Irish Wind Farmers' Association Clg and Others v European Commission.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2022:898
• Date: 17 November 2022
• Docket Number: C-578/21
• Celex Number: 62021CJ0578
• Court: Court of Justice (European Union)

JUDGMENT OF THE COURT (Seventh Chamber)

17 November 2022 (*)

Table of contents

Legal context

Background to the dispute

The procedure before the General Court and the judgment under appeal

Forms of order sought and procedure before the Court

The appeal

The first ground

Arguments of the parties

– The first part

– The second part

– The third part

– The fourth part

– The fifth part

– The sixth part

Findings of the Court

– Preliminary observations

– The first part

– The second part

– The third part

– The fourth part

– The fifth part

– The sixth part

The second ground

Arguments of the parties

Findings of the Court

Costs

(Appeal – State aid – Article 107(1) TFEU – Article 108(2) and (3) TFEU – Regulation (EU) 2015/1589 – Article 4 – Member State legislation on business property taxation – Methods for valuation of property used to calculate the basis of assessment of the rate payable – Complaint from wind farm operators – Allegation of an under-assessment of the basis of assessment for the business rate payable by fossil fuel electricity producers and, consequently, of a level of business rate of those electricity generators lower than that of other electricity producers due to the choice of valuation method used – Preliminary examination procedure – Decision finding that there is no State aid – No economic and selective advantage – Failure to initiate the formal investigation procedure – Concept of ‘serious difficulties’ – Extent of the European Commission’s investigative duty – Principle of sound administration – Obligation to conduct the investigation procedure diligently and impartially – Scope of review by the General Court of the European Union)

In Case C‑578/21 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 17 September 2021,

Irish Wind Farmers’ Association Clg, established in Kilkenny (Ireland),

Carrons Windfarm Ltd, established in Shanagolden (Ireland),

Foyle Windfarm Ltd, established in Dublin (Ireland),

Greenoge Windfarm Ltd, established in Bunclody (Ireland),

represented by M. Segura Catalán, abogada, and M. Clayton, avocate,

appellants,

the other party to the proceedings being:

European Commission, represented by I. Georgiopoulos, S. Noë and K. Herrmann, acting as Agents,

defendant at first instance,

THE COURT (Seventh Chamber),

composed of A. Prechal (Rapporteur), President of the Second Chamber, acting as President of the Seventh Chamber, F. Biltgen and J. Passer, Judges,

Advocate General: A. Rantos,

Registrar: A. Calot Escobar,

having regard to the written procedure,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1 By their appeal, Irish Wind Farmers’ Association Clg (‘the IWFA’), Carrons Windfarm Ltd, Foyle Windfarm Ltd and Greenoge Windfarm Ltd seek to have set aside the judgment of the General Court of the European Union of 7 July 2021, Irish Wind Farmers’ Association and Others v Commission (T‑680/19, not published, EU:T:2021:412; ‘the judgment under appeal’), by which the General Court dismissed their action for annulment of Commission Decision C(2019) 5257 final of 9 July 2019 concerning State aid SA.44671 (2019/NN) – Ireland (‘the decision at issue’), from which fossil fuel electricity producers benefitted in the form of a business rate lower than that of other electricity producers.

Legal context

2 Article 4 of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 [TFEU] (OJ 2015 L 248, p. 9), entitled ‘Preliminary examination of the notification and decisions of the Commission’, provides, in paragraphs 1 to 4 thereof:

‘1. The Commission shall examine the notification as soon as it is received. Without prejudice to Article 10, the Commission shall take a decision pursuant to paragraphs 2, 3 or 4 of this Article.

2. Where the Commission, after a preliminary examination, finds that the notified measure does not constitute aid, it shall record that finding by way of a decision.

3. Where the Commission, after a preliminary examination, finds that no doubts are raised as to the compatibility with the internal market of a notified measure, in so far as it falls within the scope of Article 107(1) TFEU, it shall decide that the measure is compatible with the internal market (“decision not to raise objections”). The decision shall specify which exception under the [FEU Treaty] has been applied.

4. Where the Commission, after a preliminary examination, finds that doubts are raised as to the compatibility with the internal market of a notified measure, it shall decide to initiate proceedings pursuant to Article 108(2) TFEU (“decision to initiate the formal investigation procedure”).’

Background to the dispute

3 The background to the dispute, set out in paragraphs 1 to 22 of the judgment under appeal, may, for the purposes of the present proceedings, be summarised as follows.

4 The business rate is a tax levied annually on non-domestic and business properties in Ireland. Its aim is to contribute towards the costs of services provided by local authorities. The amount of that rate is calculated on the basis of the net annual value (‘the NAV’) of property used for commercial purposes, to which a rate, generally determined by local authorities at county level, is applied. The NAV of property essentially means the annual amount of the rent which can reasonably be expected from letting that property.

5 The Valuation Act 2001 (‘the 2001 Act’) provided for the revaluation of the NAV – formerly known as the ‘RV value’ – of all properties in Ireland as from 2005 by the Valuation Office (Ireland) (‘the VOI’) with a view to determining the amount of the business rates payable in respect of real property.

6 It is apparent from the 2001 Act that the VOI has three methods for determining the NAV of property, namely the so-called ‘rental method’ method, the so-called ‘tone of the list method’ and that known as the ‘contractor’s method’. A fourth method has been developed in the case-law on the application of that act, namely the method known as the ‘receipts and expenditure method’, which applies to properties that are seldom let or are difficult to replicate.

7 On 4 February 2016, the IWFA lodged with the Commission a complaint in which it argued that, as a result of the choice of valuation method used by the VOI for the purposes of determining the NAV when calculating business rates in Ireland, and the manner in which that method was applied, fossil fuel electricity generation facilities, to which the ‘contractor’s method’ was applied, were treated more favourably than wind farms, to which the ‘receipts and expenditure method’ was applied (‘the contested measure’).

8 That choice and the broad discretion enjoyed by the VOI in applying one or other of those methods had led to an under-assessment of the NAV of those facilities and, therefore, to a reduction in the amount of business rates payable by them. The IWFA argued that the existence of that tax advantage was illustrated by the fact that operators of the said facilities had paid, in 2015, a business rate approximately three times less than that paid by other electricity producers, such as wind farms.

9 In the course of the administrative procedure, the Irish authorities argued that the contested measure did not constitute State aid within the meaning of Article 107(1) TFEU and provided information to the Commission in response to two requests for information which the Commission had sent to them.

10 In the light of the complaint lodged by the IWFA and the additional information it had been sent by the latter and by those authorities during that procedure, the Commission expressed, on three occasions, its provisional position that, in the absence of a selective advantage, the contested measure could not be regarded as constituting ‘State aid’ within the meaning of Article 107(1) TFEU.

11 On 9 July 2019, the Commission adopted the decision at issue, by which it considered that the contested measure did not entail any economic advantage or a selective advantage and, therefore, did not constitute ‘State aid’ within the meaning of Article 107(1) TFEU.

12 In particular, the Commission considered, first, that it had not been established that the contested measure had conferred an advantage on operators of fossil fuel electricity generation facilities and, second, that, even assuming that an advantage had been derived for those operators from the choice of the valuation method used, that advantage was not selective in nature but was explained by the availability or lack of detailed and reliable financial information needed to apply a particular valuation method.

The procedure before the General Court and the judgment under appeal

13 By application lodged at the Registry of the General Court on 30 September 2019, the appellants brought an action for annulment of the decision at issue.

14 In support of their action, the appellants raised a single plea in law, alleging infringement of Article 108(2) TFEU and Article 4(4) of Regulation 2015/1589 and, therefore, violation of their procedural rights, on the ground that, in the case at hand, the Commission was obliged to initiate the formal investigation procedure if it was faced with serious difficulties.

15 That single plea was divided into five parts. By the first part, the appellants claimed that the contested measure had not been correctly identified in the decision at issue. By the second part, they maintained that the Commission ought to have had doubts following the preliminary examination phase. By the third part, they claimed that the Commission had failed to understand certain fundamental elements of the complaint lodged. By the fourth part, they alleged that the Commission had not adequately examined all the information provided by the IWFA in the context of that complaint. Last, by the fifth...