Avis juridique important

Order of the President of the Court of First Instance of 15 July 1994. - Association des Aciéries Européennes Indépendantes v Commission of the European Communities. - State aid - ECSC Treaty - Procedure for interim relief - Suspension of operation of a measure - Interim measures. - Case T-239/94 R. European Court reports 1994 Page II-00703

Parties Grounds Operative part

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Application for interim measures ° Suspension of operation of a measure ° Suspension of the operation of decisions authorizing the grant of aid to steel undertakings ° Conditions for granting ° Serious and irreparable damage ° Materialization of the damage dependent on future and uncertain events ° Damage of a general nature to the structure of competition ° No link with the personal situation of the applicant or its associates ° Balancing of all the interests involved

(ECSC Treaty, Art. 39; Rules of Procedure of the Court of First Instance, Art. 104(2))

In Case T-239/94 R,

Association des Aciéries Européennes Indépendantes (EISA), established in Brussels, represented by Alexandre Vandencasteele, of the Brussels Bar, with an address for service in Luxembourg at the Chambers of Ernest Arendt, 8-10 Rue Mathias Hardt,

applicant,

v

Commission of the European Communities, represented by Michel Nolin and Ben Smulders, of the Commission' s Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Georgios Kremlis, also of its Legal Service, Wagner Centre, Kirchberg,

defendant,

APPLICATION for the suspension of the operation of Article 1 of Commission Decisions 94/256/ECSC to 94/261/ECSC of 12 April 1994 concerning aid to be granted by various Member States to steel undertakings within their respective territories (OJ 1994 L 112, pp. 45, 52, 58, 64, 71 and 77 respectively),

THE PRESIDENT OF THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES

makes the following

Order

Facts and procedure

1 By application received at the Registry of the Court of First Instance on 6 June 1994, the Association des Aciéries Européennes Indépendantes ("EISA") brought an action under Article 33 of the Treaty establishing the European Coal and Steel Community ("the ECSC Treaty") for the annulment of the Commission decisions of 12 April 1994 authorizing:

° the aid to be granted by Germany to the steel company EKO Stahl AG, Eisenhuettenstadt (Decision 94/256/ECSC, OJ 1994 L 112, p. 45);

° the aid to be granted by Portugal to the steel company Siderúrgia Nacional (Decision 94/257/ECSC, OJ 1994 L 112, p. 52);

° the aid to be granted by Spain to the public integrated steel company Corporación de la Siderurgía Integral (Decision 94/258/ECSC, OJ 1994 L 112, p. 58);

° the aid to be granted by Italy to the public steel sector (Ilva Group) (Decision 94/259/ECSC, OJ 1994 L 112, p. 64);

° the aid to be granted by Germany to the steel company Saechsische Edelstahwerke GmbH, Freital/Sachsen (Decision 94/260/ECSC, OJ 1994 L 112, p. 71);

° the aid to be granted by Spain to the special steel company Sidenor (Decision 94/261/ECSC, OJ 1994 L 112, p. 77).

2 By a separate document received at the Registry of the Court of First Instance on the same date the applicant applied, under Article 39 of the ECSC Treaty, for suspension of the operation of Article 1 of each of the contested decisions inasmuch as they declare the aid in question to be compatible with the common market and accordingly authorize that aid.

3 The Commission submitted its written observations on this application for interim measures on 24 June 1994. The parties presented oral argument on 6 July 1994.

4 Before the merits of the present application are examined, it is appropriate to summarize the facts underlying the dispute before the Court, as set out in the parties' written submissions and their oral observations at the hearing of 6 July 1994.

5 The contested decisions were adopted by the Commission on the basis of the first and second paragraphs of Article 95 of the ECSC Treaty. The first recital in the preamble to each decision is the same and refers to the aggravation of the financial situation of the majority of steel companies in the Community as a result of the collapse in prices resulting from serious imbalances between supply and demand in the international market brought about by a general slowdown in the economy and an unfavourable situation in the international markets.

6 According to the Commission, the present "Aid Code", comprising the Community rules on aid for the steel industry, as laid down in general decisions likewise based on the first and second paragraphs of Article 95 of the Treaty, did not constitute an adequate framework for the contested decisions in so far as it does not make it possible to authorize aid for operation or aid for reconstruction without closures. The contested decisions were therefore adopted on an ad hoc basis by the Commission, with the assent of the Council, in connection with a new plan for restructuring of the sector.

7 The approval of the abovementioned aid was made subject to a number of conditions, in particular the obligation to reduce production capacities in proportion to the aid granted, involving a total of some 5.5 million tonnes of hot-rolled products a year. The objective set by the Commission is to achieve a reduction of about 750 000 tonnes for each 1 000 million ECUs paid by way of aid. Over a period of five years, the beneficiary undertakings must not increase their production capacity, under the approved restructuring plans, except in the case of increases in productivity.

Law

8 Pursuant to the combined provisions of the second paragraph of Article 39 of the ECSC Treaty and Article 4 of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p. 1), as amended by Council Decision 93/350/Euratom, ECSC, EEC of 8 June 1993 (OJ 1993 L 144, p. 21), the Court may, if it considers that the circumstances so require, order suspension of the operation of the contested measure or prescribe the necessary interim measures.

9 The second paragraph of Article 104 of the Rules of Procedure of the Court of First Instance provides that applications regarding the interim measures referred to in the second paragraph of Article 39 of the Treaty must specify the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case for the measure applied for. The measures applied for must be provisional in that they must not prejudge the decision on the substance (see the order of the President of the Court of First Instance in Case T-543/93 R Gestevision Telecinco v Commission [1993] ECR II-1409, paragraph 16).

Arguments of the parties

10 As regards the prima facie case for suspension of the operation of the contested decisions to be granted, the applicant claims that the aid authorized is, at first sight, incompatible with the ECSC Treaty since it is clearly contrary to Article 4(c). Moreover, according to the applicant, the conditions for the application of the first paragraph of Article 95 of the Treaty, on which the Commission based the contested decisions, are not fulfilled in the present case. In that connection, it states that in any event State aid cannot be regarded as falling within "cases not provided for in this Treaty" referred to in Article 95 of the Treaty since Article 4(c) expressly provides that aids granted by States, in any form whatsoever, are prohibited.

11 The applicant also claims that even if the more rigorous procedure provided for in the third and fourth paragraphs of Article 95 of the Treaty had been followed, the validity of the contested decisions could not be upheld. In the applicant' s view, the powers used by the Commission in authorizing the contested aid could only have been conferred on it by the procedure for amendment of the ECSC Treaty envisaged in Article 96 thereof. It follows that the Commission has misused its powers and consequently that the contested decisions must be declared unlawful.

12 The applicant considers that the urgency of the matter is apparent, essentially, from a combination of two factors: first, if the operation of the contested decisions were not suspended, the Member States could invoke the principle of the protection of legitimate expectations in order to evade the obligation to require the companies which had received the aid to pay it back; also, some of the aid at issue is intended to enable the recipients of it to be privatized in the near future and that privatization might be carried out in such a manner that the purchasers could not be compelled to repay the aid granted, and the competitive structure would thereby be irreparably damaged.

13 As regards the balance of interests at issue, the applicant considers that any risks which non-payment of the contested aid might entail for the viability of the undertakings to which it was granted are no more than the consequence of normal competition and that any damage thereby arising cannot be compared to that which would be suffered by competing steel undertakings as a result of the implementation of decisions authorizing the aid in breach of the provisions of the ECSC Treaty.

14 The Commission, for its part, states that, although granted by States, the aid in question, like aid to the steel industry authorized under the various "aid codes", cannot be described as national aid. In fact, according to the Commission, it is Community aid intended to respond to the serious crisis afflicting Community undertakings in the steel industry and to facilitate the attainment of the objectives of the ECSC Treaty. That the aid is Community aid is confirmed by the fact that it is subject to prior authorization from the Commission and is limited to what is strictly necessary. The payment of such aid by the Member States is justified by the lack of the necessary Community funds to finance efforts to restructure the steel industry.

15 According to the Commission, the contested decisions have the same logical basis as the general decisions establishing a Community system of aid for the steel industry, namely the "aid code". In the Commission' s view, the serious difficulties facing the Community undertakings as a result of over-capacity in the industry, constitute one of the "cases not provided for" within the meaning of the first paragraph of Article 95 of the ECSC Treaty, which justifies action by the Community. Moreover, the Commission emphasizes that the practice of authorizing State aid limited to the amount absolutely necessary and subject to the requirement of reductions in capacity proportional to the aid granted was accepted by the Court of Justice in its judgment in Case 214/83 Germany v Commission [1985] ECR 3053.

16 As regards the matter of urgency, the Commission considers that the applicant' s argument that the Member States might be able to invoke the principle of the protection of legitimate expectations in order not to obtain repayment of the aid by the beneficiary undertakings is irrelevant where, as in the present case, an action for the annulment of the contested decisions is brought before the Court of First Instance within the time-limit laid down by the Treaty. As regards the liability of possible future purchasers of the beneficiary undertakings to repay such aid as the Court might hold to have been unlawfully granted, the Commission points out that it fixed a minimum threshold of indebtedness for undertakings to be privatized. According to the Commission, the imposition of net financial charges at initial levels of between 3.5 and 3.2% of the annual turnover is sufficient to bring those new undertakings into line with the average Community figures for indebtedness in the steel industry.

17 At the hearing, the Commission also pointed out that the risk that the purchasers of beneficiary undertakings might in certain circumstances not be compelled to repay the aid granted to the sellers is common to all cases of national or Community assistance in which a purchaser buys a beneficiary undertaking before that undertaking has been required to repay the aid granted to it. According to the Commission, that fact does not justify suspension of the operation of all decisions authorizing the payment of aid.

18 As regards the balance of interests, the Commission contends that the measures sought from the Court are wholly disproportionate to the applicant' s interests. If suspension of the operation of the decisions were granted, certain of the undertakings in question would be required to close or irreversibly to reduce their activities, which in most cases are located in regions of serious unemployment. The Commission considers that the result of upholding the applicant' s application would be, from the point of view of the public interest, to jeopardize the overall strategy of restructuring the steel industry pursued by the Community on the basis of a programme for the reduction of capacity, of which the six contested decisions form part.

The President' s assessment

19 It has been consistently held (see the order in Gestevision Telecinco v Commission, cited above, paragraph 27) that the urgency of an application for interim measures must be assessed by reference to the need for a provisional decision in order to avoid serious and irreparable damage to the party requesting such measures. It is incumbent on the party applying for suspension of the operation of a decision to prove that it cannot await the outcome of the main proceedings without suffering damage that would entail serious and irreparable consequences.

20 With respect to the first argument put forward by the applicant regarding the urgent need for the measure applied for, it must be noted that the applicant merely referred to the possibility that the Member States might argue, on the basis of the principle of the protection of legitimate expectations, that it would not be possible to recover the aid at issue from the beneficiary undertakings, but it has not provided any evidence whatsoever that there is any serious possibility of such an argument being considered by the Community judicature to be well founded. In those circumstances, it must be concluded that the applicant' s argument is entirely hypothetical and is based on the unpredictable probability of future and uncertain events.

21 Furthermore, even if such a possibility were to materialize, the applicant has not referred to any circumstance such as to indicate that the possible non-repayment of the aid, even if the contested decisions were annulled, would be liable to cause it or its members any serious and irreparable damage which it is necessary to obviate immediately by granting the suspension of the operation of those decisions.

22 As regards the second argument put forward by the applicant to show that the damage that it would suffer if the operation of the contested decision were not suspended would be irreparable, it must also be recognized that, in mentioning the conditions under which any privatizations of the beneficiary companies might take place, the applicant is referring only to the possibility of future and uncertain events. No evidence of more than a purely hypothetical nature has been adduced before the President regarding the terms and conditions which might apply, under the various national laws and the provisions adopted for that purpose by the competent authorities, to any privatization of the undertakings concerned. Accordingly, the President is not in a position to assess the probability of privatization under conditions such as to hinder any repayment by the undertakings concerned of the aid at issue.

23 Moreover, the applicant' s view that "the possibility of repayment by the seller who, ex hypothesi, would have withdrawn from the steel market, would not, even indirectly, redress the damage caused to the competitive structure of that market" is not relevant to assessment of such serious and irreparable damage as it might suffer since no link has been established, or even alleged, between such a threat to the general competitive structure and the individual situation of the applicant or its members.

24 It is also necessary to weigh the applicant' s interest in securing suspension of the operation of the contested decisions against the interests of affected third parties who are not parties to these proceedings and the public interest in the prompt implementation of a Commission decision concerning aid to the steel industry.

25 The Commission has referred in its submissions to the serious difficulties which would be experienced by the beneficiary undertakings and the risks of closure or irreversible major reductions of capacity in the assisted regions which would ensue if this application were to succeed. It also draws attention to the importance of the contested decisions within the overall plan for the reduction of capacity and the restructuring of the steel industry in accordance with the objectives of the ECSC Treaty.

26 The applicant merely refers to "considerable damage resulting from manifest discrimination" which, it claims, would be suffered by the steel undertakings not granted aid but provides no further details and does not even allege that there is a risk of damage such as to affect seriously the financial situation of those undertakings or threaten their survival.

27 Accordingly, it must be concluded that the general and abstract interests invoked by the applicant in support of its request for interim measures are not such as to outweigh those referred to by the Commission in response thereto, namely the public interest and the interests of third parties who are not parties to these proceedings, in particular the undertakings to which the aid was granted.

28 Accordingly, without its being necessary for the President to give a decision on the existence or otherwise of a prima facie case or on the standing of the applicant EISA to apply for interim measures on behalf of its members, the application for suspension of the operation of Decisions 92/256 to 94/261 of 12 April 1994 authorizing the payment of aid by certain Member States to undertakings established within their territories should be dismissed.

On those grounds,

THE PRESIDENT OF THE COURT OF FIRST INSTANCE

hereby orders:

1. The application for interim measures is dismissed.

2. The costs are reserved.

Luxembourg, 15 July 1994.