it and for other dairy products had completely collapsed. There had thus indeed been a causal link between the natural
disaster or exceptional occurrence, the cooperative’s debt and its rescheduling on the basis of Article 32(2) of Law No 2008/92.
52.
Thirdly, the Commission should have explained in paragraph 141 of the contested decision why it could not accept the arguments
presented by the Greek authorities to account for the considerable lapse of time between the circumstances causing the alleged
damage and the measure taken to write off the debts arising from those circumstances. A thorough and objective assessment
of the damage suffered by the cooperatives had indeed taken some time, the main reason being that two types of investigation
committee had had to be involved. Moreover, point 11.1.2 of the recent guidelines for State aid in the agricultural sector,
in which previous policy practice had been codified, presented an argument for account to be taken of administrative and budgetary
constraints when the lapse of time between the circumstances causing the damage and the compensation for that damage was assessed.
Such constraints had indeed occurred in the present case.
53.
The Commission essentially presents two arguments against this. First, it was clear from the wording of Article 87(2)(b) EC
that the derogation from the general prohibition for which it provided applied only to aid measures that sought to compensate
for damage which was a direct consequence of natural disasters or other exceptional occurrences. In the present case there
was no such direct link, since it was not the assisted cooperatives who had suffered damage but the primary producers whose
products or production had suffered as a result of the natural disasters concerned. The fact that the cooperatives had suffered
damage through having for social reasons to continue to take from the primary producers at the current target prices products
which were greatly reduced in value was, at best, indirectly linked to those occurrences. The ‘damage’ they suffered emanated
directly from the obligations imposed on them by the Greek authorities. In the application of Article 32(2) of Law No 2008/92
to the cooperatives no reference whatever is to be found to the damage actually suffered by the primary producers.
54.
In the construction chosen by the Greek Government it was also impossible to determine precisely how extensive was the damage
actually suffered by the producers or whether the compensation received therefor in the form of products taken at fixed prices
was adequate. The application of Article 87(2)(b) EC therefore lacked the necessary transparency. This, according to the Commission,
is also reflected in the manner in which the cooperatives spent the aid: in some cases the resources were used for investments,
in others as production subsidies. This is far removed from the limited and precise tenor of the prohibition of State aid
imposed in Article 87(1) EC.
55.
Secondly, the lapse of time between the circumstances which caused the damage and the compensation therefor under Law No 2008/92
makes it difficult, in the Commission’s view, to assume a direct and compelling link between the two. Rather than compensation
for damage caused by exceptional occurrences, the financial assistance provided after a considerable delay may be deemed to
be a production or investment aid, which may seriously affect the conditions of competition.
2. Assessment
56.
As I have already pointed out in paragraphs 44 to 48 above, Article 32(2) of Law No 2008/92 could not qualify for approval
as a generic aid scheme. The same arguments can be advanced against the acceptability of the contested aid as a – generic
– derogation from the prohibition of State aid under Article 87(2)(b) EC.
57.
It is clear from the manner in which this measure was applied that in some cases there was no link whatever to a previous
natural disaster or exceptional occurrence. In other cases it was applied to settle debts which the cooperatives had incurred
for investments or the financing of certain activities in their operations, such as the promotion of exports or the storage
of products. There is no evidence of any causal link between natural disasters or exceptional occurrences as circumstances
causing damage and the activities for which debts were incurred. In yet other cases such causality does emerge, but the link
is no more than indirect. This diversity of application is simply inconsistent with the conclusion that Article 32(2) of Law
No 2008/92 is, as a generic scheme, compatible with the specific ground for derogation set out in Article 87(2)(b) EC. For
this reason alone the Greek Government cannot rely on this ground for derogation.
58.
I would also point out that the arguments advanced by the Greek Government in support of this plea do not refute the Commission’s
observations in paragraphs 139 to 142 of the contested decision. Firstly, the nature of the ground for derogation referred
to in Article 87(2)(b) EC is such that there must be a clear and direct link between the occurrence causing the damage and
the financial assistance provided by the authorities to compensate for that damage. Taking account of financial burdens which
are indirectly or tenuously linked to the occurrences causing the damage might increase the number of potential beneficiaries
of such financial assistance to an almost unlimited degree, along with the ‘damage’ qualifying for compensation. Secondly,
the Greek Government does not refute the Commission’s contention in paragraph 140 of the decision that evidence of a causal
link to a natural disaster or exceptional occurrence was to be found in only six of 116 evaluation sheets submitted. Finally,
the Greek Government fails to show why it had been necessary for so much time to elapse between the circumstance causing the
damage and the compensation for that damage. Its explanations are confined to a few generalities, which are by definition
unequal to the task of explaining why, in each specific case, so much time had to elapse between the circumstance causing
the damage and the compensation therefor.
C –
The third plea: the compatibility of the aid with Article 87(3)(a) EC
1. Arguments of the parties
59.
The Greek Government essentially presents two arguments in support of this plea.
60.
It contends, firstly, that the aid granted under Article 32 of Law No 2008/92 is consistent with the derogation for which
Article 87(3)(a) EC provides, since the aid schemes exist to promote economic development in certain Greek areas where the
standard of living is abnormally low and where there is serious underemployment. In paragraphs 147 to 154 of the contested
decision the Commission had made an incorrect assessment by declaring that Article 32 of Law No 2008/92 did not qualify for
the derogation for which Article 87(3) EC provides.
61.
The rescheduling of the debts of 116 cooperatives was necessary to repair the damage resulting from various exceptional occurrences,
such as the nuclear disaster at Chernobyl. Where these debts corresponded to the various investments effected by the cooperatives,
these investments had been necessary, according to the Greek authorities, under their policy of the reorganisation, restructuring
and economic and social modernisation of the cooperative sector.
62.
The Greek authorities had agreed to the rescheduling of the debts of only 116 cooperatives because they were important for
the economic development of the areas in which they were operating (underdeveloped areas with high unemployment). The requirement
that the cooperatives be viable must also be seen in that light. It extended to ensuring that the debt rescheduling contributed
to regional development.
63.
The Commission should have arrived at the conclusion that the rescheduling of the debts was necessary in the interests of
the sound economic development of the areas concerned and that the aid was compatible with Article 87(3)(a) EC.
64.
The Commission had omitted to refer to the favourable implications of the rescheduling of the cooperatives’ debts for economic
regional development. In view of the fundamental role played by the cooperatives in the weaker, primarily agricultural areas
of Greece, these implications had been substantial. There was little employment outside the agricultural sector in those areas.
The economic position of agriculture was of the utmost importance for their development. Omitting to reschedule the cooperatives’
debts would have meant their bankruptcy, which would have had catastrophic consequences for the development prospects of the
areas concerned.
65.
This being the case, the Commission should have weighed up the favourable implications of the aid for regional economic development
against the adverse effects it might have on international trade, the conditions of competition and the organisation of agricultural
markets. It had neglected to do so.
66.
Secondly, the Commission should have considered whether the aid granted in individual cases for investments might be regarded
as aid to promote economic development as defined in Article 87(3)(a) EC.
67.
The Greek Government refers in this context to the judgment of 14 September 1994,
(7)
in which the Court stated that ‘...
ad hoc aid, that is to say, aid which does not form part of a national programme of Community interest, does not in principle meet
the criterion of regional specificity. That aid is not primarily intended to facilitate the development of certain economic
regions, but is granted, as in the present case, in the form of aid for the operation of undertakings in difficulty. In those
circumstances, it is for the Member State concerned to establish that the aid in question actually fulfils the regional specificity
criterion. ... The fact that the aid in question was granted on the basis of
ad hoc decisions cannot therefore preclude them from being described in the present case as regional aid within the meaning of Article 92(3)(a)
of the Treaty’.
68.
In reply, the Commission contends that Article 32 of Law No 2008/92 cannot come under the Commission communication on the
method for the application of Article 92(3)(a) and (c) to regional aid.
(8)
This communication refers to specific legislation on such ‘sensitive’ sectors as agriculture.
(9)
In accordance with the Commission’s established practice the granting of operating aid to undertakings is prohibited in general,
i.e. where there is no actual causal link to the development of regional areas. Article 32(2) of Law No 2008/92 provides for
the writing off of debts incurred in the implementation of social measures or some other investment measures. An arrangement
of this kind clearly serves a different purpose from a programme to promote investments with a view to improving employment
in economically weaker areas.
69.
The prohibition of the granting of operating aid is more stringent in the case of activities undertaken in the context of
the common organisation of agricultural markets. As the scope of Article 32(2) of Law No 2008/92 is not restricted to the
specific products to which, exceptionally, no common organisation of a market applies, the strict prohibition of operating
aid is entirely applicable to this arrangement.
70.
Nor, according to the Commission, can the applicant’s second argument be accepted. In the present case the Commission had
to assess the aid scheme as such. It was not a question of assessing each separate application of the scheme. For that, the
individual cases would have had to be notified under Article 88(3) EC.
2. Assessment
71.
Since, as I have explained above, the scheme for which Article 32(2) of Law No 2008/92 provides could not in itself qualify
for generic approval, it cannot qualify for examination on the basis of one of the generic grounds for derogation referred
to in Article 87(3)(a) and (c) EC. For this reason alone the Greek Government’s plea is unacceptable. Even if that were not
the case, the arguments advanced by the Greek Government in favour of the applicability of the grounds for derogation referred
to would be unacceptable.
72.
In certain cases an aid programme may qualify for one of the derogations permitted in Article 87(3)(a) and (c). It is evident
from the communication on the method for the application of Article 92(3)(a) and (c) (now Article 87(3)(a) and (c) EC) to
regional aid
(10)
that aid to the creation of employment or to the benefit of initial investments may be permitted in certain cases. Where
there are special or persistent problems, production aid may also be permitted by way of exception.
73.
In the case here under consideration it is evident from the way in which the scheme was applied that the aid concerned was
not intended to bring about new investments or to create new jobs in weaker regions but simply to improve the financial situation
of producers.
(11)
In this instance the Greek Government does not deny that the aid was granted
inter alia in the form of production aid and as compensation to the cooperatives for effecting investments. The Greek Government merely
indicates that the aid granted may have favourable implications for economic regional development. It has in no way demonstrated,
however, that through its nature the aid concerned may make an effective and lasting contribution to economic development.
74.
I would also point out in this context that a regional aid programme in the agricultural sector cannot simply qualify for
the derogations defined in Article 87(3) EC. Although Articles 87 to 89 EC are entirely applicable to the sectors governed
by a common organisation of the market, application continues to be subject to the provisions of the regulations concerned.
In other words, any reliance on the grounds for derogations given in Article 87(3)(a) or (c) for aid to an economic activity
governed by an organisation of the agricultural market should be assessed primarily in the light of that organisation of the
market. In that assessment the Commission has some discretionary power. The Greek Government has not demonstrated that the
Commission’s view that the contested scheme undermines the effect of the common organisation of the market was manifestly
unfounded.
(12)
75.
According to the applicant, the Commission should also have considered whether, in the individual cases in which aid was granted
for investments, the latter can be regarded as permissible
ad hoc aid.
Ad hoc decisions may come under the derogation for which Article 87(3)(a) EC provides if a Member State shows that the aid meets
the criterion of regional specificity.
(13)
An
ad hoc assessment in unacceptable here for two reasons: firstly, because – as I have stated in paragraphs 41 to 43 – the Commission
was able to regard the aid scheme as a generic aid scheme and assess it as such. An assessment of all the individual cases
of aid already granted and provided is therefore out of the question here. Secondly, it is unacceptable because the Greek
Government has not demonstrated that the aid scheme meets the criterion of regional specificity. Under Article 32(2) of Law
No 2008/92 cooperatives are the beneficiaries, regardless of the area in which they are operating.
D –
The fourth plea: the slowness with which the Commission acted in this matter
1. Arguments of the parties
76.
The Greek Government essentially advances two arguments in support of this plea. Firstly, the Greek Government believes that
the aid was notified as required by the law. Secondly, it reproaches the Commission for the fact that the procedure took too
long.
77.
The Greek Government criticises the Commission for regarding the aid as unlawful. As early as 7 June 1993 the applicant had
informed the Commission of its intention to apply Article 32(2) of Law No 2008/92 with a view to writing off the debts which
various kinds of cooperatives owed to the ABG for the period from 1982 to 1989.
78.
It was, however, not until 19 December 1997, four and a half years after the letter had been forwarded, that the Commission
informed Greece of its decision to initiate the procedure provided for in Article 88(2) EC with respect to the scheme for
the writing off of debts of cooperatives under Article 32(2) of Law No 2008/92.
79.
The applicant adds that the Greek authorities had informed the Commission not later than June 1997 that Article 32(2) of Law
No 2008/92 had been applied. In March 1998 the Greek authorities had also forwarded separate sheets on 116 cases in which
aid had been granted to cooperatives under Article 32. The information on the 116 cases in which aid had been granted had
therefore been in the Commission’s hands for almost two years.
80.
Secondly, the Greek Government refers to the judgment in
RSV v
Commission,
(14)
in which the Court annulled the Commission decision concerning the recovery of incompatible aid because of the Commission’s
delay of 26 months in giving the contested decision. The Court considered that such a delay could in the case in point establish
a legitimate expectation on the part of the recipient of the aid so as to prevent the Commission from requiring the national
authorities to order the refund of the aid. The Greek Government takes the view that the situation in the present case is
no different from that in the case of
RSV v
Commission.
81.
The Commission contends that the Greek Government’s first plea is manifestly unfounded. It maintains that the mere passage
of a given time after the beginning of the procedure within the meaning of Article 88(2) EC cannot establish a legitimate
expectation of aid where the aid has been granted without regard for the procedure for which that article provides. The mere
fact that two months passed after the notification of the aid is insufficient for the assumption that the aid has been approved.
After notifying an aid scheme, the Member State concerned should also inform the Commission of its intention to begin applying
that scheme, so that the Commission may comment in good time.
82.
The Commission believes that there is a clear difference between the judgment in
RSV v
Commission and the present case. The Greek Government had never formally notified the Commission of the aid granted as it was required
to do by Article 88(3) EC. That aid neither stemmed from nor was associated with a previous aid scheme which had already been
approved by the Commission.
83.
The Greek Government’s reliance on the case of
RSV v
Commission is, according to the Commission, not legitimate since the conditions applying in the case of
RSV v
Commission are not satisfied in the present case. Not only had the Commission not been formally notified in the present case of the
aid granted, but that aid differed from that granted in the earlier case in that it was not related to the additional costs
of an operation for which aid already approved by the Commission had been granted.
2. Assessment
a) Has Article 88 EC been correctly observed?
84.
Article 88 EC provides for procedures which entrust exclusively to the Commission the ongoing examination and supervision
of aid measures. The possible incompatibility of an aid measure with the common market is to be determined, under the Court’s
supervision, by means of an appropriate procedure, for whose application the Commission is responsible.
85.
Where new aid measures are concerned, this procedure is set out in Article 88(3) EC. The details of the application of that
procedure are elaborated in extensive rulings of the Court, which were codified in a Council regulation in 1999.
(15)
As the acts and events relevant in this case occurred before that regulation entered into force, they must be examined primarily
in the light of the Court’s rulings on the application of Article 87(3).
86.
In its judgment in the
Lorenz case,
(16)
confirmed in subsequent case-law,
(17)
the Court stated that the introductory phase of the investigation alluded to in Article 88(3) EC was intended to enable the
Commission to form an initial opinion on the question whether the intended aid measures of which it had been notified were
fully or partly compatible with the Treaty. The aim of this provision, preventing the introduction of aid measures inconsistent
with the Treaty, means that the prohibition laid down in the last sentence of Article 88(3) EC remains in force throughout
the introductory phase. In view of the interest which the Member States have in knowing at an early date where they stand
in areas where intervention may be urgently needed, the Commission should therefore set to work with vigour. If, after being
notified by a Member State of an intended aid measure or an intended change to an aid measure, the Commission omits to lodge
an objection by initiating the procedure provided for in Article 88(2), the Member State concerned may, after a reasonable
period, set at two months by the Court, grant the intended aid provided that it gives the Commission prior notification, whereafter
that aid is governed by the rules on existing aid measures.
87.
It is settled case-law that a Member State may not rely on the principles of the
Lorenz judgment
(18)
when it has implemented a planned aid measure before it has been notified. The
Lorenz judgment was based
inter alia on the Member States’ interest in being quickly informed in situations where an aid measure is urgently needed. That legitimate
interest is deemed not to exist when a Member State implements the measure prior to notification.
(19)
88.
Thus two conditions must be satisfied before the consequences of the
Lorenz judgment occur. The aid is governed by the rules on existing aid measures and may be granted by a Member State if (a) the
Commission does not initiate the opposition procedure provided for in Article 88(2) within two months of notification and
(b) the Member State concerned informs the Commission beforehand of its intention to implement the notified aid measure. In
the present case the Greek Government did not satisfy the second condition. After the notification of an aid measure and after
a period of two months a Member State may not grant the aid concerned without informing the Commission. It thus acted contrary
to the obligations arising from the third sentence of Article 88(3). The aid must therefore be regarded as unlawful.
b) The time taken by the procedure provided for in Article 88(2) EC
89.
The Greek Government has argued that the procedure provided for in Article 88(2) EC took too long, namely 26 months. In the
judgment in
RSV v
Commission
(20)
it was ruled that, as the period of 26 months which the Commission needed to give its decision in this case might have established
a legitimate expectation on the part of the applicant that this was compatible with the Treaty, the Commission should not
have been permitted to require the national authorities concerned to recover the aid. It is my view, however, that this ruling
must be interpreted in the light of the specific circumstances of the case.
90.
The Commission had been formally notified of the aid granted in the case of
RSV v
Commission, albeit after it had been paid to the beneficiary. The aid was related to the additional costs of an operation for which
aid approved by the Commission had already been granted. It concerned a sector to which aid approved by the Commission had
been granted by the national authorities since 1977. The assessment of its compatibility with the common market had not required
a thorough investigation. The Court deduced from this that in those circumstances the applicant could have assumed that the
aid would no longer meet any opposition from the Commission.
91.
There are, however, some fundamental differences between the facts of the case of
RSV v
Commission and those of the present case.
92.
What is certain in the present case is that Greece submitted no more than an incomplete notification on 7 June 1993. It is
clear from the Commission communication of 7 April 1998
(21)
that the Commission did not at that time have all information necessary to assess conformity of the State aids granted with
the provisions of the Treaty. By letter dated 31 October 1993 to the Greek authorities, the Commission therefore requested
additional information on the measures foreseen. Furthermore, by letter dated 5 February 1997, the Commission reminded the
Greek authorities of the previous letter. In its last letter, the Commission informed the Greek authorities that failure to
provide the additional information requested might oblige the Commission to open the procedure provided for in Article 88(2)
of the Treaty. On 19 December 1997 the Commission actually initiated the procedure after the Greek Government had failed to
respond for three and a half years. The Greek Government itself is therefore primarily to blame for the length of the procedure,
at least until 19 December 1997, since it did not provide the Commission with adequate information.
93.
The aid granted under Article 32(2) of Law No 2008/92 was not, moreover, related to the additional costs of an operation for
which aid approved by the Commission had already been granted. It was therefore possible for the investigation into all the
relevant facts and circumstances to take longer than in the case of
RSV v
Commission.
(22)
That this investigation was not easy is evident from the fact that the Greek Government had to acquire extensive information
for the purpose, for example on the 116 cases in which the contested scheme had been applied.
94.
In the light of these completely different facts and circumstances the applicant cannot successfully rely on the judgment
in
RSV v
Commission.
VII – Article 5 of Law No 2237/94
95.
The Greek Government has essentially entered three pleas in opposition to the Commission’s view that Article 5 of Law No 2237/94
is incompatible with Article 87 EC and that State aid granted under that law should be recovered:
- –
- the Commission wrongly contended that Article 5 of Greek Law No 2237/94 concerning the consolidation of debts of agricultural
cooperatives is an aid measure within the meaning of Article 87(1) EC;
- –
- the Commission’s view that the aid granted cannot be deemed compatible with the common market under Article 87(2)(b) EC or
Article 87(3)(a) EC was equally untenable;
- –
- the Commission wrongly contended that the application of the scheme could not be justified with a reference to Article 87(3)(c)
EC.
96.
The Greek Government’s pleas are directed in particular against the following recitals of the decision:
- ‘(116)
- The Commission noted that there are legal provisions authorising all banks in Greece to execute debt rescheduling arrangements.
The terms and conditions according to which these debt reschedules are done is left the discretion of every bank according
to its commercial banking practices. The adoption of Article 5 of Greek law No 2237/94 allows the ABG to perform the same
type of operations, but in more specific conditions. The Commission can then presume that these operations would not have
taken place in normal market conditions, i.e. if the ABG operated according to the private creditor principle using purely
commercial banking criteria.
- (117)
- Firstly, the range of eligible undertakings is considerably reduced, introducing an element of selectivity. Indeed, Article 5
of Greek law No 2237/94 specifically concerns agricultural cooperatives and is not available to other types of undertakings.
Secondly, while in the general case it is up to the banks to set the interest rates applicable for the debt rescheduling arrangements,
Article 5 of Greek law No 2237/94 established very favourable terms for these arrangements, that can go up to 15 years, with
a grace period of three years, and at 50% of the normal market rate for such loans.
- (118)
- Consequently, the Commission considers that this measure is selective and distorts competition conditions in the internal
market. It gives benefiting cooperatives competitive advantages not compatible with the private creditor principle.
- (119)
- The Commission considers that the aid intensity is at least equivalent to the granting of a new loan for the overall amount
of the cooperative’s debt, having a duration of 10 or 15 years, at 50% of the normal market rate for consolidation loans.
As the scheme was applicable to 116 cases and the Commission cannot exclude that at least some of these cooperatives would
not obtain any debt rescheduling under normal market conditions, the aid intensity could be in some cases up to 100%, if one
of such cooperatives had been unable obtain such settlement arrangements in any circumstances (point 41 of the Commission
communication on the application of Articles 92 and 93 of the Treaty and of Article 5 of Commission Directive 80/723/EC to
public undertakings in the manufacturing sector.
(23)
- (120)
- Furthermore, the Greek argument according to which it would be financially more advantageous to the ABG to reschedule the
cooperatives’ debts than to force cooperatives, for example AGNO, into bankruptcy, does not withstand closer examination.
The Commission considers this should be assessed on a case-by-case basis.
- (121)
- As to the case of the dairy cooperative AGNO, it received support from the Greek Government in the form of debt write-offs
or settlements through the ABG at least in four instances (Greek law No 2008/92, Greek law No 2198/94, Greek law No 2237/94
and Greek law No 2538/97). Any private investor would at a certain point call into question its participation in a cooperative
in order to limit further losses.
- (122)
- Secondly, the Greek authorities failed to demonstrate that the private banks were executing the same operations on the same
conditions to relieve the debt of the agricultural cooperatives.
- (123)
- Thirdly, the debt of AGNO to the ABG amounted to GRD 16.754 billion, while the net assets of AGNO had a market value of about
GRD 7 billion. The debt of AGNO to other banks was minor (GRD 698 million) compared with the debt to the ABG, indicating that
even if the banking system, as a whole, agreed to granting favourable lending terms to AGNO,
(24)
the ABG’s servicing could not be comparable with that of the other banks. Equally, even if nominally the overall value of
the securities provided (GRD 44.23 billion) exceeds the amount of debt to be restructured, the Commission noted that most
of these securities come from the member’s joint liability (GRD 30.55 billion) or claims (GRD 4.84 billion). By definition,
these types of securities may prove extremely difficult to mobilise
(25)
or uncertain, depending on the exact nature of these claims.
- (124)
- Therefore, the Commission considers that all the conditions for the application of Article 87(1) of the Treaty are fulfilled.’
A –
The first plea: Is Article 5 of Greek Law No 2237/94 an aid measure within the meaning of Article 87(1) EC?
1. Arguments of the parties
97.
In its first plea Greece contends that Article 5 of Law No 2237/94 concerning the consolidation of debts of agricultural cooperatives
does not constitute an aid measure within the meaning of Article 87(1) of the EC Treaty. The Greek Government presents four
arguments in support of this plea.
98.
Firstly, the Greek Government accuses the Commission of wrongly holding that regularising debts under Article 5 of the aforementioned
law does not comply with the private investor principle. Secondly, it disputes the Commission’s view that the ABG performs
a specific function. The third argument concerns the fact that the ABG had not been required to reschedule debts and did not
honour all applications for debt rescheduling. Finally, the Greek Government maintains that the State did not compensate the
ABG for any costs associated with the action it had taken.
99.
The applicant takes the view that the ABG acted in the same way as a private investor of capital. The Greek Government argues
that the ABG is required to act in accordance with the principle of the private investor of capital when undertaking all its
operations so that it may function effectively in the highly competitive Greek and European financial markets. For these reasons
debt rescheduling was subject to the satisfaction of strict conditions.
100.
The ABG had a considerable economic interest in the rescheduling of the cooperatives’ debts. In 1994 many cooperatives were
unable to settle their debts. The causes of this varied.
101.
As compensation for the damage resulting from the Chernobyl disaster was not paid until 31 August 1993, the cooperatives had
incurred major debts. These were only partly covered by the measures based on Law No 2008/92. The interest on the remaining
debts was extensive, partly because the interest rate was high in the period concerned. Consequently, a considerable financial
burden weighed on the cooperatives as a result of the interest and repayment obligations associated with the outstanding debts.
In addition, marketing opportunities had been reduced by the collapse of the Soviet Union, while marketing costs had risen
steeply because the normal transit routes had been blocked by the conflicts in the former Yugoslavia. Finally, the general
climate in Greece was unfavourable owing to the restrictive financial and monetary policies pursued by the Greek Government
to ensure the convergence of the Greek economy with those of the other European Union countries.
102.
The debts and associated high repayment costs were a serious threat to the continuity of the cooperatives. As many of the
ABG’s clients were cooperatives, the ABG had a direct interest in ensuring the continuation of the cooperatives’ activities
in order to protect its own economic interests. If the cooperatives had failed, the ABG would have been in danger of losing
not only its loans but also future revenue.
103.
The decisions taken by the ABG on the rescheduling of the cooperatives’ debts had thus been in total accord with the way in
which a private bank would have acted in similar circumstances. The ABG had examined all applications for debt rescheduling
on the basis of commercial criteria and approved them only if the cooperatives satisfied the ABG’s general conditions with
respect to debt rescheduling. For this purpose, the ABG laid down requirements for these settlements in circulars No 150/94
and No 22/95 (see paragraph 87 of the decision). Various cooperatives did not satisfy the criteria, and their applications
were therefore rejected. The ABG was, moreover, virtually the only bank to operate in an agricultural sector.
104.
The applicant argues that the Commission has failed to demonstrate that in similar circumstances a private bank would not
have made the same arrangements on the same terms. Nor had the Commission shown that the ‘very favourable terms’ established
by Article 5 of Greek law No 2237/94 were more favourable than a private bank would have established. The Greek Government
emphasises that it is very doubtful that a private bank would have been prepared to reschedule the debts of the cooperatives
on the same terms as the ABG.
105.
The ABG’s role in the agricultural sector in Greece obliges the ABG to take account of major sectoral parameters in its decisions,
such as the long-term viability of its clients and the protection of its reputation as a financier in this sector. The Commission
infers from this that the ABG performs a specific function in the agricultural sector. The applicant disputes this and refers
in this context to the Commission communication on the application of Articles 92 and 93 of the Treaty and of Article 5 of
Commission Directive 80/723/EEC to public undertakings in the manufacturing sector,
(26)
which states that it should be accepted that a ‘mother company may also, during a limited time, carry the losses of a subsidiary
in order to allow this latter to withdraw from the sector under the most favourable conditions. Such decisions can be motivated
not only by the possibility to get a direct profit, but also by other concerns such as maintaining the image of the whole
group or to redirect its activities. However, when the new injections of capital are divorced from all possibility of profitability,
even in the long term, these injections must be considered as aid’.
106.
The applicant also maintains that Article 5 of Law No 2237/94 cannot be equated with State aid since Article 5 does not impose
any obligation on the ABG to reschedule the debts of cooperatives or give cooperatives any right to require the ABG to reschedule
their debts. Nor has the ABG received any compensation from the Greek State for the rescheduling of debts under Article 5.
107.
In view of the foregoing, the applicant believes that the Commission’s decision should be annulled because it is based on
an incorrect interpretation of the applicable provisions, on an incorrect interpretation of the facts and on an inconsistent
and inadequate statement of reasons.
108.
In reply the Commission argues that Article 5 of Law No 2237/94 concerning the consolidation of debts of agricultural cooperatives
does indeed constitute an aid scheme within the meaning of Article 87(1) EC. Notwithstanding the existence of general provisions
giving banks the option of rescheduling their clients’ debts, Article 5 of Law No 2237/94 provides for the special treatment
of the cooperatives by the ABG. More specifically, it is clear that Article 5 of Law No 2237/94 establishes very favourable
conditions for the cooperatives, namely a term of not more than 15 years, a grace period of three years and an interest rate
50% of the normal market rate for such loans. The Commission therefore considers it likely that some cooperatives would not
have qualified for debt rescheduling under normal market conditions.
109.
On the other hand, the Commission does not rule out the possibility that certain reschedulings of the debts of undertakings
complied with the private investor principle in a market economy. This does not mean, however, that it must assess each case
individually. The present case concerns a general scheme, which is examined at a general and abstract level. The applicant
in this case fails to appreciate that the Commission must be notified of general schemes the application of which may result
in aid being granted.
(27)
110.
The Commission takes the view that the ABG performs a specific function. It gives two reasons for this. Firstly, there are
no private banks which grant loans to cooperatives. This implies that the ABG performs a special task in the agricultural
sector which differs from the performance of a task under normal market conditions. Secondly, the ABG is interested not only
in the probability of making a direct profit but also in other elements, such as the continuity of the undertakings concerned.
The Commission communication to which Greece refers when contesting this point is not applicable in this context, since the
disputed case concerns not the injection of capital but the rescheduling of debts.
111.
The applicant has maintained that Article 5 of Law No 2237/94 does not provide for State aid since the ABG has not received
any compensation from the Greek State for the rescheduling of debts. According to the Commission, however, this does not determine
whether State aid is involved. The ABG is a public-sector bank whose sole shareholder is the Greek State and which is controlled
by the Greek State. Article 5 of Law No 2237/94 enables the ABG to grant loans on more favourable terms, that is to say on
terms which are not normal market terms. This advantage, which is paid for from State resources, must be regarded as State
aid.
2. Assessment
112.
Article 5 of Law No 2237/94 stipulates that the ABG may, within certain limits, help agricultural cooperatives to pay outstanding
debts. This arrangement applies to all debts outstanding on 31 December 1993 which are due to objective and external circumstances.
This means that debts arising, for example, from mismanagement do not qualify for restructuring. Under this law no interest
need be paid during the first half of the term of the rescheduled loan. Thereafter interest equivalent to 50% of the normal
market rate is payable on such loans. The term of the loans is set at 10 years. However, the ABG has the option, in exceptional
cases where the deficits are particularly serious, of extending the repayment period to 15 years, with a grace period of three
years, or reducing the interest rate to less than 50% of the market rate. Assistance to cooperatives is subject to the prior
submission of a development/modernisation feasibility study, demonstrating that the cooperatives are able to repay the rescheduled
debts. Furthermore, assistance may be conditional on certain requirements being met (such as administrative and organisational
modernisation, the reduction of personnel and an increase in own capital).
113.
In the following I begin by considering the Greek Government’s last two arguments.
114.
The Greek Government has argued that, as it has not paid any compensation to the ABG, there can be no question of State aid
being involved. This argument cannot be accepted.
115.
It follows from the Court’s case-law that Article 87(1) EC covers all the financial means by which the authorities may actually
support undertakings, irrespective of whether or not those means are permanent assets of the State. Consequently, even though
the sums involved in the measure concerned are not permanently held by the Treasury, the fact that they constantly remain
under State control, and therefore available to the competent national authorities, is sufficient for them to be categorised
as State aid.
(28)
116.
The ABG is under the control of the Greek State to a significant degree. It is not disputed that the ABG’s sole shareholder
is the Greek State. Furthermore, its board of directors is appointed by governmental decision, and the Greek State can thus
exercise a dominant influence directly or indirectly. It must be concluded that, through its dominant influence over the ABG,
the Greek State is able to guide the use of its resources and to finance specific advantages for cooperatives. The resources
which it provides are therefore State resources within the meaning of Article 87 EC.
117.
Equally unacceptable is the Greek Government’s argument that Article 5 of Law No 2237/94 cannot be equated with State aid
because Article 5 does not impose any obligation on the ABG to reschedule the debts of cooperatives or grant the cooperatives
any right to require the ABG to reschedule their debts. The same is true of the Greek Government’s argument that Article 5
does not provide for aid because not all applications for debt rescheduling have been honoured.
118.
I endorse the argument advanced by the Commission in its comments that the absence of an obligation to honour all applications
for rescheduling is inherent in an aid measure. The Greek Government’s argument contains a contradiction in terms. Aid measures
are, after all, by nature selective. This specificity is also one of the main elements of the term ‘aid measure’. Where the
Greek Government refers to the selectivity of the law in its argument, it is implicitly indicating that this demonstrates
one of the basic features of an aid measure.
119.
The following two arguments in the Greek Government’s plea oppose the Commission’s view that the ABG performs a specific function
and the Commission’s contention that regularising debts under Article 5 of the aforementioned law does not comply with the
private investor principle.
120.
The Greek Government has stated in its comments that the ABG is required to take account in its decisions of such major sectoral
parameters as the long-term viability of its clients and the protection of its own reputation as a financier in this sector.
The Commission infers from this that the ABG performs a specific function, partly because the ABG is virtually the only bank
operating in the agricultural sector. The Greek Government disputes this view by referring to the Commission communication
on the application of Articles 92 and 93 of the Treaty and of Article 5 of Commission Directive 80/723 to public undertakings
in the manufacturing sector.
(29)
The recital to which it refers concerned the situation in which a mother company might carry the losses of its subsidiaries
for considerations other than the pursuit of profit.
121.
The relevant passage of the Commission communication is not, however, applicable in the situation here at issue. Not only
can the relationship between the ABG and the agricultural cooperatives not be compared to that between a mother company and
a subsidiary, but there is also no capital injection involved in the present case, but rather a debt rescheduling arrangement
between the creditor and the debtor. The comparison is not therefore tenable.
122.
It is my opinion that the ABG does indeed perform a specific task, firstly because the ABG is virtually the only bank operating
in the agricultural sector. In contrast, the Greek Government itself also states that the ABG has such a function since it
emphasises in its comments that the only question is whether a private bank would have rescheduled the debts of the agricultural
cooperatives on the same terms as the ABG. Secondly, the Greek Government has said that the ABG should take account of major
sectoral parameters. Through its public undertakings the State is able to pursue other than commercial objectives, as the
eleventh recital of the preamble to Directive 80/273 points out. From this too it must be inferred that the ABG performs a
specific function.
123.
Finally, it must be considered whether the Greek Government is justified in complaining that the Commission was wrong to rule
that Article 5 of Law No 2237/94 does not comply with the private investor principle.
124.
Firstly, it should be remembered that the criterion of acting like a private investor is derived from the principle of the
equal treatment of the public and private sectors, which means that 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.
(30)
125.
In the judgment in
Belgium v
Commission
(31)
the Court considered that ‘by virtue of Article 92(1) of the Treaty, the provisions of the Treaty concerning State aid apply
to aid granted by a Member State or through State resources in any form whatsoever. It follows ... that no distinction can
be drawn between aid granted in the form of loans and aid granted in the form of a subscription of capital of an undertaking.
Aid taking either form falls within the prohibition contained in Article 92 where the conditions set out therein are fulfilled.
An appropriate way of establishing whether such a measure is a State aid is to apply the criterion ... of determining to what
extent the undertaking would be able to obtain the sums in question on the private capital markets. In the case of an undertaking
whose capital is almost entirely held by the public authorities, the test is, in particular, whether in similar circumstances
a private shareholder, having regard to the foreseeability of obtaining a return and leaving aside all social, regional-policy
and sectoral considerations, would have subscribed the capital in question’.
126.
In the present case Article 5 of Law No 2237 establishes very favourable terms. Greece has failed to show that private banks
would have undertaken debt reschedulings on the same favourable terms. In fact, it is very difficult to imagine that a private
bank operating under normal market conditions would agree to a grace period and an interest rate of 50% of the market rate
normally applying to such loans. Debt rescheduling under Article 5 of Law No 2237/94 is offered on terms which cannot be regarded
as normal for a bank. If that had been the case, there would have been no need for a special scheme such as that under consideration.
127.
The ABG does not bear comparison with a private investor. If a private bank rescheduled debts in this way in similar circumstances,
on the basis of expected profitability and aside from any consideration of a social nature or of regional or sectoral policy,
no State aid would be forthcoming. For it is assumed that a private lender acts in its own commercial interest. The ABG, on
the other hand, is required to take account of interests which differ from those of a private bank. It does not act solely
on the basis of its own commercial interests, but also bears in mind sectoral interests which are broader than its own commercial
interest. If with a view to precisely those broader interests credit arrangements are made of which even the Greek Government
says that the only question is whether a private bank would have resorted to them, it must be assumed that those arrangements
do not satisfy the private investor criterion. They must therefore be regarded in principle as State aid. This is not altered
by the fact that the cooperatives must meet certain requirements, such as viability.
128.
In the light of the above it cannot be maintained that the ABG’s action on the basis of Article 5 of Law No 2237/94 satisfies
the private investor criterion. The Greek Government’s plea must therefore be dismissed as unfounded.
B –
The second plea: the compatibility of the aid with Article 87(2)(b) EC or Article 87(3)(a) EC
1. Arguments of the parties
129.
The arguments presented by the Greek Government in its second plea in support of its contention that Article 5 of Law No 2237/94
is compatible with the common market under Article 87(2)(b) EC or Article 87(3)(a) EC are very similar to those which it advanced
in its comments on Article 32(2) of Law No 2008/92. For the substance of these argument I refer, for brevity’s sake, to paragraphs 49
to 52 and 59 to 67. It follows that the Commission’s defence is virtually the same; see paragraphs 53 to 55 and 68 to 70.
2. Assessment
130.
For the same reasons as those given in paragraphs 56 to 58 and paragraphs 71 to 74 of this Opinion with respect to the examination
of the second and third pleas against the Commission’s ruling on Article 32 of Law No 2008/92, I consider the Greek Government’s
arguments
mutatis mutandis to be untenable and not to form a ground justifying Article 5 of Law No 2237/94.
C –
The third plea: the compatibility of the aid with Article 87(3)(c) EC
1. Arguments of the parties
131.
In this plea the Greek Government argues that, if Article 5 of Greek Law No 2237/94 is deemed to provide for State aid, that
provision is compatible with the common market under Article 87(3)(c) of the EC Treaty. The latter provision stipulates that
aid to facilitate the development of certain economic activities or of certain economic areas may be declared compatible with
the common market, where such aid does not adversely affect trading conditions to an extent contrary to the common interest.
132.
The information from the Commission concerning Community guidelines on State aid for rescuing and restructuring firms in difficulty
(32)
shows that restructuring aid may be approved if the following conditions are satisfied:
- (i)
- restoration of viability;
- (ii)
- avoidance of undue distortions of competition;
- (iii)
- aid in proportion to the restructuring costs and benefits;
- (iv)
- full implementation of a restructuring plan and observance of conditions;
- (v)
- monitoring and annual report.
133.
Greece accuses the Commission of having incorrectly assessed the last four of these conditions. According to the Greek Government,
the second condition has indeed been satisfied since the restructuring scheme applies primarily to small cooperatives and
in some cases loss-making activities have had to be abandoned or cut back. The third condition has similarly been satisfied.
From the list of the 388 agricultural cooperatives which have qualified for a debt rescheduling scheme it is clear that most
of the aid corresponds to the costs and benefits of the restructuring. In the decision the Commission argued that it could
not be guaranteed that the approved aid was limited to the strict minimum needed in every case. Greece ascribes this conclusion
to the fact that the Commission has not examined each case individually. If the Commission had done so, it would have come
to the conclusion that they satisfied the third condition. The last two conditions had similarly been satisfied, the ABG having
intervened whenever necessary. Monitoring had also been carried out and annual reports drawn up.
134.
Furthermore, the aid did not adversely affect trading conditions to an extent contrary to the common interest.
135.
It follows from this analysis, according to the Greek Government, that the rescheduling of the debts and the operation of
the agricultural cooperatives in the less prosperous areas on a better economic basis is beneficial to the activity and economic
development of agriculture there. This could not be achieved by the market itself. The market, however, did not play any part
in the agricultural sector since, as in all EC countries, the specific features of this sector had led to extensive regulation
of agricultural production in all EC countries (see also Articles 33 and 42 EC).
136.
According to the applicant, the Commission has also contravened Article 158 EC, which stipulates: ‘In order to promote its
overall harmonious development, the Community shall develop and pursue its actions leading to the strengthening of its economic
and social cohesion’. According to the Greek Government, a higher Community objective, the strengthening of economic and social
cohesion, is pursued by Article 5.
137.
The Commission argues that account must indeed be taken of the provisions concerning economic and social cohesion in the implementation
of Community policy (Article 159 EC). This had also occurred in cases of restructuring aid, where a somewhat more flexible
application of the capacity reduction requirement was possible if the undertakings concerned were located in vulnerable areas.
(33)
This more flexible approach did not, however, mean that the conditions would be completely ignored.
138.
Nor was the applicant able to justify the absence from the law of a criterion relating to the required minimum contribution
from the cooperatives to the restructuring costs. Even more important was the fact that the application of the law was not
confined to small and medium-sized undertakings, making it
a priori impossible for the ground for derogation given in Article 87(3)(c) EC to apply in the case of the contested scheme in its
present form.
139.
The applicant believes that the Commission should have assessed the various cases individually. The Commission disputes this.
Where a Member State notifies an aid scheme in a general and abstract form, the Commission assesses it on the basis of its
general and abstract features. This means that the scheme must include sufficient guarantees that all requirements relating
to compatibility with Article 87 EC are met. In the absence of such guarantees the scheme concerned must be considered incompatible
with the common market. This does not, however, rule out the possibility of individual cases of the granting of aid being
notified and being examined and assessed on their own merits in isolation from the general scheme.
2. Assessment
140.
Article 87(3) EC gives the Commission a discretion the exercise of which involves economic and social assessments which must
be made in a Community context.
(34)
In the present case there is nothing to show that, in stating that the aid scheme concerned does not qualify for the derogation
provided for in Article 87(3)(c) EC, the Commission exceeded this discretionary power. In paragraphs 158 to 191 of the contested
decision the Commission devotes sufficient attention to all the elements of Article 87(3)(c) EC. In particular, it considers
in this context the requirements which the general Community guidelines entail for the restructuring of undertakings in difficulty.
(35)
This examination has led to the conclusion that the scheme provided for in Article 5 of Law No 2237/94 does not satisfy the
requirements of the guidelines in various respects. The arguments advanced by the Greek Government do not present any facts
or circumstances to show that the Commission based its view on incorrect information. Nor do they demonstrate that the Commission
associated manifestly incorrect conclusions with it. This plea is therefore unacceptable.
VIII – The aid granted to AGNO Comments of the parties
141.
The Greek Government has essentially presented two pleas against the Commission’s ruling that the aid granted to AGNO is incompatible
with the common market. They can be summarised as follows:
- –
- The Commission wrongly considers the aid granted to AGNO under Article 32(2) of Law No 2008/92 and Article 19(1) of Law No 2198/94
to be incompatible with the common market.
- –
- The Commission’s ruling that the aid granted to AGNO under Article 5 of Law No 2237/94 and the Act of the Governor of the
Bank of Greece of 5 October 1989 cannot be considered compatible with the common market is equally untenable.
A –
The first plea: the compatibility of the aid granted to AGNO under Article 32(2) of Law No 2008/92 and Article 19(1) of Law
No 2198/94
1. Arguments of the parties
142.
The Greek Government accuses the Commission of wrongly assuming that there is no causal link between the rescheduling of AGNO’s
debts and the losses caused by the Chernobyl nuclear disaster. Although the Commission has established that six cases in which
aid was granted were linked to the Chernobyl nuclear disaster, it does not regard that aid as justified State aid within the
meaning of Article 87(2)(b) EC. In its decision it notes in relation to the aid granted to AGNO as a result of the Chernobyl
nuclear disaster that at least part of the losses consist of the difference between the average prices paid by AGNO to its
producers and the target prices for the same raw materials. According to the Commission, these losses result from higher producer
prices for milk and not from the exceptional event itself. This assessment is incorrect, according to the Greek Government,
since AGNO’s losses result from the purchase of raw milk products at market prices which applied before the nuclear disaster.
AGNO’s competitors were not obliged to purchase the contaminated milk and did not do so. AGNO protected its members by covering
the losses due to the nuclear disaster. The Greek Government therefore takes the view that there was indeed a causal link.
143.
The Greek Government also takes the view that the compensation for the losses incurred by AGNO as a result of the Chernobyl
nuclear disaster was not excessive. The amount granted, GRD 1.38 billion, comprised the direct loss of GRD 851 million and
the interest on that loss in the amount of GRD 529.89 million. The actual interest on the loss amounted to GRD 959.79 million.
The ABG therefore argued that the rescheduling of GRD 529.89 million in interest was not excessive compensation for the losses
actually incurred and that the rescheduling of this debt must therefore be regarded as compatible aid under Article 87(2)(b)
EC.
144.
Opposing this view, the Commission states that the aid granted to AGNO under Article 32 of Greek Law No 2008/92 was intended
to cover the losses due to the fact that large quantities of milk which would not otherwise have been sold were purchased
from the producers at a higher price than that obtaining before the disaster. The effects this had on the market and on international
trade could not be disputed.
145.
This aid must be described as operating aid and had no direct link with the accident at Chernobyl. It constituted political
intervention by the Greek State to the benefit of the primary producers. There was consequently no causal link between an
exceptional occurrence and the debts.
146.
The Commission points out that the aid granted to AGNO under Article 19 of Law No 2198/94 (GRD 529.89 million) covered interest
on compensation paid belatedly for losses caused by the Chernobyl nuclear disaster. This aid was prohibited operating aid,
and there had been no direct link with an exceptional occurrence. As this aid was granted for the same reason as the aid granted
under Article 32(2) of Greek Law No 2008/92, the same conclusion must be drawn in this case.
2. Assessment
Preliminary comment
147.
The above assessment of Article 32(2) of Law No 2008/92 and Article 5 of Law No 2237/94 shows that AGNO was assisted through
the application of two aid schemes which must be regarded as unlawful. For the measures taken specifically in relation to
AGNO to be examined for their compatibility with Article 87 EC an individualised notification would have been needed. As such
a notification was not made, the application to AGNO of the two aid measures concerned cannot but be unlawful.
148.
For the sake of completeness I will now briefly consider the pleas entered by the Greek Government concerning the assessment
of the specific case of AGNO.
149.
In paragraphs 56 to 58 I have already referred to the absence of any direct causal link between natural disasters or exceptional
occurrences as loss-inducing circumstances and the activities for which the debts were incurred under Article 32(2) of Law
No 2008/92. In the specific case of AGNO there is no more than an indirect link. It cannot therefore be argued that the specific
aid granted to AGNO should benefit from the derogation from the prohibition of State aid under Article 87(2)(b) EC.
150.
The second argument concerns the aid granted to AGNO under Article 19 of Law No 2198/94. In this case there is no link whatsoever
between natural disasters or exceptional occurrences as loss-inducing circumstances and the activities for which the debts
were incurred. Interest on compensation paid belatedly for losses which cannot be said with any certainty to have been a direct
consequence of the Chernobyl nuclear disaster cannot benefit from the derogation from the prohibition of State aid under Article 87(2)(b)
EC. The Greek Government’s argument should therefore be dismissed.
B –
The second plea: the compatibility of the aid granted to AGNO under Article 5 of Law No 2237/94 and the Act of the Governor
of the Bank of Greece of 5 October 1989
1. Arguments of the parties
151.
Firstly, the Greek Government maintains that the Commission has made an incorrect assessment of the facts which played a part
in AGNO’s treatment in 1995. In its decision the Commission took account of subsequent facts and information of which the
ABG could not have been aware at the time of its transactions with AGNO. It could not therefore have taken those facts and
that information into account. The Commission’s conclusion that AGNO received aid on as many as four occasions and that any
private investor would have reconsidered his continued financial involvement in AGNO was not therefore sustainable.
152.
Secondly, in paragraph 123 of the contested decision the Commission had incorrectly ruled that the ABG could not accept the
personal assets of the members as a security against the risk of the bankruptcy of a cooperative. The applicant takes the
view that a private investor would have done so in similar circumstances. If personal assets could not be used as a security
for the cooperatives’ loans, the legislation which provided for the members to be jointly liable for debts would be meaningless.
153.
Thirdly, the Commission had made an incorrect assessment of the cost-benefit analysis undertaken by the ABG before the rescheduling
of AGNO’s debts. The objective value of AGNO’s assets was not GRD 4 billion but almost twice that figure. If AGNO had failed
and its activities had ceased, the value of its assets would have been reduced by 50% and its inventory by 70%. In addition,
AGNO’s obligations towards the ABG had matured on 31 December 1994. Those obligations formed the basis of the debt rescheduling
and amounted to GRD 8.061 billion; consequently, the Commission should have taken account of AGNO’s entire debt to the ABG,
a sum of GRD 16.7 billion, more than half of which had matured at the time when the debt rescheduling occurred in 1995. The
real securities, such as the mortgage and claims against third parties to the benefit of the ABG, which amounted to almost
GRD 9 billion, must be regarded as an adequate security for the ABG or any other bank. Consequently, the ABG’s assessment
clearly showed that the securities provided by AGNO were sufficient in relation to the debts incurred.
154.
Fourthly, the applicant continues, the Commission had wrongly established in its assessment of Act No 1620 of the Governor
of the Bank of Greece of 5 October 1989 that the ABG had to apply the reference rate to the rescheduling of AGNO’s debt. The
Commission applied the reference rate when determining the amount of regional aid, for example. The banks did not use the
reference rate when granting loans to their clients. The Commission had not explained why the ABG should use reference rates.
These reference rates, which reflected the average bank rate in the capital market, as had been established in consultations
between the Commission and the Greek authorities, were not applied in the case of actual loan transactions between banks and
clients.
155.
In the Commission’s view the Greek Government’s contention that it had taken account of later facts which could not be known
to or assessed by the ABG at the time of the acceptance of debt rescheduling is unfounded. The Greek Government had not actually
considered the Commission’s reasons for declaring the aid incompatible with the common market. As Article 5 of Law No 2237/94
and Act No 1620 of the Governor of the Bank of Greece did not satisfy the conditions set out in the Community guidelines,
they were incompatible with the common market, as were the transactions which had been effected on the basis of those provisions.
156.
Furthermore, the cost-benefit analysis undertaken by the ABG was not the same as an analysis carried out by a private investor.
On at least four occasions the dairy cooperative AGNO had received aid in the form of the cancellation or rescheduling of
debts by the ABG (Greek Laws Nos 2008/92, 2198/94, 2237/94 and 2538/97). Any private investor would, at a given moment, reconsider
his financial involvement in such a cooperative with a view to avoiding further losses.
157.
In the cost-benefit analysis carried out by the ABG AGNO’s own assets of GRD 4 billion were compared to its debt to ABG (GRD
16.7 billion) and its obligations to private banks (GRD 698 million). This analysis revealed that there were virtually no
private investors. What was even more important was that it showed there to be no real securities for the loan provided by
the ABG. Most of the securities consisted of the joint liability of the cooperative’s members. Mobilising such securities
was extremely difficult in practice. In these circumstances it could not be maintained that a private investor would have
continued to finance AGNO without real securities easily mobilised in the market.
158.
The Commission explains, finally, why it compared the interest rate agreed by the ABG and AGNO (21.5%) for the 1995 debt rescheduling
with the reference rate (26.47%). The reference rates were regularly calculated by the Commission in consultation with the
Member States’ authorities on the basis of the available data on the national capital markets. They reflected the average
current interest for loans to the business community. The Member States must take account of the average reflected in the
reference rate if they were to be able to determine whether the loans they provided for the business community contained an
element of aid. It went without saying, therefore, that the Commission had used the reference rate as a yardstick when appraising
the transaction between the ABG and AGNO.
2. Assessment
159.
Did the ABG act like a private investor when rescheduling debts in 1995? I am not convinced by the arguments presented by
the Greek Government in this respect. The mere fact that the ABG needed to assist AGNO on three occasions within a period
of something more than five years makes it unlikely that the ABG acted like a private investor when called upon to provide
a financial injection on the fourth occasion. This is true
a fortiori where the financial risks to the ABG inherent in this fifth operation were substantial and the recovery options offered by
AGNO in the event of its insolvency were insufficient and unsound when compared to the ABG’s claims. The latter aspect is
undoubtedly true of recovery from AGNO’s members. As partners in this cooperative, they were liable for its debts. The security
requirement agreed at the time of the debt rescheduling adds little or nothing to this. Effecting such recovery from the primary
producers would meet with serious social resistance, and the possible yield should not be overrated. In this hypothesis, after
all, vulnerable primary producers who had already lost their financial contribution to the cooperative would also be held
liable for the ABG’s – extensive – outstanding claims. It is highly unlikely that a private investor would have dared to resort
to what were, as experience in the recent past has shown, extremely risky financial transactions backed by securities which
could, in practice, have scarcely been mobilised.
160.
Against this background the extensive statements made by the Greek Government about AGNO’s business situation fail to convince
me. In essence, they do little to change the basic finding that after the 1995 debt rescheduling AGNO continued to be an undertaking
in which the ratio of the assets made available by the ABG to the partners’ own assets was highly vulnerable. In view of the
aforementioned weakness of the securities, it remains unlikely that a private investor would have accepted the obvious risks
of continued and more extensive financial involvement in AGNO.
161.
I can be brief regarding the Commission’s use of the reference rate when assessing Act No 1620 of the Governor of the Bank
of Greece. That rate is used to calculate the element of aid present in subsidised loan schemes.
(36)
It corresponds to the average level of interest in the various Member States for medium- to long-term loans (five to ten
years) for which the usual securities have been provided. In its assessment of the transaction between the ABG and AGNO the
Commission could not but compare the agreed interest with the reference rate applicable to Greece. From this it was bound
to conclude that the agreed interest terms included an element of aid. That element of aid is, moreover, reinforced by the
other terms of the transaction, such as the grace period.
162.
My conclusion is therefore that the arguments advanced by the Greek Government in this plea do not refute the Commission’s
position that the debt rescheduling agreed by the ABG with AGNO in 1995 was an aid operation.
IX – Other pleas, inter alia against the obligation imposed by Article 3 of the decision to recover the aid granted
163.
The Greek Government’s other pleas can be grouped as follows:
- –
- the Commission infringed the principle of equality by declaring Law No 2237/94 incompatible with the common market;
- –
- the Commission incorrectly ruled that Greek Laws Nos 2237/94 and 2198/94 and Act No 1620 of the Governor of the Bank of Greece
affect trade adversely;
- –
- the Commission has not presented an adequate statement of reasons for the decision;
- –
- the Commission’s order that the aid granted be recovered is inconsistent with the principles of proportionality and legal
certainty; finally,
- –
- it is absolutely impossible for the aid granted to be recovered.
A –
The first plea: infringement of the principle of equality
1. Comments of the parties
164.
According to the Greek Government, the Commission has infringed the principle of equality by declaring Law No 2237/94 incompatible
with the common market. On 15 December 1998 the Council of the European Union stipulated, under the third subparagraph of
Article 88(2), that the aid measures referred to in Articles 14 to 18 and Article 21 of Greek Law No 2358/97 were compatible
with the common market up to a maximum of GRD 158.672 billion.
(37)
That law repeatedly refers to the provisions of Law No 2237/94. The applicant believes that the Council thus implicitly validated
all previous aid measures.
165.
In its decision of 15 December 1998 the Council approved Greek Law No 2538/97. In the situation thus created Greek farmers
or agricultural cooperatives could not foresee that the amounts involved in earlier aid operations would subsequently have
to be repaid.
166.
The Commission responds by claiming that the Council decision of 15 December 1998 approving various aid measures is not applicable
in this case since it concerned schemes other than those approved. The references in Law No 2538/97 to earlier legislation
indicate some complementarity of the various schemes, but do not mean that they are covered by Law No 2538/97.
167.
If the Greek Government had wanted to obtain approval for the scheme it had established earlier, it should have explicitly
requested the Council’s approval beforehand. The approval of Greek Law No 2538/97 cannot be extended to mean that all previous
comparable schemes are approved with retroactive effect.
168.
The Commission dismisses the Greek Government’s contention that the recovery of the aid granted under Laws No 2008/92 and
No 2237/94 will result in the recipient undertakings being placed at a disadvantage compared to the undertakings which have
benefited from Law No 2538/97, which the Council has approved. First of all, that contention rebounds on the Greek Government
itself. It did, after all, encourage the Council to approve Law No 2538/97. The unequal treatment that was the direct consequence
of this cannot be taken as an argument for extending the Council’s approval of aid granted in a few cases to include all cases
in which aid has previously been granted to the cooperatives contrary to Community law.
169.
The arguments derived from the alleged inability of the farmers who benefited from the earlier aid schemes to understand why
the aid granted to them must be recovered are untenable for the same reasons. The Greek Government might have known that the
Council decision which it encouraged could have this effect.
2. Assessment
170.
The Council of the European Union may decide, under the second subparagraph of Article 88(2) EC, that an aid measure is compatible
with the common market if exceptional circumstances justify such a decision. The Council’s discretion in this respect is very
specific in nature and an exception to the exclusive discretion which the Commission has in principle when assessing national
aid measures. The Council’s discretion extends to declaring specific aid measures compatible or incompatible. The scope of
the decisions taken by the Council therefore extends no further than the aid measures to which those decisions explicitly
relate. If this were not so, the Commission’s primary competence would be eroded. The Council decision of 15 December 1998
(No 14015) declares Articles 14 to 18 and Article 21 of Law No 2538/97 to be compatible, in derogation from Article 87 EC,
with the common market up to a maximum of GRD 158.672 billion. The scope is thus exhaustively and accurately defined. Any
further extension of that scope with a reference to the principle of equality is incompatible with the distribution of powers
under Articles 87 and 88 EC. It might, moreover, lead to the erosion of the prohibition laid down in Article 87(1) EC. This
plea cannot therefore serve any useful purpose.
B –
The second plea: adverse effect on trade
1. Comments of the parties
171.
In the second plea the applicant argues that, even if Greek Law No 2237/94, Greek Law No 2198/94 and Act No 1620 of the Governor
of the Bank of Greece can be regarded as providing for State aid within the meaning of Article 87 EC, they are neither prohibited
nor inconsistent with Community law since they do not distort competition and they do not affect trade between Member States
adversely. The debt reschedulings related to only a small proportion of the cooperatives and had no effect on international
trade or the conditions of competition.
172.
Nor had the Commission explained on what grounds it had reached the conclusion that the contested provisions affected trade.
173.
The applicant also refers to the information from the Commission of 23 December 1994,
(38)
which states that aid that is too small in amount to have a significant effect on inter-State trade is not prohibited. This
de minimis figure has been set at ECU 50 000. In at least 17 cases of debt rescheduling under Article 32(2) of Greek Law No 2008/92
the amount of aid provided was less than ECU 50 000. Of the debt reschedulings under Article 5 of Greek Law No 2237/94, 90
concerned amounts equal to or less than GRD 17 million (ECU 50 000).
174.
The Commission argues, however, that, according to settled case-law, State aid to undertakings affects inter-State trade irrespective
of the amounts granted, irrespective of the size of the undertakings and irrespective of whether or not they export their
products. A detailed economic analysis or proof of the actual effects on trade is not required. In addition, in a case such
as this account must be taken of the cumulative result of application to a hundred cooperatives.
175.
The applicant’s argument concerning
de minimis aid is unacceptable, according to the Commission. The ‘
de minimis’ rule did not apply to sensitive sectors, such as agriculture.
2. Assessment
176.
It is settled case-law that the relatively small amount of aid or the relatively small size of the undertaking concerned does
not as such exclude the possibility of intra-Community trade being affected.
(39)
Other factors may be decisive when assessing the effect of aid on trade, such as whether the aid is cumulative and whether
the undertakings that receive it are operating in a sector that is particularly exposed to competition.
(40)
The agricultural sector is exposed to such competition among the producers of the Member States whose products are traded
within the Community. Greek agricultural production in 1998 accounted for 4.1% of overall European production, and Greece
exports substantial quantities of products to other Member States.
(41)
In such circumstances even small amounts of aid may affect trade between Member States.
177.
As the Commission has itself recognised in its guidelines concerning undertakings in difficulty and in its notice on the
de minimis rule,
(42)
certain very small amounts of aid may not have an appreciable effect on trade or competition between Member States, and the
Commission does not therefore need to be notified of them beforehand.
178.
It is clear from the guidelines concerning undertakings in difficulty and from the fourth paragraph of the notice on the
de minimis rule, however, that the
de minimis rule does not apply to sectors governed by special Community rules on State aid, including, in particular, agriculture and
fisheries. The Greek Government cannot therefore rely on these Commission policy rules in the present case.
179.
In view of these considerations the arguments presented by the Greek Government in support of this plea must be dismissed.
C –
The third plea: inadequate statement of reasons for the decision
1. Arguments of the parties
180.
No further relevant comments have been made concerning this plea.
2. Assessment
181.
In this third plea the Greek Government contends that the Commission has not provided an adequate statement of reasons for
the decision. It is my opinion that this plea is untenable.
182.
The obligation to provide a statement of reasons is an essential formal requirement that must be distinguished from the question
of the correctness of that statement, which concerns the material lawfulness of the contested act. The statement of reasons
must be appropriate to the act at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the
institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons
for the measure and to enable the Court to carry out its review. It is not necessary for the reasoning to go into all the
relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253
EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter
in question.
(43)
183.
In the present case the Commission unambiguously states in its decision why the contested aid cannot be deemed consistent
with Articles 87 and 88 EC. The Commission has considered very thoroughly in its assessment of the contested schemes whether
the latter are to be regarded as aid and whether the grounds for a derogation given in Article 87(2)(b) and Article 87(3)(a)
and (c) could be relied upon.
D –
The fourth plea: recovery of the aid granted is inconsistent with the principles of proportionality and legal certainty
1. Comments of the parties
184.
The applicant maintains that the Commission’s order to recover the aid granted with interest from the date on which the aid
was made available to the beneficiaries is disproportionate. The agricultural cooperatives acted in good faith, they knew
that the Commission had been notified of the aid in 1993, and after a period of seven years recovery of the aid and interest
would be inconceivable.
185.
The applicant refers to the case-law which, it claims, reveals that recovery is no longer possible after seven years, especially
as the Greek Government complied with the procedure for which Article 88 provides.
(44)
186.
The Commission contends that the recovery of unlawful aid is the logical consequence of the finding that the aid is unlawful.
The recovery of unlawful aid was meant to re-establish the previously existing situation, even if it led to the bankruptcy
of the undertakings concerned. Recovery was not therefore disproportionate.
187.
However, reliance on the good faith of the cooperatives was possible, since the Greek Government had not met the requirements
of Article 88(3) EC when applying Article 32 of Greek Law No 2008/92. Good faith could certainly not be invoked in the case
of aid which was granted under Article 5 of Greek Law No 2273/94, since that scheme had never been notified.
188.
Recovery could, however, be rejected on the ground that five years had elapsed since the aid was granted. The competent authority
was obliged by Community law to withdraw the order awarding unlawful aid which had been declared incompatible with the common
market in a Commission decision and whose recovery had been ordered, even if it had allowed the deadline to pass after which
withdrawal was excluded under national law in the interest of legal certainty.
2. Assessment
189.
This plea, in which the applicant contests the Commission’s order to recover the aid granted, is similarly untenable. It is
settled case-law that recovery of unlawful aid is the logical consequence of the finding that it is unlawful.
(45)
Consequently, the recovery of State aid unlawfully granted for the purpose of re-establishing the previously existing situation
cannot in principle be regarded as disproportionate to the objectives of the Treaty in regard to State aids.
(46)
The same is true of the demand for interest over the period between the date of the award of the aid and that of its actual
repayment.
190.
The Greek Government cannot rely on the legitimate expectation of the recipients of the aid since aid granted under Article 32
of Law No 2008/92 and Article 5 of Law No 2237/94 is inconsistent with the provisions of Article 88(3) EC.
(47)
Contrary to the obligations imposed on the Member States by Article 88(3) of the EC Treaty, the contested aid was awarded
without having been previously notified or was awarded after notification without prior information being submitted. Undertakings
which receive aid may in principle have a legitimate expectation of its lawfulness only if it has been awarded in compliance
with all the obligations arising for the Member States from Article 88 EC. The undertakings benefiting from State aid should
be aware that they are subject to the provisions of Articles 87 and 88 EC. They must therefore be able to determine whether
in their case all the obligations arising from those provisions have been fulfilled.
191.
Article 2 of the contested decision does not therefore infringe the legitimate expectation of the undertakings which received
the aid.
E –
The fifth plea: absolute impossibility of recovering the aid
1. Comments of the parties
192.
In its final plea the Greek Government claims that it is absolutely impossible to recover the aid. According to the Greek
authorities, it is absolutely impossible to implement the decision because they would have to recover the aid received by
500 cooperatives in 1993, 1994 and 1995 with interest. As the cooperatives have no assets of their own, their movable and
immovable property would have to be sold. If the cooperatives could not pay the debts, the members of the agricultural cooperatives
would have to pay them, since the members were jointly liable for the debts. This would cause social, economic and political
problems.
193.
The Greek Government then states that, if Article 5 of Law No 2237/94 and Act No 1620 of the Governor of the Bank of Greece
are regarded as providing for aid that cannot have any legal consequences for individual cases of debt rescheduling. The rescheduling
of the debts of the agricultural cooperatives by the ABG was based on loan agreements between parties governed by private
law. The logical consequence of this was that the Commission could not order the recovery of the aid relating to an individual
case of debt rescheduling by the ABG.
194.
According to the Commission, the large number of members of the cooperatives concerned to which the Greek Government refers
in support of its claim that recovery is impossible cannot justify the absolute impossibility of recovering the aid. The Commission
also points out that the responsibility of the members of the cooperatives with respect to recovery is not self-evident, but
depends on the size of the cooperatives’ debt in relation to their assets.
195.
If the applicant’s argument that recovering the aid was impossible because it was based on agreements concluded by autonomous
parties was accepted, any Member State could avoid applying the rules on State aid by granting aid under private-law contracts
through an intermediary.
2. Assessment
196.
According to the Greek Government, recovering the aid would give rise to social, economic and political problems. However,
mere apprehension of internal difficulties cannot justify a failure to apply the rules in question.
(48)
Nor can the fact that the aid has to be recovered from a large number of beneficiaries lead to the conclusion that recovery
is absolutely impossible.
(49)
Similarly, the absolute impossibility of recovery cannot be invoked where aid has been granted under a private-law contract.
As the Commission has rightly stated, the form in which aid is provided must not be deemed relevant, since Member States could
otherwise evade the applicable aid rules by wording them in a certain way.
197.
I would further point out that, as the Court has already ruled, a Member State which, in giving effect to a Commission decision
on State aid, encounters unforeseen and unforeseeable difficulties or becomes aware of consequences overlooked by the Commission
must submit those problems to the Commission for consideration, together with proposals for suitable amendments to the decision
in question. In such cases, the Commission and the Member State must, by virtue of the rule imposing on the Member States
and the Community institutions a duty of genuine cooperation which underlies, in particular, Article 5 of the Treaty, work
together in good faith with a view to overcoming the difficulties whilst fully observing the Treaty provisions and, in particular,
the provisions on aid.
(50)
198.
In conclusion, it must thus be said that the Commission’s action has not infringed any procedural rules, that it was proportionate
and that it did not contravene the principle of the protection of legitimate expectation.
X – Costs
199.
The Commission has concluded that the appeal should be dismissed as unfounded and that the applicant should be ordered to
pay the costs of the proceedings. As I conclude that the Greek Government’s appeal should be declared unfounded, it should
be ordered to pay the costs.
XI – Conclusion
200.
In the light of the foregoing, I propose that the Court should:
- (1)
- dismiss the action by the Greek Government against the decision of the Commission of the European Communities on the aid schemes
implemented by Greece in favour of the settlement of debts by the agricultural cooperatives in 1992 and 1994 including the
aids for reorganisation of the dairy cooperative AGNO;
- (2)
- order the Greek Government to pay the costs pursuant to Article 69(2) of the Rules of Procedure.
- 1 –
- Original language: Dutch.
- 2 –
- Commission decision of 1 March 2000 on the aid schemes implemented by Greece in favour of the settlement of debts by the agricultural
cooperatives in 1992 and 1994 including the aids for reorganisation of the dairy cooperative AGNO (notified under document
number C(2000) 686, OJ 2002 L 159, p. 1).
- 3 –
- OJ 1992 L 215, p. 91.
- 4 –
- Decision No 1620, not published; see, however, Communication from the Commission concerning State aid C 32/98 (ex NN 22/98)
involving aid for debt settlement and consolidation of agricultural cooperatives and other enterprises through the Agricultural
Bank of Greece (OJ 1999 C 120, p. 16).
- 5 –
- Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC
Treaty (OJ 1999 L 83, p. 1).
- 6 –
- Case C-47/91 Italy v Commission (‘Italgrani’) [1994] ECR I-4635.
- 7 –
- Joined Cases C-278/92, C-279/92 and 280/92 Spain v Commission [1994] ECR I-4103, paragraph 49.
- 8 –
- OJ 1988 C 212, p. 2.
- 9 –
- See also recital 151 of the decision.
- 10 –
- Cited in footnote 8.
- 11 –
- State aid which is meant solely to improve the financial situation of producers, but does not in any way contribute to the
development of the sector and above all aid which is granted solely on the basis of prices, quantities, units of production
or units of means of production are regarded as operating aid incompatible with the common market. Through its nature, it
may be detrimental to the conditions of competition in the sectors in which it is granted and threaten to change trade to
such an extent that the common interest is affected, while it is, on the other hand, unlikely to achieve one of the objectives
referred to in the provisions concerning derogations. The policy line was subsequently defined in Information from the Commission
─ Community Guidelines for State aid in the agriculture sector (OJ 2000 C 28, p. 2).
- 12 –
- According to settled case-law, Article 87(3) gives the Commission a discretion the exercise of which involves economic and
social assessments which must be made in a Community context. See, in particular, Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraph 24, and Case 310/85 Deufil v Commission [1987] ECR 901, paragraph 18.
- 13 –
- .Spain v Commission, cited in footnote 7, paragraph 49.
- 14 –
- Case 223/85 [1987] ECR 4617, paragraph 17.
- 15 –
- Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (hereinafter
‘regulation’) was adopted on 22 March 1999 (cited in footnote 5). The regulation contains binding, general rules of procedure
which apply to aid measures in all sectors. The regulation was adopted with the aim of codifying and reinforcing the Commission’s
previous practice and of increasing transparency and legal certainty.
- 16 –
- Case 120/73 Lorenz [1973] ECR 1471.
- 17 –
- See inter alia Case C-334/99 Germany v Commission [2003] ECR I-1139, Case C-390/98 Banks [2001] ECR I-6117, Case C-99/98 Austria v Commission [2001] ECR I-1101 and Case C-332/98 France v Commission [2000] ECR I-4833.
- 18 –
- Cited in footnote 16.
- 19 –
- Case T-95/96 Gestevisón Telecinco v Commission [1998] ECR II-3407, paragraphs 76 to 79.
- 20 –
- Cited in footnote 14.
- 21 –
- Commission communication pursuant to Article 93(2) of the EC Treaty to other Member States and interested parties concerning
aids which Greece has decided to grant for reimbursement of cooperative debts (OJ 1998 C 107, p. 19).
- 22 –
- Cited in footnote 14.
- 23 –
- OJ 1993 C 307, p. 3.
- 24 –
- Bulletin EC 9-1984 and see fn. 14, point 3.2, third indent, mutatis mutandis (as to the private contribution).
- 25 –
- See aid C 47/95 where Italy obtained from the Council under the procedure of Article 88(2) third subparagraph of the Treaty
an authorisation to grant aid in order to prevent banks from claiming personal assets of cooperative members, in case of bankruptcy
of these cooperatives.
- 26 –
- Cited in footnote 23.
- 27 –
- Case C-295/97 Piaggio [1999] ECR I-3735.
- 28 –
- See Case C-83/98 P France v Ladbroke Racing and Commission [2000] ECR I-3271, paragraph 50.
- 29 –
- Cited in footnote 23.
- 30 –
- Case C-303/88 Italy v Commission [1991] ECR I-1433, paragraph 20.
- 31 –
- Case 234/84 Belgium v Commission [1986] ECR 2263, paragraphs 13-14.
- 32 –
- Information from the Commission – Community guidelines on State aid for rescuing and restructuring firms in difficulty, 23
December 1994 (OJ 1994 C 368, p. 12).
- 33 –
- Information from the Commission (cited in footnote 32, point 3.2.3).
- 34 –
- .Philip Morris v Commission (cited in footnote 12, paragraph 24), Deufil v Commission (cited in footnote 12, paragraph 18) and Case C-169/95 Spain v Commission [1997] ECR I-135, paragraph 18.
- 35 –
- Information from the Commission (cited in footnote 32).
- 36 –
- Commission notice on the method for setting the reference and discount rates (OJ 1997 C 273, p. 3).
- 37 –
- Communication from the Commission concerning State aid C 32/98 (ex NN 22/98) involving aid for debt settlement and consolidation
of agricultural cooperatives and other enterprises through the Agricultural Bank of Greece (cited in footnote 4).
- 38 –
- Cited in footnote 32.
- 39 –
- .Philip Morris (cited in footnote 12) and Case 259/85 France v Commission [1987] ECR 4394.
- 40 –
- Case C-113/00 Spain v Commission [2002] ECR I-7601, paragraph 30.
- 41 –
- See paragraph 106 of the decision.
- 42 –
- Commission notice on the de minimis rule for State aid (96/C 68/06) (OJ 1996 C 68, p. 9).
- 43 –
- See, in particular, Joined Cases 296/82 and 318/82 Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985] ECR 809, paragraph 19, Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraphs 15 and 16, and Case C-56/93 Belgium v Commission [1996] ECR I-723, paragraph 86.
- 44 –
- In Joined Cases 205/82 to 215/82 Deutsche Milchkontor [1983] ECR 2633, paragraph 30, the Court ruled that the principles of the protection of legitimate expectation and assurance
of legal certainty are part of the legal order of the Community. The fact that national legislation provides for the same
principles to be observed in a matter such as the recovery of unduly paid Community aids cannot therefore be considered contrary
to that same legal order.
- 45 –
- See inter alia Case C-142/87 Belgium v Commission (Tubemeuse) [1990] ECR I-959, paragraph 66, Case C-183/91 Commission v Greece [1993] ECR I-3131, paragraph 16, and Case C-39/94 SFEI and Others [1996] ECR I-3547, paragraph 68.
- 46 –
- .Tubemeuse (cited in footnote 45, paragraph 66).
- 47 –
- If this were permitted, Articles 87 and 88 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 those provisions of the Treaty of their
effectiveness. Case C-5/89 Commission v Germany [1990] ECR I-3437, paragraph 17.
- 48 –
- Case C-52/95 Commission v France [1995] ECR I-4443, paragraph 38.
- 49 –
- See also Case C-280/95 Commission v Italy [1998] ECR I-259.
- 50 –
- Case C-348/93 Commission v Italy [1995] ECR I-673, paragraph 17.
