Netherlands

AuthorTh. Jestaedt; J. Derenne; T. Ottervanger
ProfessionJones Day; Lovells; Allen & Overy
Pages361-406

Page 361

Tom Ottervanger Simone Evans Mechteld van den Oord 335

2. Report on the availability of judicial remedies before the Dutch courts in the field of State aid
2. 1 Introduction

In the Netherlands, both administrative and civil courts deal with issues of State aid. A list of cases with summaries of the relevant decisions is provided in section 3 of this report. The following actions can be lodged before the Dutch courts:

  1. request for an injunction by a competitor or other third party claiming injury due to an aid measure, against the agency granting the allegedly unlawful aid; see the following cases: 3.1.2; 3.1.3; 3.1.4; 3.1.6;

  2. action by a competitor or other third party against the agency that granted aid for annulment of the decision to grant aid; see the following cases: 3.1.7; 3.2.6; 3.5.3; 3.5.5;

  3. action for damages brought by a competitor against the beneficiary of the aid and/or the agency that granted the aid for losses as a result of the unlawful grant of the aid; no cases can be reported;

  4. action by the agency that granted aid against the recipient to recover aid either granted contrary to Article 88 (3) EC or that, on the basis of a Commission decision, is not compatible with the Common Market; see the following cases: 3.1.5; 3.1.8; 3.3.1; 3.3.2;

  5. action against the agency that granted aid for annulment of the decision to collect a levy, or other financial burden, imposed on an undertaking where the levy was used to finance the unlawful aid; see the following cases: 3.4.1; 3.4.4; 3.4.5; 3.4.6; 3.4.7; 3.4.8; 3.4.9; 3.4.10; 3.6.2; 3.6.1; 3.6.2; 3.6.5.

Before discussing the most relevant of the above-mentioned actions, the handling of the "direct effect" of Article 88 (3) EC and the interpretation of the State aid concept by the Dutch courts will briefly be discussed. In addition, the differences between civil and administrative proceedings and the number of requests for a preliminary ruling will be touched upon. Note that, with the exception of case 3.1.3 and to some extent case 3.2.2, there have been no cases involving the relationship between (unlawful) aid and public procurement.

2. 2 General comments
2.2. 1 Article 88 (3) EC

The power to determine the compatibility of State aid has been exclusively assigned to the Commission. As a result, national courts have no jurisdiction in this regard. National courts do, however, have the power to enforce the direct effect of the procedural obligations of thePage 362 Member States as contained in Article 88 (3) EC, last sentence. This provision states that "the Member State concerned shall not put its proposed measure into effect until this procedure has resulted in a final decision". This clause extends to aid granted during the Commission's preliminary examination and, in particular, to aid granted before any notification is made to the Commission.

As can be derived from the examined case law, the Dutch courts apply the direct effect of Article 88 (3) EC conscientiously. In case 3.4.9 the court ruled that, in the absence of a final decision by the Commission, the imposition of the levy under the Commission's investigation under Article 88 (2) EC had to be suspended. The direct effect of Article 88 (3) EC was also noted in case 3.4.12 in which the rejection of a request for compensation with regard to disability insurance contributions was annulled due to the fact that the Commission had not yet concluded its investigation of these compensatory measures under Article 88 (2) EC.

However, the Supreme Court recently held in case 3.5.7, which started as summary proceedings, that if the Commission decides to investigate a certain measure, this will not automatically mean that the measure constitutes State aid within the meaning of Article 87 (1) EC. The Article 88 (3) EC prohibition is only applicable if there is a State aid measure within the meaning of Article 87 (1) EC. In case 3.5.7 the Commission only initiated the investigation because it could not exclude that the measure in question constituted State aid. According to the Supreme Court, this statement of the Commission could not be interpreted as a provisional judgment that there was indeed State aid. Therefore, there was no need to prohibit the implementation of the measures until the investigation under Article 88 (2) EC had resulted in a final decision.

An odd one out appears to be case 3.4.4, in which the interested party claimed that the contested levy constituted illegal State aid contrary to Articles 87 and 88 EC. The court ruled that such qualification would require it to test the legality of the law, which it was prohibited from doing by Article 120 of the Constitution. In addition, the court concluded that the levy could not be considered to be contrary to European law by reasoning that the State aid prohibition as laid down in Article 87 (1) EC is not directly effective and the Commission had not at any point in time acted against the State under Article 88 (1) EC.

2.2. 2 Differences between civil and administrative proceedings

In Dutch law, different time limits apply to filing objections in civil and administrative proceedings. In case 3.1.6, where a civil injunction proceedings were brought before the President of the District Court, the issue of these differing time limits was raised. The Municipal Council of Appingedam decided to grant guarantees and funding to a project providing its residents with broadband internet access. The municipality contended that, due to the fact that such decision qualified as a decision under the General Act on Administrative law ("Algemene wet bestuursrecht", "Awb"), objections should have been raised within the six weeks period as laid down in this Act. The action should therefore be declaredPage 363 inadmissible since the six week term for raising objections had expired. The claimant argued that Community law prevails over any expiry of the period under national law. The court ruled it unnecessary to decide on this issue. It considered that the validity of the Municipal Council's decision was not the subject under discussion, but the implementation of this decision prior to notification to and approval by the Commission under Article 88 (3) EC. The court stated that, due to the direct effect of the notification obligation, non-notification leaves undertakings such as the claimant free to turn to the national civil court to have the illegal aid blocked or prohibited.

Case 3.2.8 concerned an appeal against the Broadcasting Commission's approved continuation of the classical concert channel by the NOS, a public body, with the aid of public funds. The Administrative Court found that, in order to assess whether the Broadcasting Commission had rightly granted approval, it had to interpret and apply the concept of "State aid" as per Article 87 EC, particularly now that the channel was subsisting, without having undergone the procedure laid down in Article 88 (3) EC. However, it considered that the Dutch administrative law system was such that the Broadcasting Commission would first have to determine whether the continuance of the channel constituted State aid and, if so, whether an exemption regulation would apply. The appeal for lack of reasoning was upheld by the court, stating that it was for the Broadcasting Commission to ensure compliance with Community law rules within its field of competence.

2.2. 3 Interpretation of "State aid"

Dutch courts appear to scrutinise the ECJ's case law on the interpretation of State aid closely.

Case 3.4.13 concerned the "Wet waardering onroerende zaken" (Act on the Valuation of Real Estate), applicable to the valuation of real estate for the purpose of taxation. Pursuant to Article 18 (3) of this Act and Article 2 of its implementing regulation, certain real estate objects were exempt from this valuation. The court was unconvinced by the affected party's argument that this exemption should be regarded as non-notified State aid. It stated that the relevant provisions did not constitute a tax exemption and therefore were unlikely to be considered State aid. Even if these provisions did indeed constitute State aid, this would only lead to the inapplicability of those provisions, instead of the entire Act, thus resulting in the exempted objects being valued, rather than other realty not being valued. The court concluded that the valuation of the object at issue was not contrary to the EC State aid provisions. A similar reasoning was followed in case 3.4.14.

The Supreme Court ("Hoge Raad") ruled in case 3.4.6 that Article 87 EC aims to prevent trade between Member States from being affected by benefits granted by the public authorities which, in their various forms, distort or threaten to distort competition by favouring certain undertakings or the production of certain goods. Article 87 EC does not therefore distinguish between measures of State intervention by reference to their rationale or purposePage 364 but defines them in relation to their effects, so that the social aim of a measure cannot suffice to exclude it from the ambit of Article 87 EC (see. Case 173/73336). Consequently, the Supreme Court concluded that the social aim of the measure at issue was insufficient to bring it outside the scope of Article 87 EC. It reiterated that, for advantages to be capable of being categorised as aid within the meaning of Article 87 (1) EC, they must be granted directly or indirectly through State resources. These include both advantages which are granted directly by the State and those granted by a public or private body designated or established by the State. Due to the fact that the foundation at hand was not designated or established by the State, the Supreme Court ruled that no State resources were involved.

In case 3.4.7 the court referred to Article 87 (1) EC ("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 shall, insofar as it affects trade between Member States, be incompatible with the common market") to rule on the question of whether the grant of compensation for offal destruction charges to cattle breeding undertakings but not to the meat-packing industry could constitute State aid. It considered that, since cattle farms and meat-packing companies are not in competition with each other, no State measure distorting or threatening to distort competition could exist.

In case 3.4.3 the court referred to CFI's ruling in Weyl337 to elaborate on the link between Articles 87 and 88 EC with other provisions of the Treaty. The claimants had argued that any anti-competitive agreement aimed to implement an approved State aid measure would fall outside the scope of Article 81 (1) EC. The court considered that the case at hand did not fulfill the criteria laid down in Weyl, in which the CFI had ruled that measures that may fall within the scope of Article 81 EC, but are inextricably linked to the purpose of the aid, cannot be evaluated separately. In this context the court considered it of importance to determine whether the potential anti-competitive effects of the measures were attributable to the aid at issue and should be regarded as necessary to implement it and to achieve its purpose.

2. 3 Possible actions before Dutch courts
2.3. 1 Request for an interim injunction

Under Dutch law, there are essentially two distinct ways to prevent agencies from granting illegal aid. Parties can either initiate summary proceedings and obtain an injunction before the President of the competent civil district court or initiate proceedings for administrative preliminary relief before the administrative district courts.

Summary proceedings before a civil court can only be initiated in case of urgency. The President of the civil court cannot give a judgment which is binding on the parties. As a result, the order will have a provisional character. It is not required that there be a principalPage 364 claim pending before the civil court in order for an action for interim relief to be admissible. According to case law of the Supreme Court ("Hoge Raad"), a civil court is obliged to abstain from ruling on an administrative dispute if the parties are able to bring their case before an administrative court338.

Interested parties can initiate proceedings for administrative preliminary relief before an administrative court on the basis of Article 8:81 of the Awb. Interim measures will only be granted if the claimant has an interest339 and the following conditions are met:

* an administrative decision (to grant aid) must be involved;

* a principal claim must be pending before the same administrative court, or the interested party must have raised its objections against the administrative decision in a compulsory review procedure before the competent administrative authority; and

* it must be a matter of urgency.

In case 3.1.6 the claimant initiated summary proceedings before the President of the Civil Court in Groningen. The Municipal Council of Appingedam had decided to construct and exploit a glass fibre network together with a network operator, a private undertaking. For that purpose, a private law legal entity was to be established, in which the Municipality of Appingedam would participate. Although this does not follow explicitly from the judgment, the exception of Article 8:3 of the Awb applies. This article provides that no appeal can be lodged with the administrative court against an administrative decision which concerns (the preparation of) typically private (i.e. non-public) conduct, such as the establishment of a private undertaking. Hence, the civil court was competent in this case.

Initiating summary proceedings can be an effective remedy to suspend the execution of agreements until the procedure of Article 88 (2) EC has led to a final decision by the Commission. However, case 3.1.7 demonstrates that this is not always the case. The claimant requested suspension of a zoning plan by the Municipal Council before the administrative court, i.e. the Council of State ("Afdeling Bestuursrechtspraak van de Raad van State"). The possibility of (incompatible) State aid was brought forward by the claimant as a subsidiary argument. The Council of State held in its judgment that it was not convinced that the financial investment by the Municipality would constitute a form of State aid which had to be notified to the Commission. It therefore rejected the request for interim measures.

In case 3.1.4 orders were sought from the President of the Civil District Court of Leeuwarden against the municipality that granted aid. The purpose of the action was to require thePage 366 beneficiary to repay the aid and to prevent the grant of any further aid. The Supreme Court in this case applied the "market investor" test to determine whether the favourable payment conditions and a loan guarantee constituted State aid. The request for interim measures was rejected on the basis of the market investor principle.

2.3. 2 Action for annulment of the decision to grant aid

The grant (or the refusal or withdrawal) of subsidies to private undertakings by an administrative authority is an administrative decision within the meaning of the Awb, even if the aid concerned is drawn from general public funds and executed by contract under civil law. Title 4.2 (Subsidies) of the Awb provides a legal framework for all subsidies by all (central, regional, local etc.) governmental bodies. The provisions on financial aid do not cover agreements dealing with the actual payment of the aid. Such agreements may be enforced by the civil courts. It should furthermore be noted that actions against aid measures granted through non-administrative acts (such as aid in the form of a participation in the share capital of a private company) should be lodged at civil courts.

Actions for annulment against decisions of an administrative authority must, under the Awb, be lodged at the administrative chamber of the District Court. However, these courts are only competent where no other special administrative court is designated by the relevant legislation. In the legislation on subsidies, for example, the Court of Appeal for Trade and Industry ("College van Beroep voor het Bedrijfsleven") is frequently the relevant administrative court for an appeal against a decision of an agency that grants aid.

In general, administrative law actions are only admissible after a compulsory review procedure within the administration has been completed. A request for such a review should be directed to the administrative body which took the decision. Re-examination may also be carried out by a higher administrative body ("administratief beroep"). Subsequent judgments of the District Court can be appealed to the Council of State.

On 1 September 2004, the Act on Direct Appeal ("Wet Rechtstreeks beroep") entered into force340. In filing its objections against the decision concerned, an interested party may request the administrative authority to leave out the compulsory review procedure and agree to a direct appeal at the administrative district court. The administrative authority will verify whether the action is suitable for direct appeal. This will depend largely on the circumstances of the case.

Administrative authorities always have to take account of the so-called general principles of proper administration ("algemene beginselen van behoorlijk bestuur") when taking an administrative decision. In requesting annulment of the decision before the administrative court, interested parties can base their grounds of appeal on these principles. ThePage 367 administrative court - but also, where appropriate, the civil court341 - will assess whether the decision-making process and the (final) decision comply with the principles. In Dutch State aid cases the following principles/requirements can be invoked:

* the requirement of adequate reasoning (for example, case 3.5.1;)

* the principles of good faith and legal certainty (for example, 3.1.5; 3.3.1; 3.3.2); and

* the requirement of due care (for example, cases 3.2.6 and 3.5.3).

In case 3.5.1 the interested party successfully invoked the principle of adequate reasoning under Article 7:12 of the Awb. The Administrative Court of Roermond found that the Secretary of the Treasury could not rightfully reach his decision to refuse the aid because the decision did not meet the requirements regarding sufficient motivation. On this basis, the court annulled the decision.

In several actions initiated by competitors (for example, cases 3.2.6 and 3.5.3) the court held that the principle of due care entails an obligation for an administrative authority to take account of the rules on State aid in its decision-making process. By not doing so, the decision violates the requirement of due care and must be annulled.

Case 3.2.9, similar to case 3.1.4, deals with aid related to the establishment of a salt-producing company in the town of Harlingen. It concerns an appeal lodged by competitors against a refusal by the administrative authority that granted a subsidy (i.e. the State Secretary for Economic Affairs) to review its decision to grant the subsidy. The administrative authority was ordered to reconsider the review request as it had failed to handle the request adequately.

2.3. 3 Action for damages

Civil courts have jurisdiction over actions for damages related to the unlawful implementation of aid. Competitors who have suffered loss as a result of illegal aid may bring actions for damages before a civil court against the agency that granted the aid. It could be argued that such action for damages may be brought against the beneficiary, although there have been no precedents in national case law in this respect.

Under Dutch law there is no explicit statutory basis for introducing an action for damages. Actions for damages for breach of the State aid rules are brought under the same rules and principles as actions for damages based on tort. Parties must refer to Article 162 of Book 6 (unlawful act) of the Dutch Civil Code ("Burgerlijk Wetboek" ("CC") or Article 6:212 CC (unjust enrichment). For Article 6:162 CC to be applicable, the claimant must prove, among other things (i) that there is an unlawful act, (ii) damage and (iii) causation, in the sense that the damage must still be (iv) attributable to the infringement by the defendant.

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The court has to interpret and apply the concept of State aid contained in Article 87 EC to determine whether aid granted in neglect of the preliminary examination procedure contained in Article 88 (3) EC should be subject to the procedure of Article 88 (3) EC.

Cases 3.2.1 and 3.2.2 are examples of such an action taken by a competitor. One of the complaints of the claimant in these proceedings was for cross-subsidisation of the municipal press by the town of Amsterdam. This cross-subsidisation, however, was assumed to have started before the date the EC Treaty came into force. The District Court of Amsterdam therefore decided that the aid was not subject to the procedure of Article 88 (3) EC. It is interesting to note that the competitor started proceedings both against the awarding agency and against the public undertaking which took advantage of the subsidised tender made by the beneficiary of the cross-subsidisation. The competitor argued that the public undertaking that took advantage of the subsidised tender should have protected it against the illegal State aid and should not have accepted the tender of the beneficiary.

2.3. 4 Action for recovery

A Commission decision by which aid is declared incompatible with the Common Market should be enforced by the agency that granted the aid. The agency should require repayment of the aid from the recipient.

Under Dutch law there are - depending on the nature of the State aid - three legal possibilities to recover the aid: (i) a recovery procedure based on administrative law (for example, subsidies); (ii) a civil law procedure (for example, selling state property under the market value or financing a company on favourable conditions); and (iii) a procedure based on the General Tax Act ("Algemene Wet inzake Rijksbelastingen").

* Administrative law

A decision by an agency to recover State aid is governed by the Awb. The legal basis for such a decision is the (originally civil law) concept of "undue payment" ("onverschuldigde betaling") or "unjust enrichment" ("ongerechtvaardigde verrijking"). This was established in respect of undue payment by the Council of State's decision of 21 October 1996 in the case Nanne v Secretary of State and, in respect of unjust enrichment, in its decision of 26 August 1997 in the case between Noord Kennemerland and the Ministry of Housing, Planning and the Environment. According to the Council of State, these principles were administrative in nature if they were applied in a case concerning administrative law. An appeal against such a decision by a beneficiary of the aid, ordered to repay the aid, could therefore be lodged at the competent administrative court.

Special provisions on recovery in regard of subsidies have been laid down in the Awb and in certain subsidy Framework Acts. Note that Article 4:57 Awb states that the agency has to recover the subsidy within a period of five years (instead of ten years for a decision by thePage 369 Commission342) after the decision to recover the State aid was made by the agency. It is questionable whether this rather short time limit is in conformity with EC law on State aid.

A complication arises when the agency is a local public authority that does not intend to enforce a negative Commission decision (in case 3.3.2 the court held that the negative Commission decision has direct effect). It is assumed that the Central Government does not have the power to impose recovery by such agencies. However, competitors may request a review procedure and subsequently lodge an appeal at the competent administrative court against a written refusal by an agency to recover illegal aid. Even if the Commission would take a positive decision declaring unlawfully introduced aid compatible with the Common Market, a court has to declare that measures adopted before such finding are unlawful. A beneficiary is therefore not protected against actions to order an agency to recover aid.

Cases 3.3.1 and 3.3.2 demonstrate the obstacles for the beneficiary to request an annulment of the decision on the basis of the principles of good faith and legal certainty. The court found that the claimant had failed to show facts or circumstances that would enable it to argue successfully that it could legitimately presume that the aid would not be recovered. The court reiterated the continuous line of jurisprudence in which the ECJ had determined that there could only be a legitimate expectation if the aid was granted in accordance with Article 88 EC, something that a normal, cautious undertaking could be expected to determine by itself without too much difficulty. In both cases, there could be no legitimate expectations on the part of the recipients. The application for annulment was dismissed. The claimants in case 3.1.5 successfully relied on the principles of proper administration in their defence against an action for recovery.

In case 3.1.8, the claimant obtained a judgment that, pending the Council of State's appeal procedure, there would be no obligation for the company to reimburse the subsidy, on the condition that the company issued a bank guarantee.

* Civil law

Private law instruments to recover State aid are based on the legal concept of "undue payment" ("onverschuldigde betaling") or "unjust enrichment" ("ongerechtvaardigde verrijking").

In order for legal obligations arising from a legal transaction to end under Dutch civil law, a new judicial act is required. An exception applies in respect of void legal transactions. Presumably, private law transactions in violation of Article 88 EC can be considered as void343.

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There is a time limit of five years for recovering sums of money. This rather short time limit may conflict with EC law on State aid.

* Tax law

The General Tax Act contains explicit statutory provisions in case of the imposition of too little tax. The tax inspector is authorised to impose additional tax but, as far as important categories of taxes are concerned, only if a 'new fact' emerges. It is unclear whether a negative decision by the Commission, finding the tax to be illegal because of State aid, can qualify as a 'new fact'. Under Dutch Tax Law there is a five-year time limit to impose additional taxes after the duty to pay the taxes arose. Again, this rather short time limit may conflict with EC law on State aid.

2.3. 5 Action against levies

The Supreme Court has requested preliminary rulings in three cases regarding levies (please see cases 3.6.2, 3.6.3 and 3.6.4), whereas the Trade and Industry Appeals Tribunal has requested a preliminary ruling in case 3.6.5. Cases 3.4.5, 3.4.8, 3.4.9 and 3.4.11 related to notified aid. The claimants were unsuccessful in their claim in the majority of these cases as the notification had resulted in a positive decision by the Commission. A change of the public body levying the charge did not lead to a different conclusion in this regard (see case 3.4.11). It was only in case 3.4.9 that the court ruled that the levy could not be imposed, as the Commission had not yet concluded its investigation under Article 88 (3) EC.

In case 3.4.1, the Administrative Court for Trade and Industry ruled that both the contested levy for an incompatible aid measure and the contested "demand note" were illegal. While the Commission had decided that a particular aid was incompatible as a result of its being financed by levies on imported products, and had prohibited future aid, "demand notes" relating to the period before the Commission decision were, according to the court, valid.

2. 4 Summary conclusions drawn from the cases below

The cases listed below have been divided into several headings and the main conclusions have been drawn for each heading.

2.4. 1 Request for an interim injunction

As follows from cases 3.1.1 to 3.1.8, State aid issues came up in several interim injunctions. Of these interim injunctions, four cases were initiated by a competitor and four of these interim injunctions were successful.

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2.4. 2 Other actions by competitors

Competitors brought nine actions (other than summary proceedings) concerning State aid before the administrative and civil courts since the last report. They were (partly) successful in only three cases.

2.4. 3 Recovery cases

There have been four recovery cases before the national courts. Recovery was refused in only one of them because of procedural rules (case 3.1.5). The President of the court found that the defendant could have offered a longer repayment schedule than the four-week period and annulled the decision in so far as it referred to a four-week period for repayment.

2.4. 4 Cases relating to taxes

Around 12 different tax measures, mostly concerning the agricultural sector, were contested before both the administrative and civil courts. The Administrative Court for Trade and Industry dealt with eight (out of 14) cases.

2.4. 5 Cases relating to State measures other than taxes per se

Because of the diversity of the cases in this category, no general comments can be made.

2.4. 6 Request for preliminary ruling

The Supreme Court ("Hoge Raad") has requested preliminary rulings in three cases (cases 3.6.2, 3.6.3 and 3.6.4), whereas the Administrative Court for Trade and Industry requested a preliminary ruling in case 3.6.5. There is only one case (3.6.1) known in which the Council of State requested a preliminary ruling. By way of exception, the District Court of Groningen requested a preliminary ruling in case 3.6.6. In most cases, the ECJ only recently provided a ruling. No comments as to the final outcome of the cases can yet be made.

3. List of cases and summaries
3. 1 Request for an interim injunction
3.1. 1 President of the District Court, The Hague, no 83/927, 30 November 1983, Vereniging van Exploitanten van Gasbedrijven in Nederland (VEGIN) and Veluwse Nutsbedrijven NV v The Dutch State and NV Nederlandse Gasunie (D)

Facts and legal issues: Application for an interim injunction (civil law), gas sector.

On 2 October 1984, the Minister of Economic Affairs fixed the minimum price for natural gas distribution companies to pay to suppliers. VEGIN and Veluwse Nutsbedrijven requested the President to annul or suspend this decision and to order NV Nederlandse Gasunie, at that time the sole supplier of gas, to supply the distribution companies at current prices.

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VEGIN and Veluwse Nutsbedrijven claimed that this decision resulted in State aid being granted to the benefit of several large Dutch industrial purchasers of gas. The benefit was a decrease in their prices compared to export gas prices. Because export prices for gas were based on average (national) Dutch prices, price increase for the distribution companies' customers as a result of the minimum prices would result in export prices rising above the prices of large industrial consumers.

Decision: The President rejected the argument made by VEGIN and Veluwse Nutsbedrijven. His view was that an annulment or suspension of the Minister of Economic Affairs, decision would not result in purchase price changes for other consumers in the Netherlands.

3.1. 2 President of the District Court, The Hague, AB 2005/395, 200405506/1, 5 July 1991, De Vereniging van Nederlandse Luchtvaartondernemingen (VNLO) v the State (Ministry of Transport and Water Management) (D)

Facts and legal issues: Application for an interim injunction (civil) law, aviation sector.

After filing a complaint with the Commission, the association of Dutch aviation companies ("de Vereniging van Nederlandse Luchtvaartondernemingen" ("VNLO") initiated summary proceedings against the Dutch State (Ministry of Transport and Water Management) to obtain an injunction in order to prevent RLS, the State Aviation School (part of the Ministry of Transport and Water Management), from executing the contract with the airline KLM concerning the privatisation of RLS until the Commission had reached a judgment on the compatibility of the (possible) State aid measures with the Common Market. VNLO was of the opinion that the financial obligations resulting from the contract between RLS and KLM constituted State aid. On the basis of the contract, RLS was obliged to transfer the (im)movable goods and the registrable property to KLM for the amount of one Dutch guilder. Furthermore, RLS was obliged to pay KLM NLG 23,000, carry the cost of a specific provision, and contribute to a guarantee fund.

Decision: The president of the civil court had to judge whether the financial obligations resulting from the contract between RLS and KLM constituted State aid. The Ministry argued that the cash value of RLS amounted to [minus] NLG 42.7 million. Moreover, KLM was obliged on the basis of the same contract to guarantee the continuation and quality of RLS, the employment and the terms of employment. The President ruled that these obligations on KLM were in proportion to the financial obligations of RLS. Therefore, the financial obligations did not constitute State aid and there was no obligation for RLS to notify the aid to the Commission.

Comment: On the basis of the complaint which was filed by the VNLO on 17 May 1991, the Commission decided in October 1993 to start a formal investigation procedure (Article 88 (2) EC). It concluded that the payment of NLG 17 million as a contribution to the exploitation deficits of the school and the price of one guilder paid for the assets of the school constitutedPage 373 illegal State aid. However, the Commission held that the State aid was in conformity with the Common Market on the basis of the (old) Article 92 (3) (c) EC. The maintenance of efficient high level training programmes for pilots contributes to a high safety level which is important for the mobility of pilots within the EC. Stimulating the development of training programmes for pilots within the EC can change the ongoing trend of obtaining training outside the EC. As a consequence of these new training possibilities, the development of economic activities will be simplified.

3.1. 3 President of the District Court, The Hague, no 93/146, 26 February 1993, Construcciones Aeronauticas SA ("Casa") v The State of the Netherlands (H)

Facts and legal issues: Application for an interim injunction (civil law), air transport sector.

The Dutch Ministry of Defence intended to purchase air transport planes from Fokker. Casa asked the President to order the Ministry to annul the procurement procedure and to prohibit any acts by the Ministry contrary to Article 87 EC. The award of the contract to Fokker, would, they claimed, be State aid because the Fokker air planes were each NLG 10 million more expensive than similar Casa air planes and because the Ministry of Defence would pay Fokker's development costs. The State of the Netherlands argued that Article 223 EC precluded the applicability of Article 87 EC.

Decision: The President noted that the air transport planes had to be significantly adapted for military use. The applicability of Article 223 EC was therefore (according to the list provided by the EC Council on 15 April 1958 based on Article 223 of the EC Treaty) accepted and the request by Casa rejected.

3.1. 4 Supreme Court ("Hoge Raad"), The Hague, no 16148, NJ 1997/303, 3 January 1997, Le Comité des Salines de France and La Compagnie des Salins du Midi et des Saline d'Est v The Municipality of Harlingen (D)

Facts and legal issues: Appeal of interlocutory proceedings (civil law), agricultural sector.

Le Comité des Salines and La Compagnie des Salins alleged that State aid for the establishment of a salt mine and salt factory in Harlingen had been granted not only by the Secretary of State for Economic Affairs but also by the Municipality of Harlingen. The aid given by the municipality related to its sale of a site to Aliss. More specifically, the Municipality allowed deferment of payment of the purchase price and it gave guarantees regarding a loan.

The French competitors asked the President of the District Court of Leeuwarden:

* to prohibit the municipality's support to Frima BV or Aliss BV without the approval of the Commission;

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* to order the municipality to claim repayment of the aid granted; and

* to take such measures necessary to achieve annulment of the guarantee.

The court was further requested to impose a penalty of NLG 10,000 for each violation of the President's judgment.

Decision: according to the Court of Appeal, the municipality had not acted in a manner different from that in which a private party, such as a development company, would have sold its land under normal market conditions. Therefore, there was no State aid granted by the municipality. This Court of Appeal judgment was confirmed by the Supreme Court.

3.1. 5 President of the Administrative Court, Assen, LJN: AA7472, 00/718 WET P01 G01, 2 October 2000, X v Y (A)

Facts and legal issues: Application for an interim injunction (administrative law), petrol sector.

X operated petrol stations along the Dutch-German border. According to a specific Act, ("Tijdelijke regeling subsidie tankstations grensstreek Duitsland") such petrol stations were eligible for a maximum of euros 100,000 (NLG 223,250) worth of aid over a three-year period to compensate for the negative competition effects arising from excise differences in the Netherlands and Germany. X was granted aid in the amount of euros 95,556 (NLG 210,600) under the condition of possible amendments or recovery of the aid. Before and after the aid grant there had been extensive written contact between the claimant and the defendant. Because of the fact that the claimant did not respond to several requests by the defendant for information, the defendant decided to recover the aid. The claimant was of the opinion that by ordering recovery of the aid and interest within a period of four weeks of publishing the relevant decision, the defendant had acted in violation of several administrative principles, most notably the principles of proportionality, legitimate expectations and reasonable consideration of the interests involved. The defendant argued that it was confronted with a Commission decision declaring the aid illegal and thus with an incontrovertible obligation to recover the aid granted, which in turn led it to demand repayment within the contested period.

Decision: The President of the court firstly considered that injunction proceedings were not suitable for the case at hand as several proceedings had been commenced at the Community Courts which could potentially result in overturning prior national court rulings. The scope of the present proceedings was thus limited to the recovery order for the entirePage 375 subsidy sum within a four-week period. Pursuant to the Commission decision344, the aid should be recovered in accordance with the relevant national rules. The President found that, with regard to the recovery, the principles of proper administration ("algemene beginselen van behoorlijk bestuur") should apply. As the total sum granted was spread over several years and the defendant had not indicated from the outset that there was a possibility of recovery due to issues at European level, this could have created expectations. The President found that the defendant could have offered a longer repayment schedule than the four-week period and annulled the decision in so far as it referred to a four-week period for repayment.

3.1. 6 President of the District Court, Groningen, LJN: AQ8920, 73785 KGZA 04-271, 3 September 2004, Essent Kabelcom BV v Gemeente Appingedam (Municipality of Appingedam) (D)

Facts and legal issues: Application for an interim injunction (civil law), telecommunications sector.

The municipality intended to provide broadband internet access to residents living in its outskirts. Due to the project costs, the municipality contributed to the funding of the project through guarantees and by granting euros 5 million. The central issue was whether the contributions required notification to the Commission.

Decision: The court rejected the municipality's argument that contribution made by government bodies could never constitute State aid if they were made in the general public interest. According to the court, this argument was based on a misinterpretation of the "Commission Guidelines on criteria and modalities of implementation of structural funds in support of electronic communications". Moreover, the court was not convinced that the municipality was, through its public task, forced to construct a new infrastructure since there were already two competing internet networks in the area in which the new network was to be built. Regardless of the relevance to the general public interest, it would have to be examined whether the granted State aid was compatible with the Common Market. The court emphasised in particular that, in light of the conclusion in Belgium v Commission345, notification to the Commission was appropriate if there was doubt as to the compatibility of the intended measure with the EC State aid provisions. Therefore, the municipality should notify the Commission of the intended measures. The application was thus granted.

Comment: On 20 October 2005, the Commission started its investigation on "Broadband development Appingedam346".

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3.1. 7 Council of State, The Hague, LJN: AR7937, 200407291/2, 14 December 2004, X v College van Gedeputeerde Staten van de Provincie Gelderland (Provincial Executive of Gelderland) (D)

Facts and legal issues: Application for an interim injunction (administrative law), real estate sector.

The claimant sought an injunction for the construction plan of a new apartment complex. X alleged, inter alia, that the decision did not deal with whether the financial support by the municipality was in accordance with European law.

Decision: The court was unconvinced that the financial support by the municipality was without a return and would thus qualify as State aid to be notified under Article 88 EC. In this regard, the court found of significance that it was sufficiently likely that the municipality's financial support related to the renovation of existing and construction of future areas, which was likely to be at the municipality's expense. Therefore, the municipality's financial support could not qualify as State aid. The application for annulment was dismissed.

3.1. 8 President of the Council of State, The Hague, AB 2005/361, 200410578/2, 10 May 2005, Ferm-O-Feed B V. v the Minister of Agriculture, Nature and Food quality (A)

Facts and legal issues: Provisional relief (administrative law), agricultural sector.

The "Bijdrageregeling proefprojecten mestverwerking" (contribution scheme for pilot manure processing projects) was approved by the Commission for a given period, expiring on 1 January 1995. However, subsidies were granted on the basis of this scheme even after this date. Consequently, the Commission ordered the Dutch State to recover these subsidies. By a decision dated 3 August 2001, the Minister of Agriculture, Nature and Food Quality requested the repayment of the subsidy granted to Ferm-O-Feed B.V.. Ferm-O-Feed B.V. lodged a notice of objection to this decision and, after dismissal of its objections, appealed to the District Court Den Bosch and, ultimately, the Council of State. Before the latter, Ferm-O-Feed B.V. filed a request for provisional relief entailing suspension of the Minister's decision. The Minister had indicated that he could not suspend the subsidy's reclamation, because this would violate Community law.

Decision: The President of the Council of State considered that in this procedure for provisional relief he would not deal with complex questions such as the relationship between Community and national administrative law. However, considering that Ferm-O-Feed B.V. declared itself willing to issue a bank guarantee, the President ruled that the company, pending the Council of State's appeal judgment, would not be under an obligation to reimburse the subsidy.

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3. 2 Other actions by competitors
3.2. 1 District court, Amsterdam, no 93/3937, 5 November 1995, Security Print Vianen B.V. v Vervoerbewijzen Nederland B.V. (E)

Facts and legal issues: Appeal, interlocutory injunction (civil law), transport ticket printing.

The facts of this case have been indicated in case 3.2.2, in which Security Print claimed damages from the Municipality of Amsterdam, the grantor of the aid. In this case, Security Print also claimed damages form Vervoerbewijzen Nederland B.V.. According to Security Print, Vervoerbewijzen Nederland B.V. knew, or should have known, when awarding the contract that Security Print had an advantage as a result of illegal State aid. Vervoerbewijzen Nederland B.V. should, claimed Security Print, have protected them against the unfair competition from the Municipal Press of Amsterdam ("MPA").

Decision: The court did not come to a conclusive decision on the State aid issue in its judgment.

3.2. 2 Court of Appeal, Amsterdam, NJ 2000/592, 18 February 1999, Security Print Vianen B V. v the Municipality of Amsterdam (H)/(E)

Facts and legal issues: Appeal (civil law), transport ticket printing.

Vervoerbewijzen Nederland B.V. awarded a contract for printing public transport tickets to the Municipal Press of Amsterdam ("MPA"). MPA is a company without legal personality which forms part of the Municipality of Amsterdam. Security Print Vianen B.V., whose tender was rejected, claimed compensation from the Municipality of Amsterdam, believing the tender by MPA was unlawful because MPA had several unfair advantages granted to it by the municipality, namely:

* availability of capital provided by the municipality

* profitable loans provided by the municipality

* contract awarded by the municipality

* guarantee of continuity by the municipality

* covering of all losses by the municipality

* no writing-off on goodwill

* no subjection of MPA's profits to company taxes

Security Print alleged that these advantages were contrary to Article 88 (3) EC. The court considered that, where a State aid measure existed before 1 January 1958, this did not havePage 378 to be notified to the Commission. Since MPA had formed part of the municipality since 1735, the Commission did not have to be informed of the advantages afforded by the municipality.

Decision: The court did not have to determine whether the profits of MPA were exempt from company taxes and whether such an exemption would amount to a State aid measure. The court decided that if MPA did not have to pay company taxes, the Municipality would commit a tort by breaching the principle of fair competition by making use of the tax advantages in a public tender.

3.2. 3 District court, The Hague, LJN: AB2893, 109653 / HA ZA 98-4115, 25 July 2001, Dutchtone v Kingdom of the Netherlands (D)

Facts and legal issues: Proceedings in first instance (civil law), telecommunications sector. KPN intervening

Within the framework of the implementation of the Mobile Telecommunications Services Act ("Wet mobiele telecommunicatievoorzieningen"), a legislative proposal to auction the available licences was introduced. KPN and Libertel already held licences for the frequencies involved. Part of the frequencies were, however, used to operate an analogue public telephone service, which was gradually replaced with the GSM network. Dutchtone complained that KPN and Libertel enjoyed unfair advantages since they did not have to purchase the remainder of their allotted frequency ranges, whereas Dutchtone did. Dutchtone argued that this constituted State aid and, since it had not been notified to the Commission, its implementation constituted a wrongful act toward Dutchtone.

Decision: Before adjudicating this matter, the court noted that it could only rule insofar as the actions were directed against the incompatibility of a national law with superseding provisions of international law, such as Community law, since Article 120 of the Dutch Constitution prohibited national courts from ruling on the legality of national laws as such. With regard to the alleged violation of Article 88 (3) EC, the court noted that it would first have to interpret and apply the concept of aid as defined in Article 87 EC. As the action, i.e. the creation of the law entailing the auction, and the position of KPN and Libertel within that auction, was not liable to distort competition, not all of the conditions of Article 87 had been fulfilled. As an underlying reason for this conclusion, the court adduced that, by initiating the auction and enabling third parties to obtain licences, the State had fulfilled its obligation to promote competition on the markets involved. The mere fact that KPN and Libertel did not have to pay for acquiring the remainder of their licences did not alter this.

3.2. 4 Administrative Court for Trade and Industry, The Hague, LJN: AD9969, AWB 00/794, 30 January 2002, Dutchtone NV, legal successor to Federa NV v Staatssecretaris van het Ministerie van Verkeer en Waterstaat (State Secretary of the Ministry of Transport and Public Works) (D)

Also see section 3.2.3 above for the decision in the civil matter.

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Facts and legal issues: Appeal (administrative law), telecommunications sector.

In light of the implementation of the "Wet mobiele telecommunicatievoorzieningen" (Mobile Telecommunications Act), KPN and Libertel acquired licences to operate GSM networks. Part of the frequency range intended for GSM Networks was not yet included in the licence due to the fact that KPN used those frequencies to operate an analogue public telephone service. Upon its replacement with the GSM network system, that frequency range was also awarded to KPN and Libertel. Dutchtone filed an appeal against the allocation of this part of the frequency range. Dutchtone's appeal in primo was dismissed, as was its subsequent appeal with the District Court of The Hague. In this case, among other things, Dutchtone argued that its obligation to pay for the frequencies through an auction, when such payments were not required by KPN and Libertel with regard to the second part of the obtained frequencies, constituted State aid for the benefit of KPN and Libertel.

Decision: The Administrative Court for Trade and Industry reached the same conclusion as was handed down by the District Court of The Hague347) that the allocation of the frequencies to Libertel and KPN did not constitute State aid within the meaning of Article 87 EC and therefore was not in violation of Article 88 (3) EC. The reasoning behind this conclusion was that, because the Kingdom of the Netherlands was in no way obliged to demand payment for the allocation of the frequencies, the fact that KPN and Libertel did not have to pay to acquire the second part of the frequencies did not mean that they avoided a financial cost which would have otherwise placed a burden on their available budget. The appeal was dismissed.

3.2. 5 Administrative Court, Rotterdam, LJN: AF2577, TELEC 01/418-SIMO / TELEC/814-SIMO, 29 November 2002, Versatel 3G NV v Staatssecretaris voor Economische Zaken (State Secretary of the Ministry of Economic Affairs) (D)

Facts and legal issues: Proceedings in first instance (administrative law), telecommunications sector.

Based on the requirements for creating national licensing schemes for the roll-out of third generation mobile phones (UMTS), the State Secretary decided to auction off licences enabling the operation of such services. Although only five licences could be auctioned off, given the capacity of the frequency spectrum, six mobile network operators participated in the auction. Versatel did not obtain a licence and initiated proceedings seeking the annulment of the decision to hold an auction as well as the decisions awarding the licences to its competitors. Versatel alleged, inter alia, that operators who already had licences to operate second-generation mobile phone networks were favoured during the auction over those who had no such licences, resulting in a below market sale price for the licences, thus constituting a selective advantage for those undertakings, which amounted to non-notified State aid.

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Decision: The court found that Versatel had failed to substantiate its allegations that the licences were sold at below market value and that the choice for an auction as the method of transfer of the licences favoured the operators with second generation licences over those who had no such licences. Therefore the court, although it did not explicitly say so, concluded that no State aid was involved. The court denied all applications for annulment of the decisions.

3.2. 6 Council of State, The Hague, AB 2004/262, 200202737/1, 17 December 2003, Samenwerkingsverband Noord Nederland and the College van Burgemeester en Wethouders van de Gemeente Groningen (Municipal Executive of the city of Groningen against a judgment by the district court Groningen in the matter between Stichting Prins Bernhardhoeve v the Governing Body of the Samenwerkingsverband Noord Nederland) (D)

Facts and legal issues: Appeal (administrative law), services sector.

The Samenwerkingsverband Noord Nederland ("SNN") granted a subsidy of approximately euros 1.8 million to the Municipal Executive of Groningen ("The Municipal Executive") for the expansion of an exhibition and conference centre named "Martinihal". The Stichting Prins Bernhardhoeve ("SPB") ran a conference centre nearby the Martinihal and competed with the Martinihal. SPB's application for annulment of the grant was rejected by the SNN. This decision was overturned in appeal. The Municipal Executive and the SNN subsequently lodged these appeal proceedings. Meanwhile, the expansion had been completed. The claimants alleged that the subsidy did not constitute State aid and in any event fell within the scope of the Block Exemption regarding aid to Small and Medium Sized Enterprise ("the Block Exemption").

Decision: The Council of State stated that it could not be excluded that trade between Member States had been affected by the subsidy. As a result, it should have been for SNN to ascertain whether Article 88 (3) EC did not apply in respect of the grant. In addition, in so far as the grant could be considered to fall under the Block Exemption, the requirements laid down in Articles 3 (1) and 9 (1) of the Block Exemption had not been fulfilled. The Council of State also found that the fact that the subsidy was part of the European Regional Development Fund did not exempt SNN from ascertaining the possible applicability of Article 88 (3) EC. The Council of State concluded, as did the administrative court in first instance, that the (administrative) decision to grant a subsidy was made without the requisite level of due care and was consequently annulled.

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3.2. 7 Council of State, The Hague, LJN: AO7997, 200307666/1, 21 April 2004, Bedrijvenvereniging Huiswaard/Overstad c s. Municipal Executive of Alkmaar and AZ Real Estate BV, applicants against the decision in the case of Bedrijvenvereniging Huiswaar/Overstad c.s. v College van Burgemeester en Wethouders van de Gemeente Alkmaar (Municipal Executive of Alkmaar) (D)

Also see section 3.5.7 for the decision in the civil matter.

Facts and legal issues: Appeal (administrative law), real estate sector.

The Municipality of Alkmaar and Stichting AZ (Foundation AZ) and AZ Onroerend Goed BV (AZ Real Estate BV), together "AZ", concluded four agreements concerning the construction of a new soccer stadium with retail opportunities, the construction of homes on the present soccer stadium's site and the transfer of the related land plot. Overstad notified the Commission of the existence of the agreements and requested an examination of their compatibility with the EC State aid provisions because the transfer of the relevant land plots was supposedly at below market value prices. The Commission concluded that the agreements might constitute State aid and continued to investigate under Article 88 (2) EC. Overstad filed this appeal to prevent the further implementation of the agreements based on the basis of Article 88 (3) EC.

Decision: The court found that the transfer of the land plots was not inextricably linked to the grant of a construction licence for real estate on those land plots. The fact that the Commission had initiated proceedings under Article 88 (2) EC regarding the compatibility of the land transfer did not mean that the construction would not be possible under any circumstances since it has not been demonstrated that the construction could only take place on the basis of the agreed land transfers. The appeal was granted.

3.2. 8 Administrative court, Amsterdam, LJN: AQ6500, AWB 02/5306, 5 August 2004, Classic FM Plc, Sky Radio Ltd , Jazz Radio BV, Wegener Radio en Televisie, Vrije Radio Omroep Nederland BV v Commissariaat voor de Media (Broadcasting Commission) (D)

Facts and legal issues: Proceedings in first instance (administrative law), television and radio sector.

The Nederlandse Omroepstichting, ("NOS") (Netherlands Broadcasting Foundation), a public body, notified the Broadcasting Commission of its intention to continue the Stichting Concertzender Nederland ("SCN") (Concert Broadcasting Foundation Netherlands), a private body, as an ancillary activity within the meaning of the Media Act ("Mediawet"). SCN was not commercially viable and such continuation would ensure its existence for the foreseeable future. To prevent any distortion of competition, the Media Act prohibited public broadcasting bodies from assisting private broadcasting bodies. The central issues here were whether the Broadcasting Commission had rightly determined that the affiliation between the NOS andPage 382 SCN was ancillary in nature; whether it was in line with the Media Act; and, specifically, whether such ancillary affiliation was likely to affect competition negatively given that, in this particular case, the financing received by SCN originated from public resources of the State Secretary of Education, Culture and Science.

Decision: The court found that the Commission had already, unrelated to this matter, initiated an investigation under Article 88 (2) EC with regard to the compatibility of the financing schemes of public broadcasting in the Netherlands, including the extent to which ancillary activities were allowed. The court moreover noted that for a decision concerning the validity of the ancillary affiliation of SCN with NOS, it would have to determine whether the provision of public funds by the State Secretary of Education, Culture and Science constituted State aid and whether such aid fell within the scope of any exemption. The fact that the Broadcasting Commission had failed to examine these issues led to the conclusion that the decision approving the subsidiary affiliation between the NOS and SCN lacked sufficient grounds. The case was thus referred back to the Broadcasting Commission.

Comment: According to the Dutch administrative law system, the court did not conclude on the issue of whether the continuation of SCN through public funds constituted State aid. It is first for the Broadcasting Commission to decide upon the application once again, taking account of the case law of the ECJ and Commission notices.

3.2. 9 Administrative Court for Trade and Industry, The Hague, no 94/2940/062/230, 4 September 1996, Le Comité des Salines de France and La Compagnie des Salins du Midi et des Salines d'Est v the Secretary of State for Economic (Staatssecretaris van Economische Zaken) and Frima BV (D)

Facts and legal issues: Appeal (administrative law), agricultural sector.

Le Comité des Salines and La Compagnie des Salins du Midi requested a review of a decision of the Secretary of State Economic Affairs of 14 March 1994, to support the establishment of a salt works in the town of Harlingen with a subsidy of up to NLG 11,338,500. This subsidy was granted under the Regulation of Subsidies for Regional Investment Projects. On 11 October 1994, the Secretary of State refused to conduct a review on the grounds that the request had not been lodged within the applicable time limit of six weeks.

Decision: The Court of Appeal for Trade and Industry annulled the decision of the Secretary of State. The ground for annulment was that the principles of fairness and due process had been breached because the Secretary of State had not adequately responded to the claimant's request to be given a copy of the decision granting the subsidy. This request had been made within the six-week period. The Secretary of State only decided not to give a copy of the decision to grant a subsidy after the six-week period had lapsed. The Secretary of State was ordered by the court to reconsider the request for review (the final decision found that there was no incompatible State aid).

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3. 3 Recovery cases
3.3. 1 Administrative court, Zutphen, LJN: AF9788, 02/551 WET, 20 May 2003, Demarol BV v Minister van Financiën (Secretary of the Treasury) (A)

Facts and legal issues: Proceeding in first instance (administrative law), petrol sector.

Demarol BV operated a number of petrol stations along the Dutch-German border. According to a specific Act, such petrol stations were eligible for a maximum of euros 100,000 worth of aid over a three-year period to compensate the negative competition effects arising from excise differences in the Netherlands and Germany. Demarol BV applied for, and subsequently received, aid under the Act. Since the Commission deemed the aid granted under the Act incompatible with EC State aid provisions, the Secretary notified Demarol BV that the aid received was to be repaid, including any interest. The Secretary denied the application for annulment of the recovery decision upon which Demarol BV initiated these proceedings.

Decision: The court found that the Secretary was justified to order the recovery of part of the granted aid based on Commission decisions348 declaring the aid incompatible in combination with Article 88 (2) EC. Moreover, Article 4:49(1) and sub (b) of the "Algemene wet bestuursrecht" (General Administrative Act) and the identical Article 13(1) and sub (b) of the Act in question enabled the Secretary to recover or amend the amount of aid granted if the decisions by which the aid was granted were flawed and the recipient was or should have been aware of such flaw. Through the correspondence between the State and Demarol BV, Demarol BV was or should have been aware that the Commission had initiated proceedings at the time of the aid grant without reaching a definite conclusion yet, and any aid granted pending such proceedings would fall under the prohibition of Article 87 (1) EC. The court moreover found that Demarol BV could not invoke the principle of legitimate expectations or legal certainty because ECJ case law clearly states that reliance on those principles could only be successful if the aid in question was granted in accordance with Article 88 EC, something that a normal, cautious undertaking could be expected to determine without too much difficulty. In light of the above the Secretary was justified in making this decision and therefore the application for annulment was dismissed.

3.3. 2 Administrative Court, 's-Hertogenbosch, LJN: AR6630, Awb 03/2581 BELEI, 26 November 2004, X v Minister van Landbouw, Natuur en Visserij (Secretary of Agriculture, Nature Management and Fisheries) (A)

Facts and legal issues: Proceedings in first instance (administrative law), agricultural sector.

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X applied for subsidies under the "Bijdrageregeling proefprojecten mestverwerking" (contribution scheme for a pilot manure processing project), which were initially granted by the Secretary. As a result of a Commission decision declaring the subsidy granted to the claimant contrary to the EC State aid provisions349, the Secretary ordered recovery of the granted subsidies, including interest. The central issue was whether the decision revoking the aid was unjustified.

Decision: The court found that the recovery decision was justified as it had been based on a directly effective Commission decision. Since the Commission decision had not been appealed within the time limits, it had become definitive. Moreover, X failed to substantiate that it could rely on a legitimate presumption that the aid would not be recovered. The court reiterated the ECJ's case law, stating that legitimate expectations only exist if aid is granted in accordance with Article 88 EC, something that a normal, cautious undertaking could be expected to determine without too much difficulty. Since the subsidy had not been granted in accordance with the Article 88 EC procedure the claimant could not rely on the principle of legitimate expectations. Finally, the court found that the Secretary could not be expected to act in defiance of a Commission decision and that this Commission decision did not provide the Secretary with any leeway to test the recovery decision against the principle of reasonableness. The action was dismissed.

3. 4 Cases relating to taxes
3.4. 1 Administrative Court for Trade and Industry, The Hague, no 89/2275/47/003, 90/022/47/0003, 90/2708/003, 26 November 1991 Gebroeders Bakker Zaadteelt en Zaadhandel BV v the Public Organisation for Trade in Horticultural seed (Bedrijfschap voor de Handel in Tuinbouwzaden) (B)

Fact and Legal issues: Appeal (administrative law), agricultural sector.

The Commission decided on 11 October 1989 on the basis of Article 88 (2) EC that the aid to a foundation for research into seed technology was incompatible with the Common Market. Its reasoning was that the foundation financed its activities with levies raised by the Public Organisation for Trade in Agricultural Seed on the growers of the seeds (unless, for example, the financing was changed so that products imported from other Member States were no longer subject to the levy). The Commission prohibited the Dutch Government from granting any further such State aid through the Public Organisation for Trade in Agricultural Seeds ("POAS").

The claimant (a grower), on the basis of this decision, refused to pay the levy to the Public Organisation for Horticultural Seed ("POHS") and asked the court to annul the POHS demand to pay the outstanding levies.

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Decision: The court noted that the Commission had not been informed of the POHS intent to grant the aid. These measures were thus contrary to Article 88 (3) EC. This fact on its own, however, was insufficient to result in the aid measure being illegal350. Neither the Commission nor any other body had ordered a suspension of the payment of the aid of POHS, other than by way of Decision 90/189. The decision prohibited the grant of further aid and was addressed to the Dutch Government. It therefore applied not only to POAS but also to POHS.

The court found both the aid measures and the contested levy illegal because Decision 90/189 makes the unlawfulness of the aid measure dependent on its financing (levies on imported products). The final issue decided by the court was whether not only the levy itself but also the demand note of the POHS was illegal. Decision 90/189 was received by the State of the Netherlands on 7 November 1989 and therefore (on the basis of Article 254 EC) entered into force on that day. The content and purpose of the decision, according to the court, precluded any retroactive effect. As the State aid was illegal since 7 November 1989, the demand note against the claimant grower of 14 December 1984 was, according to the court, valid. The demand note made on 4 January 1990, however, was annulled.

3.4. 2 Administrative Court for Trade and Industry, The Hague, AB 1995/483, 8 November 1994, Fokbedrijf Vloet Oploo B V. v Landbouwschap (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

Het Landbouwschap, the Agricultural board, imposed a levy on Fokbedrijf Vloet Oploo B.V., a breeding establishment, on the basis of the 1992 Regulation on manure levies (in Dutch: "Heffingsverordening Mest 1992"). The levy was aimed at stimulating an efficient process of manure surplus. Fokbedrijf Vloet Oploo lodged a notice of objection to the decision of the Agricultural board, because it was of the opinion that undertakings, which take initiative and make investments for the processing of manure, did not have to pay the levy.

Decision: The 1992 Regulation on manure levies was approved by the Commission. In its decision, the Commission considered that aid to cattle breeding establishments, which process the manure themselves, could be considered exploitation aid. The Administrative Court for Trade and Industry held that there was no possibility under the 1992 Regulation on manure levies of making an exception for undertakings which have invested in the stimulation of an efficient process of manure surplus. Furthermore, the court ruled that the Regulation was not contrary to EC law. It dismissed the appeal.

3.4. 3 Administrative court, Rotterdam, LJN: AD9026, MEDED 00/933-SIMO and MEDED 00/955-SIMO (joined cases) Stichting Saneringsfonds Varkensslachterijen ("SSV") and U-Vlees BV, Exportslachterij J Gotschalk & Zonen BV, Slachthuis Nijmegen BV, Houbensteyn Porkhof BV, Het Rotterdams Varkensslachthuis CV v Directeur-Generaal van de Nederlandse Mededingingsautoriteit (Director-General of the Dutch Competition Authority) (D)

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Facts and legal issues: Proceedings in first instance (administrative law), agricultural sector. SturkoMeat Group BV intervening in both cases.

SSV was a foundation established to reorganise the overcapacity in the pig slaughter sector. To finance the reorganisation, levies were imposed on all pig slaughterhouses. This scheme was notified to and approved by the Commission. Sturkomeat complained that several of the agreements concluded between SSV and other parties violated Article 81 (1) EC. SSV argued that, because the agreements in question were part of an approved aid scheme, they could not be in violation of Article 81 (1) EC.

Decision: The court did not agree with SSV's argument that the agreements were exempt simply because they related to an approved aid scheme, as the Commission had not been able to consider these agreements when it approved the aid scheme. Therefore, it could not take their effects into account when reaching its definitive conclusion. As a result, there were insufficient grounds to automatically assume that the agreements were inextricably linked to the approved aid scheme. Moreover, with regard to the reliance by SSV on the Weyl judgment, the court noted that, in that particular case, the agreements were exempt from Article 81 (1) EC because they formed an integral part of an approved aid scheme and did not restrict competition beyond what was necessary for the attainment of the desired objectives. In the case at hand, the agreements were not inextricably linked to the object of the approved aid scheme and the court dismissed the application.

3.4. 4 Court, Leeuwarden, LJN: AD8994, Bk 3231/96 1 February 2002 Inspecteur van het Bureau Heffingen van het Ministerie van Landbouw, Natuurbeheer en Visserij (Inspector of the Ministry of Agriculture, Nature Management and Fisheries Levies Office) (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

The Inspector imposed a levy on X for a manure surplus. X contended, inter alia, that the basis of the levy was unlawful and that it entailed State aid.

Decision: The court did not follow X's arguments and found that Article 120 of the Dutch Constitution prohibited it from examining whether the levy qualified as State aid since that would entail a review of the law. In addition, the prohibition of Article 87 (1) EC did not have direct effect on the national legal order. Furthermore, the Commission had not initiated any proceedings against the Netherlands under Article 88 EC. Therefore, the court concluded that no State aid was involved.

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3.4. 5 Administrative Court for Trade and Industry, The Hague, LJN AD 9818, AWB 99/7, 13 February 2002, A v Productschap voor Tuinbouw (Horticultural Commodity Board for Horticulture) (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

The Commodity Board for Horticulture imposed a levy on A, consisting of a percentage of its income generated through the sale of horticultural products as well as a fixed amount for all members of the Horticultural Commodity Board. The levy's proceeds were (in part) destined for research and promotional activities, as well as quality and environmental projects. A argued that the activities paid for with these proceeds constituted incompatible State aid.

Decision: The Administrative Court for Trade and Industry ruled that, as the levies had been notified to and approved by the Commission in accordance with the required procedures, no violation of Article 88 (3) EC had occured. Therefore, the levies did not constitute incompatible State aid and the appeal was dismissed.

3.4. 6 Supreme Court (Hoge Raad), The Hague, NJ 2004/59, 7 March 2003, Compaxo BV, Internationale Groothandel Vlees BV, Compaxo Vlees Zevenaar BV v Stichting Vormingsfonds voor de Opleiding van Werknemers in de Vleeswarenindustrie (Foundation for the Educational Fund of the Education of Employees in the Meat Industry) (B)

Facts and legal issues: Appeal in cassation (civil law), agricultural sector.

A levy was imposed on Compaxo a.o., active in the meat industry, for the financing of three funds managed by the Stichting Vormingsfonds, established during the implementation of the Collective Labour Agreement for the meat industry. These funds included the Fund for Youth Employment in the Meat Industry, the Fund for Industry Education and the Social Fund. Compaxo a.o., however, refused to pay the levies, arguing that the payments constituted State aid and that the scheme, contrary to Article 88 (3) EC, had not been notified to the Commission. At first instance and on appeal, the courts found that the levies constituted State measures and could therefore, at least theoretically, constitute State aid. However, no State aid was involved in the case at hand because the Collective Agreement was reached after collective negotiations had taken place between employers and employees to the benefit of all employees and the entire industry (i.e. there was no selective advantage). Compaxo a.o. argued that the interpretation of selective advantage was incorrect and reiterated its argument used in the previous instances, as described above.

Decision: The Supreme Court found that whether or not a measure qualifies as State aid depends on the effects of the measure concerned and not its reasons or intended purposes. Therefore, the fact that the measure at hand was created through collective negotiations and was applicable to all employees and undertakings in the sector, did not preclude the applicability of Article 87 (1) EC, nor could the social purposes of the funds lead to such aPage 388 conclusion. The court went on to investigate whether the advantages were (directly or indirectly) granted through State resources and therefore whether the measure actually fell within the scope of Article 87 (1) EC. The Stichting Vormingsfonds was a private foundation that was not created by the State and the proceeds of the levies were for the benefit of the Stichting and the funds it managed. The advantages of the undertakings were thus not funded through State resources. This was not altered by the fact that the levy had been imposed within the framework of a compulsorily applicable Collective Agreement, as this compulsory applicability did not provide the State with any power of disposal of the Stichting's proceeds.

3.4. 7 Council of State, The Hague, LJN: AF8316, 200201196/1, 7 May 2004, Centrale Organisatie voor de Vleesgroothandel v Minister van Landbouw, Natuur en Visserij (Secretary of Agriculture, Nature Management and Fisheries), (B)

Fact and legal issues: Proceedings in first instance (administrative law), agricultural sector.

Under the "Destructiewet" (Destruction Act) the Secretary of Agriculture, Nature Management and Fisheries could determine the levies to be imposed on undertakings that provided services as described in the Destruction Act, including the removal of dead animals from farms and slaughter waste from slaughter houses. The claimant's request for annulment of the decision establishing the levies for 2000 was dismissed by the Secretary, whereupon these proceedings were initiated. The claimant alleged, inter alia, that the levies discriminated between undertakings operating in the slaughter industry and cattle-breeding undertakings, as the latter received a non-recurring compensation for those charges from the Ministry of Public Health, Education and Sport (the legal predecessor to the Secretary of Agriculture). These compensations thus constituted State aid and were in violation of Article 87 EC.

Decision: The court circumvented the question of whether the levies qualified as State aid by concluding that undertakings in the slaughter industry were part of a distinctly different market than the cattle-breeding undertakings. Because they could not reasonably be considered competitors, the court found that no State aid could exist that distorted or threatened to distort competition.

3.4. 8 Administrative Court for Trade and Industry, The Hague, LJN: AO1786, AWB 01/830, 19 December 2003, A v Productschap voor Vee, Vlees en Eieren (Commodity Board for Cattle, Meat and Eggs) (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

In 1998, the Commodity Board's legal predecessor notified the Commission of several intended aid schemes in accordance with Article 88 EC, which the Commission subsequently approved. A unsuccessfully initiated proceedings against the decision requiring it to pay the levies imposed under one of the schemes, upon which it filed the current appeal. A allegedPage 389 that the levies were imposed on the basis of an un-notified scheme or, if notified, the scheme did not contain the legal basis on which the levies were imposed.

Decision: The Administrative Court for Trade and Industry found that, although the levies concerned constituted State aid within the meaning of Article 87 EC, the aid scheme had been duly notified and approved by the Commission in accordance with Article 88 EC. Moreover, the approved scheme included the basis on which the levies were imposed. Therefore the application was dismissed.

3.4. 9 Administrative Court for Trade and Industry, The Hague, LJN: AO7843, AWB 98/422, 7 April 2004, A v Productschap voor Tuinbouw (Horticultural Commodity Board) (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

A initiated proceedings against a decision by the Horticultural Commodity Board denying its application for annulment of the primary decision. The underlying point of contention was the refusal of A to pay the levies imposed by a decree issued by the Horticultural Commodity Board. A alleged that the levies constituted State aid, which had not been notified to the Commission.

Decision: The court found that the various aid schemes drawn up by the Horticultural Commodity Board had been notified to the Commission but that the Commission had not yet concluded its investigation. Because there had been no definitive decision, Article 88 (3) EC applied. As a result, the Horticultural Commodity Board was not allowed to impose the levies concerned. Therefore, the application was successful and the decisions by which A was confronted with a demand for payment of the levies were annulled.

3.4. 10 Administrative Court for Trade and Industry, The Hague, LJN: AO7804, AWB 97/1115 7 April 2004, A v Productschap voor Tuinbouw (Horticultural Commodity Board) (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

Similar to those mentioned in case 3.4.9 above due to joint adjudication.

Decision: Ibid.

3.4. 11 Administrative Court for Trade and Industry, The Hague, LJN: AQ5558, AWB 02/1985, 15 June 2004, Dutch Wine Traders BV v Productschap voor Wijn (Wine Commodity Board) (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

Page 390

The Wine Commodity Board imposed a levy on its members which, according to Dutch Wine Traders BV, amounted to un-notified State aid because the Wine Commodity Board did not exist at the time that these levies, calculated by the Wine Commodity Board's legal predecessor, were notified to the Commission.

Decision: The Administrative Court for Trade and Industry found that the levies had been notified to the Commission. The fact that the organisation responsible for calculating the initial levies differed from the organisation imposing them did not alter this. Therefore the imposition of the levies was not considered to be in violation of Article 88 (3) EC.

3.4. 12 Administrative Court for Trade and Industry, The Hague, LJN: AR6472, AWB 02/1512, 02/1513, 12 November 2004, A and B v Productschap voor Vis (Fish Commodity Board ) (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

The Netherlands notified a subsidy for fishermen to reduce their financial burden as regards disability insurance premium charges. The Commission informed the Netherlands that it would initiate proceedings under Article 88 (2) EC. Meanwhile, the Fish Commodity Board rejected A's and B's subsidy request, upon which A and B started proceedings for the annulment of that decision. When those proceedings proved unsuccessful this court action was initiated.

Decision: The Administrative Court for Trade and Industry found that refusing the subsidy requests was in violation of Article 88 (3) EC now that such decision was made without the Commission having reached a final conclusion under Article 88 (3) EC. The decision was to be annulled and the Fish Commodity Board was to make a new decision as soon as the Commission had concluded its investigation.

3.4. 13 Court, Amsterdam, LJN: AS4899, 00/03621, 14 January 2005, Stadion Amsterdam NV v Directeur van de Gemeentebelastingen Amsterdam (Director of the Municipal Taxes Amsterdam) (B)

Facts and legal issues: Appeal (administrative law), real estate sector.

Stadium Amsterdam NV appealed the Director of the Amsterdam Municipal Taxes' decision determining the value of its stadium. One of the issues was whether Article 18 (3) of the "Wet waardering onroerende zaken" ("WOZ"; Act on the Valuation of Real Estate) and Article 2 of the implementing regulation constituted State aid.

Decision: The court stated that, even if the application of the WOZ qualified as State aid, which it considered not to be the case here, it would only lead to the inapplicability of the particular provision constituting State aid instead of the entire law, as was argued by Stadium Amsterdam NV. As a result, the property involved would still need to be valued in order toPage 391 enable taxes to be levied over the value of the property. Therefore, the provisions concerned were not incompatible with Articles 87 and 88 EC since they did not confer a benefit upon the owner of the property concerned. The appeal, however, was awarded on different grounds.

3.4. 14 Court, Amsterdam, LJN: AS5058, 00/03881, 21 January 2005, Stadion Amsterdam CV v Directeur van de Gemeentebelastingen Amsterdam (Director of the Municipal Taxes Amsterdam (B)

Facts and legal issues: Appeal (administrative law), real estate sector.

Stadium Amsterdam CV appealed the Director of the Amsterdam Municipal Taxes' decision determining the value of the stadium in question. One of the issues was whether Article 220c j° 220d "Gemeentewet" (Municipality Act) constituted State aid and therefore whether failure to notify these provisions to the Commission constituted a violation of Article 88 EC. It was argued that, by not determining a value for a property, it would become impossible to tax that property for the purposes of the WOZ and, as a result, the owner of the property obtained a benefit, i.e. would not be confronted with a burden it would normally have faced.

Decision: The court found that labelling the aforementioned provisions as State aid would not preclude the applicability of the entire WOZ, but only the particular provisions concerned. As a result, the property involved would still have to be valued, thereby enabling taxes to be levied over the value of the property. Therefore, there was no benefit for the owner of the property and the provisions concerned were not in violation of the State aid provisions.

3. 5 Cases relating to State measures other than taxes per se
3.5. 1 Administrative court, Roermond, LJN: AA6940, 99/1117 WET K, 30 June 2000, Rijmar Spoorlaan BV + Rijmar de Bond BV v Minister van Financiën (Secretary of the Treasury) (A)

Facts and legal issues: Proceedings in first instance

Rijmar BV operated petrol stations along the border between the Netherlands and Germany. According to a specific Act ("Tijdelijke regeling subsidie tankstations grensstreek Duitsland"), such petrol stations were eligible for a maximum of euros 100,000 in aid over a three-year period to compensate the negative effects on competition due to excise differences in the Netherlands and Germany. Rijmar BV created the subsidiaries Rijmar Spoorlaan BV and Rijmar de Bong BV in order to obtain multiple aid grants. No such multiple aid was granted, however, since the Secretary considered the undertakings as a single entity for the purposes of Community competition law (more specifically State aid) and Rijmar BV had received the maximum amount of aid. The Secretary based his decision on a Commission decision351declaring the aid granted under the law incompatible with the Common Market with respectPage 392 to the majority of aids granted. The central issue in this case was whether the defendant rightfully refused to grant the aid to Rijmar Spoorlaan BV and Rijmar de Bong BV.

Decision: The court found that the Secretary's decision should be annulled as it violated the justification principle as laid down in Article 7:12 of the "Algemene wet bestuursrecht" (General Administrative Act) for several reasons. First, the Commission decision forming the basis of the Secretary's decision did not specifically relate to the situation of Rijman Spoorlaan BV and Rijman de Bong BV since their requests had not been notified to the Commission and therefore were not part of the Commission's decision-making process. Secondly, the Secretary had failed to demonstrate why the undertakings involved constituted a single undertaking for the purpose of Community competition law. The court also found that the Secretary's mere reference to the Commission's initiation of an investigation under Article 88 (2) EC rather than to the Commission's decision did not constitute a sufficient justification as required Article 7:12 of the General Administrative Act. The court further held that the claimants could not justifiably rely on the expectation that the aid would be approved, given the communication between the claimants and their representative association and the fact that the latter was aware of potential difficulties. The decision was annulled for lack of justification.

3.5. 2 Administrative Court for Trade and Industry, The Hague, LJN: AF8582, AWB 02/05, 29 April 2004, Happy Radio Netherlands BV v Staatssecretaris van het Ministerie van Verkeer en Waterstaat (State Secretary of the Ministry of Transport and Public Works) (B)

Facts and legal issues: Appeal (administrative law), television and radio sector.

Happy Radio had to pay the State Secretary a sum, the level of which was determined by a yearly revised Ordinance under the "Wet op de telecommunicatievoorzieningen" (Act on Telecommunications Facilities). This sum was to cover the costs concerned for the grant of an operating licence and for supervision services. Article 16 of the "Telecommunicatiewet" (Telecommunications Act) facilitated the promulgation of Ordinances regarding reimbursement of costs made in connection with matters specified under the Telecommunications Act. Happy Radio refused to pay the determined sum and, after having lodged a complaint with the State Secretary, which was denied, filed an appeal, which was also denied. It subsequently initiated these proceedings. It submitted that the Ordinance discriminated between (local) public radio stations and commercial stations with regard to the sums payable and therefore with regard to the amount of correlated reimbursements received, without there being any justification for such differential treatment. Happy Radio claimed that, as a result, the State Secretary illegally granted State aid to (local) public radio stations.

Decision: The Administrative Court for Trade and Industry found that the Ordinance stated with sufficient clarity why and how the different allocation norms, which determined whichPage 393 station got what and why, had been formulated. It went on to state that the payments were essentially reimbursements, requiring a legal basis, which could not exceed the actual costs of the services provided. In addition, the relationship legally required between the service and the costs was present. Therefore the differential payments determined by the allocative norms were neither unreasonable nor arbitrary. As a result, no selective reduction in burdens otherwise borne by the public stations existed and hence there could be no State aid. The appeal was dismissed.

3.5. 3 Council of State, The Hague, LJN: AO8853, AB 2004/225, 200303711/1, 6 May 2004, X v College van Gedeputeerde Staten van de Provincie Overijssel (Provincial Executive of Overijssel) (C)

Facts and legal issues: Appeal (administrative law), real estate sector.

The Provincial Executive approved the Haaksbergen City Council's zoning plan for retail area development. After the Provincial Executive's denial of X's application for annulment of that decision, these proceedings were initiated. Within the context of the zoning plan, the City Council would donate land free of charge and grant partial financing of the construction project.

Decision: The Council of State found that the Provincial Executive had not taken account of the city council's notification of the use of public funds, and donating land free of charge would have to be notified to the Commission. Moreover, the Provincial Executive had failed to determine in what other ways the zoning plan could be realised, should the Commission deem the use of public funds and the transfer of the land incompatible with the EC Treaty. In light of these considerations, the Council of State was of the opinion that the Provincial Executive denied the application without the proper level of due care. As a result, the appeal for annulment of the administrative decision was successful.

3.5. 4 Administrative Court for Trade and Industry, The Hague, LJN: AQ5097, AWB 03/722 and 27 other cases, 28 May 2004, Interrose BV and 27 others v Minister van Economische Zaken (Secretary of Economic Affairs)(B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

Interrose BV c.s. initiated proceedings in reaction to the Secretary's refusal to annul his initial decision denying Interrose BV c.s. an R&D declaration pursuant to the "Wet vermindering afdracht loonbelasting en premie voor de volksverzekeringen" (Act Concerning the Payment of Income Tax and Premium for Social Insurances). This Act had been amended to exclude undertakings active in the conventional refinement of flowers from obtaining such declarations. Previous R&D declarations had enabled Interrose BV c.s. to claim tax benefits in relation to its R&D activities, which essentially meant that Interrose BV c.s. obtained subsidies. Although such subsidies had been declared compatible by the Commission, Interrose BV c.s. submitted that such a finding of compatibility only applied to the scheme inPage 394 the format as notified (i.e. including conventional refinement activities). Any changes to this format, such as the exclusion of conventional refinement, would lead to the scheme no longer corresponding to the notified scheme, thus necessitating notification to the Commission. Failure to do so would be a violation of Article 88 EC.

Decision: Based on what was submitted during the oral stages of the proceedings, the Administrative Court for Trade and Industry was of the opinion that the sole reason that Interrose BV c.s. had invoked incompatibility of the scheme with the EC State aid provisions was to cause conventional refinement to once again be included within the definition of R&D. The court ruled that, since the argument as to whether or not the amended scheme would constitute State aid could not result in the grant of the R&D declaration to Interrose c.s., there was no need to rule further on the matter of whether the R&D scheme constituted a scheme that was so substantially different from the notified scheme that it had to be notified to the Commission.

3.5. 5 Council of State, The Hague, AB 2004/343, 11 August 2004, X v State Council of Zuid-Holland (D)

Facts and legal issues: review of former judgment (administrative law), real estate sector.

X initiated proceedings for review of a zoning plan approval which had already been considered at the highest instance. The central issue was whether new facts had arisen since the decision at highest instance which, if known, could haven led to a different conclusion. X alleged that during the time leading up to the zoning plan decision it had become clear that the fund from which the project was to be financed would be discontinued and therefore other sources would have to be used to maintain the project's financial solvability. X alleged that the decision had been taken without the requisite investigation and certainty regarding the financial solvency of the project and alleged that the State council had been inadequately informed in this regard.

Decision: The Council of State agreed that the information provided regarding the project's financing had been inadequate. It found that the fact that at the time the zoning plan decision had been taken, the project's financial details had not yet been decided upon, was no reason for the State council to withhold its approval, since this was unlikely to prevent the project's realisation within the set time frame.

3.5. 6 Council of State, The Hague, AB 2005/395, 200405506/1, 4 May 2005, The Minister of the Interior and Kingdom Relations, applicant, the court judgment in the case between respondent and the Minister of the Interior and Kingdom Relations (A)

Facts and legal issues: Appeal (administrative law), agricultural sector.

Page 395

On the basis of the "Wet tegemoetkoming schade bij rampen en zware ongevallen" (Act on allowance in case of damage resulting from disasters and severe accidents), the "Regeling tegemoetkoming schade bij extreem zware regenval 1998" (Regulation on allowance in case of damage from extremely severe rainfall 1998) was adopted. The defendant in this case (a commercial partnership) was granted an allowance on the basis of this regulation of over euros 400,000. During the procedure for lodging an objection, initiated by the defendant, the "Algemene Inspectiedienst" (General Inspection service) started an investigation into the accuracy of the information provided by the defendant while applying for the allowance. It appeared that the defendant had committed fraud. As a consequence, the Minister decided to recover the amount granted in excess, increased by the interest payable by law.

The District Court had ruled amongst other things that in this case there was no public law basis for claiming statutory interest. The Minister argued before the Council of State that this ruling was unjustifiable and that he could derive his competence in this respect from Article 87 (1) EC. He asserted that, because it had appeared that the defendant had unjustifiably been granted an allowance, this allowance had gained the character of an illegal aid. Since recovery was meant to restore the situation to what it was before the grant of the aid, it would also have to extend to the statutory interest.

Decision: The Council of State did not agree. It held that, contrary to what the Minister argued, Article 87(1) EC does not furnish a public law basis for claiming statutory interest. The article was not intended to stretch so far as to provide the Minister with a direct competence to claim statutory interest when recovering unjustifiably granted allowances on the basis of the Regulation.

3.5. 7 Supreme Court (Hoge Raad), The Hague, LJN: AT6370, C04/183 HR, 7 October 2005, Bedrijvenvereniging Huiswaard/Overstad, X, Hein Jong Projectontwikkeling BV v Gemeente Alkmaar (Municipality of Alkmaar) (D)

Facts and legal issues: Appeal in cassation (civil law), real estate sector.

Stichting AZ (Foundation AZ) and AZ Onroerend Goed BV (AZ Real Estate BV), together "AZ", and the Municipality of Alkmaar concluded four agreements concerning the construction of a new soccer stadium in combination with retail opportunities, the construction of homes on the site of the present soccer stadium and the transfer of the related plots of land. Overstad pointed the Commission to the existence of the agreements and requested an examination of their compatibility with the State aid provisions because the relevant plots of land were supposedly transferred at prices below market value. The Commission concluded that the agreements potentially constituted State aid and continued to investigate as provided for in Article 88 (2) EC. Overstad filed an application to obtain an interim injunction based on Article 88 (3) EC to prevent the further implementation of the agreements. The interim injunction was rejected by the court. Overstad lodged an appeal against this ruling.

Page 396

Decision: In the appeal procedure, the President of the court rejected the argument of the municipality that Article 88 (3) EC did not have any direct effect due to the fact that no definite conclusion on State aid had yet been reached. The President also found that lower-level governmental bodies were bound by the direct applicability of Article 88 (3) EC as well and therefore ordered to hold the further implementation of the agreements until the Commission concluded its investigation under Article 88 (2) EC. The municipality lodged an appeal. The Supreme Court had to rule on the legal consequence of an investigation initiated by the Commission on a new State aid measure, which had not been notified to the Commission. The stand-still obligation of Article 88 (3) EC is only applicable if there is a state aid measure in the meaning of Article 87 (1) EC. Contrary to the earlier judgment of the civil court, the Supreme Court held that if the Commission decided to investigate a certain measure, this would not automatically mean that the measure constituted State aid in the meaning of Article 87 (1) EC. The Commission only initiated the investigation because it could not exclude that the measure in question constituted State aid. According to the Supreme Court, the Commission' statement could not be interpreted as a provisional judgment that there was indeed State aid. The judgment of the civil court was set aside. The Supreme Court referred the case to the Civil Court in The Hague for further consideration.

3. 6 Preliminary rulings
3.6. 1 Council of State, The Hague, AB 1995/437, 1 November 1994, Ijssel-Vliet Combinatie B V. v State (Minister of Economic Affairs) (B)

Facts and legal issues: Appeal (administrative law), shipbuilding and fisheries sectors.

The undertaking IJssel-Vliet was building a fishing vessel. Its request for subsidy, based on the Regulation concerning generic aid for the construction of new sea ships 1988 ("Regeling generieke steun zeescheepsnieuwbouw 1988"), was denied by the Minister of Economic Affairs. The Minister explained in his decision that the aid could not be granted because of the Commission's policy on aid to the fisheries and shipbuilding sector, which was laid down in guidelines and a circular.

Decision: On appeal, the question was raised of whether the Commission had the authority to assess a State aid measure, not only on criteria relating to competition policy (Article 87 (1) EC), but also on criteria which the Commission derived from the European common fisheries policy and which are laid down in guidelines. The legal effect of these guidelines could be questioned, because the European Council had the exclusive authority on the European fishery policy. Therefore, it was also unclear whether Member States were obliged to apply the guidelines as basic principles when deciding on an application for aid for the building of a fishing vessel.

The Council of State decided to request a preliminary ruling to the ECJ on the following questions:

Page 397

"1. In the absence of an express authorization from the Council of the European Communities, is the Commission of the European Communities, having regard to Article 42 of the Treaty establishing the European Community in conjunction with Article 49 of Council Regulation (EEC) No 4028/86 of 18 December 1986 on Community measures to improve and adapt structures in the fisheries and aquaculture sector, empowered under the competence given to it by Article 93 of the EC Treaty to investigate aid granted by Member States, to draw up, publish and apply as basic principles for the assessment of State aid measures, Guidelines for the Examination of State aids in the Fisheries Sector (88/C 313/09) in order to coordinate Council Regulation (EEC) No 4028/86 and the Council Directive of 26 January 1987 on aid to shipbuilding (87/167/EEC), where those Guidelines lay down not only criteria pertaining exclusively to competition policy but also criteria derived from the Community fisheries policy?

2. If Question 1 is answered in the affirmative: Are the Member States obliged to apply the abovementioned Guidelines as basic principles when deciding on an application for aid for the building of a vessel intended for fishing? If so, what is the basis for that obligation?

Does that obligation only apply where the vessel in question is wholly or partly intended for fishing in waters under the sovereignty or jurisdiction of the Member States of the Community or waters to which the Communities' external fisheries policy relates?"

In answer to the questions referred to it by the Council of State, the ECJ ruled that352:

  1. The Commission, in exercising its powers under Articles 87 and 88 EC could adopt the guidelines for the examination of State aid in the fisheries sector (88/C 313/09), which required compliance, not only with criteria pertaining exclusively to competition policy, but also with those applicable in relation to the common fisheries policy, even if the Council had not expressly authorised it to do so.

  2. A Member State, such as the Netherlands, which is subject to the obligation of cooperation under Article 88 (1) EC and which has accepted the rules laid down in the Guidelines must apply those Guidelines when deciding on an application for aid for the construction of a fishing vessel intended to form part of one of the Community fleets, irrespective of the area in which it fishes.

Page 398

3.6. 2 Supreme Court, The Hague, BNB 2002/253 and case C-175/02 (F J. Pape v. Minister van Landbouw, Natuurbeheer en Visserij), 13 January 2005, 8 March 2002, X v Inspecteur van het Bureau Heffingen van het Ministerie van Landbouw, Natuurbeheer en Visserij (Inspector of the Ministry of Agriculture, Nature Management and Fisheries) Levies Office (B)

Facts and legal issues: Appeal in cassation, agricultural sector.

The Inspector imposed a levy on X pursuant to the "Meststoffenwet" (Fertiliser Act). The proceeds of the levies were partly used to finance a "kwaliteitspremiëringssysteem", a system designed to finance the transportation of high quality manure or other organic fertilisers to areas where only lower quality levels were available. Although this measure constituted State aid, the Commission informed the Netherlands that it would not object to its implementation until the end of 1989. X alleged that the levies during 1987 and 1988 were imposed in violation of the stand still provision of Article 88 (3) EC.

Decision: The Supreme Court requested a preliminary ruling from the ECJ on the following questions:

1. "For so long as the implementation of an aid measure is not permitted under the last sentence of Article 88 (3) EC, does the prohibition laid down in that provision also apply to the introduction of a levy, the revenue from which is, under the relevant law, earmarked in part for the financing of that measure, regardless of whether there has been any disturbance of trade between Member States which can (partly) be attributed to the levy as the method of financing the aid measure?

If the answer to this question depends on the closeness of the connection between the levy and the aid measure, or on the time when the revenue from the levy is actually used for the aid measure, or on other circumstances, what circumstances are relevant in that regard?"

The ECJ determined that it was necessary to answer only the third part of this preliminary question (i.e. whether Article 88 (3) EC applies regardless of the closeness of the connection between the financing tax and the aid measure in question). It found that the prohibition of implementation under Article 88 (3) EC could not apply to a tax, if that tax, or a certain part of the revenue from it, is not hypothecated to the financing of an aid measure.

  1. "If the prohibition on implementing the aid measure also applies to the earmarked levy, can the person on whom the levy is imposed then, by relying on the direct effect of Article 88 (3) EC, oppose in legal proceedings the full amount levied on him or only that portion which corresponds to the part of the revenue which is expected to be spent or has actually been spent during the period in which the implementation of the aid measure is or was prohibited under that provision?"

    Page 399

    In light of the answer to the first preliminary question, the ECJ considered there was no need to answer the other questions.

  2. "Do specific requirements arise from Community law with regard to the method of determining what portion of a levy falls under the prohibition laid down in the last sentence of Article 88 (3) EC in the case of a levy the revenue from which is earmarked for various purposes for which there are also other sources of financing in addition to the levy and which are not all covered by Article 88 EC, where no apportionment formula is specified in the national provision instituting the levy? In such case, must the portion of the levy which can be allocated to financing the aid measure falling under Article 88 EC be determined or an estimated basis according to the time when the levy was imposed or must it be based on subsequently available data relating to the total revenue from the levy and to the actual expenditure for each of the various purposes?"

    In light of the answer to the preliminary question, the ECJ determined that there was no need to answer the other questions.

    At the time of writing, the Supreme Court had not yet issued a ruling based on the ECJ judgment.

3.6. 3 Supreme Court, The Hague, LJN: AB2884, 35525 and case C-174/02, Streekgewest Westelijk Noord-Brabant v Staatssecretaris van Financiën, 15 January 2005, 8 March 2002, Streekgewest Westelijk Noord-Brabant and Staatssecretaris van Financiën (State Secretary of the Treasury) v a judgment given by the court of Appeal of The Hague case nr BK-96/03827, 15 July 1999 (A)

Facts and legal issues: Appeal in cassation, agricultural sector.

The Netherlands Government notified the Commission of the draft "Wet heffingen op milieugrondslag" (Law introducing taxes for the protection of the environment). The Commission informed the Netherlands of its decision not to raise any objections to the aid measures included in the draft. The Netherlands subsequently amended the Act to include various other aid schemes. The Commission considered the amended schemes as non-notified aid since they had been adopted before the Commission had confirmed its position in respect of them. Streekgewest Westelijk Noord-Brabant argued that, because the schemes were not notified, the levies were imposed without a proper legal basis and were therefore illegal. Moreover, the levies imposed on the basis of the Act were incontrovertibly linked to exemptions, reduced tariffs and other benefits for other parties subject to the Act, i.e. the proceeds of the levies were used to provide others with exemptions. As a result, the Act was unwarrantedly selective in its application and this, in combination with the benefits enjoyed by some, constituted State aid in the view of the Streekgewest Westelijk Noord-Brabant.

Page 400

Decision: To resolve the issues before it, the Supreme Court turned to the ECJ for a preliminary ruling. With regard to the State aid issue the court asked the following questions:

  1. "May only an individual who is affected by a distortion of cross-border competition as a result of an aid measure rely on the last sentence of Article 88 (3) EC?"

    The ECJ found that the last sentence of Article 88 (3) EC should be interpreted as meaning that it may be relied upon by a person liable to a tax forming an integral part of an aid measure levied in breach of the prohibition on implementation referred to in that provision, whether or not the person is affected by the distortion of competition resulting from that aid measure.

  2. "Where an aid measure within the meaning of the last sentence of Article 88 (3) EC consists of an exemption from tax (which is to be construed as also meaning a reduction in or relief on such tax) whose proceeds are paid into the public coffers, and no provision in that respect is made for suspending the exemption pending the notification procedure, must that tax be regarded as part of that aid measure, by virtue of the very fact that the levying of the tax on persons who do not enjoy an exemption is the means whereby a favourable effect is produced, so that as long as the implementation of that aid measure is not permitted under the abovementioned provision, the prohibitions laid down therein is also applicable to (the levying of) that tax?"

  3. In the event that the answer to the pervious question is in the negative: where a connection [such as the fact that a small part of the tax (NLG 0.70 per tonne of waste) serves to compensate for the reimbursement schemes referred to in paragraph 6 of this judgment] must be established between the increase in a particular tax whose proceeds are paid into the public coffers and a proposed aid measure within the meaning of the last sentence of Article 88 (3) EC, must the introduction of that increase be regarded as a (start on the) putting into effect of that aid measure within the meaning of this provision? If the answer to this question turns on the intensity of that connection, what circumstances are relevant in this respect?"

    Due to the similarity between the subjects of preliminary questions two and three, the ECJ found it appropriate to deal with those questions together. The ECJ concluded that with preliminary questions two and three, the court essentially wanted to establish the circumstances under which there was sufficient link between a tax and an aid measure which consisted of an exemption from that tax, with the result that the prohibition on implementation referred to in the last sentence of Article 88 (3) EC would apply not only to the aid measure. The answer to the second and third question according to the ECJ was that the last sentence of Article 88 (3) EC should be interpreted as meaning that the prohibition in it applies to a tax only if the revenue from it is hypothecated to the aid measure at issue. The fact that the aid is granted in the form of a tax exemption or that the loss of revenue due to that exemption is,Page 401 for the purposes of the budget estimates of the Member State in question, offset by an increase in the tax is not in itself sufficient to amount to such hypothecation.

  4. If the prohibition on implementation of the aid measure also relates to the tax, does a final decision by the Commission declaring the aid measure compatible with the common market not mean that the unlawfulness of the tax is retroactively corrected?

    The ECJ was of the opinion that in light of the answers given to question one to three, questions four to six did not need to be answered.

  5. If the prohibition on implementation also relates to the tax, can persons on whom the tax is levied oppose such tax in legal proceedings by relying on the direct effect of Article 88 (3) EC in respect of the total amount of the tax or only effect of Article 88 (3) in respect of the total amount of the tax or only in respect of part thereof? Ibid.

  6. In the latter case, do specific requirements stem from Community law as regards the manner in which it must be determined which part of the tax is covered by the prohibition in the last sentence of Article 88 (3) EC? Ibid.

    At the time of writing, the Supreme Court has not yet issued a ruling based on the ECJ judgment.

3.6. 4 Supreme Court, The Hague, LJN: AE2143, C00/308HR and case C-345/02, Pearle BV, Hans Prijs Optiek Franchise BV, Rinck Opticiens BV and Hoofdbedrijfschap Ambachten, 15 July 2005, 27 September 2002 Pearle BV, Hans Prijs Optiek Franchise BV, Rink Opticiens BV v Hoofdbedrijfschap Ambachten (Trades Council for Trade) (B)

Facts and legal issues: Appeal in cassation, services sector.

The Central Industry Board for Skilled Trade imposed a charge on its members with a view to funding a collective advertising campaign for the benefit of the undertakings in the field of optical services. Neither this campaign nor its funding was notified to the Commission. Pearle c.s. submitted that the payments constituted State aid which had not been notified pursuant to Article 88 (3) EC, and the levies were therefore unlawful.

Decision: The Supreme Court deemed it necessary to request the ECJ for a preliminary ruling with regard to the following questions:

  1. Is a scheme, such as that under consideration, in which levies are imposed to finance collective advertising campaigns, to be regarded as (part of a measure of) Page 402 aid within the meaning of Article 87 (1) EC, and must the plans to implement it be notified to the Commission under Article 88 (3) EC? Does that apply only to the benefit derived from the scheme, in the form of the organisation and provision of collective advertising campaigns, or does it also apply to the method of financing it, such as a bye-law instituting levies and/or the decisions imposing levies based thereon? Does it make any difference whether the collective advertising campaigns are offered to (undertakings in) the same business sector as that on which the levy decisions in question are imposed? If so, what difference does it make? Is it relevant in that connection whether the costs incurred by the public body are offset in full by the earmarked levies payable by the undertakings benefiting from the service, so that the benefit derived costs the public authorities, on balance, nothing? Is it relevant in that connection whether the benefit from the collective advertising campaigns is distributed more or less evenly across the field of activity concerned and whether the individual establishments within the branch are also deemed, on balance, to have derived a more or less equal benefit or profit from those campaigns?

  2. Does the obligation to notify under Article 88 (3) EC apply to any aid or only to aid which satisfies the definition in Article 87 (1) EC? In order to avoid its obligation to notify, does a Member State have free discretion to determine whether aid satisfies the definition of Article 87 (1) EC? If so, how much discretion? And to what extent can such free discretion affect the obligation to notify under Article 88 (3) EC? Or is it the case that the obligation to notify ceases to apply only if it is beyond reasonable doubt that no aid is involved?

  3. If the national court concludes that aid within the meaning of Article 87 (1) EC is involved, must it then consider the "de minimis" rule, as formulated by the Commission in the de minimis notice, when assessing whether the measure in question is to be regarded as aid which ought to have been notified to the Commission under Article 88 (3) EC? If so, must that "de minimis" rule also be applied with retroactive effect to aid which was granted before the publication of the rule, and how must that "de minimis" rule be applied to aid such s annual collective advertising campaigns which benefit an entire branch of industry?

    The ECJ considered the first three questions together and found that bye-laws adopted by a trade association governed by public law for the purpose of funding an advertising campaign organised for the benefit of its members and decided on by them, through resources levied from those members and compulsorily earmarked for the funding of that campaign, did not constitute an integral part of an aid measure within the meaning of Article 87 (1) and 88 (3) EC and it was not necessary for prior notification of them to be given to the Commission since it had been established that that funding was carried out by means of resources which that trade association, governed by public law, never had the power to dispose of freely.

    Page 403

  4. Does it follow from the grounds of the judgments in Case C-39/94 SFEI and Others [1996] ECR I-3547, for the purposes of the practical effect of Article 88(3) EC, that the national court must annul both the bye-laws and the levy decisions imposed under those bye-laws and that that court must order the public body to repay the levies, even if that is precluded by the rule developed in the Netherlands case-law concerning the formal legal force of the levy decisions? Is it relevant in that regard that repayment of the levies does not in practice eliminate the advantage which the field of activity and the individual undertakings in the branch obtained through the collective advertising campaigns? Does Community law allow repayment of the earmarked levy not to take place, either wholly or in part, if, in the opinion of the national court, the field of activity or the individual undertakings would be placed at an unfair advantage in connection with the circumstance that the advantage obtained as a result of the advertising campaign cannot be returned in kind?

  5. In case of failure to notify as laid down in Article 88 (3) EC, can a public body rely, in order to avoid an obligation to refund the aid, on the abovementioned rule of formal legal force of the levy decision if the person to whom that decision was addressed was not aware, at the time of the adoption of that decision and during the period within which it could have been challenged in administrative proceedings, that the aid of which the levy forms part had not been notified? May an individual assume in this connection that the authorities have fulfilled their obligations to notify aid under Article 88 (3) EC?

    Given that the answer to questions one to three makes it clear that the Board's decision imposing the charges for the purpose of funding the advertising campaign at issue do not form an integral part of an aid measure within the meaning of Article 87 (1) EC and that they did not have to be notified in advance to the Commission, the ECJ declared that the premise on which these questions were predicated was not, in the circumstances of this case, fulfilled.

    The ECJ found therefore no need to answer these questions.

    At the time of writing the Supreme Court has not yet issued a ruling based on the above ECJ judgment.

3.6. 5 Administrative Court for Trade and Industry, The Hague, LJN: AH9722 and case C-283/03, A H. Kuipers v Productschap Zuivel, 26 June 2003, A v Productschap voor Zuivel (Dairy Commodity Board) (B)

Facts and legal issues: Appeal (administrative law), agricultural sector.

A was a dairy producer who sold milk to a local dairy. Due to the presence of an anti-bacterium in his milk, the payout for that particular shipment of milk was reduced by NLG 0.50. A contended that the reduction of payments constituted State aid because of thePage 404 selective application, i.e. those dairy producers who were not confronted with the reduction of payments were awarded a benefit over those who were. Moreover, since this alleged aid had not been notified, it was contrary to Article 88 (3) EC.

Decision: The Administrative Court for Trade and Industry requested a preliminary ruling from the ECJ on the following questions:

1. "Is a national system of deductions and supplements based on the quality of raw milk delivered to the dairy, such as that at issue, consistent with Regulation 804/68 on the common organisation of the market in milk and milk products and in particular with the prohibition of equalisation between the prices in Article 24 (2)?" (now, after consolidation of amendments to the text, Article 38 (2) of Regulation 1255/99)

2. Is a national system of supplements based on the quality of raw milk delivered to the dairy, such as that at issue, consistent with the prohibition of aid in Article 24 (1) of Regulation 804/68?

3. If Question 2 is answered in the affirmative, is such a national system to be regarded as aid the grant of which must be notified beforehand to the Commission under Article 88 (3) EC?

The ECJ ruled on these questions as follows. It stated that the common pricing system which forms the basis of the common organisation of the market in milk and milk products instituted by Regulation No 804/68 of the Council of 27 June 1968 as amended by Council Regulation (EC) No 1538/95 of 29 June 1995, prohibits Member States from unilaterally adopting provisions affecting the machinery of price formation at the production and marketing stages established under the common organisation. That is the case with regard to a system such as that at issue in the main proceedings, which, whatever its alleged or stated objective may be, instituted a mechanism under which:

* on the one hand, dairies were required to withhold deductions from the price of milk delivered to them when that milk did not meet certain quality criteria; and

* on the other hand, the amount thus withheld over a given period by all the dairies was aggregated before being redistributed, after possible financial adjustments between the dairies, in the form of supplements identical in amount paid by each dairy, per 100 kilogrammes of milk delivered to it during that period, to those diary farmers alone who had delivered milk meeting those quality criteria.

At the time of writing, the Administrative Court for Trade and Industry had not yet issued a ruling based on the ECJ's judgment.

Page 405

3.6. 6 District court, Groningen, LJN: AT8973, 22 June 2005, Essent Netwerk Noord B V. and B.V. Nederlands Elektriciteit Administratiekantoor (formerly SEP) v Aluminium Delfzijl B.V. (Aldel) (main action); Aluminium Delfzijl B.V. and the state of the Netherland (third-party action); Essent Netwerk Noord B.V. and B.V. Nederlands Elektriciteit Administratiekantoor, Saranne B.V. (third-party action) (F)

Facts and legal issues: Proceedings in first instance, energy sector.

Under the closed system of the Electricity Act 1989, the production, import and distribution of electricity in the Netherlands was in the hands of four electricity production companies ("EPC"s) and their mutual subsidiary, SEP. (Partly) at the instigation of the Dutch Government, these five companies made investments in the area of environmental policy/experiments that would not have been profitable, and consequently would not have been made, in a liberalised market. These investments led to so-called non market-conform ("NMC") costs or stranded costs ("bricks").

In anticipation of the Dutch electricity market's liberalisation, SEP, the four EPCs and the distribution companies concluded a Protocol agreement relating to the period 1997-2000, in order to free the EPCs from their stranded costs. Under this agreement, the distribution companies would pay SEP an annual amount of NLG 400 million in contribution to the total stranded costs. Payment by the distribution companies was financed by an increase in the electricity tariff for small, medium and (regular) business consumers.

As a consequence of the energy market's liberalisation, the distribution companies were obliged to unbundle. Essent Netwerk Noord B.V., a network manager having thus ensued from one of the distribution companies, secured the transport of electricity to Aldel from 1 January 2000. Execution of the Protocol agreement in this year was not allowed because the applicable legislation prohibited an integrated tariff. In order to free SEP and the four EPCs from their stranded costs and to enable them to compete effectively, the "Overgangswet Elektriciteitsproductiesector" (Interim Act Electricity production sector) ("OEPS") was enacted. This Act provided for a raise per kWh for every consumer (not being a protected consumer), payable to the network manager and calculated on the basis of the total amount of electricity transported to its connection in the period 1 August 2000 -31 December 2000. The amounts thus obtained would have to be paid to SEP. SEP, in turn, was obliged to make a statement to the Minister responsible of the total amount obtained. If the amount exceeded NLG 400 million, SEP was under an obligation to pay the excess to the Minister, who would use the money to reimburse the costs made for one of the environmental experiments carried out in the past.

On the basis of this scheme, Essent invoiced an amount of NLG 9,862,646.25 to Aldel. Aldel did not pay. Essent initiated proceedings before the District Court.

Page 406

Aldel (among others) claimed that the scheme as laid down in the OEPS constituted illegal State aid because SEP was accountable to the Minister, the excess amount was payable to the Treasury and, if the contribution scheme had not been in place, the State would have had to have contributed to the stranded costs.

Decision: The District Court ruled that in this case it would have to be ascertained whether the applicable provisions in the OEPS (Article 9) violated EC law. It decided to stay the proceedings and request a preliminary ruling from the ECJ on (among others) the following question: Is the scheme as laid down in Article 9 of the OEPS compatible with Article 87 (1) EC Treaty?

At the time of writing, the ECJ had not yet delivered a judgment in this case.

---------------------------------

[335] The authors are indebted to Patrick van de Ven, student-trainee at Allen & Overy, Amsterdam, for his assistance in preparing this report.

[336] Case 173/73, Italian Republic v Commission [1974] ECR 709.

[337] Joined cases T-197/97 and T-198/97, Weyl Beef Products BV, Exportslachterij Chris Hogeslag BV and Groninger Vleeshandel BV v Commission [2001] ECR II-303.

[338] HR 12-12-1986, NJ 1987, 381.

[339] The Council of State ("Afdeling Bestuursrechtspraak Raad van State") held in cases ABRvS 17 May 2001, AB 2002, 58, ABRvS 6 November 2002, AB 2003, 115 and ABRvS 17 December 2003, AB 2004, 262 that a competitor can be regarded as an interested party within the meaning of Article 1:2 Awb.

[340] Act of 13 May 2004, Stb. 220; coming into force by Royal Decree of 7 June 2004, Stb. 270.

[341] Supreme Court (HR), 27 June 1986, NJ 1987, 726.

[342] EC Regulation 659/1999, Article 15.

[343] See report by Centrum voor Wetgevingsvraagstukken of Tilburg University, "Terugvordering van staatssteun - een rechtvergelijkend onderzoek", available at http://www.wodc.nl/Onderzoeken/Onderzoek_346.asp.

[344] 1999/705/EC (OJ (1999) L280/87).

[345] Case 40/85, Belgium v Commission [1986] ECR 2321.

[346] C 35/2005.

[347] LJN: AB 2893, 109653/HA ZA 98-4115.

[348] 1999/705/EC (OJ (1999) L280/87).

[349] 2001/521/EC (OJ (2001) L189/13).

[350] Case C-301/87, France v Commision [1990] ECR I-307, recitals 9, 11 and 19.

[351] 1999/705 1EC (OJ (1999) L280/87).

[352] Case C-311/94, Ijssel-Vliet Combinatie B.V. v Minister van Economische Zaken [1996] ECR I-5023.

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