France
| Author | Th. Jestaedt; J. Derenne; T. Ottervanger |
| Profession | Jones Day; Lovells; Allen & Overy |
| Pages | 135-202 |
Page 135
Three main types of procedures should be distinguished:
- procedures whereby the claimant raises a violation of Article 88 (3) EC before the national court directly (section 2.1);
- procedures whereby the claimant seeks to enforce a negative Commission decision (section 2.2); and
- procedures whereby the claimant seeks to enforce a positive Commission decision (section 2.3).
A few particularities relating to the procedure before the administrative courts and to the application of EC law principles and EC case law by the administrative courts will be emphasised (section 2.4).
Analytical conclusions will then be drawn (section 2.5) from the State aid cases detailed in section 3 below.
In France, an infringement of Article 88 (3) EC can be contested by means of private actions both before the administrative and the civil courts.
Most actions will be brought before the administrative courts, in particular when claimants bring an action for annulment of a State decision or a State measure involving State aid (for example taxes, regulations and tenders) or an action for State liability in order to obtain damages from the State (in principle, the State can only be sued in the administrative courts).
The competent courts are the administrative courts ("tribunaux administratifs"), the administrative courts of appeal ("cours administratives d'appel") and the Council of State ("Conseil d'Etat"). The Conseil d'Etat is competent in the first and final instance for actions against decrees, actions against decisions within its exclusive competence and, also, actions against administrative decisions applicable throughout the French territory. Actions before the Conseil d'Etat are generally dealt with within two to three years on average. Some actions against decrees or taxes can be decided within a year. However, since the case first progresses through the lower administrative courts (just under two years for the administrative courts of appeal), the Conseil d'Etat may deliver its judgment, as the court of last instance, up to seven years after the facts of the case.
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An action may be brought before the civil courts (including the commercial courts) in litigation between private parties, for example private law claims against a State-owned company and its subsidiaries (i.e. cross-subsidy issues)105. Moreover, the civil courts have exclusive jurisdiction in some specific areas, for example indirect taxes. The competent courts are the courts of first instance, ("tribunaux d'instance" and "tribunaux de grande instance"), the courts of appeal ("cours d'appel") and the Supreme Court ("Cour de cassation").
The commercial courts ("tribunaux de commerce") have jurisdiction in litigation between professionals acting in the course of their business and in any other litigation concerning business acts. Actions for damages brought against a competitor can be brought before the commercial courts, although, where the claimant is a non-professional, an action can also be brought before the civil courts. Judgments of the commercial courts can be appealed to the commercial division of the courts of appeal ("cours d'appel") and can be further appealed to the Supreme Court ("Cour de cassation") on points of law. An action before the Cour de cassation can take between one to two years to be resolved. Depending on whether there is an appeal on points of law ("pourvoi"), a case can take between five to six years total to be resolved (around six months before a commercial court, two years before a court of appeal and two years before the Cour de cassation).
Finally, opinions that address State aid issues can also be adopted by national regulatory authorities, for example the Competition Council ("Conseil de la concurrence") or the Energy Regulation Commission ("Commission de régulation de l'énergie"). In the future, the national telecommunications regulatory body, the renamed Autorité de régulation des postes et des communications électroniques ("ARCEP"), whose competence has recently been extended to postal matters, is also likely to adopt opinions on State aid related issues in postal and telecommunications matters.
French administrative law distinguishes between two main types of actions. Depending on the object of the dispute, the claimant can either contest the legality of a decision of the Administration ("contentieux de l'annulation" or "contentieux de l'excès de pouvoir") or bring an action for damages for the harm caused by a decision of the Administration ("plein contentieux" or "contentieux de pleine juridiction"), whereby the Administration's decision or act can also, incidentally, be declared illegal.
For both types of actions, it is mandatory for the claimant to submit a preliminary request to the Administration ("recours administratif préalable") before bringing an action in the competent administrative court. This requirement, which may take the form of anPage 137 administrative action or a recours hiérarchique, obviously lengthens the procedure in case the Administration refuses to act, in which case the claimant would be required to challenge the decision of the Administration in court.
The first action, the "contentieux de l'excès de pouvoir", has the object of holding the Administration accountable and obtaining the annulment of an administrative decision. The action is subject to strict deadlines. Usually, the claimant has two months from the date of notification or publication of the decision to bring the action. In cases where a legislative or regulatory act provides for this, it will be necessary to submit a preliminary request to the Administration ("recours administratif préalable"). In all other cases, the claimant must bring an action before the competent administrative court within the deadlines mentioned above.
The claimant must show that it has an interest in challenging the decision ("décision faisant grief"). Various interests have been held to justify the bringing of an action by the claimant, including a purely financial interest. The conditions for admissibility are less strict than those of the contentieux de pleine juridiction.
The second action, the contentieux de pleine juridiction, has the object of protecting the rights of the natural or legal person subject to the Administration in the context of State liability or contracts with the State. The claimant must demonstrate that it has a personal interest in the action. This requirement is not difficult to meet when the claimant requests damages from the State.
The claimant must bring the action within a two-month deadline, running from the date of publication or notification of the contested decision. In most cases, the claimant must, within these two months, first bring a preliminary administrative action ("recours / decision préalable"), requesting the Administration to take a decision (for example, to withdraw a previous decision and/or to award damages). If the Administration refuses to withdraw its decision and to award damages, the claimant can challenge this refusal before the competent administrative court. This action should be brought within two months of the notification of the refusal.
If the Administration fails to respond to the claimant's request, the Administration is deemed to have adopted an implicit decision rejecting the request ("décision implicite de rejet") once the two-month time limit has lapsed. Thereafter, the claimant has a further two months (from the end of the first two months running from the publication or notification of the contested decision) to bring this action in the competent administrative court.
French administrative law provides for a specific regime for cases of State liability. If the claimant challenges the State's liability, it has between five and ten years (depending on the State liability regime) to bring an action, starting from the date of notification of the Administration's refusal to award damages to the claimant. It is not mandatory to submit aPage 138 preliminary request save where this is expressly required by a legislative or regulatory provision.
Concerning actions before the civil courts, the only actions to date have been actions for liability brought by competitors against the beneficiary of State aid.
Irrespective of the legal classifications mentioned above, the different actions which can be brought before a French civil or administrative court concerning State aid are presented below, according to the objective pursued by the claimant in bringing the action:
* action for annulment or contesting the legality of the act
In order to obtain the annulment of the administrative act granting aid without clearance by the Commission (whether the aid has been notified or not) or to obtain a declaration of illegality, both administrative actions mentioned above can be used, depending on the specific circumstances.
In the context of taxes, for example, decrees establishing a tax regime can be contested (within the prescribed time limit) by means of an action for misuse of powers ("excès de pouvoir"). However, claimants contesting an act that imposes certain tax payments on them should bring an action requesting that they should not be subject to the tax by contesting the legality of the act ("plein contentieux").
In this regard, the tax cases analysed below, in particular regarding the tax levied on the disposal of animal carcasses, are a good example, since, in some cases, the claimant's right to reimbursement of the illegal tax was recognised, whereas, in other cases, it was the claimant's right not to pay the illegal tax.
Regarding contracts with the State, the decision to enter into the contract can be challenged by means of an action for misuse of powers ("excès de pouvoir"). The annulment of such a decision can result in the nullity of the contract. Decisions relating to the execution of the contract can only be challenged by third parties (by bringing an action for misuse of powers). The parties to the contract must file an action for damages ("plein contentieux")106.
* action to obtain an order to reimburse unlawful aid
From the point of view of administrative procedure, it is possible to request the Administration to adopt an order for reimbursement of public monies. These arrêtés de débet ("état exécutoire") are orders for reimbursement rendered mandatory by the Minister of Finance which are then delivered to the beneficiary of unlawful State aid, requiring it to reimburse the unlawful State aid to the relevant public authority107. In addition, the Judicial Officer of thePage 139 Treasury ("agent judiciaire du Trésor") can be delegated the authority, by the Minister, to render mandatory and deliver such orders.
The competitor of a beneficiary of State aid could therefore request the Administration to adopt an arrêté de débet. In case of refusal by the Administration or in case of silence for over two months (implicit decision of rejection, see above), the competitor may challenge this decision before an administrative court. The administrative judge can order the Administration to act by means of an injunction.
The arrêté de débet is immediately enforceable ("exécutoire par provision"). Enforcement cannot be suspended by an action. An arrête cannot be contested before the civil courts.
Once the State aid has been declared unlawful by an administrative court in an action for damages ("plein contentieux") or by a civil court or even by a Commission decision, competitors of the beneficiary can also obtain an injunction from the administrative court requiring the Administration to order recovery of the unlawful aid ("exécution de jugement"). This type of request was introduced in 1995 with the purpose of ensuring that court decisions are executed by the Administration108. An injunction ordering the Administration to execute a judgment can be requested by the claimant before judgment is given. In the absence of a request prior to judgment, the claimant can apply for an injunction once the Administration has failed to comply with a judgment that has become definitive.
In addition to the action in the administrative courts, competitors could, at the same time, bring parallel proceedings before a commercial court, seeking an order that the beneficiary reimburses the aid to the Administration. This action would be based on unfair competition (i.e. involving the civil liability of the beneficiary for accepting illegal State aid, see the Ufex case and the Ducros case before the Cour de cassation discussed below). Claimants could also request the judge to order interim measures: these measures would be based on the principle of supremacy of EC law over national law, so that the judge must set aside any national legislation or regulatory act that is contrary to Article 87 EC (in case of a negative Commission decision) or Article 88 (3) EC.
* action for liability and damages from the State
To seek an award for damages from the State in an action regarding State liability, the claimant must, first, bring an administrative law action against a specific decision or request the Administration to adopt such a decision, before bringing an action in the administrative courts (rule of the "prior decision" or "recours / décision préalable").
The Administration generally has two months to react before the claimant can turn to the administrative courts. Should the Administration fail to adopt a decision ("décision implicite de rejet"), the deadline for the claimant to file an action with the administrative courts is fivePage 140 years from the date of notification of the Administration's refusal (if there is one). The action before the administrative courts actually consists in requesting annulment of the administrative decision refusing to award damages or compensation.
It is important to note that the conditions for awarding damages in cases of State liability are very strict under French law. Moreover, the court will not automatically award damages, even if it finds that the State is liable109. Damages can be awarded only if (i) the rule breached intended to confer rights on individuals; and (ii) there is a direct causal link between the damage sustained and the breach of the relevant rule. The main liability regime is liability for fault ("responsabilité pour faute"), although, in specific areas, liability of the State can be triggered without proof of fault on the part of the Administration ("responsabilité sans faute").
The liability of the State could also be based on EC law, according to the conditions laid down in the Francovich case110.
Competitors of the beneficiary of unlawful State aid, and, also, the beneficiary itself, can request damages from the State in the administrative courts, regardless of whether the Commission finally declares the aid compatible111 or not.
The liability of the State under EC law was relied on, for the first time, in a State aid case112 brought by a beneficiary of unlawful aid before the Administrative Court of Grenoble in 2003113. The claimant argued that the liability of the State for breach of EC law, namely Article 88 (3) EC, could be raised without proof of fault on the part of the State, and that it concerned all "emanations" of the State, including the legislator. It was alleged that liability arose both under principles of French liability law and those principles of EC law derived from the ECJ's Francovich case law. The action was dismissed for reasons relating to the condition of causation.
The Administrative Court of Clermont-Ferrand held in 2004114 that the State can be liable under French law for failing to fulfill its obligations under EC State aid law.
In that case, the Administrative Court of Clermont-Ferrand examined for the first time whether the legislator could be held liable for violation of EC law (i.e. the enactment of a law contrary to Article 87 EC), although, following established case law of the Conseil d'Etat (contrary to EC law), the Administrative Court of Clermont-Ferrand refused to establish liability on the basis of the principle of supremacy of EC law over national law. Damages were not awarded because the Administrative Court of Clermont-Ferrand considered thatPage 141 Article 87 EC did not confer rights on individuals (this debatable argument will be further discussed below).
The Administrative Court of Clermond-Ferrand also found the Administration liable for violation of Article 88 (3) EC. Here, the conditions for damages were fulfilled and damages were awarded to the beneficiary, although the amount of damages had to be fixed by an expert.
* action for suspension of implementation (interim measures)
Competing undertakings can request that the implementation of a decision granting unlawful State aid be suspended ("référé-suspension"). In theory, this type of action could be based on the principle of supremacy of EC law but that principle has never been invoked in State aid cases115.
The référé-suspension was introduced into French law in 2000116. The judge can order suspension of a contested decision in the context of an action for annulment. Suspension can only be requested when the administrative decision granting the aid has not yet been fully implemented117.
The conditions for this type of interim measure are (i) urgency; (ii) the establishment of a prima facie case; and (iii) harm to the claimant if the contested measure is put into effect. The interpretation of these criteria is generally less strict than under EC law. For example, urgency may be established on the basis of the purely financial consequences resulting from the implementation of the contested measure118.
* action for liability and damages from the beneficiary
An action challenging the liability of the beneficiary of unlawful State aid must be brought before the civil courts. The judge must determine whether the beneficiary benefited from the aid (regardless of whether the beneficiary had full knowledge of or should have known about the unlawfulness of the aid, i.e. the violation of Article 88 (3) EC) and must ascertain the amount of damages to be awarded to the beneficiary's competitors.
The Cour de cassation confirmed the principle of extra-contractual liability of the beneficiary of unlawful State aid in several cases. Since, according to the ECJ, the principle cannot bePage 142 derived from EC law alone119, it must be based on the principle of unfair competition, i.e. on Article 1382 of the French Civil Code (proving fault, damage and a causal link between the fault and the damage).
* action contesting recovery
The procedure for the recovery of unlawful State aid can be initiated by the State issuing an act for recovery ("état exécutoire") which can be subject to forced execution. This act can only be contested by the addressee of the act by way of an opposition action in the form of an action for misuse of powers ("excès de pouvoir")120. This action has suspensory effect.
* action in case the aid has been granted and no recovery is ordered
If, following a Commission decision, the State does not order recovery of the aid from the beneficiary, competitors could request the State to act and, in case of refusal, bring an action for annulment of this refusal before the administrative courts121.
Competitors could also apply for interim measures in the competent civil court. Several types of interim measures could be ordered by the judge in the context of State aid: provisional recovery of unlawful aid and/or the issuance of a guarantee seem the most obvious measures. The civil judge could also order conservatory measures ("mesures conservatoires"), the object of which is to prevent the beneficiary of unlawful aid from proceeding with claims against third parties pending seizure of its goods ("saisie"). If the judgment has been delivered but is not executed, the judge can order execution or provisional execution of the judgment.
* action contesting the validity of the Commission decision
National courts have no jurisdiction under EC law to declare acts of the Community institutions void122. Even if the national courts consider a negative Commission decision to be illegal, the national courts cannot prevent the parties from initiating a national recovery procedure. However, as explained below, a preliminary reference concerning its validity should be made to the ECJ under Article 234 EC.
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Moreover, as explained in the SFEI case123, the national courts should take appropriate interim measures while awaiting judgment by the ECJ. This has not yet been put into effect by the administrative courts.
* action for damages from the State after a negative Commission decision124
Damages can be awarded in an action for damages, based on the illegality of an act by the Administration.
Such an action could also be based on a Commission decision. Moreover, in accordance with the Brasserie du Pêcheur and Factortame cases125, since Article 87 EC can be considered to have the object of conferring rights on individuals, the national courts should grant relief if this rule of law is violated by a Member State, whether or not it has direct effect. This principle applies, a fortiori, to any breach of Article 88 (3) EC.
However, considering the ruling in the above-mentioned Clermont-Ferrand case regarding the liability of the legislator, it is unlikely that the French administrative judge will accept to declare the legislator liable for breach of Article 87 EC.
One of the main difficulties for the claimant is to prove the causal link between the damages and the incompatible and unlawful State aid126.
Even if the Commission decided that a State aid scheme is compatible with the Common Market, claimants (whether they are competitors or beneficiaries, for which the grant of aid is subject to certain conditions) may challenge the validity of this decision before a national court by applying to the national court for a preliminary ruling from the ECJ under Article 234 EC ("exception d'illégalité").
The claimant's request will, however, be inadmissible if the claimants have standing but fail, within the prescribed time limit, to bring an action challenging the Commission decision directly before the CFI under Article 230 EC, where that action could have been admissible127.
To our knowledge, there have been no such cases before the French national courts to date.
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If the State aid is unlawful, a final decision of the Commission declaring the aid compatible with the Common Market does not prevent the claimants from requesting recovery of the aid from the beneficiary, at least for the period until adoption of the positive decision, once the positive decision has been issued,128.
This section will outline a few particularities relating to the procedure before the French administrative courts and to the application of EC case law and legal principles by the French administrative courts.
In several cases, the parties based their claim on Article 87 EC (explicitly contesting the compatibility of the State aid measure with the Common Market) but their claims were rejected by the national courts which considered that Article 87 EC could not be invoked by individuals before the national courts129. Indeed, it is clear that the Commission has exclusive competence to assess the compatibility of a State aid measure with the Common Market under Article 87 (3) EC. However, in these cases it appears that, by implication, the judge refused to consider the parties' claims because they had not invoked Article 88 (3) EC.
The administrative judge is under the obligation to take decisions within the ambit of the parties' claims before it. On the one hand, for example, the judge cannot omit to take a decision on the reparation of certain types of harm alleged by the claimants, whereas, on the other hand, the judge cannot award damages if the parties fail to request damages in their written pleadings, or award an amount of damages that exceeds the amount of loss established in evidence by the parties.
However, this obligation is subject to the judge's interpretation of the parties' claims. The judge may interpret these claims in order to be able to take a decision in conformity with the parties' real intentions. The judge is therefore competent to reinterpret the object of a party's claim.
Depending on the facts of the case and the type of action filed, it seems that the judge could choose to interpret a claim based on Article 87 EC as meaning that the parties' real intentionPage 145 was to invoke Article 88 (3) EC130. There are very few cases where this has clearly been the case131.
Where the parties do not explicitly raise a violation of Article 88 (3) EC but claim that a State measure constitutes State aid, it is questionable whether the judge can examine the State measure under Article 88 (3) EC of its own motion.
Under French administrative law, the judge is under the obligation to raise grounds of public policy of its own motion. Most of these grounds have been determined by case law according to the importance of regulating certain types of behaviour. These public policy grounds include, for example, incompetence on the part of an administrative authority signing a decision or a contract and "misapplication of the scope of application of the law" ("méconnaissance du champ d'application de la loi").
As a ground of public policy, "misapplication of the scope of application of the law" covers not only legislative acts, but also administrative regulations and case law. It must be raised, for example, where the legality of an administrative decision is based on a legislative act, regulation or case law that cannot be applied to the individual or situation concerned.
The Conseil d'Etat is not prepared to recognise the "misapplication of the scope of application of the law" as a ground of public policy in situations where national law and EC law are incompatible.
This interpretation is contrary to the EC Treaty and the principle of supremacy of EC law. Indeed, in the Peterbroeck case, the ECJ held that "the impossibility for national courts or tribunals to raise points of Community law of their own motion does not appear to be reasonably justifiable by principles such as the requirement of legal certainty or the proper conduct of procedure".132 Article 88 (3) EC should be regarded as a provision of public policy, which the national courts should be able to raise of their own motion. By analogy, it should be recalled that Article 81 EC has been held to constitute such a fundamental provision133.
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In conclusion, the judge is prohibited from ruling ultra petita. If the parties explicitly refer to the issue of compatibility of the State aid, the judge should dismiss the action. However, the judge is under an obligation to reinterpret the parties' claims. For example, where the parties simply claim that there is a State aid issue, the judge could reinterpret this as referring to both the existence of the State aid and the question of its notification. Moreover, the judge is required to raise public policy grounds of its own motion. In the opinion of the authors, this would include a violation of Article 88 (3) EC by the French State (i.e. the legislator or the Administration).
The cases analysed in section 3 below cover the period from June 1999 to June 2005 and are divided into several categories. Hereafter follow some conclusions that can be drawn from each category.
The section on taxes contains the highest number of cases and was also the biggest section in the 1999 Report. It seems that claimants are well aware that the State aid argument is particularly relevant to contesting the payment of certain taxes and contributions.
Following a comparison of nine cases concerning the tax levied on the disposal of animal carcasses, the following conclusions can be drawn:
- first, knowledge by the competent administrative court of most recent Commission decisions and court cases134 was uneven, although, in this case, the interpretation at EC level had not yet been settled at the time;
- secondly, several forms of judicial relief were used by the claimants regarding this tax: action for annulment, summary proceedings requesting suspension of the act and successful applications for a preliminary ruling from the ECJ, which shows that, in general, claimants are using various legal means of action at their disposal; and
- finally, some judgments conclude that the tax paid should be reimbursed, whereas other judgments conclude that the claimant has the right to refuse to pay the tax. The judgments differ as to the conclusions to be drawn from the unlawfulness of the tax on the basis of the different factual scenarios raised in each case. However, the main difficulty stems from the type of action filed by the claimant. In an action for excès de pouvoir, the judge cannot grant damages, which is possible in an action for plein contentieux. This is an important particularity of French administrative law.
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Different tax measures were contested before both the administrative and the civil courts. Two judgments, which specifically refer to negative Commission decisions, show what measures need to be taken in accordance with these Commission decisions declaring the taxes incompatible with the Common Market135.
These cases raise the issue of claimants basing their action on Article 87 EC or Article 88 EC. Two administrative judgments136 dismissed the actions brought before them by arguing that the claimants referred to Article 87 EC, "which does not create individual rights which may be invoked by individuals in national courts". This analysis seems to be based on the reasoning that it is only when examining whether Article 88 (3) EC has been violated that the national judge can examine whether a measure constitutes State aid under Article 87 EC, before examining whether the aid has been notified to the Commission. Accordingly, if a claimant invokes Article 87 EC instead of Article 88 EC, some national courts consider that the action should be dismissed, without further interpreting the claimant's claims.
Although it is true that Article 87 EC does not have direct effect as far as Article 87 (3) EC is concerned (giving the Commission exclusive jurisdiction to examine the compatibility of State aid with the Common Market)137, it could be argued that Article 87 (1) EC has as its object the protection of individual interests, as well as of general interests, at least to the extent that Article 87 (1) EC can be read in combination with Article 88 (3) EC. Claimants should therefore be able to refer to Article 87 EC and, based on the supremacy of EC law, obtain a ruling from their national courts examining whether Article 88 (3) EC has not been violated in that respect138.
In civil cases, the Cour de cassation comes to different conclusions as to the burden of proof, which is on the claimant with regard to notification (only new State aid has to be notified). Whereas, in one case, the claimants were required to bring evidence of the absence of notification, in another case, the judgment of a court of first instance was quashed because that court did not examine whether the aid had been notified. There are therefore uncertainties regarding evidence before the civil courts.
Finally, the Pantochim case addresses the question of the award of damages from the State for having repealed an act, which the Commission declared contrary to Article 87 EC (i.e. incompatible State aid). Since the conditions for awarding damages are interpreted strictly, in particular with regard to causation, it is crucial for claimants to choose the right action amongPage 148 those available. In this case, the claimant chose to request the competent minister to repeal the act and award damages, whereas the claimant would have stood a better chance if it had filed an action for State liability regarding the grant of the aid.
Only seven orders or decrees were challenged before the administrative courts. In each case, the Conseil d'Etat found that there was no violation of Article 88 (3) EC. In order to reach this conclusion, it interpreted the concepts of transfer of public resources, existing State aid and resulting advantage in such a way that there was no (new) State aid. These decisions could have been more thoroughly explained, as the justification for the finding that there was no State aid was merely implied.
Competitors have brought eleven actions concerning State aid before the administrative and civil courts since the 1999 Report. They were successful to some extent in three cases only. In the two Ryanair cases, the claimants obtained a declaration from the court that the measures constituted illegal State aid, but did not obtain an order for recovery of the aid, due to certain provisions of French administrative procedure. In the third case regarding the Centre d'exportation du livre français ("CELF"), recovery of the State aid was ordered, but the claimants did not obtain damages. In the SFEI/UFEX case, the Court of Appeal of Paris stayed the proceedings to await judgment in these State aid cases from the ECJ and the CFI139.
In the remaining cases, the courts interpreted the notion of "advantage" and the obligation to notify and ruled on the absence of aid in a tender procedure. Commission decisions have been relied on in four cases.
There have been four main recovery cases before the national courts and recovery was refused in only one case on procedural grounds. In two cases, the courts (including an independent regulatory authority) examined from whom the aid should be recovered.
On the basis of an analysis of the French legal system, it seems that recovery is carried out through administrative channels and is an issue very rarely brought before the national courts (see Part II of this study).
Two actions concerning State liability were brought before the administrative courts (see above). They both concerned the "Borotra plan", the State aid scheme set up in 1996 inPage 149 favour of the textile and shoe industry. One action was dismissed because the applicant failed to prove the causal link between the damage and the violation of Article 88 (3) EC. The question of State liability, especially the legislator's liability, is problematic in France, since the administrative courts are reluctant to apply the principle of supremacy of EC law.
Three actions concerning the liability of the beneficiary were brought before the civil courts. It is interesting to note that the beneficiary's liability can be established on Article 1382 of the French Civil Code (extra-contractual liability).
In one case, the Cour de cassation held that the beneficiary could, in principle, have been held liable under national law for not having verified whether the State aid had been notified to the Commission. The Cour de cassation quoted the ECJ stating that the beneficiary could not be held liable, under EC law, for not having verified whether the State had fulfilled its procedural obligations.
In another case, the national court held that the mere fact that the aid granted enabled the beneficiary to make a lower offer in a bid could trigger liability under civil law (a very similar case occurred before the Belgian courts - see the 1995 Breda case). The third case was dismissed because of lack of evidence. However, the principle concerning the liability of the co-contractor who benefits from State aid that has not been notified was not contested.
The French courts have prompted some notable judgments, for example in the Baxter and the Ferring cases. The answer to the question referred to the ECJ on the burden of proof on claimants regarding the evaluation of public service costs will also be very interesting140 in terms of, first, the impact it may have on French procedural law, and, secondly, in terms of the ECJ's reaction when faced with the conditions which the ECJ itself set for determining whether undertakings entrusted with public service obligations benefit from State aid (the Altmark criteria).
Under EC law, the judiciary is responsible for ensuring direct, immediate and effective protection of individuals and could be held liable for not doing so. In particular, the national courts must apply EC law and, of their own motion, do all that is necessary to remove national measures that are contrary to EC law, whether they are of a legislative, administrative or judicial nature, including relevant judicial rules of procedure.
The most interesting cases are those dealing with liability (that of the State or the beneficiary) and damages (awarded to competitors or to the beneficiary). The main conclusion to bePage 150 drawn is that there are still a few obstacles in applying EC State aid rules, in particular as interpreted by the ECJ. These various difficulties are:
- there are legal obstacles, especially in terms of procedural rules (the burden of proof and the difficulty of establishing the existence of State aid), which impinge upon (i) the protection of individuals against the grant of unlawful State aid; and (ii) the award of damages to competitors of the beneficiary. We would, for example, recommend raising potential claimants' awareness of the formulation of their claims as well as judges' awareness of their obligations under EC law and of whether they should raise grounds of their own motion or give full effect to the principle of supremacy of EC law over national law;
- the choice of the type of procedure to be commenced before the administrative courts is of primary importance for the award of damages, given the particular nature of French administrative procedure;
- there are obstacles of a more "psychological" nature, considering the reluctance, which is historical, of the French administrative courts to apply EC law principles and to use all means at their disposal, as determined by EC case law; this is quite obvious in respect of their reluctance to hold the legislator liable for breach of both Articles 87 and 88 EC, for instance, for having adopted a law granting illegal State; however, the cases above indicate that, overall, there is no reluctance to apply the EC State aid rules in general.
In comparison with the 1999 Report, there has been a steady increase in the number of cases and, also, of interesting cases, where the national courts, especially courts of first instance, applied the relevant State aid rules correctly. It is noteworthy that the 1999 Report only reported one action by competitors (the SFEI case), whereas, in this study, there are over a dozen cases brought by competitors against the State or against the beneficiary, three of which were successful. State liability cases (brought by beneficiaries!) also constitute a new development in the enforcement of State aid cases in France.
- CD-ROM Le Doctrinal since 1993: this database comprises all articles published in about 200 French legal journals and a few journals in English;
- LexisNexis: internet website offering a database similar to that of Le Doctrinal (about 10 journals since 1990);
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- LexisNexis: complete database comprising decisions of courts of first instance and of courts of appeal;
- Association of the Councils of State and Supreme Administrative Jurisdictions of the European Union i.n.p.a.: French language database comprising decisions of national administrative courts applying EC law :
- http://193.191.217.21/fr/jurisprudence/jurisprudence_fr.lasso , or
- http://www.raadvst-consetat.be/Juradmin/home.html (website of the Belgian Conseil d'Etat); and
- Lamyline Reflex: internet website offering an exhaustive database comprising case law of the Cour de cassation (since 1959) and of the Conseil d'Etat (since 1960).
- (aide* d'état*) and (Article 92 [87] EC) or (Article 93 [88] EC) or
- (régime* d'aide*) and (Article 92 [87] EC) or (Article 93 [88] EC) or
- (mesure* d'aide*) and (Article 92 [87] EC) or (Article 93 [88] EC).
- BOCCRF: Bulletin Officiel de la Concurrence, de la Consommation et de la Répression des Fraudes (Report of the opinions of the Competition Council);
- Bull. civ.: Bulletin civil (Report of the judgments of the Cour de cassation);
- Lebon: Report of the judgments of the Conseil d'Etat;
- RJF: Revue de jurisprudence fiscale (Editions Francis Lefebvre);
- RFDadm: Revue française de droit administratif;
- AJDA: Actualité juridique droit administratif.
The section below contains a brief141 description of and a commentary on the State aid cases that have been brought before French courts since the 1999 Report. These cases have been classified under the following main headings and have been further sub-divided between actions before the administrative courts and actions before the civil courts:
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(i) control of the legality of State acts, for example taxes and other administrative measures;
(ii) actions by competitors;
(iii) recovery cases;
(iv) liability claims; and
(v) requests for preliminary rulings.
For ease of reference, the references of cases mentioned in the 1999 Report have also been inserted under the appropriate headings.
Finally, each case has been categorised in the tables included at the end of this report. The letters after each case refer to the classification in these tables.
In 1996, the French government set up a system for the free collection and disposal of animal carcasses and slaughterhouse waste for stockbreeders and slaughterhouses. This system was financed by a tax payable by any person active in the retail sale of meat at the distribution level. The question whether this tax constituted State aid was finally answered by the ECJ in the Gemo case142.
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Administrative courts
Facts and legal issues: Picard, the first distributor of frozen products in France, contested the legality of the tax, arguing, inter alia, that it was part of an unlawful State aid scheme. It argued, in particular, that the carcass disposal service relieved French stockbreeders of a burden which their competitors had to bear in other Member States.
Decision: the Administrative Court of Melun rejected the claim and considered that the system in place did not constitute State aid.
First, it considered that the public carcass disposal service could not be regarded as an aid for carcass disposal companies as the remuneration received by these carcass disposal companies was full compensation for the service rendered.
Secondly, the Administrative Court of Melun stated that this system did not represent aid for stockbreeders and did not bring about a significant restriction of competition, in particularPage 153 because the carcass disposal service had always been free for French stockbreeders. In any case, the Administrative Court of Melun considered that the claimant should have indicated what proportion of the total cost of meat production represented carcass disposal costs and how these costs were borne by competitors in other Member States.
Comments: the Administrative Court of Melun applied the approach of the Commission at the time (see the FFSA decision of 8 February 1995143), according to which no State aid is found to exist when the State measure offsets additional charges imposed by the State for public service reasons. However, the Court of First Instance had already annulled the Commission decision in 1997144 holding that, even though there was no overcompensation for the cost of discharging the public service, the measure constituted State aid that could be exempted under Article 86 (2) EC. The Administrative Court of Melun did not therefore comply with the then applicable case law.
Moreover, it is difficult to follow the Administrative Court of Melun's reasoning, specifically the Melun Court's finding that the fact that the meat producers have always benefited from a free carcass disposal service explained why the service did not distort competition, in particular with regard to operators importing meat products from other Member States.
Facts and legal issues: the claimant contested the legality of the tax, arguing inter alia that it was part of an unlawful State aid scheme.
Decision: the Caen Court stated that the scheme financed by this tax was not State aid. The Caen Court justified its decision by the fact that the tax paid to the undertakings in charge of carcass removal was full compensation for the service rendered.
The Caen Court also considered that the measure did not constitute aid for stockbreeders since carcass removal cannot be considered to be a burden only on stockbreeders. Stockbreeders in other countries also benefited from this service, as well as milk producers and other animal owners. Since this service was always free of charge for French stockbreeders, the tax could not restrict competition.
Moreover, the claimant did not provide sufficient detail on the effect of the cost of carcass removal on meat prices and the cost borne by the competitors of French stockbreeders.
Comment: the Caen Court confirmed the decision of the Administrative Court of Melun in its decision Société Picard Surgelés.
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Facts and legal issues: the claimant contested the legality of the tax in question, as well as that of another tax financing the processing of bones. It argued that these taxes were incompatible with Articles 90, 87 and 88 EC.
Decision: first, the Administrative Court of Dijon considered the tax to be incompatible with Article 90 EC relating to discriminatory internal taxation.
Secondly, the Dijon Court stated that, without public financing, stockbreeders and slaughterhouses would have to pay for carcass disposal and processing of bones. According to the Dijon Court, the political and economic circumstances relating to the establishment of the public carcass disposal and bone processing services, their general nature and aims demonstrated that they constituted advantages for stockbreeders and slaughterhouses. The Dijon Court considered that such advantages corresponded to a State aid scheme and that trade between Member States was "necessarily" affected.
The Administrative Court of Dijon observed that the French government had established a service of general economic interest which could benefit from the exemption laid down in Article 86 (2) EC. However, it considered that the potential application of Article 86 (2) EC did not exempt the State from the notification requirement.
The Dijon Court noted that the Commission had not been notified of the provisions establishing either tax. Because of this breach of Article 88 (3) EC, these provisions were declared illegal and the Administrative Court of Dijon allowed the claimant's right to be reimbursed of both taxes.
In its judgment, the Administrative Court of Dijon explicitly mentioned that it was useless to refer the case to the ECJ for a preliminary ruling.
Comments: the Administrative Court of Dijon applied EC State aid rules strictly, as interpreted by the CFI in the FFSA and SIC cases, regarding the link between Article 86 (2) EC and services of general economic interest145. This is one of the few cases where an administrative court actually ordered restitution of the contested tax.
Facts and legal issues: the Ministry of the Economy, Finance and Industry published an administrative notice ("instruction") merely mentioning the provisions of the law. The legality of this notice was challenged.
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Decision: according to established case law, the Conseil d'Etat considered that this notice did not create new legal rights or obligations in comparison with the provisions of the relevant legislation and therefore could not be contested. The fact that the provisions of the relevant legislation mentioned in the notice could be contrary to EC State aid rules was considered irrelevant.
Comments: the Conseil d'Etat did not rule on the State aid issue, since the Conseil d'Etat considered that the notice in question could not be the subject of an action for misuse of powers ("excès de pouvoir"). This case is therefore of limited interest.
Facts: the claimant contested the legality of the tax, arguing, inter alia, that it was part of an unlawful State aid scheme.
Decision: the Administrative Court of Orléans stated that the scheme financed by this tax did not consititute State aid. The Orléans Court justified its decision by the fact that the tax financed a public service created in the interest of public health and the protection of the environment (and not in the interest of stockbreeders). Since the stockbreeders never paid this tax, the new tax could not have the effect of exempting the meat producers from a cost they would normally have to bear. The French authorities therefore were under no obligation to notify the tax to the Commission.
Comment: the Administrative Cour of Orléans confirmed the ruling of the Administrative Court of Caen in its decisions Société Uniservice Distribution and Société Honfleur
Distribution. It did not examine whether the measure constituted State aid but focused on the notion of general economic interest and the fact that, before the introduction of the tax, the stockbreeders did not pay for the carcass removal service.
Facts and legal issue: The claimant contested the legality of the tax.
Decision: the Administrative Court of Lille stated that stockbreeders were the quasi-exclusive beneficiaries of the services financed by the tax. The Lille Court considered that the system constituted State aid, even though it related to a public service obligation and was already offered for free to farmers before the introduction of the tax.
The Lille Court upheld the claimant's right to refuse to pay a tax financing a State aid measure that had not been notified to the Commission, as provided for by Article 88 EC.
Comments: The Administrative Court of Lille came to the same conclusion as the Administrative Court of Dijon. It is not clear from the judgment (although EC law principlesPage 156 would imply it) whether the right to refuse to pay the tax also results in the reimbursement of any tax unduly paid by the claimant until judgment.
Facts and legal issues: Gemo, a medium-sized supermarket, contested the legality of the tax.
In 2000, the Administrative Court of Lyon ordered the reimbursement of the tax to Gemo. The Minister of the Economy, Finance and Industry appealed this decision and the Administrative Court of Appeal of Lyon decided to refer the case to the ECJ for a preliminary ruling (see section 3.7 of this study). In a judgment of 20 November 2003
Decision of the Court of Appeal of Lyon: the Administrative Court of Appeal of Lyon noted that the State aid scheme had not been notified to the Commission and therefore concluded that the tax provisions were unlawful. It upheld Gemo's right to be reimbursed for the tax it had paid.
The Minister argued that the State could not reimburse a tax, the burden of which had been passed onto consumers and the reimbursement of which would result in undue enrichment ("enrichissement sans cause") of the company.
The Lyon Court rejected this argument since the Minister had not demonstrated (i) that the tax did not have a negative impact on the relevant sector; and (ii) that, even if the burden of the tax had been passed onto consumers, its reimbursement would constitute undue enrichment of the company.
The Lyon Court applied the ECJ's case law both on State aid and on the reimbursement of illegal taxes strictly.
Decision of the Conseil d'Etat: the appeal (appeal on points of law, "pourvoi en cassation") brought by the Minister of the Economy, Finance and Industry focused on the concept of undue enrichment.
The Conseil d'Etat considered that, in the case of a tax refund, the burden of proving undue enrichment lies on the Tax Administration. However, it only requested the Administration to satisfy the standard of proof, which was "a sufficiently high level of likelihood".
Finally, the Conseil d'Etat upheld the Lyon Court's analysis. Even if the tax amount was passed onto consumers, it necessarily resulted in undue enrichment. Moreover, the nationalPage 157 courts should have assessed the negative effects of the tax on the taxpayer's economic situation.
The Conseil d'Etat rejected the appeal.
Facts and legal issues: professional associations for the agricultural sector filed a claim, in summary proceedings, for the suspension ("référé-suspension") of a ministerial order ("arrêté") setting out different methods for implementing the tax. They argued, inter alia, that the ministerial order was part of a new State aid scheme and that the notification requirement under Article 88 (3) EC had not been fulfilled.
Decision: the Conseil d'Etat dismissed the claim because the conditions for summary proceedings, in particular the criterion relating to urgency, were not met. The Conseil d'Etat did not rule on procedural issue of State aid.
Facts and legal issues: the claimant requested the Conseil d'Etat to annul an order ("arrêté") of the Ministry of the Economy, which laid down the method of calculation and rates of slaughter tax, allocated to the financing of the elimination of animal waste and byproducts.
The claimant argued that the contested order was made in violation of Article 87 EC and of a Council Regulation on the grounds that the rate fixed by this decision would pass onto the poultry sector part of the financing of the cost incurred by the public carcass disposal service.
Decision: the Conseil d'Etat noted that, in order to comply with the Gemo judgment of 20 November 2003 adopted by the ECJ, the General Tax Code established a slaughter tax to be paid by companies responsible for the slaughter of animals. The rates for each type of animal fixed by the decision were calculated by dividing the cost of this service between the stockbreeding sectors, depending on the volume of animal carcasses. The Conseil d'Etat stated that the claimant had not submitted evidence to show that the volume of poultry carcasses had been overestimated when calculating the rates.
The Conseil d'Etat also referred to the ECJ's case to conclude that the tax did not have the effect of distorting competition, nor affected trade between Member States, nor even had an influence on market prices because the tax represented an inherent cost of the economic activities carried out by stockbreeders and slaughter houses. The Conseil d'Etat therefore dismissed the action.
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Comment: in this case, the Conseil d'Etat did not reject the claimant's action, although the action was based on Article 87 EC only. The Conseil d'Etat directly referred to the judgment of the ECJ to justify its finding that there was no State aid in this case.
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Civil courts
No cases.
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Administrative Courts
Facts and legal issues: the claimant requested the Conseil d'Etat to annul a decree ("décret") relating to the creation of a special tax on basic oils in favour of the Agency for the Environment and the Management of Energy ("Agence de l'environnement et de la maîtrise de l'énergie"). It argued that the decree should have been notified to the Commission.
Decision: the Conseil d'Etat noted that the special tax on basic oils was instituted with a view to promoting the collection, treatment and elimination of used oils and that part of the tax income would be allocated to aid schemes for companies collecting used oils and be used as investment aid for companies that collect, treat and eliminate used oils. It stated that this aid corresponded to indemnities provided for in the EC directives relating to the elimination of used oils.
The Conseil d'Etat noted that in its decision of 7 February 1985, but rather consideration for the services performed by the collection or disposal undertakings the ECJ had ruled that such indemnities "do not constitute aid [...]."147
Therefore, the Conseil d'Etat rejected the argument based on a breach of Article 88 (3) EC.
Comment: the Conseil d'Etat referred to an ECJ case without having to further interpret the notion of State aid.
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Facts and legal issues: horticulturists148 contested the legality of a tax that was payable to the National Interprofessional Committee for Horticulture. The Administrative Court of Appeal of Paris ruled that the tax was illegal because it breached Article 90 EC relating to discriminatory internal taxation. The National Interprofessional Committee filed an appeal on points of law ("pourvoi en cassation") before the Conseil d'Etat.
Decision: the Conseil d'Etat quashed the Paris Court's judgment for misapplication of Article 90 EC. However, instead of referring the case back to a lower court, it considered the other arguments that had been raised which considered the tax from a State aid point of view.
It noted that the tax financed different forms of aid and that, in 1990, the Commission had ruled that the State aid scheme was incompatible with the Common Market and had refused its renewal.
The Paris Court also observed that the regulations establishing the scheme had not been notified to the Commission and were therefore unlawful. The Paris Court upheld the claimant's right not to pay the contributions.
Comments: the Conseil d'Etat directly referred to a Commission decision on the relevant taxes and drew the necessary conclusions from the direct effect of Article 88 (3) EC.
Facts and legal issues: horticulturists contested the legality of a tax paid to the National Interprofessional Committee for Horticulture. The Administrative Court of Appeal of Paris declared the tax illegal because of its incompatibility with Article 90 EC. The Committee appealed.
Decision: the Administrative Court of Appeal of Paris considered that the Administrative Court had committed an error of law by basing its decision on incompatibility with Article 90 EC, without considering whether the contributions contested by the horticulturists had been established on the basis of purchases relating to products of other Member States.
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The Administrative Court of Appeal of Paris noted that the tax financed works that related to research, experiments and market knowledge, as well as actions related to professional training, dissemination of knowledge and promotion of products, and constituted a State aid measure. It noted that the measures financed by the CNIH were put into practice without the draft decrees having first been notified to the Commission. Accordingly, it held that the tax paid in 1984, 1986 and 1988 was illegal.
The Administrative Court of Appeal of Paris also noted that the Commission had granted the French authorities a deadline in which to abolish the State aid. This decision of 14 December 1990 had been notified to the French authorities on 7 February 1991. The Paris Court held that the decree of 9 January 1991, which provided for the collection of the tax in 1991, breached Article 88 (3) EC. It stated that the claimant was therefore justified in refusing to pay these contributions from 1 January to 7 February 1991.
Comment: the Paris Court changed the position taken in previous cases and followed the interpretation of the Conseil d'Etat in respect of this tax and the notification requirements in its judgment of 6 November 1998.
Facts and legal issues: publishers paid a publishing tax to the National Centre for the Humanities ("Centre national des lettres") that promotes literature and the distribution of books. The publisher Glénat contested the legality of the tax. The Administrative Court of Grenoble rejected the claim but the Administrative Court of Appeal of Lyon considered that the tax constituted part of a State aid scheme established in breach of the notification requirement, and therefore allowed the claim for non-payment of the tax. The Minister of the Economy, Finance and Industry filed an appeal on points of law before the Conseil d'Etat.
Decision: the Conseil d'Etat quashed the Lyon Court's decision because the Lyon Court had failed to establish whether the tax affected trade between Member States.
The Conseil d'Etat held that the financial aid granted by the National Centre for the Humanities, a public undertaking, to writers, translators, libraries, non-profit organisations or events promoting literature and books had no effect on competition between publishers. It also observed that, where financial aid was granted to publish books or literary reviews, their topics were so specific and their readership so restricted that they could not be considered to be in competition with books published in other Member States. The Conseil d'Etat concluded that this financial aid could not be considered as affecting trade between Member States and therefore did not fulfil one of the conditions for State aid.
Comments: although the Conseil d'Etat was justified in quashing the Lyon Court's decision for not having examined all qualifying conditions for State aid, its interpretation of effect onPage 161 trade between Member States seems to be much more restrictive than the interpretation of the ECJ, the CFI and the Commission. The latter bodies have a broader perception of the notions of distortion of competition and effect on trade between Member States in the area of State aid.
Facts and legal issues: French regulations provided for specific postal rates for the distribution of newspapers. These specific postal rates were inserted in a decree ("décret") of 1997, which amended the Post and Telecommunications Code. The legality of the decree was contested for breach of the notification requirement under Article 88 (3) EC.
The publishing company requested the Conseil d'Etat to annul a decision whereby the Joint Commissions for Publications and Press Agencies refused to grant the benefit of the specific postal rates to the publishing company on the basis of misuse of powers. Its argument was based, inter alia, on the incompatibility of the provisions of the Post and Telecommunications Code, as amended by the 1997 decree, with EC State aid rules.
Decision: the Conseil d'Etat considered that the scheme constituted existing State aid because the decree of 1997, which simply summarised the postal rates applicable to the distribution of newspapers, did not question the principle of granting State aid to the press sector and did not amend the conditions for granting that aid. Therefore, the decree could not be considered to amount to a modification of the State aid scheme, did not constitute new State aid and was not subject to the notification requirement.
Comment: the Conseil d'Etat interpreted the notion of existing State aid, but did not verify whether the existing State aid at issue had been notified in the past.
Facts and legal issues: the claimant contested the legality of a tax financing the Coordination Committee of Mechanical Research Centres ("Comité de coordination des centres de recherches en mécanique"), arguing, inter alia, that the tax breached Article 87 EC.
The Administrative Court of Amiens rejected the claim and the claimant appealed.
Decision: the Administrative Court of Appeal of Douai held that Article 87 EC did not create individual rights which may be invoked by individuals before the national administrative courts.
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Comments: the finding of the Douai Court that Article 87 EC does not have direct effect was correct to the extent that it related to Article 87 (3) EC, but not concerning Article 87 (1) EC in connection with Article 88 (3) EC. The Douai Court seemed to rely on the fact that the claimant had not expressly referred to Article 88 EC, thus voluntarily omitting to assess whether the procedural rules laid down by Article 88 EC had been complied with, which may be invoked by individuals in national courts.
Facts and legal issues: certain provisions of the Finance Act of 1992 ("loi de finances") provided for an exemption of the tax on the consumption of certain petroleum products. In 1996, the Commission considered the scheme to be incompatible with the Common Market and requested the French government to abolish the scheme by 29 March 1997 at the latest.
On 9 June 1997, an undertaking requested the Minister of Agriculture to repeal the ministerial order ("arrêté") adopted in order to apply the unlawful provisions of the Finance Act of 1992 ("the Act"). The Minister refused, stating that the order would be modified by new legislation at the end of the year. The undertaking filed an action for annulment of the Minister's refusal to repeal the order and requested damages.
Decision: according to the Conseil d'Etat, since the ministerial order was unlawful because it was based on the illegal Act the Minister had misused its powers when refusing to repeal the order. However, the Conseil d'Etat rejected the claimant's claim for damages for alleged losses resulting from the impossibility of marketing certain products. The Conseil d'Etat considered that the loss suffered by the undertaking actually resulted from the fact that it had not benefited from the tax break and had therefore not been able to lower its market prices. The Conseil d'Etat concluded that there was no direct causal link between the loss suffered and the Minister's failure to repeal the unlawful order.
Comments: the Conseil d'Etat applied the principle of supremacy of Commission decisions over national law. However, the condition of a causal link between the loss suffered by the undertaking and the Minister's misuse of powers when refusing to repeal the act was interpreted strictly by the Conseil d'Etat. Since the claimant did not itself benefit from the tax break, the action was aimed at eliminating this advantage for competitors. In this context, the
Conseil d'Etat held that there was no causal link between the loss suffered by being at a disadvantage compared to competitors and the refusal of the Minister to repeal the Act (and to eliminate the benefits to competitors). It seems that the undertaking would have stood a better chance if it had filed an action for State liability (since the State had introduced an incompatible State aid scheme) or a civil action against its competitors.
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Facts : the National Professional Association of French Wines ("Association nationale interprofessionnelle des vins de table et des vins de pays de France" or "ANVIT"), created by the French public authorities, promoted table wines and French wines. ANVIT's only financial resource was a single contribution, voted on by the board of directors and rendered obligatory by decree.
This contribution was notified to the Commission as State aid in 1983 and was found to be compatible with Article 87 EC in 1984. However, in 1993, the Commission published a Commission recommendation declaring the aid incompatible because of its financing.
From October 1991, ANVIT, refused to pay its contributions, since its budget had grown significantly and was essentially used to promote exports, whereas it mainly sold its wine in France, arguing that these contributions constituted new aid,.
Decision: the appellant relied on Article 88 (3) EC to argue that the regime had changed and that it must be renotified to the Commission. Without a notification, this new State aid would be illegal.
The Court of Appeal of Caen rejected the appellant's argument, holding that the regime had not changed significantly since the last notification to the Commission in 1984. The regime was not new State aid but constituted an adjustment to developing economic and legal circumstances.
Although the Commission had informed France in 1993 that it considered the aid to be incompatible because of its financing, the Court of Appeal of Caen rejected the appellant's argument relating to the modification of the aid on the grounds that the basis for the contribution ("assiette") had not changed since 1983, as opposed to the use made of the contribution.
Considering that the Commission recommendation did not apply to contributions paid from 1991 to 1993, the Court of Appeal of Caen found that the appellant was unable to rely on the Commission recommendation. The appellant therefore had to pay its contributions.
Comment: see Société des Etablissements Friedrich case by the Cour de cassation149.
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Facts and legal issues: two textile companies filed a claim for the reimbursement of excess tax paid to the Committee for the Development and Promotion of Textiles and Clothing ("Comité de développement et de promotion du textile et de l'habillement"). They argued, inter alia, that the tax constituted State aid granted to the textile sector in violation of Article 87 EC.
Decision: the Administrative Court of Appeal of Paris ruled that Article 87 EC did not create rights which could be invoked by individuals in the national courts.
Facts and legal issues: an association representing the pharmaceutical industry and pharmaceutical companies brought an action for annulment of a decree ("décret") that imposed a new tax on pharmaceutical companies, replacing an older tax, which had been ruled contrary to the EC Treaty and, therefore, reimbursed to the companies that had paid the illegal tax. The parties argued, inter alia, that certain pharmaceutical companies benefited from a financial gain equal to the difference between the amount of money reimbursed and the amount of the new tax, which constituted State aid. They claimed that the decree should have been subject to the notification requirement.
Decision: the Conseil d'Etat found that the gain corresponding to the difference between the amount of money reimbursed and the amount of the new tax could not have the consequence that the new tax constituted State aid in favour of certain companies and the decree was not, therefore, subject to the notification requirement.
Comments: the Conseil d'Etat did not explain its reasoning in detail in this matter, although it seems clear that the gain, benefiting certain undertakings as a result of these two tax regulations, is not derived from any particular public act in favour of specific undertakings.
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Civil courts
Page 165
Facts and legal issues: several companies brought actions against the Regional Directorate of Customs and Indirect Duties of Nantes to obtain the reimbursement of a special tax for cereal storage during the 1986-1987 and 1987-1988 campaigns. They argued, inter alia, that the tax was used as illegal State aid. The Civil Courts of Mans and Nantes dismissed their actions because the claimants did not submit evidence of a Commission decision to that effect and because the Civil Courts of Mans and Nantes were not competent to declare the aid incompatible. The claimants appealed on points of law ("pourvoi en cassation") to the Cour de cassation.
Decision: the Cour de cassation quashed the judgments of Courts of First Instance since the Civil Courts of Mans and Nantes should have examined whether the French authorities had notified the State measure in question. However, the Cour de cassation found that the appellants had not demonstrated in their submissions that the storage tax collected during the 1986 to 1987 and 1987 to 1988 campaigns constituted new State aid compared to the tax which had been collected since 1953. The Cour de cassation held that the appellants had not justified the application of Article 88 (3) EC and rejected their claims.
Comment: the Courts of First Instance did not correctly apply EC State aid rules. The appellants must submit evidence justifying the application of Article 88 (3) EC.
Facts and legal issues: the applicant contested the legality of a tax on the stocking of cereals, paid in 1986, 1987 and 1988, arguing its incompatibility with different EC rules, including EC State aid rules.
The Court of Appeal rejected the claim and the applicant lodged an appeal to the Cour de cassation on points of law. The appellant argued, in its submission, that (i) national courts should protect the rights of individuals where Member States violated the notification requirement and the standstill obligation; (ii) an individual could invoke a breach of Article 88 (3) EC even if the Commission had not initiated a formal investigation procedure; (iii) national courts should assess whether the contested measure constituted new or modified State aid that was, therefore, subject to the notification requirement.
Decision: the Cour de cassation noted that the tax levied on the stocking of cereals was established in 1953. The Cour de cassation stated that the appellant had not explained why the tax paid in 1986, 1987 and 1988 would constitute new State aid.
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Therefore, the Cour de cassation considered that the applicant had not justified the application of Article 88 (3) EC and rejected the claim.
Comments: according to French civil law proceedings, the burden of proof lies on the appellant. The Cour de cassation considered that the same principle should apply to State aid rules. The appellant should have demonstrated that the tax constituted new State aid in order to establish the breach of Article 88 (3) EC.
Facts and legal issues: according to a legislative act of 1975 and certain ministerial orders ("arrêtés ministériels"), wine producers and traders had to pay contributions to the National Professional Association of French Wines ("Association nationale interprofessionelle des vins de table et des vins de pays de France" or "ANIVIT"). A company refused to pay its contributions, arguing that the contribution was part of a State aid scheme established in breach of the notification requirement.
The Civil Court of Appeal of Rennes rejected this argument because (i) the scheme corresponded to an existing State aid, even if it had been established after 1957; and (ii) the Commission itself, when requesting the French government to modify the tax, referred to Article 88 (1) EC - related to existing aid - in a letter to the French authorities about this scheme.
The appellants argued that the Court of Appeal of Rennes had violated Article 88 (3) EC by concluding from the Commission's letter to the French authorities that the aid was existing State aid. The appellants also argued that, even if the aid had originally been notified, it had been modified and should therefore have been notified again.
Decision: the Cour de cassation mentioned the ECJ case law on the notion of existing State aid, quoting the 1994 Namur-Les assurances du crédit case, as well as on the direct effect of Article 88(3), quoting the Lorenz case of 1973. It concluded that the Civil Court of Appeal of Rennes had erred in law. Since the scheme was established in 1983, the Court should have verified whether the scheme had been notified to the Commission.
Comments: the Cour de cassation applied EC State aid rules strictly by referring to the relevant ECJ case law. The case was referred back to another Court of Appeal. It is interesting to read this case in conjunction with the Guyomarch case above, where the Cour de cassation found that the appellant had to submit evidence of the absence of notification of the aid to the Commission.
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Facts and legal issues: the Commercial Court of Morlaix ruled that the claimants, horticulturists, had to pay their contributions to the Professional Horticulture Association ("ANIHORT") according to a law implemented by several ministerial orders ("arrêtés interministériels"). The Commercial Court of Morlaix considered that the claimants had not proven that these taxes had anti-competitive effects.
Decision: the Cour de cassation quashed the judgments of the Court of First Instance for breach of Article 88 EC because the judge had not examined the claimant's argument that taxes amounted to State aid and that the ministerial orders should have been subject to the notification requirement. Whereas in the first case, the Morlaix Court held that Mr Le Guen had not proven that the tax distorted competition, the Morlaix Court did not address the State aid question at all in the case concerning Mr Guyomarch.
Comments: according to the ruling of the Cour de cassation in these cases, a civil court is obliged to properly assess the parties' argument relating to the existence of a State aid measure. It is interesting that, whereas in the first case (Mr Le Guen) this obligation is based on Article 88 (3) EC itself, the Cour de cassation based it on Article 455 of the Code of Civil Procedure (on the legal reasoning of judgments) in the second case (Mr Guyomarch).
Facts and legal issues: a Social Security Court rejected the claim of a company that refused to pay a social contribution. The company lodged an appeal, arguing that the Court of First Instance had not examined whether this social contribution had been notified to the Commission.
Decision: the Cour de cassation considered this State aid procedural issue to be a new ground of appeal, mixing facts and law, which could not be invoked in a pourvoi en cassation since the argument had not been pleaded before.
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Administrative courts
Page 168
Facts and legal issues: a Social Security Centre requested the Conseil d'Etat to annul a decree amending the national status of staff of the electric and gas industries and fixing the contribution basis under the general social security regime.
The amendment provided that the contributions owed to the general social security regime for services relating to social insurances and work-related accidents were based on the remunerations paid to active agents reduced by bonuses and indemnities. This provision derogated from the Social Security Code, according to which all sums paid to workers had to be considered as remuneration and must, therefore served as a basis for the calculation of social contributions.
Decision: according to the Conseil d'Etat, even if this derogation constitutes a State aid measure, an analogous provision had already been inserted in the interministerial order of 1960. Therefore, the Conseil d'Etat considered that the contested provision had not been introduced or modified by the contested decree and held that the French government, by failing to notify this decree to the Commission prior to its adoption, had not violated Article 88 (3) EC.
Comment: the Conseil d'Etat interpreted the notion of existing aid, without verifying whether the existing aid had been notified in the past.
Facts and legal issues: an individual brought an action for annulment of a decree ("décret") fixing the conditions according to which public universities and public research centers were entitled to provide services to private undertakings, arguing, inter alia, that the decree was contrary to Article 87 EC.
Decision: the Conseil d'Etat assessed whether the law authorising public universities and public research centers to provide services ("the Law") was compatible with the EC Treaty. It considered that Articles 81, 82 and 87 EC did not prevent a public entity from providing services on a market. It noted that public entities, when providing commercial services, are subject to the same tax rules as private undertakings and stated that, if public entities and private undertakings were sometimes subject to different regulations (for example, with regard to labour and social regulations), these differences neither have "as their object nor effect" to put public entities in a more favourable position than private undertakings, by allowing them to distort competition. The Conseil d'Etat concluded that the Law was compatible with the EC Treaty and that the decree adopted in application of this law was also valid.
Page 169
Finally, the Conseil d'Etat considered that Article 87 EC did not create individual rights which may be invoked by individuals in the national courts.
Comments: see the comment above about claimants referring to Article 87 EC instead of Article 88 EC.
Facts and legal issues: a professional association and certain companies commenced summary proceedings for the suspension of a tender for digital channels by the Higher Audiovisual Council ("Conseil supérieur de l'audiovisuel"), arguing that the tender conditions included State aid elements and were subject to the notification requirement.
Decision: the Conseil d'Etat held that the decision to organise a tender cannot be challenged because it is only a preparatory measure.
Facts and legal issues: a professional association filed an action for annulment of certain provisions of the Code for Public Works Contracts, arguing, inter alia, their incompatibility with EC State aid rules.
Decision: the Conseil d'Etat rejected the State aid argument because the claimant invoked Article 87 EC, which does not have direct effect.
Comments: see the comment above about claimants referring to Article 87 EC instead of Article 88 EC.
Facts and legal issues: a professional association filed an action for annulment of a ministerial order ("arrêté") which imposed an obligation on electricity distributors to buy electricity produced by wind turbines at a higher price than the prevailing market price. The professional association argued, inter alia, that the order was subject to the notification requirement under Article 88 (3) EC.
Decision: quoting the ratio decidendi of the Preussen Electra case150, the Conseil d'Etat pointed to the absence of State resources in the present case, and therefore of State aid.
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Comments: the Conseil d'Etat strictly applied established ECJ case law.
Facts and legal issues: the Ministry of Health put in place a system for the reimbursement of health costs by encouraging hospitals to negotiate the cost of hospital equipment with equipment manufacturers. A professional association filed an action for annulment of the decision taken by the Minister of Health not to withdraw the order implementing this reimbursement system, arguing, inter alia, that this system was equivalent to State aid for hospitals and was subject to the notification requirement.
Decision: the Conseil d'Etat considered that this system encouraged price negotiation under normal market conditions, was financially advantageous for the social security system and did not grant an economic advantage to hospitals within the meaning of Article 87 EC. The order was therefore not subject to the notification requirement.
Comments: the Conseil d'Etat could have analysed each condition of State aid in more detail, in particular with regard to the nature of the activities carried out by the relevant hospitals (economic activity or not, public service obligations or not) and in respect of the advantages resulting from the system.
Facts and legal issues: companies which put into circulation on the French market a recording device that is used for the reproduction, for private use, of phonograms or videos must pay royalties for copyright. A professional association filed a claim for annulment of an administrative decision that provided for the payment of royalties for recording devices integrated into electronic products, whereas it exempted certain IT products.
The professional association argued that the administrative decision granted State aid to the computer industry, as the payment of royalties did not apply to recording devices integrated into certain types of computers and was therefore subject to the notification requirement.
Decision: according to the Conseil d'Etat, the system did not create a tax but had been created to remunerate the undertakings representing the relevant copyright owners. The fact that the decision did not provide for the payment of royalties for recording devices integrated into certain types of computers did not mean that, thereby, this system of royalties fulfilled the requirements of State aid for the computer industry and the decision was therefore not subject to the notification requirement.
Comments: the Conseil d'Etat did not expressly state that there could not be State aid in the absence of State resources.
Page 171
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Civil courts
No cases.
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Administrative courts
Facts and legal issues: certain companies and a professional association brought two actions before the Conseil d'Etat. One action concerned the annulment of a decision of the Ministry of Posts and Telecommunications to enter into a contract with Securipost for the transport of funds. The other action concerned a claim for damages from the State for loss caused by the decision and the grant of State aid to Securipost.
Decision: the Conseil d'Etat noted that, according to the law, the relationship between La Poste, France Telecom and their users, suppliers and third parties was governed by private law and that the resulting disputes should be brought before the civil courts. Therefore, the
Conseil d'Etat held that an action for damages was beyond its jurisdiction.
However, in respect of the decision to enter into the contract, the Conseil d'Etat held that the conditions of tendering had not been respected and that the decision to enter into the contract should therefore be annulled.
Comment: the Conseil d'Etat did not have the opportunity to rule on State aid issues151.
Facts and legal issues: the State sold, through a tender procedure, its majority holding in a financial company ("Crédit Industriel et Commercial") to a subsidiary of that company ("Banque Federative du Crédit Mutuel"). Competitors filed a claim for annulment of the procedure, arguing, inter alia, that there were elements of State aid and that the tender procedure was subject to the notification requirement.
Decision: the Conseil d'Etat considered that the sale by the State of its majority holding in a company through a tender procedure could not constitute State aid. Therefore, the decision to sell was not subject to the notification requirement.
Page 172
Comment: the Conseil d'Etat considered it irrelevant that the purchaser was a subsidiary of Crédit Mutuel which was the exclusive distributor of a savings product ("Livret bleu") and that the Commission had initiated a formal investigation into this issue152.
Facts and legal issues: Bouygues and other building companies commenced summary proceedings for the suspension of a tender procedure. The claimants contested the conclusion of a new concession contract between the State and Cofiroute in respect of the construction and operation of the last stretch of a circular highway around Paris. Cofiroute had already built and now operated the other stretches of the highway. The claimants argued, inter alia, that Cofiroute benefited from an undue financial advantage, contrary to Article 87 EC.
The Administrative Court of Paris rejected the claim on the grounds that the Conseil d'Etat had already, in a previous judgment, annulled certain provisions of an amendment to another concession contract between the State and Cofiroute. The amendment provided for a 15-year extension of the concession and the Conseil d'Etat considered that, for certain stretches of the highway, this extension constituted an undue financial advantage granted by the State to Cofiroute.
Decision: The Conseil d'Etat stated that the Court of First Instance should have focused on the contested, new concession contract, and, for its judgment, should not have taken into account a ruling assessing a different concession contract.
The Conseil d'Etat considered that the appellants could not raise, in their action against the conclusion of a new concession contract, the fact that the execution of another concession contract - the amendment concerning other stretches - gave a financial advantage to Cofiroute contrary to EC State aid rules. The Conseil d'Etat therefore quashed the judgment of the Court of First Instance on the grounds of an error of law in the legal reasoning but also rejected the action due to an inadmissible argument.
Comment: the Conseil d'Etat did not analyse whether Cofiroute had benefited from an advantage by being awarded the contract.
Facts and legal issues: the National Federation of Insurance Agents requested the Minister of the Economy to abolish the distribution on the part of the Tax Administration, of certain insurance products recommended by a private insurer ("Caisse nationale de prévoyance").
Page 173
The Minister rejected the request. The Federation appealed the Minister's decision, arguing, inter alia, its incompatibility with EC State aid rules.
Decision: first, the Conseil d'Etat mentioned, again, that Article 87 EC did not create individual rights which may be invoked by individuals in the national courts.
Secondly, the Minister's decision stated that compliance with competition law was a condition for the distribution of these insurance products by the Tax Administration, meaning that exact payment for the services rendered was required and that no advantage should result from the discharge of public service obligations by the Tax Administration.
Thirdly, the Conseil d'Etat considered that the distribution, by the Tax Administration, of insurance products recommended by a private entity did not, in itself, amount to granting State aid to this private entity.
The Conseil d'Etat therefore upheld the Minister's decision.
Comment: the Conseil d'Etat does not seem to have accurately examined the advantages granted to the insurance company by the Tax Administration (possibly, cross-subsidies) or whether the Tax Administration received indirect remuneration for its services.
Facts and legal issues: in 1996, EDF and SNET, two public undertakings producing electricity, entered into an electricity supply contract. In the context of the liberalisation of the electricity market, contracts between public undertakings, including the contract at issue, had to be renegotiated. Since the parties failed to reach an agreement, an ad hoc committee defined new contractual obligations that were inserted as amendments into the contract.
Both EDF and SNET brought an action against the committee's decision. EDF argued, inter alia, that this decision was subject to the notification requirement because the new contractual obligations included State aid elements in favour of SNET.
Decision: the Conseil d'Etat did not exclude the existence of State aid measures but considered that the notification requirement did not apply to the decision of the ad hoc committee but, rather, to the amendment to the contract itself. The notification requirement could therefore only apply to the amendment to the actual contract signed by both undertakings, and not the administrative decision to modify the contract.
Comments: this interpretation does not seem to be in line with EC State aid rules since the aid should not be implemented until the Commission has declared it compatible with the Common Market. In the present case, the aid had not been notified to the Commission. OncePage 174 the contract had been signed, implementation should have been suspended in case of doubts as to the existence of State aid.
Facts and legal issues: the Assembly of the Chamber of Commerce and Industry of Strasbourg and of the Bas-Rhin passed a motion authorising the president to enter into two agreements with Ryanair. According to these agreements, the Chamber would grant financial aid to Ryanair for flights from Strasbourg airport, and Ryanair committed to increasing the number of passengers and to advertising. A complaint was brought before the Administrative Court of Strasbourg by a competitor of Ryanair, Brit Air.
The Administrative Court of Strasbourg considered that the Chamber of Commerce and Industry had granted State aid to Ryanair under these agreements. The Strasbourg Court held that the aid was unlawful because it had not been notified to the Commission. The Strasbourg Court annulled the president's decisions to sign the agreements. Both the Chamber of Commerce and Industry and Ryanair appealed.
Decision: the Administrative Court of Appeal of Nancy annulled the judgment of the Strasbourg Court for procedural reasons (i.e. the Strasbourg Court was composed of an even number of judges when counting the Government Commissioner ("commissaire du gouvernement")). The Administrative Court of Appeal of Nancy affirmed, however, the reasoning of the Court of First Instance. The Administrative Court of Appeal of Nancy considered that the respective commitments of the parties were so unbalanced that they amounted to mere financial support for Ryanair. The Administrative Court of Appeal of Nancy noted that the State aid granted was provided for by the local authorities ("collectivités territoriales") and that the Chamber of Commerce and Industry therefore had to be considered as a State entity, as provided for under EC law. The Chamber of Commerce and Industry did not behave like a private investor in the market and the Administrative Court of Nancy concluded that the financial aid constituted State aid.
As the aid had not been notified to the Commission, the Administrative Court of Nancy considered it unlawful. The Administrative Court of Nancy cancelled the Assembly's motion and the president's decisions to sign the agreements and ordered the Chamber of Commerce and Industry to terminate the agreements with Ryanair within two months, either by means of contractual termination or judicial annulment.
Since the appellants had filed an action for misuse of powers ("action for annulment"), the Administrative Court of Nancy could not order suspension of the payment of the aid by the Chamber of Commerce and Industry or recovery of the aid already granted.
Page 175
Comments: due to the particularities of French administrative procedure, the Administrative Court of Nancy did not order recovery of the aid. These two decisions strictly apply the rules on State aid and are good examples of the role of national courts in State aid matters. They anticipate the Ryanair Commission decision concerning BSCA ("Charleroi") airport in Belgium.
Facts and legal issues: from 1980 to 2002, the Ministry of Culture granted aid to CELF ("Centre d'exportation du livre français") for the export of French books. The Commission was informed of the aid in 1992 and considered the aid compatible with the Common Market in 1993. As the CFI annulled the Commission decision in 1995153, a competitor requested the Minister to suspend and recover the aid. The Minister refused and its negative decision was annulled by the Administrative Court of Paris. However, the arguments relating to State liability were dismissed.
Decision: the Administrative Court of Appeal of Paris noted that the respondents had not demonstrated that the aid amounted to compensation for the cost incurred by discharging a public service obligation and that there was no established and transparent legal basis for this compensation.
The annulment of the Commission decision implied that the Minister should have suspended and recovered the aid. In the absence of a new Commission decision concerning recovery, at the time the Minister was requested to recover the aid, the Paris Court considered that it was the responsibility of the State to assess whether legitimate reasons existed for not recovering the aid.
The Paris Court considered that, in the present case, there was no obstacle to recovery, although the respondents had raised the principle of legitimate expectations (with regard to the size of the organisation, its activities and the fact that the system had been in place since 1980), as well as the argument that recovery would threaten the public service mission carried out by the organisation. The Paris Court also set aside the French administrative rule according to which an administrative decision creating rights can only be annulled in case of illegality and within four months of the adoption of the decision.
The Administrative Court of Appeal of Paris upheld the decision of the Court of First Instance, ordered recovery of the aid granted from 1980 to 2002 with a penalty payment, but rejected the claim for damages and State liability. Indeed, it considered that the State aid was unlawful, but, in the absence of a definitive decision by the Commission declaring thePage 176 aid compatible or incompatible, it was impossible to establish the existence of a causal link between the alleged loss suffered by the competitor and the breach of Article 88 EC by the State.
Comments: the Administrative Court of Appeal of Paris applied Article 88 EC strictly and the case law of the ECJ and the CFI by ordering immediate recovery. Setting aside the rule concerning the conditions for annulment of administrative acts is also in compliance with the principles of supremacy of EC law. However, damages could have been awarded for not having recovered the aid earlier. Moreover, the Paris Court adopts a very restrictive interpretation of causation.
Once the first Commission decision had been annulled by the CFI, the Commission adopted a second decision, which was again annulled by the CFI154. The Commission adopted a third decision on 20 April 2004155. However, at the time of the Paris Court's decision, CELF had already brought an action for annulment against this new decision (on 15 September 2004)156. The Paris Court mentions the absence of a definitive Commission decision.
In any case, notwithstanding the Commission decision declaring the aid compatible, the mere fact that CELF benefited from aid that had not been notified was sufficient for the Paris Court to order recovery of the illegal aid. The question remains whether the Paris Court, even though it assessed whether the measure constituted State aid, was bound by a Commission decision that was challenged before the CFI (see comments under the UFEX case below).
Facts and legal issues: the president of the Chamber of Commerce and Industry of Pau decided to sign an agreement with Ryanair. The Chamber of Commerce was under the obligation (i) to pay Euro 80,000 to its co-contractor (without receiving consideration) for the launch of the airline's services between London and Pau; and (ii) to pay to Ryanair the sum of Euro 11 per passenger leaving the Pau airport, to a maximum of Euro 400,000 a year for each daily rotation. In return for the latter payments, Ryanair agreed to advertise the city of Pau, according to its own terms and conditions, at a frequency it could in its own discretion decide and without compliance monitoring. Moreover, the landing and ground lighting fees applied to Ryanair were lower than the rate applicable at Pau airport in general.
Air Méditerrannée was in charge of air transport of travelers from London to Lourdes, operating charter flights between London and Tarbes-Lourdes airport.
Air Méditerranée requested the Administrative Court of Pau to annul the decision of the president of the Chamber of Commerce and Industry of Pau to sign the agreement at issue.
Page 177
Decision: the Administrative Court of Pau stated that a non-negligible number of passengers using the new service between London and Pau were likely to go to Lourdes. Consequently, Air Méditerrannée's action was admissible.
The Pau Court noted the imbalances in the reciprocal undertakings of the parties to the agreement (i) in respect of, in particular, the imprecise nature of the obligations of Ryanair; and (ii) the fact that restitution of sums paid under the agreement, even in part, was not provided for in the event of non-realisation of the objectives pursued by the parties. The Pau Court concluded that the contested decision to sign the agreement constituted financial aid in favour of Ryanair.
The Pau Court stated that the Chamber of Commerce and Industry should be regarded as a State entity and that the aid affected trade between Member States because it favoured a single airline managing an international airline. Therefore, it considered that the aid constituted State aid within the meaning of Article 87 EC.
The Pau Court observed that the aid had not been notified to the Commission and was therefore illegal. The Pau Court annulled the decision of the president of the Chamber of Commerce and Industry and ordered the Chamber of Commerce and Industry to either bring an action for annulment or terminate the agreement.
Comment: the Pau Court could not award damages because an action for misuse of powers ("action for annulment") had been brought. See the Ryanair cases before the Administrative Court of Strasbourg and the Administrative Court of Appeal of Nancy above.
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Civil courts
Facts and legal issues: Stardust Marine ("Stardust") rented and sold boats. It was part of CDR and was sold after recapitalisation to FG Marine. Sunsail International ("Sunsail"), a British competitor of Stardust, contested the sale and requested the Commercial Court to order the suspension of the sale of Stardust to FG Marine, to put Stardust and FG Marine into temporary administration ("administration judiciaire"), to appoint new representatives and to order disclosure of documents and an expert opinion.
At the same time, Sunsail brought a complaint before the Commission against the aid measures granted to Stardust.
Decision: the Commercial Court of Paris stated that the share transfer agreement for the sale of Stardust to FG Marine was a private agreement to which Sunsail was not connected and which could not affect it. The Commercial Court of Paris pointed out that there was a contradiction between Sunsail filing an action before the Commission, requesting that the aidPage 178 to Startdust be declared unlawful157 and Sunsail's request for a formal declaration that it remained a potential buyer of Stardust, which presupposes that the aid is maintained.
The Commercial Court of Paris admitted that the national court was under a duty to impose sanctions for violations of EC law and relief, but stated that it did not see how putting Stardust and FG Marine into administration and replacing the current corporate management would enable it to fulfil this duty. It added that ordering an expert opinion and disclosure of documents had nothing to do with this duty.
Finally, the Commercial Court of Paris stated that its decision concerning the contract of sale of Stardust to FG Marine was not relevant for the decision to be handed down by the Commission on the legality of State aid measures, since the Commission was asked to decide whether or not the aid should be recovered.
The Court therefore declared that Sunsail's action was inadmissible.
Comment: Sunsail did not request the Paris Court to rule on the unlawfulness of the aid and raising State aid issues would therefore not have been in line with Sunsail's other requests.
Facts and legal issues: the claimants brought an action for a cease and desist order before the Commercial Court of Paris based on different arguments relating to logistic and financial assistance granted by La Poste to its subsidiaries SFMI and Chronopost (alleged cross-subsidies) and other legal and tax measures in their favour.
Decision: the Commercial Court of Paris observed that the Commission had found, in a decision of 1 October 1997, that there was no State aid in this case and considered that this decision was binding on national courts, even though the Commission decision was challenged before the CFI158. Indeed, actions brought before the CFI have no suspensory effect.
The Commercial Court of Paris rejected the argument raised about the breach of Article 88 (3) EC. Since the Commission had found that there was no State aid, the procedure under Article 88 (3) EC was inapplicable.
Finally, referring to established ECJ case law, the Commercial Court of Paris ruled that a recipient of State aid could not be held liable, on the basis of EC law alone, for not havingPage 179 verified whether the aid had been notified to the Commission by a Member State159. The ECJ held that the beneficiary could be held liable under applicable national civil law. In the present case, however, the Commercial Court of Paris held that the claimants based their claim on EC law, which was inadmissible, because they had previously argued that the defendant was liable under Article 1382 of the French Civil Code for not having verified the legality of the aid under Article 88 EC.
Comments: the Commercial Court of Paris relied strictly on the Commission decision but refused to consider the fact that this decision was challenged. As a result, the Paris Court ran the risk of coming to a decision that would be contrary to the final decision of the CFI. This raises the issue mentioned in the Masterfood case160, where the ECJ held, concerning antitrust rules, that the national judge should avoid taking decisions that could be contrary to decisions taken by the European institutions and should therefore wait until an action for annulment of a Commission decision has been decided. In the UFEX case, the Commission decision was annulled by the CFI, whose decision was then annulled by the ECJ.
Moreover, the justification for rejecting civil liability of the beneficiary since the claimants had raised Article 1382 of the Civil Code seems far-fetched. The claimants had raised this national provision in the aftermath of the SFEI case in which the ECJ refused to find EC law a basis for a liability under EC law (as an extension of the Francovich case). The Commercial Court's judgment was appealed to the Court of Appeal of Paris which stayed the proceedings to await the outcome of the EC litigation161.
Facts and legal issues: a company manufacturing equipment used for the development of forests brought an action for anti-competitive conduct against the public entity protecting forests ("Office national des forêts" or "ONF") before the Competition Council, alleging, inter alia, that State aid was granted by the State to ONF.
The Competition Council ruled that the action was inadmissible as far as the State aid rules were concerned as the Competition Council is not competent in matters other than those listed in the French Commercial Code ("Code de commerce") and Articles 81 and 82 EC162. The company appealed to the Civil Court of Appeal of Paris.
Page 180
Decision: the Civil Court of Appeal of Paris upheld the exclusive competence of the administrative courts to assess the right of a public entity to engage in commercial activities, as well as the exclusive competence of the Commission to assess the compatibility of State aid with the Common Market.
The Civil Court of Appeal of Paris rejected arguments related to the abuse of a dominant position on the basis of a previous Commission decision and on the basis of operational accounts submitted by ONF to prove the absence of cross-subsidisation. Finally, the Paris Court considered that the mere fact that some of ONF's employees were civil servants did not constitute a competitive advantage, except in specific circumstances to be established by the appellant.
Comments: the Civil Court of Appeal of Paris could only rule on Article 82 EC. The Paris Court took, however, a clear decision on whether the civil servant status of employees constituted a competitive advantage.
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Independent public agencies
Facts and legal issues: in 1999, the Competition Council decided of its own motion to investigate the grant of financial aid by EDF to certain producers of electric dryers. Acting upon a complaint, the Commission also investigated the financial aid and adopted a decision on 11 April 2000 finding that there was no State aid163.
Decision: referring to the principle of the supremacy of EC law, including EC competition law, the Competition Council adopted a decision to drop the investigation.
Comments: the Competition Council considered that it was bound by decisions of the Commission dealing with exactly the same facts. However, concerning Article 82 EC, the Competition Council did not seem to appreciate the difference between a rejection decision for lack of Community interest (precisely allowing the national competition authorities to act) and a rejection decision when there is no anti-competitive behaviour (which was not the case here as the Commission had recognised the existence of discriminatory prices).
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Administrative courts
Page 181
See description of the case above.
See description of the case above.
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Civil courts
Facts and legal issues: the Jaunet family sold a company ("Manufacture de Confection l'Océane" or "Océane") to Sojerca, another company. It provided to Sojerca both a guarantee on the net asset value and a bank guarantee.
Océane benefited from a reduction in employers' national insurance contributions, which the Commission considered to be State aid that was incompatible with the Common Market. In 2000, the State ordered recovery of the aid.
The Jaunet family indicated that they did not consider taking into account the request for recovery because of the guarantee. Sojerca asked the Jaunet family to pay jointly and severely Euro 268,000 because the decision to accept the reduction in national instance contributions had been taken by the Jaunet family. The Jaunet family refused, arguing that the decision to recover the aid had been taken once they had sold their company.
In the meantime, Sojerca was put into liquidation and Océane went into receivership.
Decision: first, the Commercial Court of Paris noted that Sojerca had not reimbursed the aid to the State and had not proven that prejudice would result from the recovery order (which could trigger payment by the Jaunet family).
Secondly, the Commercial Court of Paris noted that the State did not present the recovery order to the creditors' representative after Océane had gone into receivership. The recovery order was therefore invalid. The Commercial Court of Paris concluded that there was no basis for Sojerca's claim and that it was no longer entitled to request payment on the basis of the guarantee.
The Commercial Court of Paris rejected Sojerca's claim and ordered Sojerca to refund the bank guarantee, which had been paid out to guarantee payment to the bank. No damages were awarded to the Jaunet family in view of the fact that the company had gone bankrupt.
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Comment: it seems that the Commercial Court of Paris ruled, by implication, that payment would have had to be made by Sojerca (the buyer), had the State claimed recovery from the right person. The Commercial Court of Paris did not consider the price at which the company was sold or who the beneficiary of the reduction in insurance contributions was. The Commercial Court of Paris focused on the justification for triggering the guarantee.
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Independent public agencies
Facts and legal issues: a French law of 1997 determined the ownership status of a high-voltage electricity network. As a result, the reserves previously built up by EDF (free of tax) over the period from 1987 to 1996 became superfluous. Some reserves were directly incorporated into EDF's capital without increasing its taxable net assets.
The Commission considered that this tax concession granted to EDF constituted unjustified operating aid, which had the effect of strengthening its competitive position. On 16 December 2003, it adopted a final negative decision and ordered the French authorities to recover Euro 1.2 billion from EDF.
In February 2004, EDF reimbursed the sum. EDF and RTE, EDF's department in charge of the high-voltage electricity network, disagreed on the amount to be paid by EDF. RTE argued that the sum of Euro 1.2 billion should be divided between the departments according to the accounting principles applied in 2001 to split liabilities between transport, distribution and production activities in the context of the liberalisation of the electricity market. RTE would be liable for 27% of the charge and EDF's other departments for 73%. EDF argued that the charge should be split between the different departments according to their shares in the contested reserves. RTE would be liable for 48.5% of the sum and EDF's distribution department for 51.5%. RTE decided to refer the case to the Energy Regulation Commission.
Decision: first, the Energy Regulation Commission recalled that the methodology proposed by EDF, based on a chronological analysis of the accounts, had already been rejected in its decision related to the accounting principles applying in the context of the liberalisation of the electricity market.
Secondly, the Energy Regulation Commission noted that (i) EDF's proposal excluded the production department from the split of the charge, whereas it was the only liberalised market in France; and (ii) the Commission's negative decision was based on the strengthening of EDF's competitive position in the liberalised market.
Thirdly, the Energy Regulation Commission noted that the reserves were incorporated into EDF's capital and therefore benefited all activities and departments of EDF, including the production department.
Page 183
The Energy Regulation Commission considered that each department of EDF should bear part of the recovery charge in proportion to its funds: 27% for RTE, 17% for the distribution department and 56% for the production department.
Comment: the Energy Regulation Commission decided that, since the aid benefited EDF, which that consolidated group accounts, all activities of EDF benefited from the aid. The aid must therefore be recovered, proportionally, from departments active in all those areas of activity where a benefit had occurred.
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Administrative courts
Facts and legal issues: a law of 1996 enabled the French government to sign agreements with undertakings in the clothing, leather, shoe and textile sectors regarding a reduction in working time, in order to avoid redundancies. In return, the French government granted an additional reduction in social charges on low salaries ("Borotra plan"). The Commission adopted a negative decision in 1997 declaring the aid scheme incompatible and ordering recovery of the illegally granted aid (the scheme had been notified but implemented prior to the Commission decision, and the Commission decided to open a formal investigation in respect of the scheme following notification). The ECJ rejected an action for annulment lodged by the French State164.
The claimant argued that the State (both the legislator and the Administration) acted in breach of Article 88 (3) EC, since the agreement had been implemented prior to the Commission decision, so that the companies would be required to reimburse the aid.
The claimant did not refuse to reimburse the illegal aid and effectively reimbursed it. The claimant did not pretend that the loss would consist in having to reimburse the aid (this would be contrary to EC law principles). However, it claimed loss of profit, since the company would have saved funds, if it had considered relocating to lower-wage countries at an early stage (which was not carried out because of the benefits received under the aid scheme). The claimant requested the Grenoble Court to annul the administrative decision rejecting its request for damages and to order the State to pay the sum of Euro 1.3 million in compensation for the loss suffered.
Page 184
The claimant relied on the liability of the State pursuant to both EC law and French administrative law, due to the violation of Article 88 (3) EC. It argued that the liability of the Member State for breach of EC law could be invoked even without proving fault and could attach to all State entities, including the legislator. The French parliament had enacted a law implementing an aid scheme contrary to Article 88 (3) EC and the State failed to inform the companies about the relevant legal risks before signing the agreements providing for the aid measure (the Commission decision opening the formal investigation was published in the Official Journal when the agreements had been signed!). It added that the behaviour of the company was not imprudent and that the request for compensation did not relate to the reimbursement of the unlawful aid.
Decision: the Administrative Court of Genoble considered that the claimant had not demonstrated in evidence that it had formally decided to implement a relocation plan, which it would have been required to abandon when signing the agreement with the French government providing for the aid. The Grenoble Court therefore rejected the claim, stating that "under these conditions and in any event its request for compensation against the State cannot be accepted". This case was therefore only rejected because of lack of causation as a condition of the type of liability sought.
Comment: In the absence of proof of causation in respect of loss of profit, the Grenoble Court took the opportunity not to take a decision on State's liability. Every other condition seemed to have been met, however, in particular those conditions laid down by established ECJ case law relating to a violation of Article 88 (3) EC165.
Facts and legal issues: a law of 1996 enabled the French government to sign agreements with undertakings in the clothing, leather, shoe and textile sectors regarding a reduction in working time, in order to avoid redundancies. In return, the French government granted an additional reduction in social charges on low salaries ("Borotra plan" mentioned above).
The claimant entered into an agreement with the French government. It undertook to maintain the number of its employees and only to carry out a reduction inferior or equal to 5%. In return, it was granted a reduction in its social charges amounting to Euro 199,364.90.
The aid had been notified to the Commission and, in a 1997 decision, the Commission declared the aid measures laid down by the law of 1996 incompatible with the Common Market. The decision was then upheld by the ECJ (see references mentioned in the case described above).
Page 185
The claimant, considering that there was a violation of Article 88 (3) EC since the aid had been implemented prior to a Commission decision, requested the State to grant damages for the loss suffered as a result of delays when the company relocates (eventually in 2000) and as a result of a reduction in the company's gross margin due to the recovery of the aid.
Decision: the Administrative Court of Clermont-Ferrand stated that, under the terms of Article 55 of the French Constitution and Article 10 EC, the State was likely to be held liable for the adoption, by the legislator, of laws that were not compatible with the provisions of the EC Treaty. The conditions for such liability in an area where the legislator has a considerable margin of appreciation is that individuals have a right to damages only where (i) the rule of law that is violated has as its object to confer rights on individuals, (ii) the violation is sufficiently clear and precise; and (iii) there exists a causal link between the violation and the damage sustained.
Since the claimants relied on Article 87 EC which does not confer rights on individuals, the Administrative Court of Clermont-Ferrand dismissed the claim regarding the liability of the legislator.
It then noted that the Prime Minister had committed a fault likely to attract the liability of the Administration by signing a decree relating to the progressive reduction in employers' social security contributions (implementing the law before the Commission decision was adopted).
The Administrative Court of Clermont-Ferrand stated that neither the Commission decision nor Article 87 EC prevented a national court from awarding damages, on the grounds of liability due to negligence, for the loss suffered by the claimant. However, the Administrative Court of Clermont-Ferrand considered that an economic entity should, normally, when acting diligently, have been in a position to ensure that the procedure described in Article 88 (3) EC is followed. The Administrative Court of Clermont-Ferrand added that the claimant could have questioned the Minister about the status of application of the procedure provided for in Article 88 (3) EC. The Administrative Court of Clermont-Ferrand concluded that this negligent omission was likely to reduce the amount in damages awarded to the claimant by a quarter.
Regarding the award of damages, the Administrative Court of Clermont-Ferrand held that the claimant's damages could not be equivalent to the aid granted under the agreement, since the judgment of the ECJ provided for recovery of this amount by the State. However, the Administrative Court of Clermont-Ferrand stated that it could award damages for the loss suffered by the claimant and ordered an expert's opinion on the loss suffered.
The Administrative Court of Clermont-Ferrand noted that the agreement entered into in 1996 by the State and the claimant was null and void due to the violation of Article 87 EC. The Administrative Court of Clermont-Ferrand stated that the State's co-contractor, whose contract was null and void, could claim reimbursement of its expenses. The Administrative Court of Clermont-Ferrand added that, if the nullity of the contract resulted from a faultPage 186 committed by the French authorities, it could, in addition, claim compensation for the resulting loss pursuant to the State's contractual liability. However, the Court considered that the claimant could not obtain an indemnity which would render EC State aid rules ineffective by conferring on the claimant a benefit similar to that illegally granted by the State.
The Administrative Court of Clermont-Ferrand finally ordered an expert to ascertain the economic causes of the reduction in the gross margin invoked by the claimant, to determine the economic consequences of the delayed relocation and to compare that with what the claimant would have obtained if it had not benefited from the State aid measures.
Comment: this case is interesting both in respect of State liability and the award of damages under Article 88 (3) EC.
In accordance with established, national case law, the administrative judge is very reluctant to hold the legislator liable for having adopted provisions violating EC law and would, in any case, not do so on the basis of EC law, but would base such liability on national law (which is contrary to established ECJ case law, which provides a legal basis for the liability of Member States violating EC law, regardless of the state entity responsible for the violation, i.e. the legislator, an administrative body or the judiciary166).
However, in this case, the Administrative Court of Clermont-Ferrand also misinterpreted the Brasserie du Pêcheur ruling with regard to the "margin of appreciation" of the legislator and the liability regime in France, according to which the legislator must be at fault in order to be liable ("responsabilité pour faute"). The Administrative Court of Clermont-Ferrand dismissed the claim regarding the legislator's liability because it considered that, although the legislator adopted legislation that violated Article 87 EC, Article 87 EC did not have direct effect.
The Administrative Court of Clermont-Ferrand should have found the legislator liable for violation of Article 88 (3) EC, which has direct effect and which does not, under any circumstances, give a margin of appreciation to the legislator. Article 88 (3) EC merely provides for a material obligation to notify a draft measure and/or not to implement it prior to a decision by the Commission. In the light of the Francovich and Brasserie du Pêcheur case law of the ECJ, any violation of Article 88 (3) EC clearly seems to amount to a "sufficiently serious breach" of EC law likely to trigger liability under EC law.
Moreover, regarding the rule of law conferring rights on individuals, the Administrative Court of Clermont-Ferrand confused the notion of direct effect (not Article 87 EC) with the mere conferral of rights on individuals, which is what Article 87 EC does in combination with Article 88 (3) EC.
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Regarding damages, however, the judge is prepared to rely on the principle of supremacy of EC law and to safeguard the effet utile of both the Commission decision and the ECJ's judgment by (i) not awarding damages equivalent in amount to the unlawful aid initially granted; and (ii) holding that the claimant could not obtain an indemnity, which would render EC State aid rules ineffective by conferring on the claimant a benefit similar to that granted illegally by the State. This, however, does not seem legally correct. Indeed, the award of damages following a violation of EC law by the State is separate from the requirement imposed on the beneficiary to reimburse the aid to the State.
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Civil courts
Facts and legal issues: in 1990, the claimant, a building company, submitted a bid for an extension to the Marseille airport, for which an Italian company was finally selected. It sued the Italian company in the commercial courts for damages for unfair competition, arguing that the Italian company had been able to make the best offer because of aid previously granted to it by the Italian Government. At the same time, the claimant filed a complaint which the Commission which initiated a formal investigation procedure.
The Court of Appeal of Aix-en-Provence concluded, on the basis of a Commission decision of 1995167 declaring the aid compatible with the Common Market, that the aid received by the Italian company at the time of the tender was not sufficient to directly affect competition, especially in the Marseille case.
The claimant appealed ("pourvoi en cassation") and tried to show that the defendant had violated Article 1382 of the Civil Code. The appellant argued, inter alia, that the Court of Appeal of Aix-en-Provence had focused on direct aid without assessing the guarantees provided by the Italian government and, in particular, the take-over of the company by a public undertaking. The Court of Appeal of Aix-en-Provence had also not assessed whether the Italian company would have been able to make the best offer without receiving State aid. It was further alleged that it was sufficient to show that there was a causal link between the aid and the proposed price regardless of whether or not the aid was the only explanation for that price.
Page 188
Decision: the Cour de cassation noted that the Court of Appeal of Aix-en-Provence had relied on evidence provided by the Commission decision and on evidence before it to conclude that the Italian company had not benefited from aid before submitting the bid. It also noted that the Court of Appeal of Aix-en-Provence had held that the causal link between the aid granted and the appellant's exclusion from the tender procedure was not obvious. The Cour de cassation therefore rejected the appeal.
Comments: unfortunately, this case did not allow the Cour de cassation to confirm the principle, well recognised at national level, established by the ECJ in the 1996 SFEI case168, according to which the beneficiary of unlawful State aid is liable, under national law, for having accepted and used the aid in these circumstances (see also the 1995 Breda case before the President of the Brussels' Commercial Court, 1999 Report, Belgian section).
See description of the case above.
Facts and legal issues: in June 1997, CDR sold its majority holding in Stardust Marine ("Stardust") to FG Marine. In September 1999, the Commission considered that the State aid granted to Stardust was incompatible with the Common Market and ordered reimbursement of the aid169. Under provisions of the purchase contract, FG Marine required CDR to repurchase the Stardust shares. Stardust went bankrupt and was purchased by another company.
FG Marine sued CDR on the basis of its extra-contractual liability and requested damages.
In November 2001, the Commercial Court of Paris ordered CDR to pay approximately Euro 4.6 million in damages to FG Marine for the following reasons: (i) lack of awareness, on the part of the co-contractor, of the breach of Article 88 (3) EC, whereas CDR declared in the purchase contract to have complied with all legal requirements; (ii) lack of awareness of State aid procedural issue which constituted a fault and caused FG Marine prejudice; (iii) that fault on the part of CDR was the main cause of the reimbursement of the unlawful State aid; and (iv) the reimbursement obligation was the main cause of Stardust's bankruptcy. CDR appealed to the Paris Court of Appeal.
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In the meantime, in May 2002, the ECJ annulled the Commission decision following an action for annulment brought by the French State170.
Notwithstanding the ECJ's judgment, FG Marine argued in its submission before the Paris Court of Appeal that CDR was liable for its extra-contractual faults, in particular due to its lack of diligence during Commission proceedings.
Decision: the Paris Court of Appeal stated that FG Marine had failed to prove that CDR had been negligent in the way it dealt with the formal investigation before the Commission and with FG Marine.
FG Marine also argued that it should have been informed by CDR of the State's intention to challenge the Commission decision. The Paris Court of Appeal rejected this argument because (i) FG Marine had required CDR to repurchase Stardust only five days after the Commission decision, i.e. before CDR/the State could have determined their legal strategy; and because (ii) FG Marine was advised by lawyers who could have foreseen this eventuality.
Finally, the Paris Court of Appeal rejected the argument according to which CDR initiated the bankruptcy procedure too early, because FG Marine no longer had a financial interest in Stardust after CDR was under the obligation to repurchase it.
The Paris Court of Appeal annulled the judgment the Court of First Instance and rejected the claim brought by FG Marine in its entirety.
Comments: following the ECJ's judgment, the case no longer raised any State aid issues and FG Marine tried to obtain a declaration of liability on the grounds of lack of diligence, which was rejected. The circumstances of the case also raise a question that has not yet been debated or settled by case law: is the scope of application of Article 88 (3) EC wider than Article 87 (1) EC (i.e. are Member States under the obligation to notify State aid or, also, measures which are likely to amount to State aid but which, after due examination, do not qualified as State aid?).
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Administrative courts
Facts and legal issues (see section 1.1): in 1996, the French government set up a system for the free collection and disposal of animal carcasses and slaughterhouse waste forPage 190 farmers and slaughterhouses. This system was financed by a tax payable by any person active in the retail sale of meat at the distribution level.
Gemo, a medium-sized supermarket, contested the legality of the tax. In 2000, the Administrative Court of Dijon ordered the reimbursement of the tax to Gemo. The Minister of the Economy, Finance and Industry appealed this decision.
Decision: the Administrative Court of Appeal of Lyon held that Article 87 EC, raised by the appellant, could not be invoked by individuals before the national courts since it is within the competence of the Commission to assess whether an aid is compatible with the Common Market. However, the Lyon Court observed that, since the validity of national acts could be affected by a violation of Article 88 (3) EC, it was necessary to examine whether the measure constituted State aid.
The Lyon Court then observed that public carcass disposal services, providing meat producers and slaughterhouses with free collection and disposal of animal carcasses and of waste, might be regarded as relieving that economic sector of a burden which it would otherwise have to bear.
The Lyon Court referred the question to the ECJ asking whether the tax payable by retail sellers of meat must be regarded as constituting State aid.
In its judgment of 20 November 2003171, the ECJ held that the system constituted State aid.
Comment: contrary to many other cases before the administrative courts, the Lyon Court did not dismiss the action on the grounds that Article 87 EC cannot be raised by individuals, but went on to assess what consequences a violation of Article 88 (3) EC could have for national measures and, therefore, to examine whether the national measure constituted State aid.
-
Civil courts
Facts and legal issues: the Social Security Court of Créteil requested a preliminary ruling from the ECJ on a tax advantage enjoyed by undertakings entrusted with the operation of a public service, such as wholesale distributors supplying medicines to pharmacies. In a judgment of 11 January 2000, the Social Security Court of Créteil referred three questions to the ECJ under Article 234 EC, one of which concerned the interpretation of Article 86 (2) EC and Article 87 EC.
Page 191
The questions were raised in the course of proceedings brought by Ferring SA before the Social Security Court of Créteil, requesting the reimbursement of sums it had paid to the Central Agency of Social Security Institutions ("ACOSS"), by way of a direct sales tax on medicines established by a law of 1998. Ferring argued that this contribution constituted illegal State aid in favour of certain wholesalers providing pharmacies with medicines.
Decision: Ferring emphasised the following points: (i) the wholesalers concerned were in a more favourable position; (ii) the tax was not proportional to the costs incurred by discharging the public service; and (iii) the tax was not justified by the system itself and therefore could not benefit from the exemption provided for under Article 86 (2) EC. The measure in question therefore constituted State aid which had not been notified to the Commission.
ACOSS (i) contested the fact that there had been a transfer of State resources; and (ii) argued that the tax was justified. In this case, the Créteil Court considered that the measure constituted State aid and argued that it should benefit from the exemption under Article 86 (2) EC. Regarding the proportionality of the tax, the Créteil Court held, however, that it was impossible to justify the amount of the tax.
Ferring requested the Créteil Court to refer the issue of the application of Article 87 EC and Article 86 EC to French legislation to the ECJ.
Comment: the ECJ distinguished between Article 86 (2) EC and Article 87 EC, ruling that "provided that the tax on direct sales of medicines imposed by a Member State on pharmaceutical laboratories corresponds to the additional costs actually incurred by wholesale distributors in discharging their public service obligations, not assessing wholesale distributors to the tax may be regarded as compensation for the services they provide and hence not State aid within the meaning of Article 92 of the Treaty (now, after amendment, Article 87 EC). Moreover, provided there is the necessary equivalence between the exemption and the additional costs incurred, wholesale distributors will not be enjoying any real advantage for the purposes of Article 92 (1) of the Treaty because the only effect of the tax will be to put distributors and laboratories on an equal competitive footing"172.
"Article 86(2) EC is to be interpreted as meaning that it does not cover a tax advantage enjoyed by undertakings entrusted with the operation of a public service such as wholesale distributors supplying medicines to pharmacies in so far as that advantage exceeds the additional costs of performing the public service because the advantage, to the extent that it exceeds the additional costs, cannot be regarded as necessary to enable them to carry out the particular tasks assigned to them" (para. 32-33 of the case cited above).
The Social Security Court of Créteil, which prompted this famous decision, clearly identified the issues involved and referred appropriate questions to the ECJ. The answer from the ECJPage 192 preceded the Altmark case, which went further in the delimitation of both Article 86 (2) EC and Article 87 EC.
Facts and legal issues: a retail store filed an action for reimbursement of a tax, which it considered to constitute State aid, because the tax was only payable by big retail stores, whereas only small retail stores were eligible to receive the retirement benefits financed by the tax.
The Court of Appeal of Caen excluded a finding of State aid, because (i) the retirement benefits at issue had a social character and were granted to individuals, not undertakings; (ii) small retail stores paid the usual amount of contributions to the contributory pension scheme; and (iii) the tax exemption for small retail stores was justified by the general nature of the system based on the principle of solidarity.
Decision: the Cour de cassation held that the Court of Appeal of Caen had erred in law by (a) deciding that individuals carrying out an economic activity did not constitute undertakings carrying out an economic activity, which, by receiving aid, could distort competition; (b) not examining whether the tax relief allowed beneficiaries to reduce their pension scheme payments; (c) not holding that all aid had to be notified to the Commission; and (d) by deciding that no indirect aid had been granted to supermarkets because the system was based on the principle of solidarity.
The Cour de cassation referred a question to the ECJ for a preliminary ruling asking whether EC law must be interpreted as meaning that a tax, paid by retail stores exceeding a certain surface or turnover, in order to finance retiring benefits granted to small traders, therefore decreasing their potential contributions to self-funded pension schemes, constitutes State aid173.
A similar request for a preliminary ruling has been made in Joined Cases C-266/04 to C-270/04 and C-276/04 by the Social Security Court of Saint-Etienne and in Joined Cases C-321 to C-325/04 by the Court of Appeal of Lyon (see below)174.
Facts and legal issues: a laboratory filed an action for the refund of a Sociàl Security contribution arguing that this contribution was unlawful State aid, because certain laboratories were exempt. Referring to the Banks case175, the Court of Appeal ruled that inPage 193 this context, the sanction for having granted unlawful State aid was its suspension and not the grant of a tax refund to the laboratories subject to it.
Decision: the Cour de cassation referred the following questions to the ECJ for a preliminary ruling: (i) whether EC law must be interpreted as meaning that a company may file a claim for a tax refund because certain companies are exempted from paying the tax and whether this exemption constitutes State aid; and (ii) considering that, according to French civil procedure, an applicant filing an action for a tax refund must prove that the tax exemption of certain companies constitutes State aid, because it overcompensates them for the costs of discharging their public service obligations or does not fulfill the four criteria of the Altmark case, whether EC law should be interpreted as meaning that this burden of proof "makes recovery impossible or excessively difficult" within the meaning of ECJ case law176.
Comment: a parallel can be drawn between the second question and the question asked in the Brasserie du pêcheur case, where the national court asked whether a national procedural provision could be considered as making it impossible or excessively difficult to obtain damages. In this case, the ECJ will address the issue of the interpretation of the notion of State aid in the context of its recovery.
Facts and legal issues: the claimant and other parties brought an action for reimbursement of certain social security contributions for retiring craftsmen and traders, from ORGANIC which they had paid during the period from 2000 to 2002. The claimant requested the Social Security Court of Saint Etienne to make a preliminary reference to the ECJ and to suspend the proceedings until the ECJ delivered its ruling.
Decision: The Social Security Court of Saint-Etienne held, by judgment of 5 April 2004, that (i) the outcome of the case depended on whether the State's payments constituted State aid; and (ii) that the Saint-Etienne Court was not, given the nature and characteristics of the contributions, in a position to determine whether the measure fell within the Member State's regulatory autonomy or whether the measure constituted State aid. In view of this, the Saint-Etienne Court decided (iii) to make the following preliminary reference to the ECJ under Article 234 EC: "Should Article 87 EC be interpreted as meaning that (a) State funding by France through the Fuel Distributors' Trade Committee ("Comité Professionnel de la Distribution des Carburants") and through the Intervention Fund for the Support of Crafts and Trade ("Fonds d'Intervention pour la Sauvegarde de l'Artisanat et du Commerce") by way of assistance when self-employed craftsmen and traders retire and (b) grants made to the old
Comment: the Court of Appeal of Lyon had raised a similar question on 24 February 2004178. In all these cases, Advocate General Stix-Hackl concluded (on 14 July 2005) that there was no State aid.
Page 195
a) Administrative courts
Administrative Court of Melun, Société Picard Surgelés, 11 March 1999, Cases n°97-3181, 97-3182 and 98-1392, Revue de jurisprudence fiscale 1999, n°944 (B)
Adminitrative Court of Caen, Société Uniservice Distribution and Société Honfleur Distribution, 02 December 1999, Cases n° 98-1460 and n° 99-526(B).
Administrative Court of Dijon, SA Nevers Viandes, 25 May 2000, Case n°99-1071, Revue de jurisprudence fiscale 2001, n°119 (B)
Conseil d'Etat, Confédération française de la boucherie, boucherie-charcuterie, traiteurs, 28 July 2000, Case n°206594, Lebon report of cases, Tables, p. 979 (B)
Administrative Court of Orléans, SA Sobledis, 08 August 2000, Case n° 98-2311 (B).
Administrative Court of Lille, SA Lianoudis, 21 December 2000, Case n°98-03864, Lebon report of cases, Tables, p. 979 (B)
Administrative Court of Appeal of Lyon, Ministre de l'Economie, des Finances et de l'Industrie c/ SA Gemo, 15 January 2004, Case n°00LY02270; Conseil d'Etat, 15 July 2004, Case n°264494, not published (B)
Conseil d'Etat, Syndicat national de l'industrie des viandes et autres, 11 February 2004, Case n°264346, not published in the Lebon report of cases (B)
Conseil d'Etat, Société Doux, 23 March 2005, Cases n°269059 and n°269060, not published (B)
b) Civil courts
a) Administrative courts
Conseil d'Etat, Union des industries chimiques and others, 5 October 1998, Case n°162562, Rec. Tables, p. 798-805-890 (B)
Conseil d'Etat, Comité national interprofessionnel de l'horticulture florale et ornementale et des pépinières ("CNIH"), 6 November 1998, Cases n°171574 and n°171576, Revue dePage 196 jurisprudence fiscale 1999, p. 70; Gazette du Palais, 1999 II Panor, p. 92; and n° 178322;
Conseil d'Etat, CNIH, 2 December 1998, Cases n° 171648 et seq179, Europe, February 1999, n° 84, p. 23, not published (B)
Administrative Court of Appeal of Paris, Comité national interprofessionnel de l'horticulture florale et ornementale et des pépinières ("CNIH"), 30 December 1998, Case n° 96PA03013; Administrative Court of Appeal of Paris, CNIH, 1 April 1999, Case n° 96PA01659; Administrative Court of Appeal of Paris, CNIH, 1 April 1999, Case n° 96PA03012 (B)
Administrative Court of Appeal of Lyon, SA Editions Glénat, 28 April 1999, Case n°96-214;
Conseil d'Etat, SA Editions Glénat, 23 November 2001, Case n°209974, Rec., p. 566-568 (B)
Conseil d'Etat, Syndicat de la presse périodique culturelle et scientifique et autres, 29 September 1999, Cases n°186227 and n°186356, Rec. Tables p. 680-689-930; Conseil
d'Etat, Publishing company Documentation Organique, 29 September 1999, Case n°194317 (B)
Administrative Court of Appeal of Douai, SA HCF, 30 May 2000, Case n°96-1653, RJF, November 2000, Case n°1373 (B)
Conseil d'Etat, Société Pantochim SA, 31 May 2000, Cases n°192006 and n°196303, Revue de jurisprudence fiscale 2000 p. 729-730 (B)
Court of Appeal of Caen, Société Etablissements Friedrich c/ ANIVIT ("Association Nationale Interprofessionnelle des Vins de Table et des Vins de Pays de France"), 21 November 2000, Case n° RG 99/00877(B)
Administrative Court of Appeal of Paris, Comité de développement et de promotion du textile et de l'habillement, 20 September 2001, Case n°98PA01610, not published (B)
Conseil d'Etat, Syndicat national de l'industrie pharmaceutique et autres, 3 December 2001, Cases n°226514, n°226526, n°226548, n°226553, n°226554, n°226555, n°226556, n°226557, n°226558, n°226569, n°225670 and n°226571, not yet published in the Lebon report of cases (B)
1999 Report
Administrative Court of Appeal of Paris, SA Lesieur Alimentaire et autres, 27 June 1997, Cases n°89PA01466, n°89PA01469, n°89PA01468, n°89PA01467 and n°89PA01470 (B)
Administrative Court of Appeal of Bordeaux, Letierce et autres, 9 July 1991, Cases n°89BX01683, n°89BX01703, n°89BX01700, n°89BX01666, n°89BX01665, n°89BX01695 and n°8901708 (B)
Page 197
Administrative Court of Appeal of Nantes, S.A. Tartrou, 09 October 1991, Cases n°89NT01114 and n°89NT01484 (B)
Administrative Court of Appeal of Nancy, SARL Decoster, 26 December 1991, Cases n°90NC00344, n°90NC00345 and n°90NC00469 (B)
Conseil d'Etat, Association La Vache à lait qui refuse de se laisser traire, 17 April 1992, Case n°117604 (B)
Conseil d'Etat, Fenacomex known as the Saumon case, 2 June 1993, Cases n°69726 and n°69727 (D)
Conseil d'Etat, SCA du Piada, 01 June 1994, Case n°129805 (B)
Conseil d'Etat, Allix c/ Directeur de l'Agence financière du bassin d'Adour Garonne, 1 June 1994, Case n°129775 (B)
Conseil d'Etat, Société Saumon Pierre Chevance, Case n°136761 (B)
b) Civil courts
Cour de cassation, Société Huttepain, 16 June 1998, Case n°1277, Petition n°96-19.109; Cour de cassation, Société Marcel Braud, 20 October 1998, Case n°1652, Petition n°96-18.682; Cour de cassation, Société Sanders, 20 October 1998, Case n°1651, Petition n°96-18.682, not published (B)
Cour de cassation, Société Guyomarch Vertou, 20 October 1998, Case n°1649, Revue de jurisprudence fiscale 1999 n°282, p. 173-174 (B)
Cour de cassation, Société des Etablissements Friedrich, 26 January 1999, Case n°289, Petition n°97-11.225, Bull. civ. , IV, n°22, p. 18 (B)
Cour de cassation, Mr Le Guen, 23 October 2001, Case n°1812, Petition n°00-10.631; Cour de cassation, Mr Guyomarch, 23 October 2001, Case n°1813, Petition n°00-10.632, not published (B)
Cour de cassation, Entreprise Michel Dewailly, 30 May 2002, Case n°1911, Petition n°00-20.526, not published (B)
1999 Report
Cour de cassation, Société anonyme Le Moulin Rouge Ponard, 23 November 1993, Case n°1840, Petition n°91-18.034 (B)
Storage of cereals
Page 198
Cour de cassation, SNC Limagne Sanders, 18 October 1994, Case n°2003, Petition n°92-15.667 (B)
Cour de cassation, SNC Bourgogne Sanders, 13 June 1995, Case n°1215, Petition n°93-21.417 (B)
Cour de cassation, Société Minoterie Joseph Nicot, 20 February 1996, Case n°360, Petition n°93-21.661 (B)
Cour de cassation, SNC Bourgogne Sanders, 20 February 1996, Case n°364, Petition n°94-11.717 (B)
Cour de cassation, SNC Sanders Aliments, 07 January 1997, Case n°60, Petition n°95-10.099 (B)
Cour de cassation, Société Normande d'alimentation animale, 27 May 1997, Case n°1357, Petition n°95-19.371 (B)
Cour de cassation, Société Rental Languedoc, 27 May 1997, Case n°1353, Petition n°95-13.053 (B)
Cour de cassation, Société Ralston Purina France, 27 May 1997, Case n°1358, Petition n°95-19.372 (B)
Cour de cassation, Société Chambre, 02 December 1997, Case n°2398, Petition n°96-10.575 (B)
Cour de cassation, Société Huttepain Maine Aliments, 16 June 1998, Case n°1277, Petition n°96-19.109 (B)
a) Administrative courts
Conseil d'Etat, URSSAF de la Haute-Garonne, 17 November 2000, Case n°185772, Droit matériel de l'Union européenne, Paris, Montchrestien, Coll. Précis Domat, 2ème éd. 2001, note 25, p. 455, para. 97 and p. 476 (D)
Conseil d'Etat, M. Guiavarch, 5 September 2001, Case n°225473, not yet published in the Lebon report of cases (B)
Conseil d'Etat, AFORM & others, 28 September 2001, Case n°238423, not published (D/H)
Conseil d'Etat, Union Nationale des Services Publics Industriels et Commerciaux, 5 March 2003, Case n°233372, not yet published in the Lebon report of cases (H)
Page 199
Conseil d'Etat, Union des industries utilisatrices d'énergie ("UNIDEN"), 21 May 2003, Case n°237466, not yet published in the Lebon report of cases (B)
Conseil d'Etat, Syndicat national de l'industrie des technologies médicales, 16 January 2004, Case n°250540, not published in the Lebon report of cases (B)
Conseil d'Etat, Syndicat des industries de matériels audiovisuels électroniques, 6 February 2004, Case n°250560, not published in the Lebon report of cases (B)
1999 Report
Conseil d'Etat, Commune de Fougerolles, 03 November 1997, Case n°169473 (C)
b) Civil courts
c) Independent public agencies
1999 Report
Competition Council, Opinion n°89-A-11 of 11 July 1989, Syndicat National des Entreprises de Drainage, BOCCRF 11 August 1989, p. 204 (D)
Competition Council, Opinion n°94-A-15 of 10 May 1994, EDF GDF, BOCCRF 20 October 1994, p. 463 (C)
a) Administrative courts
Conseil d'Etat, Chambre syndicale nationale des entreprises de sécurité and others, 29 July 1998, Case n°156019, not published (E)
Conseil d'Etat, Société Générale & others, 18 December 1998, Case n°197175, AJDA, 1999, p. 285 (H)
Conseil d'Etat, SA Bouygues & others, 28 July 1999, Case n°206749, BJDCP, n°7, 1999, p. 620-627 (H)
Conseil d'Etat, Fédération Nationale des syndicats d'agents généraux d'assurance, 28 March 2001, Case n°155896, D., 2002, Juris., p. 630 (B)
Conseil d'Etat, Electricité de France ("EDF") - Société Nationale d'Electricité et de Thermique ("SNET"), 11 June 2003, Case n°240512, 240520, not published in the Lebon report of cases (B)
Page 200
Administrative Court of Strasbourg, Ryanair, 24 July 2003, Case n°02-04641, LPA, 28 November 2003, n°238, p. 13; Administrative Court of Appeal of Nancy, Ryanair, 18 December 2003, Cases n°03NC00859 and n°03NC00864, AJDA, 2004, p. 396-401 (E/D)
Administrative Court of Appeal of Paris, Centre d'exportation du livre français, 5 October 2004, Cases n°01PA02717, n°01PA02761, n°01PA02777 and n°03PA04060, AJDA, 7 février 2005, p. 260-268,.Dr. Adm., janvier 2005, n°2, p. 20-21 (D/E/I)
Administrative Court of Pau, Ryanair, 3 May 2005, Case n°0301635, not published (D/E/I)
b) Civil courts
Commercial Court of Paris, Sunsail International, 2 February 1998, not published (F/G)
Commercial Court of Paris, UFEX, DHL & others c/ La Poste, SFMI, Chronopost & others, 7 December 1999, Docket n°96072418 and 96082065, not published (G)
Civil Court of Appeal of Paris, SARL Germain Environnement c/ Office National des Forêts ("ONF"), 27 July 2004, Official Bulletin of Competition, Consumers and Fraud Repression n°9 of 8 November 2004, p. 725, NOR: ECOC0400311X; Competition Council, 10 February 2004, Case n°04-D-02, Official Bulletin of Competition, Consumers and Fraud Repression n°5 of 4 May 2004
c) Independent public agencies
Competition Council, EDF, 19 May 2004, Case n°04-D-19, Official Bulletin of Competition, Consumers and Fraud Repression, n°9 of 8 November 2004, p. 660
a) Administrative courts
Administrative Court of Appeal of Paris, Centre d'exportation du livre français, 5 October 2004, Cases n°01PA02717, n°01PA02761, n°01PA02777 and n°03PA04060 (see above)
Administrative Court of Appeal of Nancy, Ryanair, 18 December 2003, Case n°03NC00859, AJDA, 2004, p. 396-401, Case n°03NC00864 (see above)
1999 Report
Administrative Court of Appeal of Paris, Boussac, 16 février 1994, Gaz. Pal. 1995, p. 813
b) Civil courts
Commercial Court of Paris, SA Sojerca c/ Jaunet, 21 January 2003, Gazette du Palais, 4 novembre 2003 n°308, p. 28 (G/F)
Page 201
1999 Report
Commercial Court of Paris SFEI v La poste, 7 December 1999, Case n°96072418
c) Independent public agencies
Energy Regulation Commission, State aid recovery, 26 February 2004, not published (F/A)
a) Administrative courts
Administrative Court of Grenoble, Société Stéphane Kelian, 15 October 2003, Case n°0102341, not published (A)
Administrative Court of Clermont-Ferrand, SA Fontanille, 23 September 2004, Case n°0101282, AJDA 2005, Jurisprudence p. 385 (A)
b) Civil courts
Cour de cassation, Etablissements J. Richard Ducros c/ Société Métallique Finsider Sud, 15 June 1999, Case n°1236, Petition n°B 97-15.684, Contrats - concurrence - consommation 1999 n°181 p. 18-19 (résumé); Gazette du Palais 1999 II Panor. p. 228 (résumé); La Semaine juridique - édition générale 1999 IV 2485 (résumé); Revue de jurisprudence de droit des affaires 1999 p. 818-819; Europe 2000 Janvier Comm. n°25 p. 20; Gazette du Palais 2000 II Chron. p. 553-554; Petites affiches, 2000 n°56 p. 17; Revue trimestrielle de droit commercial et de droit économique 2000 p. 261-262 (H/G)
Commercial Court of Paris, UFEX, DHL & others c/ La Poste, SFMI, Chronopost & others, 7 December 1999, Docket n°96072418 and 96082065 (see above), not published
Court of Appeal of Paris, CDR c/ FG Marine-Stardust, 16 January 2004, Case n° 2002/05900, not published (G)
1999 Report
Cour de cassation, Société Lener Ignace, 12 May 1993, Case n°752, Petition n°89-21.840 (A)
a) Administrative courts
Administrative Court of Appeal of Lyon, Ministre de l'Économie, des Finances et de l'Industrie c/ SA, 13 March 2001, Case n° 00LY02270 (B)
Page 202
1999 Report
Conseil d'Etat, Fenacomex known as the Saumon case, 26 October 1990, Cases n°69726 and n°69727, Rep. Lebon p. 294 (D)
Conseil d'Etat, Société Baxter et autres, 28 March 1997, Case n°179049, n°179050 and n°179054 (B)
b) Civil courts
Social Security Court of Créteil, S.A. Ferring c/ Agence Centrale des organismes de Sécurité Sociale ("ACOSS"), 11 January 2000, Case n° CR. 1260/98
Cour de cassation, Société Galeries de Lisieux, 16 November 2004, Case n°1642, Petition n°03-12.565, AJDA 2005, Jurisprudence p. 727 (B)
Cour de cassation, Laboratoires Boiron, 14 December 2004, Case n°1837, Petition n°02-31.241, not published (B)
Social Security Court of Saint-Etienne, SAS Bricorama France v Caisse Nationale de l'Organisation Autonome d'Assurance Vieillesse des Travailleurs Non-Salariés des Professions Industrielles et Commerciales - Caisse ORGANIC, 5 April 2005 (B)
Court of Appeal of Lyon, SAS Distribution Casino France v Organic de recouvrement a.o., 24 February 2004 (B)
------------------------------
[105] See the SFEI (now UFEX) case, in which the Tribunal des conflits (a specific court made up of representatives of the Conseil d'Etat and the Cour de cassation competent to decide conflicts between the judicial and administrative orders of courts) ruled that the dispute in question was aimed at bringing to an end to and making good damage caused by certain commercial practices that were likely to distort competition, and that, when such a dispute does not involve activities connected with the exercise of public authorities' powers, the civil courts have jurisdiction (Tribunal des conflits, 19 January 1998, Case n°03084 in Recueil Lebon - see 1999 Report).
[106] The Ryanair cases provide an example of a contract involving State aid concluded between the State (Chamber of Commerce) and an airline.
[107] See Decree of 29 December 1962, Article 84 ("Décret portant règlement général sur la comptabilité publique").
[108] See the case before the Administrative Court of Appeal of Paris, Centre d'exportation du livre français ("CELF") of 5 October 2004 and see section 3.4 on actions by competitors below and, also, the criticism in the 1999 Report, p. 48.
[109] On State liability and the award of damages for violation of secondary EC law, see M. Deguergue, "La responsabilité en matière de police sanitaire" on Case Sté Gillot, Conseil d'Etat, 12 May 2004, Case n°236834, in AJDA of 19 July 2004, p. 1487.
[110] Joined Cases C-6/90 and C-9/90, Francovich and Bonifaci [1991] ECR I-5357, para. 35 and 41.
[111] See the Saumon case, (i) Case C-354/90, National Federation for Foreign Trade of Food Products (Fenacomex) v France [1990] ECR I-5505, para. 14; and (ii) Conseil d'Etat, 2 June 1993, see 1999 Report, p. 77.
[112] The 1999 Report did not report any State liability cases.
[113] Administrative Court of Grenoble, Société Stéphane Kélian, 15 October 2003 (see section 3.6 on liability claims below).
[114] Administrative Court of Clermont Ferrand, SA Fontanille, 23 September 2004 (see section 3.6 on liability claims below).
[115] For the period before 1999, see the 1999 Report, p. 47 and 48, as well as the SFEI case, Case C-39/94, SFEI a.o. v La Poste a.o. [1996] ECR I-3547 and p. 80 and 81 of the 1999 Report.
[116] Law n°2000-597 of 30 June 2000, Official Journal of 1 July 2000, in force on 1 January 2001.
[117] See various cases mentioned below, where, however, all actions were dismissed: Conseil d'Etat, Syndicat national de l'industrie des viandes a.o, 11 February 2004; Conseil d'Etat, AFORM a.o., 28 September 2001; Conseil d'Etat, SA Bouygues a.o., 28 July 1999.
[118] On the differences between French and EC law regarding interim measures, see P. Cassia "La contribution du juge administrative français des référés au caractère complet des voies de droit communautaire" on the Order of the Conseil d'Etat, 29 October 2003, Sté Techna a.o., Cases n°260768, 261033 and 261034 in Europe, éditions du Juris-Classeur, January 2004, p. 5-11.
[119] Case C-39/94, SFEI a.o. v La Poste a.o. [1996] ECR I-3547, para. 75 (see the 1999 Report, p. 80-81). The case (now renamed UFEX case) is still pending, at national level, before the Court of Appeal of Paris.
[120] See the Boussac case, Administrative Court of Paris, 16 February 1994; see the 1999 Report, p. 74. In the absence of such an act, see Commercial Court of Paris, SA Sojerca v. Jaunet, 21 January 2003.
[121] Administrative Court of Appeal, Centre d'exportation du livre français, 5 October 2004 (see section 3.4 on competitors below).
[122] Case C-314/85, Foto-Frost v Hauptzollamt Lübeck-Ost [1987] ECR I-4199.
[123] Case C-39/94, SFEI o.a. v La Poste o.a. [1996] ECR I-3547, para. 53. See p. 80 and 81 of the 1999 Report.
[124] Also see above on State liability.
[125] Joined Cases C-46/93 and C-48/93, Brasserie du Pêcheur-Factortame III [1996] ECR I-1090, para. 20: "The Court has consistently held that the right of individuals to rely on the directly effective provisions of the Treaty before national courts is only a minimum guarantee [ ...]. The purpose of that right is to ensure that provisions of Community law prevail over national provisions. It cannot, in every case, secure for individuals the benefit of the rights conferred on them by Community law and, in particular, avoid their sustaining damage as a result of a breach of Community law attributable to a Member State".
[126] See Conseil d'Etat, Société Pantochim SA, 31 May 2000 (see section on other tax measures below).
[127] See case C-188/92, TWD Textilwerke Deggendorf v Germany [1994] ECR I-833, para 26.
[128] See the Saumon case, case C-354/90, National Federation for Foreign Trade of Food Products (Fenacomex) v France [1990] ECR I-5505 and Conseil d'Etat, 2 June 1993, see 1999 Report, p. 77.
[129] See Court of Appeal of Douai, SA HCF, 30 May 2000; Court of Appeal of Paris, Comité de développement et de promotion du textile et de l'habillement, 20 September 2001; Conseil d'Etat, M. Guivarch, 5 September 2001; Conseil d'Etat, Union Nationale des Services Publics Industriels et Commerciaux, 5 March 2003; Conseil d'Etat, Fédération nationale des syndicats d'agents généraux d'assurance, 28 March 2001; Court of Clermont-Ferrand, SA Fontanille, 23 September 2004 to the extent that this case concerned the liability of the legislator. In addition, please refer to many cases reported in the 1999 Report.
[130] At least when the claimant does not explicitly rely on Article 87 (3) EC, i.e. the compatibility of the measure with the Common Market.
[131] Court of Appeal of Lyon, Ministre de l'Economie v. Gemo, 13 March 2001 where the applicants did not explicitly refer to Article 88 (3) EC but mentioned lack of notification.
[132] Case C-312/93, Peterbroeck Van Campenhout & Cie SCS v Belgian State [1995] ECR I-4599, para. 19. Para. 20 reads as follows: "Community law precludes the application of a domestic procedural rule whose effect [ ... ] is to prevent the national court, seized of a matter falling within its jurisdiction, from considering of its own motion whether a measure of domestic law is compatible with a provision of Community law". It should, however, be noted that the ECJ recalled in a similar case that "Community law does not require national courts to raise of their own motion an issue concerning the breach of provisions of Community law where examination of that issue would oblige them to abandon the passive role assigned to them by going beyond the ambit of the dispute defined by the parties themselves and relying on facts and circumstances other than those on which the party with an interest in the application of those provisions bases his claim", see Joined cases C-430/93 and C-431/93, Jeroen van Schijndel and Johannes Nicolaas Cornelis van Veen v Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705, para. 22.
[133] Case C-126/97, Eco Swiss China Time Ltd v Benetton International NV [1999] ECR I-3055, para. 41.
[134] See the differences in interpretation between the Melun Court and the Dijon, Lille or Lyon Courts.
[135] See the CINH and the Pantochim cases.
[136] See the SA HCF and the Textile cases.
[137] In the Capolongo case, the ECJ ruled that "for the purposes of interpretation, the first paragraph of Article [87] cannot be regarded in isolation, but must be considered within the framework of the scheme of Article [87] to [89]", para. 5 of Case C-77/72, Capolongo v Maya [1973] ECR 611. It can be inferred from this case and from the Steinicke case mentioned below that, if Article 87 is invoked before a national court, the judge should examine whether Article 88 (3) has been complied with (see above).
[138] Case C-78/76, Steinike & Weinlig v Germany [1977] ECR 595, para. 14. See, for example, the Gemo ruling of the Administrative Court of Lyon (see section 3.7.1), where, although the claimants had only raised Article 87 EC, the Court did not dismiss their action, but requested a preliminary ruling from the ECJ.
[139] Case T-613/97 RV, Ufex and Others v Commission [2000] ECR 11-4055.
[140] See Cour de cassation, Laboratoires Boiron, 14 December 2004, Case C-526/04, OF (2005) C 69/11, pending before the ECJ.
[141] The authors thank Eric Paroche for his research and contribution to the drafting of this section. They are also grateful to Stéphane Laget for his useful assistance in compiling State aid decisions before French courts.
[142] Case C-126/01, Ministère de l'Économie, des Finances et de l'Industrie v GEMO SA [2003] ECR I-13769.
[143] OJ (1995) C 262/11.
[144] Case T-106/95, FFSA v Commission [1997] ECR II-229.
[145] Case T-46/97, SIC v Commission [2000] ECR II-2125.
[146] Case C-126/01, Ministère de l'Économie, des Finances et de l'Industrie v GEMO SA [2003] ECR I-13769.
[147] Case 240/83, Procureur de la République v Association de défense des brûleurs d'huiles usagées ("ADBHU") [1985] ECR 531, para. 18.
[148] According to the legal review Europe (February 1999, p. 23), there would be a total of 280 cases dealing with horticulturists and CNIH, all based on the same reasoning.
[149] Cour de Cassation, Société des Etablishements Friedrich, 26 January 1999, Case n° 289, Petition n° 97-11225, Bull, Civ, VI, n° 22, p.18; see section 3.2.13.
[150] Case C-379/98, PreussenElektra AG v Scheswag AG [2001] ECR I-2099.
[151] See the Commission decision of 20 July 1999 (OJ (1999) L 274/37) concluding that there was no State aid element to the relationship between Securipost and La Poste (after both Sytraval cases before the CFI (see Case T-95/98) and the ECJ (see Case C-367/98 P) annulling the Commission's first decision of 31 December 1993 for violation of the rights of the complainants).
[152] Investigation concluded by a decision of 15 January 2002 that was annulled by the CFI in January 2005 (Case T-93/02).
[153] Case T-49/93, SIDE v Commission [1995] ECR II-2501.
[154] OJ (1998) L 44/37 and Case T-155, SIDE v Commission [1998] ECR II-1179.
[155] OJ (2005) L 85/27.
[156] Case T-372/04, OJ (2004) C 300/88 removed from the Register on 31 May 2005.
[157] The Commission adopted a decision in 1999 that was annulled in Case C-482/99, French Republic v Commission [2002] ECR I-4397.
[158] Case T-613/97, UFEX a.o. v Commission [2000] ECR II-4055. The CFI annulled the Commission decision but the CFI's judgment was later annulled by the ECJ (Joined Cases C-83/01 P, C-93/01 P and C-94/01 P, French Republic, La Poste, Chronopost v UFEX a.o. [2003] ECR I-6993). The case was referred back to the CFI (Case T-617/93 RV), which still has to rule on the legality of the Commission decision.
[159] See Case C-39/94, SFEI a.o. v La Poste a.o. [1996[] I-3547, the preliminary ruling requested by the Commercial Court of Paris.
[160] Case C-344/98, Masterfoods v Commission [2000] ECR I-1369, para. 55 to 59.
[161] Case T-613/97 RV, to be decided in 2006.
[162] See Case n° D4-D-02 of 10 February 2004.
[163] OJ (2001) L 95/18. On 15 March 2002, the Commission adopted another decision rejecting the aspects of the complaint based on Article 82 EC (abuse of a dominant position) for lack of Community interest, due notably to EDF's decision to put an end to its behaviour and to the fact that the effects on the market ceased (the Commission had clearly concluded that EDF had adopted abusive discriminatory practices).
[164] Case C-251/97, France v Commission [1999] ECR I-6639.
[165] Joined Cases C-6/90 and C-9/90, Francovich and Bonifaci [1991] ECR I-5357; Joined Cases C-46/93 and C-48/93, Brasserie du Pêcheur and Factortame III [1996] ECR I-1029.
[166] Joined Cases C-46/93 and C-48/93, Brasserie du Pêcheur and Factortame III [1996] ECR I-1029, para. 33 to 35; see also para. 114 et 115 of the opinion of Advocate-General Léger in Case C-5/94, The Queen v Ministry of Agriculture, Fisheries and Food, ex parte Hedley Lomas (Ireland) Ltd [1996] ECR I-2553.
[167] OJ (1995) C120/8.
[168] Case C-39/94, SFEI a.o. v La Poste a.o, ECR [1996] I-3547, para. 75 (see the 1999 Report, p. 80-81). See also UFEX case described in section 3.4.10 above.
[169] OJ (2000) L206/6.
[170] Case C-482/99, French Republic v Commission [2002] ECR I-4397.
[171] Case C-126/01, Ministère de l'Economie, des Finances et de l'Industrie v GEMO SA [2003] ECR I-13769.
[172] Case C-53/00, Ferring SA v ACOSS [2001] ECR I-9067, para. 27.
[173] Case C-488/04, OJ (2005) C 31/20.
[174] Joined Cases C-266/04 to C-270/04 and C-276/04 and Joined Cases C-321 to C-325/04, OJ (2005) C 330/10.
[175] Joined Cases C-380/98, Banks & Co v The Coal Authority and Secretary of State for Trade and Industry [2001] ECR I-6117.
[176] Case C-526/04, Reference for a preliminary ruling by the Cour de cassation (France), OJ (2005) C 69/5.
[177] Joined Cases C-266/04 to C-270/04 and C-276/04 and Joined Cases C-321 to C-325/04, OJ (2005) C 330/10.
[178] Joined Cases C-266/04 to C-270/04 and C-276/04 and Joined Cases C-321 to C-325/04, OJ (2005) C 330/10.
[179] According to the legal review Europe (February 1999, p. 23), there would be a total of 280 cases dealing with horticulturists and CNIH, all based on the same reasoning.
