Judgments nº T-671/14 of Tribunal General de la Unión Europea, September 12, 2017

• Resolution Date: September 12, 2017
• Issuing Organization: Tribunal General de la Unión Europea
• Decision Number: T-671/14

In Case T-671/14,

Bayerische Motoren Werke AG, established in Munich (Germany), represented by M. Rosenthal, G. Drauz and M. Schütte, lawyers,

applicant,

supported by

Freistaat Sachsen (Germany), represented by T. Lübbig and K. Gaf‌lner, lawyers,

intervener,

v

European Commission, represented initially by F. Erlbacher, T. Maxian Rusche and R. Sauer, and subsequently by T. Maxian Rusche and R. Sauer, acting as Agents,

defendant,

APPLICATION pursuant to Article 263 TFEU for partial annulment of Commission Decision C(2014) 4531 final of 9 July 2014 on the State aid No SA.32009 (2011/C) (ex 2010/N) which the Federal Republic of Germany plans to grant to BMW for a large investment project in Leipzig,

THE GENERAL COURT (Fifth Chamber),

composed of A. Dittrich, President, J. Schwarcz (Rapporteur) and V. Tomljenović, Judges,

Registrar: S. Bukšek Tomac, Administrator,

having regard to the written part of the procedure and further to the hearing on 8 September 2016,

gives the following

Judgment

Background to the dispute

1 The applicant, Bayerische Motoren Werke AG, is the parent company of the Bayerische Motoren Werke Group (‘BMW’), whose principal activity is the manufacture of BMW, MINI and Rolls-Royce automobiles and motorcycles.

2 On 30 November 2010, pursuant to Article 6(2) of Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the [internal] market in application of Articles [107 and 108 TFEU] (General block exemption Regulation) (OJ 2008 L 214, p. 3), the Federal Republic of Germany notified aid in the nominal amount of EUR 49 million that it intended to grant pursuant to the Investitionszulagengesetz 2010 (Law on investment subsidies) of 7 December 2008, as amended (BGBl. 2008 I, p. 2350) (‘the IZG’), with a view to the construction in Leipzig (Germany) of a production site for the manufacture of the BMW i3 electric car and the i8 hybrid rechargeable car, in accordance with the Guidelines on national regional aid 2007-2013 (OJ 2006 C 54, p. 13) (‘the Guidelines’). The notification indicated investment costs of EUR 392 million (EUR 368.01 million excluding interest) and aid intensity of 12.5%. The actual payment of the aid was made subject to the grant of authorisation by the European Commission.

3 After having obtained certain additional information, on 13 July 2011 the Commission decided to open the formal investigation procedure pursuant to Article 108(2) TFEU and subsequently obtained the observations of the Federal Republic of Germany in that regard. On 13 December 2011, the decision entitled ‘State aid - Germany - State aid SA.32009 (11/C) (ex 10/N) - LIP - Aid to BMW Leipzig - Invitation to submit comments pursuant to Article 108(2) of the TFEU’ was published in the Official Journal of the European Union (OJ 2011 C 363, p. 20). By letter of 3 February 2012, the Commission informed the Federal Republic of Germany that it had not received observations from third parties.

4 On 17 January 2012, the German authorities amended the initial notification to include additional aid for an additional investment element. This was decided by the aid recipient subsequently to the decision to open the formal investigation procedure. In that context, a number of clarifications were requested from the Federal Republic of Germany, who provided them to the Commission. By letter of 5 August 2013, the Federal Republic of Germany again informed the Commission of other amendments to the aid project relating to the reduction of the aid amount and aid intensity.

5 On 9 July 2014, the Commission adopted Decision C(2014) 4531 final on the State aid No SA.32009 (2011/C) (ex 2010/N) (‘the contested decision’), Article 1 of which is worded as follows:

‘The State aid which [the Federal Republic of] Germany is planning to implement in favour of [the applicant’s] investment in Leipzig, amounting to EUR 45 257 273 is compatible with the internal market only if it is limited to an amount of EUR 17 million (in prices of 2009); the exceeding amount (EUR 28 257 273) is incompatible with the internal market.

The aid may accordingly only be implemented up to the amount of EUR 17 million.’

6 As regards the reasons for the contested decision, it should be noted as a preliminary point that, in recital 113 thereof, the Commission found that, by notifying the planned aid measure before putting it into effect, the Federal Republic of Germany had complied with its obligation under Article 108(3) TFEU and the individual notification requirement under Article 6(2) of Regulation No 800/2008. Next, in recitals 114 to 123 of that decision, the Commission stated inter alia that it had acted in accordance with the Guidelines, especially section 4.3 thereof, entitled ‘Aid for large investment projects’, and in its Communication from the Commission concerning the criteria for an in-depth assessment of regional aid to large investment projects (OJ 2009 C 223, p. 3). In that context, after establishing that footnote 65 of the Guidelines, relating to the creation of a new product market, was not applicable to the present case, the Commission went on to conduct an assessment in accordance with paragraph 68(a) and (b) of the Guidelines, in order to establish whether the thresholds provided for therein were going to be exceeded, with the result that it has to conduct an in-depth assessment of the notified aid. Thus, in the light of information obtained from the Federal Republic of Germany, it was led to assess whether the aid recipient was going to account for a share of more than 25% on the product market and the geographic market in question. The Commission stated that, if it was not possible to arrive at a conclusive definition of those markets, it would assess whether the aid beneficiary was shown to have a market share exceeding the 25% threshold in at least one plausible relevant market. In any event, the Commission emphasised that a decision to carry out an in-depth assessment in no way prejudged the compatibility of the aid measure with the internal market.

7 As regards, more specifically, the determination of the relevant product markets, firstly, the Commission in essence stated in recitals 124 to 127 of the contested decision that it had doubts as to whether electric and hybrid cars were part of the general car market. Secondly, in recitals 128 to 132 of the contested decision, the Commission began by emphasising the particular importance of market analysis in regards to the purely electric vehicle i3 model (Battery Electric Vehicles), given that if that model exceeded the relevant thresholds on at least one of the plausible markets that would suffice to warrant an in-depth assessment, without the Commission having to concern itself with determining the relevant market for the i8 rechargeable hybrid models (Plug-in Hybrid Electric Vehicles). It took the view that it could not conclude with certainty that those cars formed part of the C or D segments of the conventional car market on the basis of the IHS Global Insight classification. Thirdly, in recitals 133 and 134 of the contested decision, the Commission again expressed reservations about whether the relevant market was the combined C and D segments of the electric car market. After finding that the plausible product markets should include the lowest level for which statistics were available, it stated that it had to take account of the particular situation that might arise, namely the dominant position held by the aid recipient in only one of the C or D segments of the electric car market.

8 As regards the relevant geographic market, the Commission stated in essence in recitals 135 to 140 of the contested decision that the Federal Republic of Germany’s assertion to the effect that the global market should be recognised as being the relevant market for electric cars was not accompanied by sufficiently detailed information on the factors laid down in Commission Notice on the definition of relevant market for the purposes of Community competition law (OJ 1997 C 372, p. 5). Therefore, and on the basis of the information submitted to it, the Commission inferred therefrom that it could not rule out all doubt that the European Economic Area (EEA) constituted the relevant geographic market for electric or hybrid cars.

9 In those circumstances, in recitals 141 to 154 of the contested decision, the Commission analysed the market shares that the applicant, as the aid recipient, would theoretically achieve on certain potential markets, in consequence of which it decided on the applicability of the Communication from the Commission concerning the criteria for an in-depth assessment of regional aid to large investment projects. It should further be noted in that context that, in recital 156 of the contested decision, the Commission found that, as a result of the judgment of 10 July 2012, Smurfit Kappa Group v Commission (T-304/08, EU:T:2012:351), it was required to conduct an in-depth assessment in all cases where the positive effects of a regional aid measure clearly did not outweigh the potential negative effects, even where the thresholds laid down in paragraph 68 of the Guidelines were not exceeded. Previously, in recital 155 of the contested decision, the Commission concluded that the absence of any ‘noteworthy distortion of competition’ had not been proven and that EUR 50 million in aid for a EUR 400 million investment had a noteworthy potential for distortion of competition.

10 Next, as part of the in-depth assessment of the notified aid, the Commission stated in recital 157 of the contested decision that it had to examine in detail, on the basis of the criteria set out in the Communication from the Commission concerning the criteria for an in-depth assessment of regional aid to large investment projects, whether the aid in question was necessary to provide an incentive effect for the investment and whether the benefits of the aid...