Case C-181/02 P

Commission of the European Communities

v

Kvaerner Warnow Werft GmbH

(Appeal – State aid – Shipbuilding – Commission decisions authorising the aid – Condition – Compliance with a ‘capacity restriction’ – Definition)

Summary of the Judgment

1. State aid – Prohibition – Derogations – Aid to shipbuilding – Directive 90/684 – Aid for East German shipyards – Criteria governing derogations – Aim of reducing excess capacity – Aim applicable to the means of production and not production itself – Commission’s discretion

(Council Directives 90/684, Art. 10a(2)(a), and 92/68)

2. Appeals – Pleas in law – Plea against a ground of the judgment not necessary to support the operative part – Plea inoperative

1. For the application of Directive 90/684 on aid to shipbuilding and Directive 92/68 amending Directive 90/684, it cannot be deduced from the aim of reducing ‘excess capacity’, which applies to the means of production which the shipyards are likely to use and not to their production itself, that a capacity restriction laid down in the decisions taken on the basis of those directives implies of itself a restriction on production.

Since the Community legislature had thus refrained from laying down itself in Directive 90/684 how the notion of capacity of shipyards was to be defined and the means by which the reduction in their excess capacity was to be achieved, the Commission had a certain measure of discretion in setting the conditions to which the proposed aid was to be subject in order to ensure that it remained compatible with the common market within the framework of the derogation scheme put into place by that directive in favour of the shipyards and did not prejudice the aim of reducing excess capacity set out in Article 10a of the directive.

However, it was for the Commission to state those conditions clearly and unequivocally.

(see paras 38, 40-41)

2. In the context of an appeal, a plea in law raised against a superfluous ground in a judgment of the Court of First Instance, the operative part of which is sufficiently founded in law on other grounds, must be rejected.

(see para. 49)

JUDGMENT OF THE COURT (Fifth Chamber) 29 April 2004 (1)

(Appeal – State aid – Shipbuilding – Commission decisions authorising payment of aid – Condition – Compliance with a ‘capacity restriction’ – Definition)

In Case C-181/02 P,

appellant,

APPEAL against the judgment of the Court of First Instance of the European Communities (Fourth Chamber, Extended Composition) of 28 February 2002 in Joined Cases T-227/99 and T-134/00

the other party to the proceedings being:

applicant at first instance,

THE COURT (Fifth Chamber),,

composed of: C.W.A. Timmermans, acting as President of the Fifth Chamber, A. La Pergola (Rapporteur) and S. von Bahr, Judges,

Advocate General: P. Léger,

after hearing oral argument from the parties at the hearing on 10 July 2003,

after hearing the Opinion of the Advocate General at the sitting on 27 November 2003,

gives the following

The following may be considered to be compatible with the common market:

...

‘1. Investment aid … may not be granted for the creation of new shipyards or for investment in existing yards unless it is linked to a restructuring plan which does not involve any increase in the shipbuilding capacity of the yard or unless it is directly linked to a corresponding irreversible reduction in the capacity of other yards in the same Member State over the same period.

…

3. … investment aid may be deemed compatible with the common market provided that

‘… the shipbuilding industry is important for the structural development of the coastal region of the territories of the former German Democratic Republic;

… the shipbuilding industry, as it existed in those territories at the time of their incorporation into the Community, requires urgent and comprehensive restructuring in order to become competitive; … the direct application of the common maximum ceiling for production aid does not allow for such measures and a special transitional arrangement should therefore be introduced to enable the shipbuilding industry in those territories to operate during the period of gradual restructuring which should enable it to comply with the State aid rules applicable throughout the Community;

… moreover, competition considerations dictate that the sector of the shipbuilding industry of the territories in question should contribute significantly to the reduction of the excess capacity which, worldwide, continues to impede the restoration of normal market conditions for the shipbuilding industry;’.

N 692/D/91 ─ Commission letter of 3 March 1993 (SG (93) D/4052)

─ DEM 45.5 million operating aid;

─ DEM 82.4 million operating aid in the form of an exemption from previous liabilities;

─ DEM 127.5 million investment aid;

─ DEM 27 million closure aid;

N 692/J/91 ─ Commission letter of 17 January 1994 (SG (94) D/567)

─ DEM 617.1 million operating aid;

N 1/95 ─ Commission letter of 20 February 1995 (SG (95) D/1818)

─ DEM 222.5 million investment aid;

N 637/95 ─ Commission letter of 18 October 1995 (SG (95) D/12821)

─ DEM 66.9 million investment aid;

N 797/95 ─ Commission letter of 11 December 1995 (SG (95) D/15969)

─ DEM 58 million investment aid.

The parties’ arguments

The Court’s assessment

On those grounds,

THE COURT (Fifth Chamber)

hereby:

Timmermans

La Pergola

von Bahr

Delivered in open court in Luxembourg on 29 April 2004.

R. Grass

V. Skouris

Registrar

President