Judgments nº T-98/00 of Court of First Instance of the European Communities, October 17, 2002

• Resolution Date: October 17, 2002
• Issuing Organization: Court of First Instance of the European Communities
• Decision Number: T-98/00

JUDGMENT OF THE COURT OF FIRST INSTANCE (Fifth Chamber, Extended Composition)

17 October 2002 (1) (State aid - Definition - Advantage - Normal commercial transaction - Rational operator in a market economy)

In Case T-98/00,

Linde AG, established in Wiesbaden (Germany), represented by H.-J. Rabe and G. Berrisch, lawyers,

applicant,

supported by

Federal Republic of Germany, represented by W.-D. Plessing, acting as Agent, assisted by J. Sedemund and T. Lübbig, lawyers,

intervener,

v

Commission of the European Communities, represented by D. Triantafyllou and K.-D. Borchardt, acting as Agents, with an address for service in Luxembourg,

defendant,

APPLICATION for partial annulment of Commission Decision 2000/524/EC of 18 January 2000 on the State aid granted by Germany to Linde AG (OJ 2000 L 211, p. 7),

THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES (Fifth Chamber, Extended Composition),

composed of: J.D. Cooke, President, R. García-Valdecasas, P. Lindh, N.J. Forwood and H. Legal, Judges,

Registrar: D. Christensen, Administrator,

having regard to the written procedure and further to the hearing on 31 January 2002,

gives the following

Judgment

Facts and procedure

1.

The applicant is a German undertaking which produces and distributes industrial gases. It owns, inter alia, a production plant in Leuna (Sachsen-Anhalt).

2.

By a contract concluded on 22 April 1993 (‘the privatisation contract of 22 April 1993’), the Treuhandanstalt (the public-law body responsible for the administration, restructuring and privatisation of undertakings of the former German Democratic Republic, ‘the THA’) sold the business activities of Leuna Werke AG (the legal predecessor to Leuna-Werke GmbH, ‘LWG’), an undertaking located in Leuna, producing amine and dimethylformamide, to UCB Chemie GmbH (‘UCB’), a German subsidiary of the Union Chimique Belge group.

3.

That contract was supplemented by a number of ancillary contracts which included an agreement of 22 April 1993 in which the THA and LWG undertook to supply specific quantities of carbon monoxide, a gas used in the production of amine and dimethylformamide, to UCB at market price, for a period of 10 years, renewable for an indefinite period (‘the supply agreement of 22 April 1993’). Article 6(4) of that agreement provided that LWG was entitled to terminate the agreement in two circumstances, namely, if UCB concluded another supply agreement with a third party on ‘terms not less favourable’ than those contained in that agreement, or if UCB built its own carbon monoxide production facility. In the latter case, the THA would pay UCB an ‘investment subsidy’ of up to DEM 5 million.

4.

Performance of the supply agreement of 22 April 1993 caused LWG and the THA to incur substantial losses, of approximately DEM 3.5 million per year. The carbon monoxide production facility which they operated for that purpose was particularly old and its production costs were very high. As UCB had decided not to build its own facility and there was no other producer of carbon monoxide operating in Leuna, LWG was not entitled to terminate the agreement under Article 6(4) of that agreement. LWG and the Bundesanstalt für vereinigungsbedingte Sonderaufgaben (‘the BvS’), the successor to the THA, therefore looked for an undertaking which was prepared to build and operate a carbon monoxide production facility and to ensure, in their place, the long-term supply of carbon monoxide to UCB.

5.

Thus, in June 1997 the BvS, LWG, UCB and the applicant concluded an agreement in which the applicant undertook to build, within 18 months, a carbon monoxide production facility which it would incorporate into its hydrogen production plant in Leuna, to operate that facility, and to supply specific quantities of carbon monoxide to UCB (‘the agreement of June 1997’). That agreement also provided that the BvS and LWG were to grant the applicant an ‘investment subsidy’ of DEM 9 million (‘the subsidy at issue’), the remaining investment costs, DEM 3.586 million, being borne by the applicant. The agreement further stipulated that the supply agreement of 22 April 1993 would terminate when the applicant started to supply carbon monoxide to UCB, or, at the latest, 18 months after the conclusion by those two undertakings of a contract for the supply of carbon monoxide (see paragraph 6 below) or of the agreement of June 1997, as the case may be.

6.

Contemporaneously with the agreement of June 1997, the applicant concluded a contract with UCB to supply it with carbon monoxide for a period of 15 years, renewable for 5-year periods (‘the 1997 supply contract’). Article 2(2) of the agreement of June 1997 states that the supply contract ‘is to be regarded as a similar contract for the purposes of Article 6(4)(i) of the [supply agreement of 22 April 1993]’. In October 1998 the applicant started to supply carbon monoxide to UCB under the 1997 supply contract.

7.

Following a meeting with the German authorities on 15 May 1998, the Commission questioned them about the subsidy at issue. The German authorities answered the Commission's questions in a letter of 7 August 1998. By letter of 18 September 1998, the Commission requested additional information, which was provided by letter of 3 December 1998.

8.

By letter of 30 March 1999, the Commission informed the German Government of its decision to initiate the procedure under Article 88(2) EC, and requested it to submit its observations and reply to a number of questions. By way of publication of the letter in the Official Journal of the European Communities of 10 July 1999 (OJ 1999 C 194, p. 14), interested parties were informed of the initiation of that procedure and invited to submit any comments they might have. By letter of 25 May 1999, the German Government submitted its observations and replied to the questions put by the Commission. No other interested party responded to the publication of the Commission's letter.

9.

On 18 January 2000, the Commission adopted Commission Decision 2000/524/EC on the State aid granted by Germany to Linde AG (OJ 2000 L 211, p. 7, ‘the contested decision’).

10.

The operative part of the contested decision provides as follows:

‘Article 1

The aid granted to Linde AG by Germany in the form of a grant for the construction of a carbon monoxide production facility in Leuna (Saxony-Anhalt) is compatible with the common market as regards the portion which, in accordance with the cumulation rules, does not exceed the 35% ceiling laid down for national regional aid in Saxony-Anhalt.

Article 2

The aid granted to Linde AG by Germany in the form of a grant for the construction of a carbon monoxide production facility in Leuna (Saxony-Anhalt) is incompatible with the common market under Article 87(1) [EC] as regards the portion which, in accordance with the cumulation rules, exceeds the 35% ceiling laid down for national regional aid in Saxony-Anhalt.

Article 3

1. Germany shall take all necessary measures to recover from the recipient the aid referred to in Article 2 and unlawfully made available to the recipient.

2. Recovery shall be effected in accordance with the procedures and provisions of national law. The aid to be recovered shall include interest from the date on which it was made available to the recipient until the date of its recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant-equivalent of regional aid.

...’

Procedure and forms of order sought by the parties

11.

By application lodged at the Registry of the Court of First Instance on 21 April...