Judgments nº T-50/06 RENV II of The General Court, April 22, 2016

• Resolution Date: April 22, 2016
• Issuing Organization: The General Court
• Decision Number: T-50/06 RENV II

(State aid - Directive 92/81/EEC - Excise duties on mineral oils - Mineral oils used as fuel for alumina production - Exemption from excise - Existing or new aid - Article 1(b)(i), (iii) and (iv) of Regulation (EC) No 659/1999 - Legal certainty - Legitimate expectations - Reasonable time - Principle of sound administration - Misuse of powers - Obligation to state reasons - Concept of State aid - Advantage - Effect on trade between Member States - Distortion of competition)

In Joined Cases T-50/06 RENV II and T-69/06 RENV II,

Ireland, represented by E. Creedon, A. Joyce and E. McPhillips, acting as Agents, and P. McGarry, Senior Counsel,

Aughinish Alumina Ltd, established in Askeaton (Ireland), represented by C. Waterson, C. Little and J. Handoll, Solicitors,

applicants,

v

European Commission, represented by V. Di Bucci, N. Khan, G. Conte, D. Grespan and K. Walkerová, acting as Agents,

defendant,

APPLICATION for the annulment of Commission Decision 2006/323/EC of 7 December 2005 concerning the exemption from excise duty on mineral oils used as fuel for alumina production in Gardanne, in the Shannon region and in Sardinia respectively implemented by France, Ireland and Italy (OJ 2006 L 119, p. 12), to the extent that that decision concerns the exemption from excise duty on mineral oils used as fuel for alumina production in the Shannon region (Ireland),

THE GENERAL COURT (First Chamber, Extended Composition)

composed of H. Kanninen, President, I. Pelikánová (Rapporteur), E. Buttigieg, S. Gervasoni and L. Madise, Judges,

Registrar: S. Spyropoulos, Administrator,

having regard to the written procedure and further to the hearing on 6 May 2015,

gives the following

Judgment

Background to the dispute

The exemption at issue

1 Alumina (or aluminium oxide) is a white powder principally used in smelters to produce aluminium. It is extracted from bauxite by a refining process, the last stage of which is calcination. More than 90% of the calcinated alumina is used in the smelting of aluminium metal. The remainder is further processed and used in chemical applications. There are two distinct product markets: smelter-grade alumina (SGA) and chemical-grade alumina (CGA). Mineral oils may be used as fuel for alumina production.

2 There is only one producer of alumina in each of Ireland, Italy and France. In Ireland, it is Aughinish Alumina Ltd (‘AAL’), established in the Shannon region. Alumina producers are also present in Germany, Spain, Greece, Hungary and the United Kingdom.

3 Since 12 May 1983, Ireland has exempted from excise duty mineral oils used for the production of alumina (‘the exemption at issue’). The exemption at issue was introduced into Irish law by Statutory instrument No 126, Imposition of Duties (No 265) (Excise Duty on Hydrocarbon Oils) Order, 1983, of 12 May 1983 (‘the 1983 order’).

4 The application of the exemption at issue to the Shannon region was authorised by Council Decision 92/510/EEC of 19 October 1992 authorising Member States to continue to apply to certain mineral oils, when used for specific purposes, existing reduced rates of excise duty or exemptions from excise duty, in accordance with the procedure provided for in Article 8(4) of Directive 92/81/EEC (OJ 1992 L 316, p. 16). That authorisation was reviewed and extended by the Council of the European Union until 31 December 1998 by Council Decision 97/425/EC of 30 June 1997 authorising Member States to apply or to continue to apply to certain mineral oils, when used for specific purposes, existing reduced rates of excise duty or exemptions from excise duty, in accordance with the procedure provided for in Directive 92/81 (OJ 1997 L 182, p. 22). It was further extended by the Council until 31 December 2000 by Decision 1999/880/EC of 17 December 1999 authorising Member States to apply and to continue to apply to certain mineral oils, when used for specific purposes, existing reduced rates of excise duty or exemptions from excise duty, in accordance with the procedure provided for in Directive 92/81 (OJ 1999 L 331, p. 73).

5 Council Decision 2001/224/EC of 12 March 2001 concerning reduced rates of excise duty and exemptions from such duty on certain mineral oils when used for specific purposes (OJ 2001 L 84, p. 23), which was the last decision concerning the exemption at issue, extends that exemption until 31 December 2006. According to recital 5 thereof, that decision ‘shall be without prejudice to the outcome of any procedures relating to distortions of the operation of the single market that may be undertaken, in particular under Articles 87 [EC] and 88 [EC]’ and ‘it does not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 88 [EC]’.

Administrative procedure

6 By letter of 28 January 1983, Ireland informed the Commission of the European Communities that it was preparing to implement an undertaking given to Alcan Aluminium Ltd (‘Alcan’) in April 1970, in relation to the construction, in the Shannon region, of an alumina production plant that was subsequently sold to AAL, and relating to an exemption from excise duty on fuel oil used in alumina production in that plant. By letter of 22 March 1983, the Commission stated that that exemption constituted State aid which had to be notified. It also stated that, if the aid were to be implemented only at the time of writing, it could regard the letter of 28 January 1983 as notification for the purposes of Article 88(3) EC. By letter of 6 May 1983, Ireland requested the Commission to regard the letter as such notification. The Commission did not adopt any decision following that correspondence.

7 By letter of 17 July 2000, the Commission requested Ireland to notify it of the exemption at issue. By letter of 27 September 2000, it reiterated that request to Ireland, inviting it to provide additional information. Ireland replied by letter of 18 October 2000.

8 By Decision C(2001) 3296 of 30 October 2001, the Commission initiated the procedure laid down in Article 88(2) EC in respect of the exemption at issue (‘the formal investigation procedure’). That decision was notified to Ireland, by letter of 5 November 2001, and was published, on 2 February 2002, in the Official Journal of the European Communities (OJ 2002 C 30, p. 25).

9 After having requested, by fax of 1 December 2001, an extension of the time limit, which was granted to it on 7 December 2001, Ireland submitted its comments by letter of 8 January 2002.

10 By letter of 18 February 2002, the Commission asked Ireland for further information.

11 By letters of 26 and 28 February and 1 March 2002, the Commission received the respective comments of AAL, Eurallumina SpA, Alcan Inc. and the European Aluminium Association. Those were sent to Ireland, by letters of 26 March 2002.

12 By letter of 26 April 2002, Ireland replied to the request the Commission had made in its letter of 18 February 2002.

Alumina Decision I

13 On 7 December 2005 the Commission adopted Decision 2006/323/EC concerning the exemption from excise duty on mineral oils used as fuel for alumina production in Gardanne, in the Shannon region and in Sardinia respectively implemented by France, Ireland and Italy (OJ 2006 L 119, p. 12; ‘Alumina Decision I’).

14 Alumina Decision I relates to the period before 1 January 2004, the date on which Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ 2003 L 283, p. 51), repealing Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils (OJ 1992 L 316, p. 12) and Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils (OJ 1992 L 316, p. 19) with effect from 31 December 2003 (recital 57) became applicable. Nevertheless, it extends the formal investigation procedure to the period after 31 December 2003 (recital 92).

15 The operative part of Alumina Decision I states, inter alia:

‘Article 1

The exemptions from excise duty granted by France, Ireland and Italy in respect of heavy fuel oils used in the production of alumina until 31 December 2003 constitute State aid within the meaning of Article 87(1) [EC].

Article 2

Aid granted between 17 July 1990 and 2 February 2002, to the extent that it is incompatible with the common market, shall not be recovered as this would be contrary to the general principles of Community law.

Article 3

The aid referred to in Article 1 granted between 3 February 2002 and 31 December 2003 is compatible with the common market within the meaning of Article 87(3) [EC] in so far as the beneficiaries pay at least a rate of EUR 13.01 per 1 000 kg of heavy fuel oils.

Article 4

The aid … granted between 3 February 2002 and 31 December 2003 is incompatible with the common market within the meaning of Article 87(3) [EC] in so far as the beneficiaries did not pay a rate of EUR 13.01 per 1 000 kg of heavy fuel oils.

Article 5

1. France, Ireland and Italy shall take all necessary measures to recover from the beneficiaries the incompatible aid referred to in Article 4.

   ...

5. France, Ireland and Italy shall order, within two months of the date of notification of this Decision, the beneficiaries of the incompatible aid referred to in Article 4 to repay, the aid unlawfully granted plus interest.’

   Procedure and forms of order sought by the parties

   16 By applications lodged with the Court Registry on 17 and 23 February 2006, respectively, Ireland and AAL brought the present actions, which were registered under reference numbers T-50/06 and T-69/06, respectively.

   17 By separate document, received at the Court Registry on 22 March 2006, AAL lodged an application for interim measures under Article 242 EC, seeking suspension of the operation of Alumina Decision I in so far as that decision concerned it. That application was registered under...