The Court of Justice began its activity on State aid law with two cases regarding tax measures. In F.J. Pape v. Minister van Landbouw (ECJ of 13 January, C-175/02), the Court examined a levy on surplus manure imposed on a farmer (Mr Pape). According to Mr Pape, a part of the levy was used in breach of the prohibition on the implementation of the planned aid measures (Art. 88(3) EC) in favour of the transport of animal manure. The Court stated that for a tax, or part of a tax, to be regarded as an integral part of an aid measure, its revenue must have a direct impact on the amount of the aid. In this case, the authority collecting the tax could exercise discretion in allocating the tax revenue for various purposes, including that of animal manure transport. Therefore, the revenue from the tax has no direct impact on the amount of the aid, so that the measure is not a State aid within the meaning of Art. 87(1) EC. Similarly, the Court held in Streekgewest Westelijk Noord-Brabant v. Staatssecretaris van Financën (ECJ of 13 January, C-174/02) that a tax on waste does not fall within the scope of the provisions of the Treaty concerning State aid unless the tax constitutes an integral part of the aid, in the sense that the revenue from the tax is necessarily allocated for the financing of the aid. Since the application of the tax exemption and its extent do not depend on the tax revenue, the measure is not State aid within the meaning of Art. 87(1) EC. As regards the direct effect of the last sentence of Art. 88(3) EC, the Court found that it must be interpreted as meaning that it may be relied on by a person liable to a tax constituting an aid, whether or not the person is affected by the distortion of competition resulting from that aid measure.
In Heiser v. Finanzamt Innsbruck (ECJ of 3 March, C-172/03) - another case involving tax exemption and deduction - the Court had occasion to clarify the concept of the effect on trade between Member States. According to the Court, "there is no threshold or percentage below which it may be considered that trade between Member States is not affected". First, the small amount of the aid or the relatively small size of the undertaking are not factors that exclude the possibility that trade between Member States might be affected. Second, the fact that the services - in this case medical care services - benefiting from the aid are provided locally is not relevant. The local or regional character of the services supplied or the scale of the field of activity concerned do not exclude the possibility that trade between Member States might be affected. When it is conceivable that medical practitioners might be in competition with their counterparts established in another Member State, the condition regarding the effect on trade must be considered fulfilled. As regards the condition of the distortion of competition, the Court takes the view that "aid which is intended to release an undertaking from costs which it would normally have had to bear in its day-to-day management or normal activities" distorts competition. The argument according to which medical practitioners do not face competition based on prices, but on criteria such as quality and confidence, cannot be upheld in so far as the price is still liable to have a substantial influence on the choice of medical practitioners.
In Commission v. Hellenic Republic (ECJ of 12 May, C-415/03) the Court declared that the Hellenic Republic had failed to fulfil its obligations to recover aid found to be unlawful. First, the transfer by the Greek authorities of all the assets of Olympic Airways, free of all debts, to a new company (also known as Olympic Airlines) made it impossible, under the national law, to recover debts from the former Olympic Airways. Second, the mere existence of legal, political or practical difficulties involved in implementing the Commission’s decision does not fulfil the condition that it be absolutely impossible to implement it. In addition, the Court held that the lack of specification regarding the exact amount to be recovered does not justify the government’s failure to fulfil its obligations. It is sufficient for the Commission to include information enabling the Member State to itself fix that amount.
The case Saxonia Edelmetalle GmbH and ZEMAG GmbH v. Commission (CFI of 11 May, T-111/01 and T-133/01) raised interesting questions regarding misuse of aid and its recovery. Misuse of aid arises when aid is used by the recipient undertaking in contravention of Commission decision. Under Art. 88(2) EC, where the Commission finds that existing aid is being misused, it shall decide that the State concerned shall abolish or alter such aid. The burden of proof lies on the Commission. However, the Member State must provide the necessary information in order to enable the Commission to determine whether the aid is misused or not. The Court held that according to Regulation 659/1999, if the Member State does not provide the information requested, the Commission is entitled to declare that the aid is misused by the beneficiary. In the present case, the Commission found that a part of the aid granted exclusively to the subsidiaries stayed within the holding company, which was not a beneficiary of the authorised aid. Due to lack of information, the Commission was not able to determine the precise use made of the aid. The Court held, first, that in absence of information it cannot be expected from the Commission to describe in detail the effective use of the amount of the aid ; second, more importantly, that the Commission is not obliged to undertake on-site visiting before taking a decision on misuse of aid. The misuse of the aid by the holding company raises the question : from whom is recovery to be claimed ? In that regard the CFI held that recovery is to be claimed from the parent company, not the applicants (subsidiaries) which had not benefited from the amount of the aid misused. The fact that the subsidiaries are the beneficiaries of the original aid is not relevant.
In Confédération nationale du Crédit Mutuel v. Commission (CFI of 18 January, T-93/02) the CFI annulled the Commission’s decision declaring the incompatibility of the aid granted to Crédit Mutuel since that decision fails to exactly identify which measures constitute State aid. The analysis of the Commission was ambiguous and incomplete. The CFI stated that the obligation to state reasons is an essential procedural requirement ; it follows that the insufficient reasoning with regard to the identification of the aid may, as in this case, lead the Courts to annul a Commission’s decision.
The case Sniace v. Commission (CFI of 14 April, T-88/01) concerns the locus standi of individual applicants. Under Art. 230(4) EC a natural or legal person may institute proceedings against a decision addressed to another person only if that decision is of direct and individual concern to him. As regards the question of whether a person is individually concerned by the contested decision in the field of State aid, an undertaking competing with the recipient of the aid cannot rely solely on its status as a competitor but must additionally show that circumstances distinguish it in a similar way to the recipient : therefore, the Court must first consider the extent of any participation by it in the procedure and, second, the extent to which that applicant’s position on the market was affected by the aid. Regarding this latter condition, it is necessary to define the competitive relationship between the applicant and the recipient. In the present case, the Court analysed the limits of the market for the products in question by discussing the substitutability of the products. In any event, the CFI found that the allegations of the applicant were insufficiently established, that it did not give any indication of the losses or other negative consequences and that it merely made allegations which were insufficiently substantiated. On those grounds the action was declared inadmissible.
In Italian Republic v. Commission (ECJ of 10 May, C-400/99) the Court discussed the question of the initiation of the procedure under Art. 88(2) EC. In view of the uncertainty as to the existence of aid, the Italian Government considered that the Commission was not entitled to initiate a procedure entailing suspension of the measure at issue. The Court held that, although the Commission must undertake a sufficient examination on the basis of the information notified to it, it is the responsibility of Member States to provide the Commission with the necessary information. If the information is not sufficient to overturn doubts as to the existence of aid and its compatibility with the common market, the Commission must initiate the procedure provided for in Art. 88(2) EC. By the same token, the Commission must undertake an adequate examination of whether the measure constitutes new aid or existing aid, the former having greater legal consequences for Member States. The Court reminds however the principle of the sincere cooperation between Member States and the Institution, as embodied in Art. 10 EC.
In two other cases the Court of First Instance dealt with questions relating to aid for rescuing and restructuring firms in difficulty. In Regione autonoma della Sardegna (CFI of 15 June, T-171/02) the Court dismissed the actions of the Sardegna Region against the Commission’s decision declaring the aid scheme for the restructuring of holdings in difficulty in the protected crop sector incompatible with the common market. The case discussed several procedural issues. The Court pointed out that the conversion of new aid into existing aid is subject to two sufficient and necessary conditions : first, the Commission must not initiate the formal investigation procedure within two months of receipt of the complete notification (time limit for preliminary examination) ; second, the Member State must give prior notice of implementation of its plans to the Commission. The Court also stated that the principle of legitimate expectation can only be pleaded once a positive decision is adopted by the Commission. As to the pleas of law, the Court held that for the application of Art. 87(1) EC, it is not necessary to determine the actual effect of an aid, but only whether the project is liable to affect trade between Member States. In addition, neither the small amount of aid nor the modest size of eligible firms precludes a planned aid scheme from being liable to affect trade between Member States and to distort or threaten to distort competition. Finally, the Court reiterated the wide discretion conferred upon the Commission under Art. 87(3) EC : it is for the Commission to assess whether to adopt a conditional or a negative decision. The argument of the applicant, according to which the Commission wrongly adopted a negative decision instead of a conditional one, was dismissed. In Corsica Ferries France (CFI of 15 June, T-349/03) the CFI annulled a Commission decision authorising a restructuring aid to SNCM. The CFI held that the amount of the restructuring aid granted to the SNCM went beyond the strict minimum of the restructuring costs. In calculating the needs of the undertaking in difficulty the Commission should take into account any revenue from the sale of assets that are not essential to the firm’s survival, which constitutes the contribution of the beneficiary to the restructuring plan. The Commission had accepted a lower contribution from SNCM, which lead to a greater amount of aid for restructuring.
In Fred Olsen SA v. Commission (CFI of 15 June T-17/02) the applicant challenged the Commission decision not to contest the aid paid to Transmediterránea in the form of public service compensation for the maritime cabotage services provided by that company. As regards the first argument, that is to say the payment is deemed existing aid (aid which existed prior to the accession of Spain), the Court held that the Commission decision is not vitiated by an error of assessment inasmuch as it considers that certain expenditure relating to staff reduction arose from the implementation of a public service contract entered into prior to the accession of Spain to the EU. As regards the second argument, that is to say the aid infringes Art. 86(2) EC, the Court held first that the fact that Transmediterránea made an application for the public service concession does not mean that there is no act emanating from the public authorities ; second, the Court asserted the large discretion of Member States regrading the definition of services of general interest. The question of whether it was necessary to declare certain routes as being of general interest can be called into question only in case of manifest error of assessment. Finally, the Court rejected the argument of Fred Olsen SA according to which the routes were not awarded by means of an open tender procedure. In that respect the Court asserted that Member States are under no obligation to invite open tenders for the allocation of public service contracts.
Finally, Kingdom of Belgium v. Commission (ECJ of 14 April, C-110/03). The Court of Justice dismissed the action of Belgium for the annulment of Commission Regulation No 2204/2002 of 12 December 2002 on the application of Articles 87 and 88 of the EC Treaty to State aid for employment (OJ L 337, 13.12.2002, p. 3).
First, Belgium referred to the principle of legal certainty, alleging lack of clarity for the contested regulation. The Court held that where a degree of uncertainty is inherent in a rule of law, the examination of it must be confined to the question whether the legal measure is so ambiguous as to make it difficult to determine the scope or meaning of any such rule. The Court did not agree with the submissions of the Kingdom of Belgium regarding the lack of clarity deriving from the overlap of provisions, or from the lack of clarity of the definition of the scope of application as well as of the different provisions of the Regulation. Belgium claimed unsuccessfully that the Regulation also contravened the principles of subsidiarity and of proportionality. Finally, the decision discussed the question whether Art. 87(3) EC is a sufficient legal basis for the Regulation. This interesting decision underlines the difficulties inherent in the drafting and the application of rules on State aid. Furthermore, it provides a useful interpretation of several provisions of the Regulation 2204/2002.
Reproduction autorisée avec indication de la source :
Pranvera Këllezi, www.unige.ch/ceje, actualité n°: 239 du 29 juin 2005.