French Republic (T-427/04) and France Télécom SA (T-17/05) v Commission of the European Communities.

• Jurisdiction: European Union
• Celex Number: 62004TJ0427
• ECLI: ECLI:EU:T:2009:474
• Court: General Court (European Union)
• Date: 30 November 2009
• Docket Number: T-427/04,T-17/05
• Procedure Type: Recurso de anulación - infundado

JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber)

30 November 2009 (*)

(State aid – France Télécom’s business tax regime for the years 1994 to 2002 – Decision declaring the aid incompatible with the common market and ordering its recovery – Advantage – Limitation period – Legitimate expectations – Legal certainty – Breach of essential procedural requirements – Collegiality – Rights of the defence and procedural rights of other interested parties)

In Joined Cases T‑427/04 and T‑17/05,

French Republic, represented initially by G. de Bergues, R. Abraham and S. Ramet, subsequently by G. de Bergues, S. Ramet and E. Belliard and finally by G. de Bergues, E. Belliard and A.-L. Vendrolini, acting as Agents,

applicant in Case T‑427/04,

France Télécom SA, established in Paris (France), represented initially by A. Gosset-Grainville and L. Godfroid and subsequently by L. Godfroid, S. Hautbourg and M. van der Woude, avocats,

applicant in Case T‑17/05,

v

Commission of the European Communities, represented by J. Buendía Sierra and C. Giolito, acting as Agents,

defendant,

APPLICATION for annulment of Commission Decision 2005/709/EC of 2 August 2004 on the State aid implemented by France for France Télécom (OJ 2005 L 269, p. 30),

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),

composed of J. Azizi, President, E. Cremona and S. Frimodt Nielsen (Rapporteur), Judges,

Registrar: C. Kristensen, Administrator,

having regard to the written procedure and further to the hearing on 18 November 2008,

gives the following

Judgment

Legal context

1. State aid rules

1 Under Article 87(1) EC, save as otherwise provided in the EC Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is, in so far as it affects trade between Member States, incompatible with the common market.

2 Article 88(2) EC provides that, if, after giving notice to the parties concerned to submit their comments, the Commission of the European Communities finds that aid granted by a State or through State resources is not compatible with the common market having regard to Article 87, or that such aid is being misused, it is to decide that the State concerned must abolish or alter such aid within a period of time to be determined by the Commission.

3 Article 88(3) EC states:

‘The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the common market having regard to Article 87 [EC], it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision’.

4 On the basis of Article 94 of the EC Treaty (now Article 89 EC), the Council adopted Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88 EC] (OJ 1999 L 83, p. 1).

5 Article 1 of Regulation No 659/1999 lays down the following definitions:

‘For the purpose of this Regulation:

(a) “aid” shall mean any measure fulfilling all the criteria laid down in Article [87](1) [EC];

(b) “existing aid” shall mean:

...

(iv) aid which is deemed to be existing aid pursuant to Article 15;

...

(c) “new aid” shall mean all aid, that is to say, aid schemes and individual aid, which is not existing aid ...

(d) “aid scheme” shall mean any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid which is not linked to a specific project may be awarded to one or several undertakings for an indefinite period of time and/or for an indefinite amount;

(e) “individual aid” shall mean aid that is not awarded on the basis of an aid scheme and notifiable awards of aid on the basis of an aid scheme;

(f) “unlawful aid” shall mean new aid put into effect in contravention of Article [88] (3) [EC];

...

(h) “interested party” shall mean any Member State and any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, in particular the beneficiary of the aid, competing undertakings and trade associations.’

6 Under Article 7(5) of Regulation No 659/1999, which is applicable to unlawful aid by virtue of Article 13(1) thereof, a ‘negative decision’ states that such aid is not compatible with the common market and prevents it from being put into effect.

7 Article 14 of Regulation No 659/1999, relating to the recovery of unlawful aid, provides as follows:

‘1. Where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary (hereinafter referred to as a “recovery decision”). The Commission shall not require recovery of the aid if this would be contrary to a general principle of Community law.

2. The aid to be recovered pursuant to a recovery decision shall include interest at an appropriate rate fixed by the Commission. Interest shall be payable from the date on which the unlawful aid was at the disposal of the beneficiary until the date of its recovery.

3. Without prejudice to any order of the Court of Justice of the European Communities pursuant to Article [242 EC], recovery shall be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission’s decision. To this effect and in the event of a procedure before national courts, the Member States concerned shall take all necessary steps which are available in their respective legal systems, including provisional measures, without prejudice to Community law.’

8 The need to establish a limitation period after which unlawful aid can no longer be recovered is referred to in recital 14 in the preamble to Regulation No 659/1999, which states that ‘… for reasons of legal certainty it is appropriate to establish a period of limitation of 10 years with regard to unlawful aid, after the expiry of which no recovery can be ordered’.

9 The rules relating to the limitation period and to the consequences of its expiry are laid down in Article 15 of Regulation No 659/1999:

‘1. The powers of the Commission to recover aid shall be subject to a limitation period of ten years.

2. The limitation period shall begin on the day on which the unlawful aid is awarded to the beneficiary either as individual aid or as aid under an aid scheme. Any action taken by the Commission or by a Member State, acting at the request of the Commission, with regard to the unlawful aid shall interrupt the limitation period. Each interruption shall start time running afresh. The limitation period shall be suspended for as long as the decision of the Commission is the subject of proceedings pending before the Court of Justice of the European Communities.

3. Any aid with regard to which the limitation period has expired, shall be deemed to be existing aid.’

2. Rules relating to the adoption of Commission decisions

10 Article 219 EC lays down the rules relating to the adoption of decisions by the Commission. It provides:

‘The Commission shall act by a majority of the number of Members provided for in Article 213 [EC].

A meeting of the Commission shall be valid only if the number of Members laid down in its Rules of Procedure is present.’

11 Article 1 of the Rules of Procedure of the Commission (OJ 2000 L 308, p. 26), applicable in the present case, is worded as follows:

‘The Commission shall act collectively in accordance with these Rules and in compliance with the political guidelines laid down by the President.’

12 Article 4 of the Rules of Procedure of the Commission states as follows:

‘Commission decisions shall be taken:

(a) at meetings;

or ...

(c) by empowerment in accordance with Article 13 ...’.

13 The second paragraph of Article 13 of the Rules of Procedure of the Commission provides:

‘The Commission may ... instruct one or more of its Members, with the agreement of the President, to adopt the definitive text of any instrument or of any proposal to be presented to the other institutions the substance of which has already been determined in discussion.’

Facts

1. Founding of France Télécom

14 The applicant – France Télécom SA (‘FT’) – is a public limited company incorporated under French law. Its object is inter alia to provide all electronic communications services at national and international levels; to fulfil public service tasks and, in particular, to provide, where necessary, the universal public service of telecommunications and mandatory services; to establish, develop and operate all public electronic communications networks; and to establish and operate all networks distributing radio, television or multimedia broadcasting services.

15 Until 1990, FT’s business activities were managed by a Directorate of the French Ministry of Posts and Telecommunications (ministère des Postes et Télécommunications (PTT)). FT was established, in the form of a sui generis legal person governed by public law, on 1 January 1991, by Law No 90‑568 of 2 July 1990 on the organisation of the public postal and telecommunications services (JORF of 8 July 1990, p. 8069). Under Law No 96‑660 of 26 July 1996 on the national company France Télécom (JORF of 27 July 1996, p. 11398), FT was converted, with effect from 31 December 1998, into a national undertaking in which, at the material time, the State held, directly or indirectly, more than half of the share capital. FT was thus governed by Law No...