JUDGMENT OF THE COURT OF FIRST INSTANCE (First Chamber, Extended Composition)
14 May 2002 (1) (State aid - Restructuring aid - Action for annulment - Manifest errors of assessment)
In Case T-126/99,
Graphischer Maschinenbau GmbH (now KBA-Berlin GmbH), established in Berlin (Germany), represented by A. Bach, avocat, with an address for service in Luxembourg,
applicant,
v
Commission of the European Communities, represented by D. Triantafyllou and P. Nemitz, acting as Agents, with an address for service in Luxembourg,
defendant,
APPLICATION for the partial annulment of Commission Decision 1999/690/EC of 3 February 1999 on State aid which Germany is planning to introduce for Graphischer Maschinenbau GmbH, Berlin (OJ 1999 L 272, p. 16),
THE COURT OF FIRST INSTANCE
OF THE EUROPEAN COMMUNITIES (First Chamber, Extended Composition),
composed of: B. Vesterdorf, President, P. Mengozzi, J. Pirrung, M. Vilaras and N.J. Forwood, Judges,
Registrar: D. Christensen, Administrator,
having regard to the written procedure and further to the hearing on 3 July 2001,
gives the following
Judgment
Facts
1.
The applicant, which is established in Berlin, is a wholly-owned subsidiary of Koenig & Bauer-Albert AG (hereinafter KBA), established in Würzburg. It manufactures parts for newspaper printing machinery and sells components to KBA which is essentially engaged in the manufacture of presses.
2.
A general fall in demand in the sector of printing machines having led in 1993 to an appreciable decrease in orders placed with the applicant by KBA and its other subsidiaries and branches (hereinafter the KBA group), the decision to shut the applicant's factory was taken in November 1996. Closure was to take place on 30 June 1997 in order to avoid an accumulation of losses.
3.
Land Berlin and the trade unions concerned expressed their wish that closure of the applicant's factory should be avoided. Accordingly, negotiations between those parties, on the one hand, and the applicant and KBA, on the other, led to the signing on 24 February 1997 of an alliance for employment on the basis of a restructuring plan drawn up, according to the applicant, in collaboration with the Berlin authorities. Land Berlin declared its readiness at this stage to grant aid of around 9 million German marks (DEM) to the applicant.
4.
In its restructuring plan which was finalised in September 1997 following several slight amendments to the February 1997 version, the applicant sought to concentrate its production on a reduced range of new products, in particular modified and more competitive roller bearers, drawing rollers and cooling rollers. Non-profitable products were to be discontinued and the production cycle was to be organised more efficiently. Within the framework of the restructuring provided for, whose total cost was to amount to DEM 22.93 million, KBA was to take over the applicant's losses, amounting to DEM 12.25 million, and make a joint capital injection with the applicant of DEM 1.37 million.
5.
Since the applicant did not have its own planning and design department, the planning and development work had to be carried out by other factories belonging to companies within the KBA group situated in Würzburg and in Frankenthal. Work to convert the Berlin factory was also envisaged to enable the applicant to manufacture the new products. According to the latter, work on design and development commenced only after signature of the alliance for employment.
6.
Since the Land Berlin had still taken no decision to grant aid to the applicant, KBA threatened in August 1997 to close the latter's factory. On 11 September 1997 the Berlin Senate finally decided to grant the applicant aid amounting to DEM 9.31 million (the contested aid), and an initial instalment of that aid, in the amount of DEM 2.5 millions, was paid to it on 23 December 1997. The German Government notified the aid to the Commission by letter of 21 January 1998 enclosing in particular a copy of the final version of the restructuring plan.
7.
Following an exchange of correspondence including three letters from the Commission dated 23 February, 28 May and 3 July 1998 requesting the German Government to provide further information concerning the aid in question and the latter's replies, in particular that of 18 June 1998, and following a discussion between the parties on 1 July 1998, the Commission informed the German authorities, by letter dated 17 August 1998 (OJ 1998 C 336, p. 13, hereinafter the notice of initiation), of its decision to initiate the investigative procedure under Article 93(2) of the EC Treaty (now Article 88(2) EC).
8.
The German Government replied to the notice of initiation by letter dated 21 September 1998 drawn up in concertation with counsel for the applicant. Moreover, the applicant states that its counsel had a telephone conversation on 7 October 1998 with the Commission official responsible for the matter.
9.
On 3 February 1999 the Commission adopted Decision 1999/690/EC on State aid which Germany is planning to introduce for Graphischer Maschinenbau GmbH, Berlin (OJ 1999 L 272, p. 16, hereinafter the contested decision). It decided to deduct from eligible restructuring costs the totality of development costs in respect of new or modified products amounting to DEM 4.875 million. Taking account in particular of KBA's contribution of DEM 12.25 million and the joint contribution by KBA and the applicant of DEM 1.37 million and of the fact that the eligible restructuring costs, as thus reduced, amounted to only DEM 18.055 million, the Commission concluded that the aid planned was compatible with the common market only to the extent to which it was intended to finance that expenditure up to a limit of DEM 4.435 million. The aid planned was therefore declared incompatible with the common market to the extent to which it exceeded that amount.
10.
The operative part of the contested decision is in the following terms:
Article 1
The State aid which Germany is planning to grant to Graphischer Maschinenbau GmbH, Berlin, in the form of a grant amounting to DEM 9.31 million, is compatible with the common market within the meaning of Article 92(3)(c) of the EC Treaty and Article 61(3)(c) of the EEA Agreement only to the extent of DEM 4.435 million.
The amount of planned aid in excess of DEM 4.435 million may not be granted.
Article 2
Germany shall provide the Commission with detailed annual reports in order to demonstrate the due implementation of the restructuring plan.
Article 3
Germany shall inform the Commission, within two months of notification of this Decision, of the measures taken to comply with it.
Article 4
This Decision is addressed to the Federal Republic of Germany.
Procedure
11.
By application lodged at the Court registry on 25 May 1999 the applicant brought this action under Article 230 EC for partial annulment of the contested decision.
12.
Upon hearing the report of the Judge-Rapporteur, the Court (First Chamber, Extended Composition) decided to open the oral procedure. By way of measures of organisation of procedure under Article 64 of its Rules of Procedure, the Court of First Instance requested the parties and the German Government to reply to certain questions in writing and to produce certain documents. Those requests were complied with within the period prescribed.
13.
The parties presented oral argument and answered the questions put orally by the Court at the hearing on 3 July 2001.
Forms of order sought by the parties
14.
The applicant claims that the Court should:
- annul the contested decision to the extent to which it declares the part of the planned aid in excess of the amount of DEM 4.435 million incompatible with the common market and prohibits it;
- order the Commission to declare the planned aid compatible with the common market in the additional amount of DEM 4.875 million,
- order the Commission to pay the costs.
15.
The Commission contends that the Court should:
- dismiss the application as unfounded;
- order the applicant to pay the costs.
Admissibility
16.
It should be recalled that under Article 113 of the Rules of Procedure the Court of First Instance may of its own motion consider whether there is any absolute bar to proceeding with an action.
17.
In that regard, the Court points out that, in accordance with settled case-law, it is not for it, in an action for annulment based on Article 230 EC, to issue directions to the Community institutions (see, in particular, Case C-5/93 P DSM v Commission [1999] ECR I-4695, paragraph 36, and Joined Cases T-374/94, T-375/94, T-384/94 and T-388/94 ENS and Others v Commission [1998] ECR II-3141, paragraph 53). If the Court annuls the contested measure, it is then for the administration concerned to adopt, in accordance with Article 233 EC, the necessary measures to comply with the judgment annulling that measure (Case T-67/94 Ladbroke Racing v Commission [1998] ECR II-1, paragraph 200). Accordingly, the second form of order sought by the applicant, namely that the Court should order the Commission to declare the planned aid compatible in its entirety with the common market, must be dismissed as inadmissible.
Substance
18.
In the contested decision the Commission founded its conclusion concerning the incompatibility of the part of the planned aid exceeding the amount of DEM 4.435 million essentially on two separate considerations, which are challenged by the applicant in two sets of pleas.
19.
First, the Commission pointed out that the work in question could not legitimately be financed by that part of the aid since development work was started before the applicant and KBA could have been certain that the aid relating thereto would be granted with the result that that aid could not have induced KBA to undertake the work. In...
