Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen v Commission of the European Communities.

• Jurisdiction: European Union
• Court: General Court (European Union)
• Date: 06 March 2003

Joined Cases T-228/99 and T-233/99


Westdeutsche Landesbank Girozentrale and Land Nordrhein-Westfalen
v
Commission of the European Communities

«(State aid – Commission's lack of competence – Infringement of the rights of the defence – Infringement of essential procedural requirements – Concept of aid – Infringement of Articles 87 EC and 295 EC – Market economy investor – Appropriate rate of return – Infringement of the obligation to state reasons)»

Judgment of the Court of First Instance (Second Chamber, Extended Composition), 6 March 2003

Summary of the Judgment

1..

Commission – Management of current business – Scope – Supervisory function in matters of State aid – Included

(Arts 87(1) EC and 211 EC)

2..

State aid – Administrative procedure – Commission's obligation to give notice to the parties concerned to submit their comments – Exclusion of those parties from rights of defence

(Arts 88(2) EC and 253 EC)

3..

Actions for annulment – Pleas in law – Infringement of essential procedural requirements – Action against a Commission decision declaring State aid incompatible with the common market – Right of the beneficiary of the aid and the grantor thereof to plead infringement of the Member State's right to be heard

(Arts 88(2) EC and 230, second para., EC)

4..

Procedure – Intervention – Application in support of the form of order sought by one of the parties but relying on a different argument – Whether admissible

(Statute of the Court of Justice, Art. 40, fourth para.)

5..

Acts of the institutions – Statement of reasons – Error of fact in an otherwise adequate statement of reasons – No bearing on the lawfulness of the decision

(Art. 253 EC)

6..

Community law – General principles of law – Right to proper administration – Diligent and impartial examination of the case

7..

State aid – Definition – Grant of an advantage by a State through State resources

(Art. 87(1) EC)

8..

Competition – Application of the competition rules – Equal treatment of public and private undertakings – Rules governing public ownership – No effect – Possibility of derogations for undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly

(Arts 86(1) and (2) EC, 87(1) EC and 295 EC)

9..

State aid – Definition – Assessment on the basis of the private investor criterion – Criterion applicable to measures favouring profitable undertakings

(Art. 87(1) EC)

10..

State aid – Definition – Financial aid granted to an undertaking by public authorities – Assessment criterion – Attractiveness to a private investor of a similar investment made on the same conditions

(Art. 87(1) EC)

11..

State aid – Definition – Private investor test – Assessment in the light of the average return on capital invested in the sector concerned – Whether permissible – Limits

(Art. 87(1) EC)

12..

State aid – Definition – Application to public investors of the informed private investor test – Breach of the principle of equal treatment – None

(Art. 87(1) EC)

13..

State aid – Definition – Application of the private investor test – Commission's power of assessment – Judicial review – Limits

(Art. 87(1) EC)

14..

Acts of the institutions – Statement of reasons – Obligation – Scope – Commission decision on State aid – Description of the effect on competition and on trade between Member States

(Arts 87(1) EC and 253 EC)

15..

State aid – Effect on trade between Member States – Prejudicial to competition – Assessment criteria

(Art. 87(1) EC)

16..

Acts of the institutions – Statement of reasons – Obligation – Scope – Choice of basic rate of return when applying the private investor principle

(Art. 253 EC)

1.

A Commission decision making a finding as to the compatibility with the common market of State aid, applying the market economy investor principle, falls within the scope of the Commission's supervisory function pursuant to Article 211 EC and in particular of its duty to apply Article 87(1) EC in such a way as to ensure that aid granted by a Member State or through State resources in any form whatsoever does not distort or threaten to distort competition by favouring certain undertakings. Accordingly, even though it applies that principle to a profitable undertaking, it is not a new political initiative which goes beyond dealing with current business. see paras 96, 98, 100

2.

The administrative procedure regarding aid is opened only against the Member State concerned. Undertakings that receive aid and the local authorities within that State which grant the aid are considered, in the same way as competitors of the recipients of the aid, only to be interested parties in this procedure. In the context of an examination under Article 88(2) EC, the Commission is required to give notice to the parties concerned to submit their comments. In that regard, the publication of a notice in the Official Journal is an appropriate means of informing all the parties concerned that a procedure has been initiated. The sole aim of this communication is to obtain from persons concerned all information required for the guidance of the Commission with regard to its future action. The parties concerned essentially play the role of information sources for the Commission in that administrative procedure. It follows that, far from enjoying the same rights of defence as those which individuals against whom a procedure has been instituted are recognised as having, the parties concerned have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case. see paras 122-125

3.

The administrative procedure for the examination of State aid is initiated only against the Member State concerned. Decisions adopted by the Commission at the end of that procedure are addressed only to that Member State. Furthermore, in accordance with Article 88(2) EC, the Member State is responsible for complying with any decision by the Commission requiring the State aid in question to be abolished or altered. In those circumstances, having regard to the Member State's central role in that procedure, the Member State's right to be heard in the same procedure constitutes an essential procedural requirement and failure to comply with that requirement entails the nullity of a Commission decision ordering that aid be abolished or altered. Consequently, the beneficiary of the aid, and the local government body which has granted it, have a legitimate interest in pleading such a defect in the Commission's decision where a failure to comply with the Member State's right to be heard may have a bearing on the legality of the contested measure. see paras 140-142

4.

The fourth paragraph of Article 40 of the Statute of the Court of Justice does not preclude an intervener from submitting arguments which differ from those of the party which he supports, provided that his aim is to support the form of order sought by that party. see para. 145

5.

Even if one recital of a contested measure contains a factually incorrect statement, that procedural defect cannot lead to the annulment of that measure if the other recitals in themselves supply a sufficient statement of reasons. see para. 162

6.

The Commission is under a duty to examine a case diligently and impartially, in particular in the context of Article 88 EC. That obligation is associated with the right to sound administration, which is one of the general principles that are observed in a State governed by the rule of law and are common to the constitutional traditions of the Member States. see para. 167

7.

For advantages to be capable of being categorised as State aid within the meaning of Article 87(1) EC, they must be granted directly or indirectly through State resources and be imputable to the State. However, Article 87(1) does not distinguish between State interventions by reference to their causes or their objectives but defines them by reference to their effects. It follows that the concept of aid is an objective one, the sole test being whether a State measure confers an advantage on one or more particular undertakings. State resources do not cease to be so simply because the use of those resources is similar to that by a private investor. The question whether the State has conducted itself like an entrepreneur is a question relating to the existence of State aid and not to the examination of whether the resources in question are public in nature. see paras 179-181

8.

Although systems of property ownership continue to be a matter for Member States by virtue of Article 295 EC, that article does not have the effect of exempting the Member States' systems of property ownership from the fundamental rules of the Treaty. Thus, and in accordance with Article 86(1) EC, the competition rules, which are fundamental rules, apply without distinction to public and private undertakings. Article 295 EC cannot therefore be held to restrict the scope of the concept of State aid within the meaning of Article 87(1) EC. This application of the competition rules to undertakings irrespective of the property systems to which they are subject does not have the effect of restricting the protection under Article 295 EC and of leaving the Member States hardly any latitude in the management of public undertakings, in the retention of shareholdings which they have in those undertakings, or in recourse to considerations other than purely profit-making criteria. Where such interests might conflict with the application of the competition rules, they are taken into account by Article 86(2) EC since it provides that undertakings entrusted with the operation of services of general economic interest or having the...