Commission of the European Communities v Kingdom of Spain.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Writing for the Court: Puissochet
• ECLI: ECLI:EU:C:2002:408
• Date: 02 July 2002
• Docket Number: C-499/99
• Procedure Type: Recours en constatation de manquement - non fondé

Avis juridique important

|

61999J0499

Judgment of the Court (Sixth Chamber) of 2 July 2002. - Commission of the European Communities v Kingdom of Spain. - Failure by a Member State to fulfil its obligations - State aid - Aid granted to companies in the Magefesa group - Commission Decisions 91/1/EEC and 1999/509/EC - Non-performance. - Case C-499/99.

European Court reports 2002 Page I-06031

Summary
Parties
Grounds
Decision on costs
Operative part

Keywords

1. Actions for failure to fulfil obligations - Failure to comply with a Commission decision concerning State aid - Decision requiring the recovery of illegal aid - Defences - Absolutely impossible to implement - Criteria of assessment - Financial position of debtor

(Art. 88(2) EC)

2. State aid - Commission decision declaring aid to be incompatible with the common market - Difficulties in implementation - Obligation on the Commission and the Member State to cooperate in seeking a solution consistent with the Treaty

(Arts 10 EC and 88(2) EC)

3. Actions for failure to fulfil obligations - Failure to comply with a Commission decision concerning State aid - Decision requiring the recovery of illegal aid - Assessment of failure to fulfil obligations - Situation to be taken into consideration - Situation at the end of the period laid down in the reasoned opinion

(Art. 88(2) EC)

Summary

$$1. Where a Commission decision requiring the cessation of State aid incompatible with the common market has not been the subject of a direct action, the only defence available to a Member State in opposing an infringement action by the Commission under Article 88(2) EC is to plead that it was absolutely impossible for it to implement the decision properly.

However, the condition that it be absolutely impossible to implement a decision is not fulfilled where the government of the Member State merely informs the Commission of the legal, political or practical difficulties involved in implementing the decision, without taking any real step to recover the aid from the undertakings concerned, and without proposing to the Commission any alternative arrangements for implementing the decision which could have enabled the difficulties to be overcome.

Similarly, the fact that, on account of the financial position of the beneficiary of the aid in question, the authorities of the Member State concerned could not recover the sum paid does not constitute proof that implementation was impossible, since the Commission's objective was to abolish the aid. The absence of recoverable assets can only be shown in proceedings to wind up the company.

( see paras 21, 25, 37-38 )

2. A Member State, which during the implementation of a Community decision on State aid, encounters unforseen and unforeseeable difficulties or becomes aware of consequences unforeseen by the Commission must submit those problems to the Commission for its assessment, proposing appropriate amendments to the decision in question. In such a case, under the rule imposing on Member States and Community institutions reciprocal duties of genuine cooperation which underlies in particular Article 10 EC, the Commission and the Member State must work together in good faith with a view to overcoming the difficulties whilst fully observing the provisions of the Treaty and in particular those on aid.

( see para. 24 )

3. In the context of an action under Article 88(2) EC seeking a declaration that a Member State has failed to fulfil its obligations by failing to adopt the measures necessary to comply with a Commission decision on State aid, the infringement must be assessed at the expiry of the time-limit fixed in the Commission's decision by which the Member State must notify the Commission of the measures it proposes to take to recover the aid declared incompatible with the common market.

( see para. 28 )

Parties

In Case C-499/99,

Commission of the European Communities, represented by G. Rozet and R. Vidal, acting as Agents, with an address for service in Luxembourg,

applicant,

v

Kingdom of Spain, represented by R. Silva de Lapuerta, acting as Agent, with an address for service in Luxembourg,

defendant,

APPLICATION for a declaration that, by failing to adopt, within the prescribed period, the measures necessary to comply with Commission Decision 91/1/EEC of 20 December 1989 concerning aids in Spain which the central and several autonomous governments granted to Magefesa, producer of domestic articles of stainless steel and small electric appliances (OJ 1991 L 5, p. 18) and Commission Decision 1999/509/EC of 14 October 1998 concerning aid granted by Spain to companies in the Magefesa group and their successors (OJ 1999 L 198, p. 15), declaring that certain aid to companies in the Magefesa group was granted unlawfully and is incompatible with the common market, the Kingdom of Spain has failed to fulfil its obligations under the fourth paragraph of Article 249 EC and Articles 2 and 3 of those decisions,

THE COURT (Sixth Chamber),

composed of: F. Macken, President of the Chamber, J.-P. Puissochet (Rapporteur), R. Schintgen, V. Skouris and J.N. Cunha Rodrigues, Judges,

Advocate General: J. Mischo,

Registrar: R. Grass,

having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 24 January 2002,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 22 December 1999, the Commission of the European Communities brought an action under the second paragraph of Article 88(2) EC for a declaration that, by failing to adopt, within the prescribed period, the necessary measures to comply with Commission Decision 91/1/EEC of 20 December 1989 concerning aids in Spain which the central and several autonomous Governments have granted to Magefesa, producer of domestic articles of stainless steel and small electric appliances (OJ 1991 L 5 p. 18) and Commission Decision 1999/509/EC of 14 October 1998 concerning aid granted by Spain to companies in the Magefesa group and their successors (OJ 1999 L 198 p. 15), declaring that certain aid to companies in the Magefesa group was granted unlawfully and is incompatible with the common market, the Kingdom of Spain has failed to fulfil its obligations under the fourth paragraph of Article 249 EC and Articles 2 and 3 of those decisions.

Background to the litigation

The facts

2 The Magefesa group consists, so far as concerns the present case, of four industrial companies which manufacture household goods: Industrias Domésticas SA (Indosa), based in the Basque Country, Cubertera del Norte SA (Cunosa) and Manufacturas Gur SA (Gursa) based in Cantabria, and Manufacturas Inoxidables Gibraltar SA (Migsa) based in Andalucia.

3 At the end of 1985 the Magefesa group was on the brink of insolvency and, to avoid its having to cease trading, a private consultancy firm (Gestiber) was appointed to manage the group. Gestiber put forward an action plan which, among other things, provided for a reduction in the workforce and for securing aid from central government and from the Governments of the autonomous regions of the Basque country, Cantabria and Andalucia, where the group's various factories were situated.

4 In order to allocate the aid, intermediary companies were created by the Governments of those three autonomous...