Reino de España contra Comisión de las Comunidades Europeas.

• Jurisdiction: European Union
• Celex Number: 61992CJ0278
• ECLI: ECLI:EU:C:1994:325
• Date: 14 September 1994
• Docket Number: C-280/92,C-278/92,,C-279/92
• Procedure Type: Recurso de anulación - infundado
• Court: Court of Justice (European Union)

Avis juridique important

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61992J0278

Judgment of the Court of 14 September 1994. - Kingdom of Spain v Commission of the European Communities. - State aid to public undertakings in the textile and footwear sectors - Capital contributions. - Joined cases C-278/92, C-279/92 and C-280/92.

European Court reports 1994 Page I-04103

Summary
Parties
Grounds
Decision on costs
Operative part

Keywords

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1. State aid ° Concept ° Financial assistance granted to an undertaking by a Member State ° Criterion of assessment ° Reasonableness of the operation for a private investor pursuing a medium or long-term policy ° Not reasonable since it concerns a reinvestment at greater cost than liquidation before transfer of the undertaking

(EEC Treaty, Art. 92(1))

2. State aid ° Effect on trade between Member States ° Impairment of competition ° Criteria of assessment

(EEC Treaty, Art. 92)

3. State aid ° Prohibition ° Derogations ° Aid intended for the development of specified regions ° Aid granted for use by undertakings in difficulty on the basis of ad hoc decisions ° Criteria for inclusion

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

4. State aid ° Prohibition ° Derogations ° Aid which may fall within the scope of the derogation provided for in Article 92(3)(c) of the Treaty ° Aid to an undertaking in difficulty which does not form part of a restructuring programme designed to reduce or redirect its activities ° Exclusion

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

5. State aid ° Recovery of unlawful aid ° Breach of the principles of proportionality, protection of legitimate expectations and legal certainty ° None

Summary

1. In order to determine whether investment by the public authorities in the capital of undertakings, in whatever form, is in the nature of State aid within the meaning of Article 92 of the Treaty, it is necessary to consider whether in similar circumstances a private investor of a size comparable to that of the bodies administering the public sector might have provided capital of such an amount.

Although a parent company may, for a limited period, bear the losses of one of its subsidiaries in order to enable the latter to close down its operations under the best possible conditions, since such decisions may be motivated not solely by the likelihood of an indirect material profit but also by other considerations, such as a desire to protect the group' s image or to redirect its activities, a private investor pursuing a structural policy ° whether general or sectoral ° and guided by prospects of viability in the long term could not reasonably allow itself, after years of continuous losses, to make a contribution of capital which, in economic terms, proves to be not only costlier than selling the assets, but is moreover linked to the sale of the undertaking, which removes any hope of profit, even in the longer term.

2. Where State financial aid strengthens the position of an undertaking compared with other undertakings competing in Community trade the latter must be regarded as affected by that aid. For that purpose, it is not necessary for the beneficiary undertaking itself to export its products. Where a Member State grants aid to an undertaking, domestic production may for that reason be maintained or increased, with the result that undertakings established in other Member States have less chance of exporting their products to the market in that Member State.

Similarly, the relatively small amount of aid or the relatively small size of the undertaking which receives it does not as such exclude the possibility that intra-Community trade might be affected.

3. Having regard to the indications provided by a communication of the Commission of 3 February 1979 on regional aid systems, the Commission was justified in regarding ad hoc aid, that is to say, aid which does not form part of a national programme of Community interest financed by the European Regional Development Fund, as not meeting in principle the criterion of regional specificity which requires Article 92(3)(a) of the Treaty to be applied. That aid is not primarily intended to facilitate the development of certain economic regions, but is granted in the form of aid for the operation of undertakings in difficulty. In those circumstances, it is for the Member State concerned to establish that such aid actually fulfils the regional specificity criterion. None the less, the Commission should first specify the criteria according to which it considers ad hoc aid, exceptionally, to be regional in character. The fact that aid was granted on the basis of ad hoc decisions cannot therefore preclude it from being described as regional aid within the meaning of the abovementioned provision.

4. In order to be declared compatible with Article 92(3)(c) of the Treaty, aid to undertakings in difficulty must be bound to a restructuring programme designed to reduce or redirect their activities. Where, according to the plan presented upon privatization of an undertaking, the sole purpose of the aid is to allow the beneficiary to continue its activities on a larger scale, the Commission is justified in declaring inapplicable the derogation provided for in Article 92(3)(c) of the Treaty.

5. The recovery of State aid unlawfully granted for the purpose of re-establishing the previously existing situation cannot in principle be regarded as disproportionate to the objectives of the Treaty in regard to State aids.

Moreover, a Member State whose authorities have granted aid contrary to the procedural rules laid down in Article 93 of the Treaty may not rely on either the legitimate expectations of recipients or the principle of legal certainty in order to justify a failure to comply with the obligation to take the steps necessary to implement a Commission decision instructing it to recover the aid.

Parties

In Joined Cases C-278/92, C-279/92 and C-280/92,

Kingdom of Spain, represented by Alberto José Navarro González, Director-General for Community Legal and Institutional Coordination, by Rosario Silva de Lapuerta and Gloria Calvo Diaz and Miguel Bravo-Ferrer Delgado, Abogados del Estado, of the State Legal Department dealing with matters before the Court of Justice, acting as Agents, with an address for service in Luxembourg at the Spanish Embassy, 4-6, Boulevard Emmanuel Servais,

applicant,

v

Commission of the European Communities, represented by Daniel Calleja y Crespo and Francisco Enrique González Diaz, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the Chambers of Georgios Kremlis, of its Legal Service, Wagner Centre, Kirchberg,

defendant,

APPLICATION for the annulment of Articles 2, 3, 4 and 5 of Commission Decision 92/317/EEC of 25 March 1992 on State aid in favour of Hilaturas y Tejidos Andaluces SA, now called Mediterráneo Técnica Textil SA and its buyer (OJ 1992 L 171, p. 54), Articles 2, 3, 4 and 5 of Commission Decision 92/318/EEC of 25 March 1992 on aid granted by Spain to Industrias Mediterráneas de la Piel SA (Imepiel) (OJ 1992 L 172, p. 76) and Articles 2, 3, 4 and 5 of Commission Decision 92/321/EEC of 25 March 1992 concerning aid awarded by Spain to Intelhorce SA (ex Industrias Textiles de Guadalhorce SA), now called GTE, General Textil España SA, a State-owned producer of cotton textiles (OJ 1992 L 176, p. 57),

THE COURT,

composed of: O. Due, President, G.F. Mancini, D.A.O. Edward (Presidents of Chambers), R. Joliet, F.A. Schockweiler, G.C. Rodríguez Iglesias, F. Grévisse, M. Zuleeg (Rapporteur), J.L. Murray, Judges,

Advocate General: F.G. Jacobs,

Registrar: D. Louterman-Hubeau, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 1 February 1994,

after hearing the Opinion of the Advocate General at the sitting on 23 March 1994,

gives the following

Judgment

Grounds

1 By applications lodged at the Court Registry on 19 June 1992 the Kingdom of Spain brought an action pursuant to the first paragraph of Article 173 of the EEC Treaty for the annulment of Articles 2, 3, 4 and 5 of Commission Decision 92/317/EEC of 25 March 1992 on State aid in favour of Hilaturas y Tejidos Andaluces SA ("Hytasa"), now called Mediterráneo Técnica Textil SA and its buyer (OJ 1992 L 171, p. 54), Articles 2, 3, 4 and 5 of Commission Decision 92/318/EEC of 25 March 1992 on aid granted by Spain to Industrias Mediterráneas de la Piel SA (Imepiel) (OJ 1992 L 172, p. 76) and Articles 2, 3, 4 and 5 of Commission Decision 92/321/EEC of 25 March 1992 concerning aid awarded by Spain to Intelhorce SA (ex Industrias Textiles de Guadalhorce SA), now called GTE, General Textil España SA, a State-owned producer of cotton textiles (OJ 1992 L 176, p. 57).

2 The Commission, having learned between 1987 and 1989 that, through the Spanish Patrimonio del Estado (the Property Office of the Ministry of Economic Affairs and Finance), the Spanish authorities had agreed to contribute capital to three companies which belonged to the Spanish State, two of which operated in the textile sector (Hytasa and Intelhorce) and one in the footwear sector (Imepiel), initiated procedures for the purpose of determining whether that action was compatible with Articles 92 and 93 of the Treaty.

3 The Commission' s findings show that between 1986, the date of Spain' s accession to the Community, and 1989, the State contributed PTA 7 100 million to Hytasa, PTA 6 029 million to Imepiel and PTA 7 820 million to Intelhorce through capital increases intended to cover operating losses. In view of the chronic unprofitability of the three undertakings the Spanish State decided to privatize them.

4 The terms of the sale provided in particular:

° in so far as concerned Hytasa, a contribution of capital in the amount of PTA 4 300 million by the Patrimonio del Estado at the time of the sale in order to improve the financial position of that undertaking, to make...