Avis juridique important

Judgment of the Court of 15 June 1993. - Matra SA v Commission of the European Communities. - State aid - Complaint by a competitor - Failure to initiate the investigation procedure - Action for annulment. - Case C-225/91. European Court reports 1993 Page I-03203 Swedish special edition Page I-00213 Finnish special edition Page I-00233

Summary Parties Grounds Decision on costs Operative part

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1. Procedure ° Intervention ° Plea of inadmissibility not raised by the defendant ° Inadmissible

(Statute of the Court of Justice of the EEC, Art. 37(3); Rules of Procedure of the Court of Justice, Art. 93(4))

2. Actions for annulment of measures ° Natural or legal persons ° Measures of direct and individual concern to them ° Commission decision addressed to a Member State finding a State aid to be compatible with the common market ° Action brought by persons concerned within the meaning of Article 93(2) of the Treaty ° Admissibility

(EEC Treaty, Art. 93(2) and (3) and Art. 173, second para.)

3. State aid ° Planned aid ° Initiation of the investigation procedure ° Commission' s discretion ° Reference to the Community context ° Review by the Court ° Limits

(EEC Treaty, Arts 93(3) and 173)

4. State aid ° Planned aid ° Examination by the Commission ° Initial examination and inter partes stage ° Compatibility of an aid with the common market ° Difficulties of assessment ° Commission' s obligation to initiate the inter partes procedure ° Size of the investment or aid ° Not relevant

(EEC Treaty, Art. 93(2) and (3))

5. State aid ° Prohibition ° Exceptions ° Discretion of the Commission and Council ° Limits ° Decision finding an aid compatible with the common market where the effects of the aid contravene specific provisions of the Treaty, especially on competition ° Not permissible ° Obligation to await the outcome of a competition procedure before deciding on the compatibility of an aid ° None

(EEC Treaty, Arts 85 et seq. and 92 et seq.; Council Regulation No 17)

1. Under the third paragraph of Article 37 of the Protocol on the Statute of the Court of Justice of the EEC and Article 93(4) of the Rules of Procedure, an intervener must accept the case as he finds it at the time of his intervention, and the submissions in his application are limited to supporting the submissions of one of the parties. He therefore has no standing to raise a plea of inadmissibility which has not been put forward by the defendant.

2. Persons other than those to whom a decision is addressed may claim to be concerned within the meaning of the second paragraph of Article 173 of the Treaty only if that decision affects them by reason of certain attributes which are particular to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed.

Where, without initiating the procedure under Article 93(2) of the Treaty, the Commission finds on the basis of Article 93(3) that a State aid is compatible with the common market, the persons, undertakings or associations whose interests might be affected by the grant of the aid, in particular competing undertakings and trade associations, and who, as parties concerned, benefit from procedural guarantees if the procedure under Article 93(2) is used, must be permitted to bring an action for the annulment of the decision making that finding.

3. As regards the application of Article 93(3) of the Treaty, the Commission enjoys a wide discretion, the exercise of which involves assessments of an economic and social nature which must be made within a Community context.

In its review of legality under Article 173 of the Treaty, the Court must therefore restrict itself to determining whether the Commission has exceeded the scope of its discretion by a distortion or manifest error of assessment of the facts or by misuse of powers or abuse of process.

4. The procedure under Article 93(2) of the Treaty is essential whenever the Commission has serious difficulties in determining whether an aid is compatible with the common market. The Commission may restrict itself to the preliminary examination under Article 93(3) when taking a decision in favour of an aid only if it is able to satisfy itself after an initial examination that the aid is compatible with the Treaty. If, on the other hand, the initial examination leads the Commission to the opposite conclusion, or does not enable it to overcome all the difficulties involved in determining whether the aid is compatible with the common market, the Commission is under a duty to carry out all the requisite consultations and for that purpose to initiate the procedure provided for in Article 93(2). In this respect, the size of an investment or aid cannot in itself constitute a serious difficulty, as otherwise the Commission would be obliged to initiate the procedure under Article 93(2) whenever the investment or aid exceeded a certain level, which would moreover have to be defined. That is all the more so as the decisive factor is not the amount of the aid so much as its effect on intra-Community trade.

5. While the procedure provided for in Articles 92 and 93 of the Treaty leaves a discretion to the Commission, and under certain conditions to the Council, in coming to a decision on the compatibility of a system of State aid with the requirements of the common market, it is clear from the general scheme of the Treaty that that procedure must never produce a result which is contrary to the specific provisions of the Treaty, and in particular the other provisions which also pursue the objective of undistorted competition in the common market.

Nevertheless, the procedure under Article 85 et seq. and that under Article 92 et seq. of the Treaty are independent procedures governed by specific rules, with the result that, when the Commission is called upon to take a decision on the compatibility of State aid with the common market, it is not obliged to await the outcome of a parallel procedure initiated under Regulation No 17, once it has reached the conclusion, based on an economic analysis of the situation and without any manifest error in the assessment of the facts, that the recipient of the aid is not in contravention of Articles 85 and 86 of the Treaty.

In Case C-225/91,

Matra SA, a company incorporated under French law, whose registered office is in Paris, represented by Mario Siragusa, of the Rome Bar, and Antoine Winckler, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Arendt and Medernach, 8-10 Rue Mathias Hardt,

applicant,

v

Commission of the European Communities, represented by Antonio Abate, Principal Legal Adviser, and Michel Nolin, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Nicola Annecchino, of its Legal Service, Wagner Centre, Kirchberg,

defendant,

supported by

Portuguese Republic, represented by Rui Chancerelle de Machete, of the Lisbon Bar, and Luis Inês Fernandes, Director of the Legal Service of the Directorate General for European Community matters at the Ministry of Foreign Affairs, acting as Agents, assisted by Pedro Manuel Pena Chancerelle de Machete, of the Lisbon Bar, with an address for service in Luxembourg at the Portuguese Embassy, 33 Allée Scheffer,

Ford of Europe Inc., a company incorporated under the law of the State of Delaware (United States of America), with a branch in Brentwood (United Kingdom), and Ford-Werke AG, a company incorporated under German law, whose registered office is in Cologne (Federal Republic of Germany), represented by Wolfgang Schneider, Rechtsanwalt, Frankfurt am Main (Federal Republic of Germany), with an address for service in Luxembourg at the Chambers of Dupong and Konsbruck, 14a Rue des Bains,

and

Volkswagen AG, a company incorporated under German law, whose registered office is in Wolfsburg (Federal Republic of Germany), represented by Rainer Bechtold, Rechtsanwalt, Stuttgart (Federal Republic of Germany), with an address for service in Luxembourg at the Chambers of Loesch and Wolter, 8 Rue Zithe,

interveners,

APPLICATION for the annulment of the Commission' s decision, notified to the Portuguese authorities on 16 July 1991 and to Matra SA on 30 July 1991, not to raise any objection in relation to an aid scheme of the Portuguese Republic for a joint venture between Ford of Europe Inc. and Volkswagen AG to set up a manufacturing unit for multi-purpose vehicles at Setúbal (Portugal),

THE COURT,

composed of: O. Due, President, M. Zuleeg and J.L. Murray (Presidents of Chambers), G.F. Mancini, F.A. Schockweiler, J.C. Moitinho de Almeida, F. Grévisse, M. Diez de Velasco and P.J.G. Kapteyn, Judges,

Advocate General: W. Van Gerven,

Registrar: J.-G. Giraud,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 3 February 1993,

after hearing the Opinion of the Advocate General at the sitting on 28 April 1993,

gives the following

Judgment

1 By application lodged at the Court Registry on 6 September 1991, Matra SA (hereinafter "Matra") brought an action under the second paragraph of Article 173 of the EEC Treaty for the annulment of a decision of the Commission, notified to it on 30 July 1991, not to raise any objection in relation to an aid scheme of the Portuguese Government for a joint venture between Ford of Europe Inc. (hereinafter "Ford") and Volkswagen AG (hereinafter "VW") to set up a manufacturing unit for multi-purpose vehicles at Setúbal (Portugal).

2 It is apparent from the case file that on 26 March 1991 the Portuguese Republic, in accordance with Article 93(3) of the Treaty and the Community framework on State aid to the motor vehicle industry (OJ 1989 C 123, p. 3), notified to the Commission an aid scheme for Newco, an undertaking set up by Ford and VW in equal shares, for the establishment of a factory for multi-purpose vehicles at Setúbal for the period from 1991 to 1995.

3 The aid notified amounts to ESC 97 440 million against a total investment cost of ESC 454 000 million, of which ESC 297 000 million confers entitlement to aid. It consists of a regional subsidy of ESC 89 100 million paid under the Sistema de Incentivos de Base Regional (SIBR), the Portuguese regional aid system approved by the Commission in 1988, and tax reliefs of ESC 8 340 million granted as from 1997. Also envisaged are a training programme for employees organized jointly by the Portuguese Government and Newco, costing ESC 36 000 million, of which 90% is to be financed by the Portuguese Government, and various investments in infra-structure relating to road construction, water and electricity supply and waste-processing.

4 Following a complaint lodged by Matra on 26 June 1991 alleging infringements of Article 92 et seq. of the Treaty by the Portuguese Government and of Article 85 of the Treaty by Ford and VW, a meeting took place between the Commission and Matra at which the latter was heard and the Commission explained why the procedure under Article 93(2) of the Treaty had not been initiated.

5 On 16 July 1991 the Commission informed the Portuguese Government that it had no objections to the aid scheme notified.

6 On 30 July 1991 the Commission sent Matra, for information, the decision of 16 July 1991.

7 By order of 4 December 1991 (Case C-225/91 R Matra v Commission [1991] ECR I-5823), the President of the Court dismissed Matra' s application for suspension of operation of the decision whose annulment is sought in the present application.

8 By orders of 8 April 1992 the Portuguese Republic and Ford of Europe Inc., Ford-Werke AG and Volkswagen AG were given leave to intervene in the proceedings in support of the form of order sought by the Commission.

9 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the pleas in law and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

Admissibility

15 In order to establish whether those conditions are fulfilled in the present case, the aim of the procedures provided for in Article 93(2) and 93(3) of the Treaty should be borne in mind.

Substance

21 In support of its application, Matra puts forward three pleas in law: manifest error of assessment of the aid in question, breach of procedural rules, and failure to have regard to certain general principles of law.

The plea of manifest error of assessment

22 In connection with this plea for annulment, Matra relies on three complaints alleging manifestly erroneous assessment by the Commission of the risk of creating excess production capacity and of the regional handicap, and manifestly erroneous classification of the infrastructure and training aids.

26 As regards the evaluation of the risk of creating excess production capacity, it must be stated, as the Advocate General pointed out in paragraphs 13 to 15 of his Opinion, that the Commission carried out a subtle and detailed examination of this question before concluding that no such risk exists. In that examination it referred in particular to market analyses produced by independent experts which envisaged a considerable expansion of the multi-purpose vehicle market until the mid-1990' s, and to foreseeable developments relating to the production of the various manufacturers concerned, and concluded that the aid in question was not likely to have a substantial effect on the balance of supply and demand.

27 With respect to the assessment of the regional handicap, the Commission also undertook an examination and an evaluation of the various aspects of the disadvantages arising from an investment in the Setúbal region. It noted in particular the geographical remoteness of the Setúbal site from the principal markets and the relative economic backwardness of that region, factors which increase the cost of transport, storage, non-local employees and infrastructure, and found that that disadvantage was compensated for only in part by lower labour and construction costs. Furthermore, the aid granted falls considerably short of the rates authorized under the SIBR scheme approved by the Commission.

29 With respect to the investment in infrastructure and the training programme, it must be emphasized that the Commission found in the contested decision that the infrastructure and training measures would not benefit the joint venture exclusively, enabling it to conclude that the financial assistance granted by the Portuguese Republic should not be regarded as State aid.

30 Matra has thus been unable to demonstrate that, in that analysis and in its consequential appraisal of the financial assistance, the Commission carried out a manifestly erroneous assessment of the economic data.

31 The first plea in law must therefore be rejected.

The plea alleging breach of procedural rules

32 Matra submits that in view of the serious difficulties involved in assessing the compatibility with the common market of the aid at issue, the Commission was under an obligation to initiate the procedure under Article 93(2) of the Treaty, and should not have adopted a decision without awaiting the outcome of the procedure initiated under Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-1962, p. 87) with regard to the agreement between Ford and VW. Matra also submits that the Commission did not provide an adequate statement of reasons in the contested decision.

35 The serious difficulties of assessment encountered by the Commission include, according to Matra, the scale of the project and the substantial amount of the aid, the risk of creating excess production capacity and the need to request the Portuguese Republic to amend the initial aid scheme.

37 As regards the assessment of the risk of creating excess production capacity, the Court has already stated, in paragraph 26 above, that the Commission carried out an economic analysis of that question, relying in particular on a study by independent experts, and that it did not exceed the bounds of its discretion to assess economic data.

38 As regards the course of the procedure, the Commission rightly states that the Portuguese Government did no more than supplement the scheme originally notified with information and details which cannot be regarded as substantial amendments complying with conditions imposed by the Commission. Matra has thus failed to show that, in keeping with its contention, the use of the infrastructure by third parties and the availability of the training programme to undertakings other than Newco were introduced at the request of the Commission. Finally, it must be stated that the production by the Portuguese Republic of an annual report is intended solely to enable the Commission to examine whether that Member State has complied with the terms for granting aid, and cannot therefore be regarded as evidence pointing to the existence of serious difficulties of assessment.

39 In those circumstances, it must be held that the Commission did not act unlawfully by considering that it faced no serious difficulties in assessing whether the aid was compatible with the common market, and that consequently it was not obliged to initiate the procedure under Article 93(2) of the Treaty.

49 In the light of the foregoing considerations, the contested decision must be regarded as containing an adequate statement of reasons.

50 Accordingly, the second plea in law must also be rejected.

The plea alleging breach of certain general principles of law

51 In this plea in law, Matra puts forward two complaints alleging breach of the rights of the defence and failure on the part of the Commission to observe the principle of sound administration.

53 The Treaty does not, on the other hand, lay down any such obligation where the Commission is able lawfully to restrict itself to finding that aid is compatible in the preliminary stage provided for by Article 93(3) of the Treaty.

54 In those circumstances, since it is clear that the Commission was entitled not to initiate the procedure under Article 93(2) of the Treaty, Matra is not justified in pleading a breach of the rights of the defence.

55 As regards the complaint alleging an infringement of the principle of sound administration, Matra reiterates the charge that there was a failure to initiate the procedure under Article 93(2), and it suffices to refer in that respect to paragraph 32 et seq. of this judgment.

56 In those circumstances, the third plea in law must also be rejected.

57 Since none of Matra' s pleas has been upheld, the application must be dismissed in its entirety.

Costs

58 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the applicant has been unsuccessful, it must be ordered to pay the costs, including the costs of the proceedings for interim measures.

On those grounds,

THE COURT

hereby:

1. Dismisses the application;

2. Orders the applicant to pay the costs, including the costs of the proceedings for interim measures.