Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. The case before the Court today concerns an action for annulment of a letter sent by the Commission on 23 November 1990 to the Italian Government. In that letter the Commission announced that it had decided to initiate the procedure provided for in Article 93(2) of the Treaty with regard to aid granted by the Italian authorities to Italgrani SpA; it also pointed out that the measures in question could not be applied before that procedure had resulted in a final decision.
In a judgment of 30 June 1992 (1) the Court already declared this action for annulment to be admissible. It must now judge whether the application is well founded.
Background to the dispute
2. In order to uphold the prohibition in principle of State aid provided for in Article 92 of the Treaty, Article 93(1) and (2) establish a certain number of procedures for verifying the compatibility with the common market of existing or new aid.
The examination of new aid differs in one fundamental respect from the examination of existing aid. Under the last sentence of Article 93(3) a Member State may not put into effect new measures pending such examination, (2) whereas there is no analogous suspensory effect in regard to existing aid. (3)
3. On 12 April 1990 the Italian Inter-ministerial Committee for the Coordination of Industrial Policy (CIPI) ratified the conclusion of a contract between the Italian Minister for Intervention in the Mezzogiorno and Italgrani, an undertaking established in Naples engaged in cereal processing. (4) Under that contract aid amounting to LIT 522.3 billion intended to finance investments amounting to LIT 964.5 billion were granted to Italgrani. (5) They formed part of a scheme of aid established by Italian Law No 64 of 1 March 1986 on extraordinary intervention in favour of the Mezzogiorno. (6)
Law No 64 was notified on 2 May 1986 to the Commission in accordance with Article 93(3) of the Treaty. The aid provided for thereunder was approved in part (7) and subject to certain conditions by Decision 88/318/EEC of 2 March 1988. (8) More particularly the decision imposed the observance of certain conditions relating to the intensity (9) of aid whereas Article 9 provides that:
"This decision shall be without prejudice to compliance with the Community legislation and codes now in force or to be introduced in the future to control aid to particular sectors of industry and fisheries."
4. Following complaints lodged by Casillo Grani, a competitor of Italgrani, and by an association of cereal starch producers (10) concerning the aid granted to Italgrani the Commission on 26 July 1990 requested the Italian authorities to forward to it information concerning the aid in question. On 7 September 1990 the Italian authorities complied with that request but in a manner judged by the Commission to be unsatisfactory. At a meeting on 28 September 1990 and by letters of 4 and 14 October 1990 the Italian authorities gave further information.
By letter of 23 November 1990 the Commission informed the Italian Government of its decision to initiate the procedure provided for in Article 93(2) since following an initial examination it had doubts as to the compatibility of the aid granted with the conditions as to intensity of aid laid down in Decision 88/318 and with Article 9 of that decision. (11) In the same letter the Commission reminded the Italian Government that "under the terms of Article 93(3) of the EEC Treaty the proposed measures cannot be put into effect until the procedure provided for in paragraph 2 of that article has resulted in a final decision". (12) The other Member States and interested third parties were put on notice by a communication published in the Official Journal to submit their observations within a period of four weeks. (13)
5. On 31 January 1991 the Italian Government brought before the Court an action for annulment under Article 173 of the Treaty against the Commission decision to initiate the procedure provided for in Article 93(2). According to the Italian Government, the Commission availed itself of the complaint lodged by Casillo Grani in order to revoke by implication Decision 88/318. It considers that such a revocation constitutes not only an abuse of power but also infringes the principles of the protection of legitimate expectations and of legal certainty, together with the rules as to competence, essential formal requirements and the obligation to provide a statement of reasons which apply to the revocation of an existing decision. On 27 March 1991 Italgrani also brought before the Court an action for annulment against the abovementioned decision. (14)
Taking the view that its decision to initiate the procedure provided for in Article 93(2) was merely a preparatory act which could not be amenable to an action for annulment under Article 173, the Commission raised before the Court an objection of inadmissibility under Article 91(1) of the Rules of Procedure. (15) In the abovementioned Italy v Commission judgment, the Court dismissed that objection. It considered that, by ordering the Italian Government to suspend the payment of the aid granted to Italgrani, the Commission had definitively described the aid as "new" aid and that:
"a decision declaring aid to be incompatible with the Treaty or an action brought against a Commission decision declaring its incompatibility cannot make good the irreversible consequences which would result from a delay in the payment of the aid owing to compliance with the prohibition provided for in Article 93(3), last sentence". (16)
6. By Decision 91/474/EEC of 16 August 1991 (17) the Commission closed the procedure initiated under Article 93(2) by authorizing the grant of the aid. In that decision it stated that the Italian Government had brought the aid in favour of Italgrani in line with the conditions laid down in Decision 88/318. (18)
Following that final positive decision Italgrani withdrew its action for annulment. On the other hand the Italian Government which moreover in fact paid the aid granted only after the Commission' s final decision (19) persisted in its action.
Delimitation of the issues
7. In my view the Court is not called on to examine the Commission' s observations concerning the Italian Republic' s interest in the action and the validity of Decision 91/474 (paragraph 8 above). Nor, it seems to me, is the Court required to examine on its merits the compatibility with the common market of the aid granted to Italgrani (paragraph 9 above). Finally, it will be seen from a delimitation of the scope of a certain number of pleas in law raised by the Italian Government (paragraph 10 above) that the Court can focus in this case on the question whether the Commission in its decision was justified in describing the aid granted to Italgrani as new aid.
8. In the written observations which it submitted to the Court the Commission asserted that the Italian Republic had no interest in bringing the action for annulment and that were the Court to declare the action well founded the validity of Decision 91/474 would be jeopardized. In my view the Court is not required to examine either of these two assertions in the context of these proceedings. It gave a definitive view on the admissibility of the action for annulment in the Italy v Commission judgment cited above (20) whereas the validity of Decision 91/474 is in no way called in question in this case.
9. In its Italy v Commission judgment on the admissibility of this action the Court considered that:
"It is clear from the arguments submitted by the Italian Government that the action for annulment relates solely to the Commission' s decision to initiate the procedure provided for in Article 93(2) of the Treaty against the aid granted to Italgrani, inasmuch as it revokes the earlier decision approving the Italian scheme but not in so far as it contains assessments as to the compatibility of the aid with the Treaty. The Court' s examination shall therefore be limited to that part of the decision". (21)
In fact the Italian Government deliberately directed its action for annulment against the manner in which the Commission initiated the procedure provided for in Article 93 and not against the question whether the compatibility of the aid with the common market had been correctly assessed. (22) I share the view of the Italian Government and will not examine in any greater detail whether that assessment was substantiated (even if the Commission devotes to it the major part of the observations which it submitted to the Court).
10. It could be inferred from the application lodged by the Government of the Italian Republic on 31 January 1991 and from the passage of the judgment of 30 June 1992 cited in the preceding paragraph that the Italian Republic regards the initiation by the Commission of the procedure provided for in Article 93(2) as unlawful per se. In its reply, however, the Italian Government rightly (23) stated that it was only challenging that procedure in so far as it was not merely examining compliance with Decision 88/318 but over and above that was directly verifying compatibility of the aid granted to Italgrani with the Treaty (see in this connection paragraph 13 below).
The description of the aid granted by the Italian Government as "new" aid
11. There is no doubt that the contested aid in favour of Italgrani forms part of the general scheme of aid introduced by Law No 64 previously approved by the Commission (partial and conditional approval) in Decision 88/318. The Commission has expressly confirmed this to be so. (24) Nor is there any doubt ° and the Court has already acknowledged this (25) ° that by requiring Italy to suspend the payment of aid the Commission treated that aid as new aid.
The question is therefore whether the Commission can describe as "new" aid an individual aid coming within a regional aid scheme previously approved by the Commission and whether it may then suspend its operation.
The Court has not yet taken a view on this question (which is raised also in another case pending before it ° Namur-Assurances du Crédit (26)). (27) However, the question is not entirely new. Advocate General Darmon already dealt with it at length in his Opinion in the Irish Cement v Commission case of 15 December 1988. (28) That judgment concerned an aid accounting for 30% of the projected investment granted to an undertaking established in Northern Ireland. Irish Cement, which was a competitor of the recipient undertaking, lodged a complaint with the Commission. The Commission however considered that the aid came within the terms of its existing communication on regional aid schemes under which aid accounting for up to 50% of projected investments could be granted without reference to the Commission. Irish Cement brought proceedings against the Commission for annulment and for failure to act.
12. In that case Irish Cement maintained that any individual aid granted on the basis of an existing aid scheme ° even if it fully satisfied the conditions of that scheme ° constituted new aid subject to notification. The Commission, adopting a different viewpoint from that which it maintains today, argued that any such individual aid had to be treated as an existing aid. Recourse to the procedure under Article 93(2) was possible with regard to such measures only after prior recourse to the procedure under Article 93(1). "Secondly", in the Commission' s view, "and in any event, the effects of the procedure provided for in Article 93(2) can relate only to alterations of the system in relation to the future and not to a specific aid granted under an existing system. Otherwise there would be conflict with the principles of legal certainty and legitimate expectation". (29)
In his Opinion, Advocate General Darmon agreed with the viewpoint that the Commission was putting forward at that time. He considered in particular that
"... The distinction drawn by the applicant between the existing system and the individual measures cannot be accepted in so far as it treats the latter as 'new aid' within the meaning of Article 93.
(The implementing measures) constitute the implementation of the existing system. There is no question of a policy of 'authorizations en bloc' , as the applicant maintains. What is concerned is the logical consequence of the fact that regional aid systems crystallize under the provisions of Article 93(1) of the Treaty.
The review carried out by the Commission under that provision enables an evaluation of the functioning of the system to be carried out together with the Member States and, if necessary to propose alterations. If the Member State in question refuses to make the alterations, they may be imposed by having recourse to Article 93(2), but, I would emphasize, only in relation to the future functioning of the system."
13. Like the Commission and the Advocate General in the Irish Cement case, I consider that individual measures adopted under a general aid scheme approved previously must be regarded as existing aid. That means in principle that they may be verified only as to compliance with the requirements of the general scheme. If such measures were to be described as "new" aid, the usefulness of general aid schemes (regional or sectoral) would be practically non-existent since the individual measures adopted under those schemes would nevertheless have to be separately notified, examined and approved. (30) If the Commission were furthermore authorized to carry out a direct assessment of the compatibility of those individual measures with the Treaty (rather than simply verifying that they satisfy the conditions laid down in the general schemes), such general schemes would lose all practical legal status since on each examination of individual measures the Commission could call in question their scope and their relationship with the Treaty. That would be to infringe the principles of the protection of legitimate expectations and of legal certainty.
Moreover, general aid schemes would in that way lose their economic and political function. That is to enable both the Member States and the Commission to conduct long-term global planning of the grant of aids. Such planning does not merely facilitate the targeting of regional and/or sector aid but also makes for a more simplified supervision of individual aids by the Commission. (31)
14. That position of principle does not obviously take away the Commission' s right to intervene against abuses by Member States which present an individual aid as the implementation of a general aid scheme approved earlier, whereas the measure in question is manifestly not covered by such a scheme (for example because the undertaking in receipt of the aid is established in a region in whose favour no general aid scheme has been adopted) or is manifestly incompatible with the conditions specifically laid down in the general scheme. (32) Where the Commission is in a position to prove any such abuse it may still treat the aid in question as "new" aid and require (possibly by a provisional decision (33)) that the payment thereof be suspended. The Commission must however in such a case clearly indicate in its decision the grounds on which it considered that there was such an abuse so as to enable the Court to review the grounds relied on by the Commission should the Member State concerned or the recipient undertaking bring an action against that decision.
The view expressed in the preceding paragraph does not prevent the Commission from contesting an individual aid because it does not satisfy the specific conditions laid down in the applicable general scheme. (34) But that must then be done in the context of an examination of existing aid in accordance with Article 93(1) and (2) of the Treaty and thus without the measure being suspended.
In the present case all the parties are at one in acknowledging that the aid in favour of Italgrani forms part of the general aid scheme under Law No 64 approved by the Commission in Decision 88/318. In those circumstances, the letter sent on 23 November 1990 by the Commission to the Italian Government must be annulled in any event since the Commission assessed the conformity of the aid granted to Italgrani SpA in the context of an examination of new aid and consequently ordered the Italian authorities to suspend payment of the aid. It is appropriate also, under Article 69(2) of the Rules of Procedure, to order the Commission to pay the costs.
15. By way of conclusion I propose that the Court should give the following decision:
(1) The letter addressed on 23 November 1990 by the Commission to the Italian Government is annulled.
(2) The Commission is ordered to pay the costs.
W. Van Gerven
(*) Original language: Dutch.
(1) ° Case C-47/91 Italy v Commission [1992] ECR I-4145.
(2) ° Advocate General Mayras already explained the difference between existing aid and new aid in his Opinion in the judgment of 12 July 1973 in Case 70/72 Commission v Germany [1973] ECR 813 by observing (at p. 836) that the decision declaring an existing aid incompatible with the common market is normative in nature not declaratory so that it cannot have retroactive effect, whereas a proposal for new aid or for the modification of existing aid may in fact be suspended because no individual right can arise out of a proposal.
(3) ° In its judgment of 30 June 1992, at paragraphs 21 et seq., the Court rejected the Commission' s argument that the decision to initiate the procedure under Article 93(2) always has suspensory effect.
(4) ° Official Journal of the Italian Republic (GURI) No 110 of 14 May 1990.
(5) ° For a detailed description of the aid see Commission Decision 91/474/EEC of 16 August 1991 (see below, footnote 17).
(6) ° Official Journal of the Italian Republic (GURI) No 61 of 14 March 1986.
(7) ° See Articles 3 to 7(1) of Decision 88/318 declaring certain measures incompatible with the common market. See also Article 8 of the decision in which the Commission reserves the right to take a view subsequently of a certain number of measures.
(8) ° Decision on Law No 64 of 1 March 1986 on extraordinary intervention in favour of the Mezzogiorno (OJ 1986 L 143, p. 37).
(9) ° See Article 2 of Decision 88/318.
(10) ° By letters of 17 July 1990 and 3 August 1990 respectively.
(11) ° In reply to supplementary questions put by the Court the Commission pointed to the passages of its letter which specifically concerned the compatibility of the projected aid in favour of Italgrani with Decision 88/318 and with the agricultural regulations to which that decision referred.
(12) ° See point I.3 of the contested decision.
(13) ° OJ 1990 C 315, p. 7.
(14) ° Case C-100/91.
(15) ° Rules of Procedure of the Court of Justice of the European Communities of 19 June 1991 (OJ 1991 L 176, p. 7).
(16) ° Paragraph 28 of the judgment.
(17) ° Decision concerning aids granted by the Italian Government to the Italgrani SpA company for the setting up of an agri-foodstuffs complex in the Mezzogiorno (OJ 1991 L 254, p. 14).
(18) ° Currently three actions for annulment of Decision 91/474 are pending before the Court of First Instance, namely Cases T-435/93, T-442/93 and T-443/93.
(19) ° That is clear in particular from the letter of withdrawal from Case C-100/91 sent on 22 January 1992 by Italgrani to the Court.
(20) ° According to the Court' s settled case-law a Member State is not moreover required to justify an interest in the proceedings in the context of an action under Article 173 of the Treaty (see judgment in Case 45/86 Commission v Council [1987] ECR 1493, paragraph 3, and in Case 131/86 United Kingdom v Council [1988] ECR 905, paragraph 6).
(21) ° Paragraph 18 of the judgment.
(22) ° The Italian Government confirms this expressly in paragraph 4, in fine, of the reply.
(23) ° If the Commission has doubts as to the compatibility of an individual aid with conditions laid down previously it may (and if an initial examination does not remove those doubts, must) no doubt have recourse to Article 93(2) of the Treaty. See the judgment in Case C-294/90 British Aerospace and Rover v Commission [1992] ECR I-493, paragraphs 11 to 13).
(24) ° See the contested letter of 23 November 1990, at A, fifth paragraph and Decision 91/474, I, third paragraph. The Commission also gave implied confirmation of that fact by assessing the compatibility of the aid with the conditions laid down in Decision 88/318.
(25) ° See paragraph 26 of the Italy v Commission judgment cited above.
(26) ° Case C-44/93.
(27) ° Since the Council has not yet availed itself of the opportunity conferred on it by Article 94 of the Treaty to lay down the conditions for the application of Article 93 the Court considers that it is compelled to interpret Article 93 of the Treaty. It has already been obliged to do so on several other occasions. Thus in Case 84/82 Germany v Commission [1984] ECR 1451 and more recently in the judgments in Case C-198/91 Cook v Commission [1993] ECR I-2487 and in Case C-225/91 Matra v Commission [1993] ECR I-3203 it stressed the difference between the formal procedure under Article 93(2) and the informal procedure under Article 93(3) of the Treaty. The relevance of these cases to the present case is limited because they all concerned aid which was by common consent new aid.
(28) ° Joined Cases 166/86 and 220/86 Irish Cement v Commission [1988] ECR 6473.
(29) ° Opinion of Advocate General Darmon in Irish Cement v Commission, paragraph 22, in which he refers to the Opinion of Advocate General Mayras, cited above, at footnote 2.
(30) ° See also paragraph 32 of Advocate General Darmon' s Opinion in the Irish Cement case: Let me take the applicant' s suggestions to their ultimate conclusion: there would not even be any need to notify new regional aid systems because individual measures would in any event have to be notified.
(31) ° For example because it is not necessary to examine in each individual case what intensity of aid is specifically compatible with the common market.
(32) ° By referring to conditions specifically laid down I wish to indicate that that is not meant to be a general condition whereby the Member State in question must observe all the provisions of Community law including Article 92 of the Treaty. In that case the Commission could nevertheless again verify the compatibility of the individual aid with the Treaty.
(33) ° The Court has confirmed that it is open to the Commission to order by way of provisional decision the suspension of payment of aid in its judgment in Case C-301/87 France v Commission [1990] ECR I-307, paragraphs 18 to 20.
(34) ° See footnote 21 and the case-law mentioned there.
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