Opinion of the Advocate-General
1 In the present case the Tribunal de Commerce, Brussels, seeks a preliminary ruling from the Court as to whether certain facilities for the late payment of social security contributions granted to an undertaking by the State body charged with the collection of those contributions constitute State aid within the meaning of Article 92(1) of the Treaty and, if so, whether the facilities granted in this case are compatible with the common market.
Background
2 The Belgian social security system is regulated by the law of 27 June 1969 as amended by the law of 30 March 1994, which according to the order for reference provides inter alia as follows.
3 The Office National de Sécurité Sociale (`ONSS') is a public body guaranteed by the Belgian State. It is responsible for the collection of social security contributions from employers and workers. The ONSS is also charged with ensuring the overall financial management of the social security system and its transparent and efficient operation. (1)
4 Employers are required to deduct contributions payable by each worker from his salary payments and to forward those contributions to the ONSS within the time-limits set by the King. (2) Employers who do not pay the contributions within those time-limits are liable to criminal and in certain cases civil sanctions and must pay prescribed surcharges and interest for late payment. (3) It is accepted that the ONSS has a discretionary power to grant periods of grace to employers, although national law recognises that there must be limits to the exercise of that discretion.
5 The national court states that, where a company becomes insolvent, the ONSS enjoys a preferential charge over its moveable property in respect of contributions owed for three years.
6 The Commercial Code, Article 442, paragraph 1, provides that insolvency is pronounced by judgment of the Tribunal de Commerce upon application by the insolvent trader, or on the application of one or several creditors, or of its own motion. (4) Each Tribunal de Commerce has a commercial investigation service (service d'enquêtes commerciales), designed to provide the court with the necessary information to put it in full possession of the facts before declaring an undertaking insolvent. The investigating judge (juge des enquêtes commerciales) refers the matter to a chamber of the Tribunal de Commerce once he has sufficient information to suggest that the undertaking may be insolvent. That chamber (juge de l'audience) must deliver a judgment finding that the undertaking's insolvency either has or has not been established.
7 Déménagements-Manutention Transport (`DMT') is a removal firm which appears to engage in some cross-border trade. It appears that the main proceedings arise out of a decision by the Tribunal de Commerce to investigate of its own motion the financial situation of DMT; the investigating judge has referred the case to the Fourth Chamber of the Tribunal de Commerce. That court has referred two questions to this Court for a preliminary ruling.
8 The facts and figures which led the investigating judge to take the view that DMT might be insolvent are not wholly clear from the order for reference. It is however apparent that the essential element which led the national court to seek the guidance of this Court is its finding that the ONSS had granted facilities to DMT for late payment of social security contributions over a number of years in circumstances where DMT's liabilities, most of which comprised outstanding social security contributions, interest and surcharges, substantially exceeded its assets.
9 The Procureur du Roi, acting as amicus curiae giving his opinion in the main proceedings, had expressed the view that DMT would have had to declare itself insolvent but for the indulgence shown by the ONSS over the previous decade and concluded that the ONSS had departed from its role as collector of social security contributions and taken on a role akin to that of dispenser of credit.
10 In those circumstances the referring court considered that the facilities for late payment of social security contributions might constitute unlawful State aid contrary to Article 92(1) of the Treaty and therefore referred the following questions to this Court:
`1. Is Article 92 of the Treaty to be interpreted as meaning that measures in the form of payment facilities granted by a public body such as the ONSS enabling a commercial company to retain over a period of at least eight years a proportion of the sums collected from staff and to use those sums in support of its commercial activities, when that undertaking is unable to obtain funding under normal market conditions or to increase its capital, are to be considered State aid within the meaning of that article?
2. If the first question is answered in the affirmative, is Article 92 of the Treaty to be interpreted as meaning that such aid is compatible with the common market?'
11 Written observations have been submitted by DMT, the French Government and the Commission. At the oral hearing, the Belgian, French and Spanish Governments and the Commission were represented.
12 The facts as set out in the order for reference were put in some doubt by the observations made by the Belgian Government at the hearing. In particular, the Belgian Government asserted that the main proceedings concerned only arrears of social security payments from June 1994, and that the extension of time had, until December 1996, been granted by judgment of the Tribunal de Commerce of September 1996 and not simply by the indulgence of the ONSS. It accepted however that DMT had a history of difficulties with social security payments going back to 1986.
13 Notwithstanding the dispute as to the facts, I consider that the Court can give a ruling in general terms. It will of course be for the national court to satisfy itself that it has established the facts sufficiently to enable it to apply the Court's ruling to the proceedings before it.
Admissibility
14 There are two aspects of the case which appear to raise doubts as to the propriety of the reference: first, whether the main proceedings are of a judicial nature and, secondly, whether a decision on the questions referred is necessary to enable the national court to give judgment.
15 As indicated above, the proceedings of the Tribunal de Commerce acting in its capacity as adjudicator of insolvency comprise two stages: the investigation by the juge des enquêtes commerciales and, if appropriate, the continuation of the procedure before the juge de l'audience if the matter is referred to a chamber. There is throughout only one party, the undertaking being investigated, although the Procureur du Roi has a role akin to that of an amicus curiae.
16 The fact that the proceedings are not adversarial does not in itself prevent the conclusion that the Tribunal is competent to make a reference. (5) As to the procedure generally, the Court has held that a court may refer a question `only if there is a case pending before it and if it is called upon to give judgment in proceedings intended to lead to a decision of a judicial nature'. (6) The fact that the national procedure at issue involves a purely investigative stage is not a bar to a reference: the Court has accepted a reference from a Pretore (magistrate) in Italy in a case in which the Pretore performed functions both of a public prosecutor and of an examining magistrate, carrying out preliminary investigations in his capacity as public prosecutor and, where those disclosed no grounds for continuing the proceedings, making an order accordingly in the place of the examining magistrate. (7) The Court ruled that it had jurisdiction to reply to a request for a preliminary ruling if that request emanated from a court or tribunal which has acted in the general framework of its task of judging, independently and in accordance with the law, cases coming within the jurisdiction conferred on it by law, even though certain functions of that court or tribunal in the proceedings which gave rise to the reference are not, strictly speaking, of a judicial nature. (8)
17 In the present case the Tribunal de Commerce is, pursuant to Article 442(1) of the Belgian Commercial Code, adjudicating on whether DMT is insolvent. The investigating juge des enquêtes commerciales appears to have referred the case to the Fourth Chamber of the Tribunal de Commerce and accordingly has no further role. The juge de l'audience, once seised by the investigating judge, is required to deliver a judgment declaring either that the undertaking is insolvent or that the conditions required for a finding of insolvency are not satisfied. The function being exercised by the Tribunal is accordingly judicial rather than administrative in nature. It is, in my view, therefore clear that the Tribunal de Commerce adjudicating in its capacity as an insolvency court is competent to refer questions to this Court pursuant to Article 177 of the Treaty.
18 The second doubt concerning the propriety of the reference goes to whether a decision on the questions referred can be regarded as necessary to enable the referring court to give judgment, as required by Article 177. Given the function of the referring court in the main proceedings, it must be assumed that that court considers that a finding that the facilities for late payment granted by the ONSS amount to unlawful State aid will affect its decision whether DMT is insolvent. If those facilities are State aid, the referring court presumably considers that DMT will have to meet its obligations to ONSS immediately and in so doing will necessarily render itself insolvent. However, this is not clear from the order for reference. Nor is it clear that the outcome of the main proceedings genuinely turns on this point, since the findings of the national court - albeit disputed by the Belgian Government - suggest that DMT is unable to meet its obligations in any event.
19 The Court has, however, consistently held that it is for the national court to assess, having regard to the facts of the case, the need to obtain a preliminary ruling to enable it to give judgment. (9) The Court has stressed the need to respect the assessment of the national court even if it is difficult to see how the answers which the Court is asked to give can influence the decision in the main proceedings, (10) provided that the questions are not manifestly unconnected with the main proceedings (11) and that the Court is not being asked to deliver a purely advisory opinion on general or hypothetical questions. (12) In this case I do not consider that it would be appropriate for the Court to reject the national court's assessment of the relevance of the questions referred to the solution of the proceedings before it.
The Treaty framework
20 It is helpful to clarify at the outset the division of competence between national courts, the Commission and this Court in respect of State aid cases. (13)
21 Article 92(1) provides:
`Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.'
22 Article 93(1) of the Treaty requires the Commission, in cooperation with Member States, to keep under constant review all systems of aid existing in those States. Article 93(2) lays down the procedure to be followed by the Commission if it finds that aid granted by a State or through State resources is not compatible with the common market or is being misused. Article 93(3) provides:
`The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the common market having regard to Article 92, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision.'
23 The implementation of the system of supervising State aid established by Article 93 is a matter for the Commission and for the national courts. (14) The respective roles of the Commission and of national courts were clarified by the Court in Steinike und Weinlig v Germany. (15)
24 The Court stated first that the intention of the Treaty, in providing through Article 93 for aid to be kept under constant review and supervised by the Commission, is that the finding that aid may be incompatible with the common market is to be arrived at, subject to review by the Court, by means of an appropriate procedure which it is the Commission's responsibility to set in motion. National courts cannot, on the basis of Article 92 alone, decide on the compatibility of aid. (16)
25 However, proceedings may be commenced before national courts requiring those courts to interpret and apply the concept of aid contained in Article 92 in order to determine whether State aid introduced without observance of the preliminary examination procedure provided for in Article 93(3) ought to have been subject to that procedure. (17) In interpreting Article 92 it is open to a national court to consult with the Commission; (18) additionally, a national court may, or must, make a preliminary reference under Article 177 to this Court, as the referring court has done in the present case. National courts must offer to individuals the certain prospect that all the appropriate conclusions will be drawn from an infringement of the last sentence of Article 93(3), in accordance with their national law, as regards the validity of the measures giving effect to the aid and the recovery of financial support granted in disregard of that provision. (19)
26 Thus neither this Court nor the referring court has jurisdiction to rule on the compatibility of aid with the common market. This Court cannot, therefore, provide an answer to the referring court's second question in these proceedings and this Opinion will accordingly be limited to interpreting the notion of aid within the meaning of Article 92.
Question 1
27 In order to determine whether a practice such as that allegedly followed by the ONSS in this case constitutes aid for the purposes of Article 92, it is helpful to consider the various components of the definition in Article 92(1).
State resources
28 First, the provision requires that the aid be granted by a Member State or through State resources. The distinction between aid granted by the State and aid granted through State resources serves to bring within the definition of aid not only aid granted directly by the State but also aid granted by public or private bodies designated or established by the State. (20) Since the ONSS is a public body guaranteed by the State and responsible to it for the collection of social security contributions, it is clear that it falls within this definition. Moreover, the Court has ruled that, since social security funds are financed through compulsory contributions imposed by State legislation and managed and apportioned in accordance with that legislation, they must be regarded as State resources within the meaning of Article 92(1) even if they are administered by institutions distinct from the public authorities. (21)
Benefit or advantage
29 Secondly, the State intervention must confer an advantage or benefit on the recipient.
30 The Treaty refers to aid `in any form whatsoever'. The Court held at an early stage that the concept of aid within the meaning of Article 92(1) is wider than that of a subsidy because it embraces not only positive benefits, such as subsidies themselves, but also interventions which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, therefore, without being subsidies in the strict meaning of the word, are similar in character and have the same effect. (22)
31 The crucial point therefore is whether the undertaking concerned obtains a benefit which it would not have received in the normal course of events on the private market. In the context of measures relating to social security contributions, the Court held in France v Commission (23) that preferential reduction of those contributions constituted aid within the meaning of Article 92(1) because they enabled an undertaking `to avoid having to bear costs which would normally have had to be met out of the undertaking's own financial resources, and thereby prevented market forces from having their normal effect'. (24)
32 In this case, however, there has been no outright reduction in the amount of social security contributions to be paid by DMT. Rather, DMT has been allowed to make the payments outside the normal time-limits and has incurred liability for interest and surcharges in respect of those late payments. In those circumstances DMT argues that it has not received an advantage amounting to aid within the meaning of Article 92(1). The Belgian, French and Spanish Governments submit that, where facilities for late payment are granted but properly compensated for by terms such as interest, guarantees and surcharges, the undertaking concerned has not obtained an advantage amounting to aid. By contrast, the Commission submits that DMT has received a substantial advantage by the simple fact of having been relieved of the duty normally incumbent upon undertakings to make social security contributions within the normal time-limits: the facility for late payment has enabled DMT to retain contributions collected from employees and to put them towards its commercial activities instead of paying them to the ONSS.
33 It is clear that in certain circumstances continued and generous tolerance of late payment of social security contributions may confer an appreciable commercial advantage on the recipient undertaking and in extreme cases be tantamount to relief from those contributions. (25) Facilities for late payment would thus in such circumstances unquestionably constitute State aid. (26)
34 In my view, the question whether facilities for the late payment of social security contributions constitute aid within the meaning of Article 92(1) is most appropriately determined according to the method proposed by the French Government. That Government submits that the terms on which such facilities are granted should be compared with those that a private creditor would have granted if placed in comparable circumstances. It is only where facilities for repayment are granted on terms that are manifestly more generous than those which would have been granted by a private creditor that such facilities will constitute aid within the meaning of Article 92(1).
35 I agree with the French and Belgian Governments that the criterion of the private investor which has often been applied to decide whether the provision by the State of capital for an undertaking is aid (27) is not appropriate in this case. However, as the Commission argues, both a private investor and a private creditor test are essentially a private market test. It is, in my view, useful to draw the closest comparison possible, which in this case would be with a private creditor and the terms that creditor might offer to a customer-debtor finding itself in financial difficulties. (28)
36 When making the comparison, the hypothetical creditor should be, so far as possible, equivalent in all relevant respects to the State body concerned. Thus in this case the hypothetical creditor should have a similar capacity to make facilities available and similar advantages such as a preferential charge over the debtor undertaking's property. However, I agree with the Commission's submission that it would be inappropriate to consider the hypothetical private creditor as being concerned to ensure that the undertaking avoid going into liquidation. The private creditor must be assumed to act in its own commercial interests. Hence, if the most effective means of recovering its debt is to allow the undertaking to go into liquidation, then it must be assumed that a private creditor would not seek to prevent that outcome.
37 It will be for the referring court to decide, on the basis of its assessment of the facts, whether the facilities granted for payment of social security contributions, taking into account their terms, are manifestly more generous than those which a private creditor, protecting its commercial interests, would have granted in comparable circumstances on the private market. If so, those facilities are aid within the meaning of Article 92(1). It may be noted that the first question put by the national court seems to assume that the undertaking concerned is unable to obtain funding under normal market conditions.
38 The private creditor test will also determine the point at which the grant of facilities for payment becomes State aid. It may be that the grant of facilities for payment for a reasonable period accords with the likely conduct of a private creditor, but that at a certain point in time a creditor would have stopped granting the facilities and sought to enforce its debt. It will be for the referring court to decide the point at which that would have occurred.
Favouring certain undertakings
39 Thirdly, aid will not fall within Article 92(1) unless it favours certain undertakings rather than being a general measure. The Belgian, French and Spanish Governments submit that, where facilities for the late payment of social security contributions are granted on the same terms to any undertaking in certain objectively defined circumstances, those facilities do not constitute aid within the meaning of Article 92 since, being of a general nature, they do not favour certain undertakings.
40 It is true that measures of a general character fall outside the scope of Article 92. However, as the Commission points out, the Court has held that, where the body granting financial facilities of an apparently general nature enjoys a considerable margin of discretion as regards who is to benefit and the terms of the measures accorded, a beneficiary will be placed in a more favourable situation in relation to other undertakings and therefore the measure cannot be considered to be of a general nature. (29) It appears that in the present case the ONSS enjoys a discretionary power to accord facilities for late payment to whichever undertakings and, to a certain extent, on what terms it sees fit: on the assumption that that is correct, therefore, the measures in question cannot be considered as having a general character.
Competition and trade
41 Finally, Article 92(1) renders unlawful aid `which distorts or threatens to distort competition ... in so far as it affects trade between Member States'.
42 As the Commission submits, it seems clear that in the circumstances of the present case the measures, if found to constitute aid, are capable of distorting or threatening to distort competition by favouring certain undertakings for the purposes of Article 92(1). Such distortion can occur even where the amount of aid granted is relatively little. (30) The measures could also affect trade between Member States. When State financial aid strengthens the position of an undertaking compared with other undertakings competing in intra-community trade the latter must be regarded as affected by that aid. (31) In the present case the putative aid is capable of strengthening the position of DMT in the removals market to the detriment of its competitors.
43 I accordingly conclude in answer to the referring court's first question that measures in the form of discretionary facilities for the late payment of social security contributions entail the grant of State aid within the meaning of Article 92(1) if those facilities, taking into account the terms on which they are granted, are manifestly more generous than those which a private creditor would grant in comparable circumstances.
Question 2
44 As explained above, it is the exclusive role of the Commission to decide, subject to review by the Court, whether an aid is compatible with the common market. It is therefore not for this Court to provide an answer to the referring court's second question.
Conclusion
45 Accordingly, I am of the opinion that the second question referred by the Tribunal de Commerce, Brussels, does not require an answer and that the first question should be answered as follows:
Measures in the form of discretionary facilities for the late payment of social security contributions entail the grant of State aid within the meaning of Article 92(1) of the Treaty if those facilities, taking into account the terms on which they are granted, are manifestly more generous than those which a private creditor would grant in comparable circumstances.
(1) - Articles 5 and 9.
(2) - Article 23.
(3) - Article 28.
(4) - Since 1 January 1998 an insolvency procedure can no longer be commenced by the court of its own motion: Law of 8 August 1997 on bankruptcy, Moniteur belge, 28 October 1997, p. 28587.
(5) - Case 162/73 Birra Dreher v Amministrazione delle Finanze dello Stato [1974] ECR 201.
(6) - Case C-111/94 Job Centre [1995] ECR I-3361, paragraph 9 of the judgment.
(7) - Case 14/86 Pretore di Salò v Persons Unknown [1987] ECR 2545.
(8) - Paragraph 7 of the judgment.
(9) - See, for example, Case 83/78 Pigs Marketing Board v Redmond [1978] ECR 2347 and subsequent cases.
(10) - Joined Cases 98/85, 162/85 and 258/85 Bertini v Regione Lazio [1986] ECR 1885, paragraph 8 of the judgment.
(11) - Case C-343/90 Lourenço Dias v Director da Alfândega do Porto [1992] ECR I-4673; Case C-428/93 Monin Automobiles [1994] ECR I-1707.
(12) - Case 244/80 Foglia v Novello [1981] ECR 3045; Case 149/82 Robards v Insurance Officer [1983] ECR 171; Case C-83/91 Meilicke v ADV/ORGA [1992] ECR I-4871.
(13) - See generally, Case C-354/90 FNCE [1991] ECR I-5505; and Case C-39/94 SFEI and Others [1996] ECR I-3547.
(14) - FNCE, paragraph 8 of the judgment.
(15) - Case 78/76 [1977] ECR 595.
(16) - Paragraphs 9 and 10 of the judgment.
(17) - Paragraph 14 of the judgment.
(18) - See the Commission Notice on Cooperation between national courts and the Commission in the State aid field, OJ 1995 C 312, p. 8.
(19) - SFEI and Others, paragraph 40 of the judgment.
(20) - Joined Cases C-72/91 and C-73/91 Sloman Neptune v Bodo Ziesemer [1993] ECR I-887, paragraph 19 of the judgment.
(21) - Case 173/73 Italy v Commission [1974] ECR 709, paragraph 16 of the judgment.
(22) - Case 30/59 Steenkolenmijnen v High Authority [1961] ECR 1. The Court was considering the concept of `aids granted by States' under Article 4 of the ECSC Treaty but the definition has been accepted in subsequent case-law as applying equally to the concept of `aid granted by a Member State' under Article 92 of the EC Treaty.
(23) - Case C-301/87 [1990] ECR I-307.
(24) - Paragraph 41 of the judgment. See also Case 173/73 Italy v Commission, cited in note 21, Case 203/82 Commission v Italy [1983] ECR 2525, and Case 52/83 Commission v France [1983] ECR 3707.
(25) - See also paragraph 9 of the Opinion of Advocate General La Pergola in Case C-342/96 Spain v Commission, delivered on 9 July 1998, which also concerned the discretionary extension of time for the payment of social security contributions.
(26) - Subject to possible application of the de minimis rule: see the Community guidelines on State aid for small and medium-sized enterprises (SMEs) adopted by the Commission on 20 May 1992 (OJ 1992 C 213, p. 2), as amended by Commission notice on the de minimis rule for State aid (OJ 1996 C 68, p. 9), exempting in certain circumstances aid of a de minimis level from prior notification to the Commission.
(27) - See, for example, Case 234/84 Belgium v Commission [1986] ECR 2263.
(28) - See also paragraph 11 of the Opinion in Spain v Commission, cited in note 25.
(29) - Case C-241/94 France v Commission [1996] ECR I-4551. See also paragraph 8 of the Opinion in Spain v Commission, cited in note 25.
(30) - Joined Cases C-278/92, C-279/92 and C-280/92 Spain v Commission [1994] ECR I-4103, paragraph 42 of the judgment.
(31) - Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraph 11 of the judgment.
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