Case C-529/09

European Commission

v

Kingdom of Spain

‛Failure of a Member State to fulfil obligations — State aid incompatible with the common market — Obligation of recovery — Failure to comply with a Commission decision — Objection of inadmissibility — Res judicata by means of a previous judgment of the Court’

Summary — Judgment of the Court (First Chamber), 24 January 2013

1. Procedure — Res judicata — Scope — Action for failure to fulfil obligations concerning State aid

   (Arts 108(2), second subpara., TFEU and 258 TFEU)

2. State aid — Recovery of unlawful aid — Obligation — Duty to implement the decision of the Commission immediately and effectively

   (Arts 108(2) TFEU and 288 TFEU; Council Regulation No 659/1999, Art. 14(3))

3. Actions for failure to fulfil obligations — Non-compliance with a Commission decision concerning State aid — Duty to recover the aid granted — Reference period — Period established in the decision which has not been implemented or, subsequently, by the Commission

   (Arts 108(2), second subpara., TFEU and 288 TFEU)

4. Actions for failure to fulfil obligations — Non-compliance with the obligation to recover unlawful aid — Defences — Absolute impossibility of implementation — Criteria for assessment — Difficulties in implementing — Obligation for the Member State to take real steps with regard to the undertakings concerned and to propose to the Commission alternative courses of action to enable such difficulties to be overcome

   (Art. 108(2) TFEU)

5. State aid — Recovery of unlawful aid — Undertaking which received unlawful aid and has become insolvent — Creation of a new undertaking to continue the activities of the insolvent undertaking — Repayment incumbent on the new undertaking — Conditions

   (Art. 108(2) TFEU)

1.  The principle of res judicata, which is also applicable to proceedings for failure to fulfil obligations, means that the res judicata which attaches to a judgment may constitute an obstacle to the admissibility of an action if, having regard to the factual and legal background of the two sets of proceedings for failure to fulfil obligations concerned, the two cases are essentially identical in fact and in law.

   As regards in particular the field of State aid, the means of redress provided for by the second subparagraph of Article 108(2) TFEU is merely a variant of the action for failure to fulfil obligations, specifically adapted to the special problems which State aid poses for competition within the internal market. In the context of proceedings under Article 258 TFEU, the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation in the Member State as it stood at the end of the period laid down in the reasoned opinion and any subsequent changes cannot be taken into consideration. The relevant date for the assessment of a failure to fulfil obligations brought pursuant to the second subparagraph of Article 108(2) TFEU is as a rule that set out in the decision of the Commission which that Member State denies not implementing. That provision does not provide for a pre-litigation phase in contrast to Article 258 TFEU and therefore the Commission does not issue a reasoned opinion allowing the Member State concerned a certain period within which to comply with EU law.

   In a case where the Commission has fixed a period for the Member State to comply with its obligations under a decision concerning State aid and where, after an earlier action for failure to fulfil obligations, in the course of long discussions between the parties regarding the recovery of the aid at issue, it prescribes a new period, it is the latter period which is relevant for the purpose of assessing the failure to fulfil obligations in the subsequent case.

   Consequently, it cannot reasonably be claimed that the subsequent case and that which gave rise to the previous judgment of the Court have the same subject-matter, as the relevant date in the subsequent case is far later than that on which the previous judgment was delivered.

   (see paras 64, 65, 67-71, 74-78)

2.  See the text of the decision.

   (see paras 90-92)

3.  See the text of the decision.

   (see para. 95)

4.  See the text of the decision.

   (see paras 99, 101)

5.  In a situation where an undertaking which has received aid declared unlawful and incompatible with the common market has been declared insolvent, the restoration of the previous situation and the elimination of the distortion of competition resulting from the unlawfully paid aid may in principle be achieved through registration of the liability relating to the repayment of such aid in the schedule of liabilities. However, such registration can meet the recovery obligation only if, where the State authorities are unable to recover the full amount of aid, the insolvency proceedings result in the winding up of the undertaking which received the unlawful aid, that is to say, in the definitive cessation of its activities.

   Where the undertaking which received the unlawful aid is insolvent and a new company has been created to continue the activities of the insolvent undertaking, the pursuit of those activities may, where the aid concerned is not recovered in its entirety, prolong the distortion of competition brought about by the competitive advantage which that undertaking enjoyed in the market as compared with its competitors. In those circumstances, such a newly created company may, if it retains that advantage, be required to repay the aid in question. That is inter alia the case where it is established that that company continues genuinely to derive a competitive advantage because of the receipt of that aid, especially where it acquires the assets of the undertaking in liquidation without paying the market price in return or where it is established that the effect of that company’s creation is circumvention of the obligation to repay the aid. That applies, in particular, if the payment of a market price is not sufficient to cancel out the competitive advantage linked to receipt of the unlawful aid.

   (see paras 103, 104, 107, 109)

Case C-529/09

European Commission

v

Kingdom of Spain

‛Failure of a Member State to fulfil obligations — State aid incompatible with the common market — Obligation of recovery — Failure to comply with a Commission decision — Objection of inadmissibility — Res judicata by means of a previous judgment of the Court’

Summary — Judgment of the Court (First Chamber), 24 January 2013

1. Procedure — Res judicata — Scope — Action for failure to fulfil obligations concerning State aid

   (Arts 108(2), second subpara., TFEU and 258 TFEU)

2. State aid — Recovery of unlawful aid — Obligation — Duty to implement the decision of the Commission immediately and effectively

   (Arts 108(2) TFEU and 288 TFEU; Council Regulation No 659/1999, Art. 14(3))

3. Actions for failure to fulfil obligations — Non-compliance with a Commission decision concerning State aid — Duty to recover the aid granted — Reference period — Period established in the decision which has not been implemented or, subsequently, by the Commission

   (Arts 108(2), second subpara., TFEU and 288 TFEU)

4. Actions for failure to fulfil obligations — Non-compliance with the obligation to recover unlawful aid — Defences — Absolute impossibility of implementation — Criteria for assessment — Difficulties in implementing — Obligation for the Member State to take real steps with regard to the undertakings concerned and to propose to the Commission alternative courses of action to enable such difficulties to be overcome

   (Art. 108(2) TFEU)

5. State aid — Recovery of unlawful aid — Undertaking which received unlawful aid and has become insolvent — Creation of a new undertaking to continue the activities of the insolvent undertaking — Repayment incumbent on the new undertaking — Conditions

   (Art. 108(2) TFEU)

1.  The principle of res judicata, which is also applicable to proceedings for failure to fulfil obligations, means that the res judicata which attaches to a judgment may constitute an obstacle to the admissibility of an action if, having regard to the factual and legal background of the two sets of proceedings for failure to fulfil obligations concerned, the two cases are essentially identical in fact and in law.

   As regards in particular the field of State aid, the means of redress provided for by the second subparagraph of Article 108(2) TFEU is merely a variant of the action for failure to fulfil obligations, specifically adapted to the special problems which State aid poses for competition within the internal market. In the context of proceedings under Article 258 TFEU, the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation in the Member State as it stood at the end of the period laid down in the reasoned opinion and any subsequent changes cannot be taken into consideration. The relevant date for the assessment of a failure to fulfil obligations brought pursuant to the second subparagraph of Article 108(2) TFEU is as a rule that set out in the decision of the Commission which that Member State denies not implementing. That provision does not provide for a pre-litigation phase in contrast to Article 258 TFEU and therefore the Commission does not issue a reasoned opinion allowing the Member State concerned a certain period within which to comply with EU law.

   In a case where the Commission has fixed a period for the Member State to comply with its obligations under a decision concerning State aid and where, after an earlier action for failure to fulfil obligations, in the course of long discussions between the parties regarding the recovery of the aid at issue, it prescribes a new period, it is the latter period which is relevant for the purpose of assessing the failure to fulfil obligations in the subsequent case.

   Consequently, it cannot reasonably be claimed that the subsequent case and that which gave rise to the previous judgment of the Court have the same subject-matter, as the relevant date in the subsequent case is far later than that on which the previous judgment was delivered.

   (see paras 64, 65, 67-71, 74-78)

2.  See the text of the decision.

   (see paras 90-92)

3.  See the text of the decision.

   (see para. 95)

4.  See the text of the decision.

   (see paras 99, 101)

5.  In a situation where an undertaking which has received aid declared unlawful and incompatible with the common market has been declared insolvent, the restoration of the previous situation and the elimination of the distortion of competition resulting from the unlawfully paid aid may in principle be achieved through registration of the liability relating to the repayment of such aid in the schedule of liabilities. However, such registration can meet the recovery obligation only if, where the State authorities are unable to recover the full amount of aid, the insolvency proceedings result in the winding up of the undertaking which received the unlawful aid, that is to say, in the definitive cessation of its activities.

   Where the undertaking which received the unlawful aid is insolvent and a new company has been created to continue the activities of the insolvent undertaking, the pursuit of those activities may, where the aid concerned is not recovered in its entirety, prolong the distortion of competition brought about by the competitive advantage which that undertaking enjoyed in the market as compared with its competitors. In those circumstances, such a newly created company may, if it retains that advantage, be required to repay the aid in question. That is inter alia the case where it is established that that company continues genuinely to derive a competitive advantage because of the receipt of that aid, especially where it acquires the assets of the undertaking in liquidation without paying the market price in return or where it is established that the effect of that company’s creation is circumvention of the obligation to repay the aid. That applies, in particular, if the payment of a market price is not sufficient to cancel out the competitive advantage linked to receipt of the unlawful aid.

   (see paras 103, 104, 107, 109)