French Republic v Commission of the European Communities.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Writing for the Court: Mancini
• ECLI: ECLI:EU:C:1990:67
• Docket Number: C-301/87
• Date: 14 February 1990
• Procedure Type: Recurso de anulación - infundado

Avis juridique important

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61987J0301

Judgment of the Court of 14 February 1990. - French Republic v Commission of the European Communities. - State aid - Prior notification - Capital contributions, provision of loans at reduced rates of interest and reduction in social security charges. - Case C-301/87.

European Court reports 1990 Page I-00307
Swedish special edition Page 00303
Finnish special edition Page 00319

Summary
Parties
Grounds
Decision on costs
Operative part

Keywords

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1.State aid - Plans to grant aid - Absence of notification - Implementation before a final decision by the Commission - Commission' s power to issue an order - Refusal to comply with order - Consequences

( EEC Treaty, Art . 93(2 ) and ( 3 ) )

2.Community law - Principles - Legal certainty - State aid - Examination by the Commission of plans to grant aid - Abnormal length of examination - Justification - Attitude of the Member State in question

( EEC Treaty, Art . 93 )

3.Community law - Principles - Right to be heard - Whether applicable to administrative procedures initiated by the Commission - Examination of plans to grant aid - Scope

( EEC Treaty, Art . 93(2 ) )

4.State aid - Decision of the Commission that aid which has not been notified is incompatible with the common market - Obligation to state reasons - Scope

( EEC Treaty, Arts 93(3 ) and 190 )

5.State aid - Concept - Financial assistance granted to an undertaking by a Member State - Criterion for appraisal - Position of the undertaking with regard to private capital markets

( EEC Treaty, Art . 92 )

6.State aid - Prohibition - Exemptions - Aid which may be regarded as compatible with the common market - Commission' s power of appraisal - Reference to the Community context - Trading conditions affected to an extent contrary to the common interest

( EEC Treaty, Art . 92(3)(c ) )

Summary

1.The purpose of the obligation to notify plans to grant aid, laid down in the first sentence of Article 93(3 ) of the Treaty, is to provide the Commission with the opportunity to review, in sufficient time and in the general interest of the Communities, any plan to grant or alter aid, while the prohibition in the final sentence of Article 93(3 ) on putting any proposed measures into effect is designed to ensure that a system of aid cannot become operational before the Commission has had a reasonable period in which to study the proposed measures in detail and, if necessary, to initiate the procedure provided for in Article 93(2 ).

In order for it to be effective, that system presupposes that conservatory measures may be taken to counteract any infringements of the rules laid down in Article 93(3 ) and that such measures may, with a view to protecting the legitimate interests of the Member States, form the subject of an action . Once it has established that aid has been granted or altered without notification, the Commission has a power to issue orders . It may, after giving the Member State in question an opportunity to submit its comments, issue an interim decision requiring it to suspend immediately the payment of such aid pending the outcome of the examination of the aid and to provide the Commission, within such period as the latter may specify, with all such documentation, information and data as are necessary in order that it may examine the compatibility of the aid with the common market . The Commission has the same power in cases where it has been notified of aid and the Member State in question has not awaited the outcome of the procedure provided for under Article 93(2 ) and ( 3 ) of the Treaty, but has instead proceeded to put the aid into effect, contrary to the prohibition contained in Article 93(3 ).

Where the Member State complies in full with the Commission' s order to provide the information requested, the Commission is obliged to examine the compatibility of the aid with the common market, in accordance with the procedure laid down in Article 93(2 ) and ( 3 ) of the Treaty . However, if the Member State, notwithstanding the Commission' s order, fails to provide that information, the Commission is empowered to terminate the procedure and makes its decision, on the basis of the information available to it, on the question whether or not the aid is compatible with the common market . If appropriate, such a decision may call for the recovery of the amount of aid which has already been paid .

If the Member State fails to suspend payment of the aid, notwithstanding the Commission' s order, the latter is entitled, while carrying out the substantive examination of the aid, to bring the matter directly before the Court by applying for a declaration that such payment amounts to an infringement of the Treaty . Such a referral is justified in respect of urgency because there has been a decision embodying an order, taken after the Member State in question has been given notice to submit its comments, and thus after the conclusion of a preliminary procedure in which it has been enabled to put its case, as in the case of the means of redress provided under the second subparagraph of Article 93(2 ) of the Treaty, which is no more than a variant of the action for a declaration of failure to fulfil obligations, specifically adapted to the special problems which State aid poses for competition within the common market .

2.The Commission does not infringe the general principle of legal certainty by allowing itself a period for consideration and investigation prior to giving a Member State the notice provided for under Article 93(2 ), if it has not been informed in sufficient time, within the meaning of Article 93(3 ), to enable it to submit its comments on plans to grant aid and has received only incomplete information . The Commission also cannot be faulted for having let a fairly lengthy period elapse before taking its final decision, in the case where, owing to the attitude of the Member State in question, it did not have available until a very late stage all the information necessary for it to examine the compatibility of the aid with the common market .

3.Observance of the right to be heard is, in all proceedings initiated against a person which are liable to culminate in a measure adversely affecting that person, a fundamental principle of Community law which must be guaranteed even in the absence of any rules governing the procedure in question . With regard to the examination by the Commission of plans to grant aid, that principle requires the Member State in question to be placed in a position in which it may effectively make known its views on the observations submitted by interested third parties under Article 93(2 ) of the Treaty and on which the Commission proposes to base its decision . In so far as that Member State has not been afforded the opportunity to comment on such observations, the Commission may not incorporate them in its decision against that State without infringing the right to be heard . However, in order for such an infringement to result in annulment, it is necessary to establish that, had it not been for such an irregularity, the outcome of the procedure might have been different .

4.If aid has been granted by a Member State without having been notified to the Commission at the planning stage, the decision finding that such aid is not compatible with the common market does not have to be based on grounds of establishing the real effect that such aid has had on competition or trade between Member States . To hold otherwise would ultimately favour those Member States which grant aid in breach of the duty to notify laid down in Article 93(3 ) of the Treaty, to the detriment of those States which do notify aid at the planning stage .

5.For the purpose of deciding whether financial assistance granted to an undertaking by a Member State constitutes State aid, it is appropriate to apply the criterion based on the opportunities open to the undertaking of acquiring the amounts in question on private capital markets .

6.The Commission enjoys a wide discretion in matters covered by Article 92(3 ) of the Treaty and the exercise of that discretion involves assessments of an economic and social nature which must be made within a Community context . The Commission does not exceed the limits of its discretionary power if it forms the view that aid which has lowered the costs of the recipient undertaking and thereby weakened the competitiveness of other manufacturers in the Community, at the risk of forcing them to withdraw from the market, even though they had hitherto been able to continue their activities because of restructuring and improvements in productivity and quality financed by their own resources, cannot come within the exemption provided for in Article 92(3)(c ) of the Treaty in favour of aid designed to facilitate the development of certain economic activities or of certain economic areas and which does not adversely affect trading conditions to an extent contrary to the common interest .

Parties

In Case C-301/87

French Republic, represented by Régis de Gouttes, Deputy Director of the Department of Legal Affairs in the Ministry of Foreign Affairs, Edwige Belliard, Sub-director in the same Department, acting as Agents, and by Catherine Colonna, acting as Deputy Agent, with an address for service in Luxembourg at the French Embassy, 9 boulevard du Prince-Henri,

applicant,

v

Commission of the European Communities, represented by its Principal Legal Advisers, Jacques H . J . Bourgeois and Antonio Abate, and by its Legal Adviser, Thomas F . Cusack, acting as Agents, with an address for service in Luxembourg at the office of Georgios Kremlis, a member of the Commission' s Legal Department, Wagner Centre, Kirchberg,

defendant,

supported by

United Kingdom of Great Britain and Northern Ireland, represented by S . J . Hay, acting as Agent, and Richard...