Important legal notice
Opinion of Mr Advocate General Darmon delivered on 6 October 1993. - Federal Republic of Germany and Pleuger Worthington GmbH v Commission of the European Communities. - State aid - Decision on aids granted by the City of Hamburg - Repayment. - Joined cases C-324/90 and C-342/90.
European Court reports 1994 Page I-01173
Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. The Federal Republic of Germany and Pleuger Worthington GmbH, a company, (hereinafter referred to as "Pleuger") seek the annulment of a Commission decision of 18 July 1990 (1) declaring incompatible with the common market a programme of aid designed to prevent the exodus of undertakings which was introduced by the city of Hamburg without prior notice to the Commission.
2. I shall briefly summarize the facts and would refer for further details to the Report for the Hearing. (2)
3. The Commission learned informally in 1986 that the city of Hamburg had granted a subsidy to Montblanc-Simplo GmbH. It therefore asked the Federal Republic of Germany for further information. On 22 October 1987 the latter confirmed that that subsidy had in fact been granted and stated that, in its view, it was justified by the risk that the undertaking in question might relocate to a country in south-east Asia where labour costs were low.
4. On 15 April 1988, however, the Federal Republic of Germany admitted that the subsidy was designed to remedy the sharp competition to which Hamburg was exposed as a result of the aid granted by the adjacent frontier areas of the former German Democratic Republic. It also named three other undertakings which had received similar subsidies, yet without mentioning Pleuger.
5. On the basis of those data, the Commission considered that
"[i]n all probability the aforementioned aid fulfils the requirements of Article 92(1) of the EEC Treaty ...",
and that
"[a]s regards any other justification for the grant of that aid, ... at the present stage ... the aid granted by the city of Hamburg does not qualify under the derogating provisions",
and decided on 3 May 1989 (3) to initiate the procedure provided for in Article 93(2) of the Treaty.
6. At talks held on 7 November 1989 between representatives of the Federal Republic of Germany, the city of Hamburg and the Commission, 33 cases of aid granted between 1986 and 1988 by the Hamburger Kreditkommission (Hamburg Credit Commission) came to the Commission' s notice, although the names of the recipient undertakings were not revealed. The Commission asked for particulars of each of the aids granted, in particular the names of the recipient undertakings, the sums invested, the amount of the subsidies, the number of jobs in Hamburg, and turnover.
7. On 8 December 1989 the Commission published in the Official Journal of the European Communities a notice in which it stated that
"Although this aid is very probably aid within the meaning of Article 92(1) of the EEC Treaty, the programme which is the basis of this aid, the budget line and the individual cases have not been notified to the Commission." (4)
That notice gave "parties concerned other than Member States notice to submit their comments on the measures [criticized] ... within one month".
8. By letter dated 3 January 1990, the Federal Republic of Germany sent certain information to the Commission. Following that letter, the Commission adopted the decision under consideration on the ground that the subsidies constituted aid within the meaning of Article 92(1) which formed part of a regional programme designed to prevent the out-migration of undertakings, with the result that there was no need to examine in depth each case in which aid was granted.
9. The Commission concluded that the programme was unlawful because it had not been notified, and was incompatible with Article 92(1), without any derogation being possible under Article 92(3)(a) or (c).
10. A preliminary observation on the unlawfulness of aid for want of notification is called for, since the decision is partly based thereon.
11. As the applicant undertaking rightly maintains, aid cannot be incompatible with the Treaty merely because the obligation to notify aid laid down in Article 93(3) of the Treaty has not been fulfilled.
12. It is sufficient to refer in this connection to the judgment in Case C-301/87 France v Commission, (5) it merely being observed that the defendant in these proceedings did not plead lack of notification in support of its defence of incompatibility with the Treaty.
13. I shall consider the pleas submitted by the applicants as follows:
- first, the pleas relating to the rules applicable to aid in general and, more specifically, to aid programmes,
- secondly, the pleas relating to the infringement of the principle audi alteram partem specifically set out by Pleuger.
14. In the first part of the Opinion, I shall appraise the complaints relating to the legal nature of the subsidy granted, the existence of a regional programme, the question of the infringement of Article 92(1), the lack of a statement of reasons, the obligation to grant exemption in respect of aid schemes of minor importance, compatibility with Article 92(3) and, lastly, the question of the infringement of the prohibition of discrimination.
15. The second part of the Opinion will deal with the question of the infringement of Article 93(2) and the requirement to state reasons for the repayment of the aid granted.
I - Rules applicable to aid and aid programmes
A - The legal nature of the subsidy granted
16. Pleuger challenges the legal classification of the subsidy granted on the ground that it is not an aid in so far as
"it could also have obtained financial facilities ... by grouping its production units in the region around Hamburg". (6)
17. Such an approach is manifestly contrary to the Court' s case-law on the definition of aid.
18. The Court has held that
"any State measure, in so far as it has the effect of according aid in any form whatsoever, may be assessed on the basis of Article 92 for its compatibility with the common market". (7)
19. Moreover, in the judgment in Denkavit, (8) the Court categorized as aid:
"the decisions of Member States by which the latter, in pursuit of their own economic and social objectives, give, by unilateral and autonomous decisions, undertakings or other persons resources or procure for them advantages intended to encourage the attainment of the economic or social objectives sought". (9)
20. By granting subsidies to certain undertakings, regardless, moreover, of the reasons invoked in support of such grant, the city of Hamburg granted aid within the meaning of Article 92(1).
21. I therefore propose that this plea should be rejected.
B - The existence of a regional programme
22. I would now turn to the key question concerning the Commission' s power to infer the existence of a programme of aid from the information at its disposal notified to it by the applicant State.
23. Both in its written submissions and at the hearing, the German Government attacked the presumption underlying the Commission' s decision that a programme exists, by stressing the circumstances in which the grant of subsidies at issue was made. Whilst some of the subsidies were indeed designed to prevent an exodus of undertakings, others, in contrast, were justified on extremely varied grounds - town planning requirements, protection of ground water or consolidation of the ground (10) - which are unrelated to the premiss underlying the Commission' s decision, namely encouraging undertakings to maintain their businesses in the city of Hamburg.
24. It is worth recalling at the outset that
"the legality of the contested decision is to be assessed in the light of the information available to the Commission when the decision was adopted". (11)
25. The procedure initiated under Article 93(2) against the aid granted by the city of Hamburg referred, according to the wording of the aforementioned letter of 3 May 1989, to a programme in so far as it stated that:
"The programme which is the basis of this aid, the budget line and the individual cases have not been notified to the Commission". (12)
26. However, the Federal Republic of Germany maintains that the publication of the notice in the Official Journal of the European Communities of 8 December 1989 (13) no longer referred to a "programme", with the result that it could legitimately be supposed only that the Commission agreed to initiate the procedure only against individual aids.
27. Whilst the French version of that notice refers to the "programme à la base de celles-ci" [the programme which is the basis of the aid], the German version reads as follows:
"Es handelt sich hierbei hoechstwahrscheinlich um Beihilfen im Sinne von Artikel 92 Absatz 1 EWG-Vertrag, fuer die weder die zugrundeliegende Regelung noch der Haushaltstitel oder einzelne Anwendungsfaelle der Kommission gemeldet worden sind". (14)
28. Despite the use of the word "Regelung" ("rules"), it must be held that that word, seen in the context in which the case arose and in accordance with the premiss on which the Commission has based itself since the initiation of the procedure under Article 93(2), meant unequivocally that that procedure was initiated against the programme, and that the aids concerned were referred to only as a consequence.
29. Furthermore, it clearly appears from reading the notice - which, it must be borne in mind, was intended for interested parties other than the Member States - that the Commission referred to an aid programme. The rationale of the notice is not to take account of one or more individual aids, but of a set of aids satisfying common criteria, namely geographical ones.
30. However, as the Commission and the Federal Republic of Germany assess the exchanges at the talks on 7 November 1989 differently, it is necessary to consider the respective roles played by the parties in the course of the procedure provided for in Article 93(2).
31. I would recall in this connection that, in that setting, the Commission does not have means of investigation available to it comparable to those which it has in competition cases. In this case, it merely checks the compatibility of the aid in the light of the information provided to it.
32. Following the talks, the Federal Republic of Germany forwarded information containing as the sole reason for the grant of the subsidies the words: "Prevention of the exodus of undertakings". (15) The argument to the effect that this was merely a general or simplifying title is not convincing in so far as that information was provided to the Commission precisely in order to enable it to verify that the subsidies at issue were compatible with the Treaty.
33. Consequently, after the adoption of the contested decision, the applicant State cannot rely on new reasons justifying the subsidies, when during the administrative procedure it refrained from putting them to the Commission, which asked it to provide all the information necessary to check whether the said programme existed and/or was compatible with the Treaty.
34. To claim that the Commission had to "put the Federal Republic of Germany on notice" that it had to communicate information from which it could be concluded that a programme did not exist disregards not only the respective roles of the Commission and the Member States in the matter, but also the case-law of the Court.
35. As far as the first point is concerned, it is sufficient to recall that the Commission does not have a power of investigation.
36. As for the case-law of the Court, and to cite only the judgment in Case C-301/87 France v Commission, (16) it appears that
"Once it has established that aid has been granted or altered without notification, the Commission has the power, after giving the Member State in question an opportunity to submit its comments on the matter, to issue an interim decision requiring it ... to provide the Commission, within such period as it may specify, with all such documentation, information and data as are necessary in order that it may examine the compatibility of the aid with the common market." (17)
37. When the procedure was initiated, the Commission, referring expressly to the "programme which is the basis of the aid", (18) stated that the German Government had failed to provide it with information about the "legal provisions on the basis of which the aid had been granted, namely the title of the applicable law, its publication date, its objectives and its duration, the conditions of grant, the definition of the recipients, the budget, etc", (19) and asked it to inform it of its position within one month.
38. In its letter of 3 January 1990, that is to say, seven months after the expiry of the prescribed period, the German Government sent the Commission information about the recipient undertakings, all under the general heading of the "prevention of an exodus of undertakings". That letter contained no statement contesting the existence of a programme and no data from which the fact that the existence of a programme was contested could be inferred.
39. In those circumstances, the Commission, as the Court held in the judgment in Case C-301/87 France v Commission (cited above), was
"empowered to terminate the procedure and make its decision, on the basis of the information available to it, on the question whether or not the aid is compatible with the common market". (20)
40. Moreover, it was in this way that in the judgment in Belgium v Commission (21) the Court refused, in order to assess the legality of a Commission decision, to take account of a reorganization plan which was brought to the Commission' s attention without being notified to it at the stage of the administrative procedure.
41. I shall therefore appraise whether the Commission was justified, in the light of the information available to it, to conclude that there was an aid programme.
42. The Court has already had occasion to define the concept of an aid programme, albeit indirectly, in the judgment in Germany v Commission. (22) In that case, the Commission claimed that the regional aid was fundamentally incompatible with the common market.
43. However, the Court held that
"Aid programmes may concern a whole sector of the economy or may have a regional objective and be intended to encourage undertakings to invest in a particular area." (23)
44. Admittedly, that judgment was given in completely different circumstances in so far as there was a planning law on regional aid, with the result that the discussion did not relate to the definition of the programme, whose existence was not in question, but to its compatibility with the rules of the Treaty.
45. In this case, the definition of the expression "aid programme" is a central part of the debate, as a result of which I should take a stand on the criteria of the regional programme and determine its content.
46. In my view, such a programme is characterized simply by the objective assigned by one or more public authorities to the aid granted.
47. It is irrelevant whether a single authority is involved; if it were relevant, the assessment of the regional nature of the programme would differ depending on whether only one or several decentralized authorities were behind the various subsidies.
48. Likewise, the criterion of publicity cannot be involved in that concept. Transparency exists only where the aid has been the subject of prior notification to the Commission. Transparency is therefore bound to be lacking where the public authority has decided not to effect notification. In such case, the public authority can hardly be in ignorance of the fact that the aid is incompatible with the rules of the Treaty.
49. Neither can the determination of the persons eligible for the payment of a subsidy assist in understanding the concept of a regional programme, which, unlike sectoral aid, may be paid, as I have mentioned, to undertakings with different activities.
50. Rather than those organic or formal criteria, it seems preferable to employ a functional criterion taking into account only the aim of the programme.
51. In the event, suffice it to recall that it should be considered that the various cases in which subsidies were granted were motivated by the aim of preventing the exodus of undertakings. (24)
52. However, if the Court should consider that the aim alone is per se insufficient to define a regional programme, the facts mentioned by the Commission in the contested decision plainly confirm that there was such a programme.
53. The Commission observed that
"the 33 known awards of aid are granted by the same, specially set-up agency (Hamburger Kreditkommission), on the same main grounds (to prevent out-migration) and under the same budgetary heading". (25)
54. Since I conclude that there was an aid programme, I infer from the Court' s judgment in Case 248/84 Germany v Commission, cited above, that
"[i]n the case of an aid programme the Commission may confine itself to examining the characteristics of the programme in question in order to determine whether, by reason of the high amounts or percentages of aid, the nature of the investments for which aid is granted or other terms of the programme, it gives an appreciable advantage to recipients in relation to their competitors and is likely to benefit in particular undertakings engaged in trade between Member States". (26)
55. In such a case, it is for the Commission to assess the impact of the programme alone from the point of view of its effects on trade between Member States and its effects on competition in the light of the parameters set out in that judgment. In contrast, there cannot be an additional requirement that each of the aids granted should be appraised, for this would ultimately favour States which did not give prior notification of their programme.
56. I would call to mind that, when a Member State notifies a programme, no individual aid can be granted until such time as the Commission has assessed whether it is compatible with the rules of the Treaty. This is merely the application of the rule set out in Article 93(3) of the Treaty.
57. In a context which, albeit different from the one at issue here - individual aids were involved -, can certainly be likened to it, the Court held in Case C-301/87 France v Commission (27) that, where unnotified aid was concerned,
"[i]f the Commission were required in its decision to demonstrate the real effects of aid which had already been granted, that would ultimately favour those Member States which grant aid in breach of the duty to notify aid laid down in Article 93(3) of the Treaty, to the detriment of those which do notify aid at the planning stage". (28)
58. That judgment provides a significant illustration of the circumstances in which the Commission has to assess the compatibility of an aid or of a programme which has not been the subject of prior notice. In the same way that it does not have to take into account the real effects of an aid, in the case of a programme it simply has to examine its chief characteristics, without a Member State which "omitted" to notify the programme being granted a "premium for failing to make notification".
59. However, Pleuger claims that an eponymous judgment in Case 102/87 (29) concerning aid granted to certain undertakings by the Fonds Industriel de Modernisation runs counter to that analysis.
60. For my part, I cannot see that there is any contradiction, since in that case the Commission authorized in principle the establishment of such a scheme, but required prior notification of "significant individual cases" in which the granting of aid was likely to affect intra-Community trade to an extent contrary to the common interest. (30)
61. Consequently, I consider that that plea should be rejected.
C - Infringement of Article 92(1) of the Treaty
62. The applicants maintain that Article 92(1) is inapplicable on the ground that the aid at issue was not likely to distort competition or affect trade between the Member States and should hence be considered compatible with the common market. However, the appraisal of compatibility will be confined to the programme alone, as has already been shown, in accordance with the standard laid down by the Court in Germany v Commission, cited above.
63. Such an appraisal will be bound to be less precise than in the case of a programme of sectoral aid and even less than in the case of an individual aid. It should moreover be noted in this connection that the representatives of the governments of the Member States observed in a resolution of 20 October 1971 (31) that
"The fact that general schemes of regional aid lack a specific sectoral nature makes it difficult to assess such schemes ...". (32)
64. The Commission observes in the decision at issue that, as a result of the average intensity of the aid granted, "the recipient undertakings gain a substantial advantage over their non-assisted competitors".
65. The intensity of the aid was such as to affect recipient undertakings' decisions on their geographical location, since the city of Hamburg bore costs which they would normally have had to bear. The budget enabling the grant of that aid amounted to the considerable sum of DM 27.3 million over the 1986-88 period.
66. As the Court emphasized in the judgment in Philip Morris, (33)
"the aid is said to have reduced the cost of converting the production facilities and has thereby given the applicant a competitive advantage over manufacturers who have completed or intend to complete at their own expense a similar increase in the production capacity of their plant". (34)
67. In the judgment in Case 259/85 France v Commission, (35) concerning aid granted by the French Government of a net grant equivalent of 5.5%, the Court held that
"the proposed aid would enable the undertakings benefiting from it to reduce their investment costs, thereby strengthening their position as against that of other undertakings competing with them in the Community". (36)
68. That condition may also be fulfilled where the aid enables undertakings situated in a Member State to maintain production, thus affecting the possibilities available to competing undertakings in other Member States for exporting their products to that State. It appears from the judgment in Case 102/87 France v Commission, cited above, (37) that
"aid to an undertaking may be such as to affect trade between the Member States and distort competition where that undertaking competes with products coming from other Member States, even if it does not itself export its products. Such a situation may exist even if there is no over-capacity in the sector at issue." (38)
69. With regard to affecting trade between Member States, I would recall that
"[W]hen 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." (39)
70. The Court reaffirmed that principle in the judgment in Belgium v Commission, (40) where it stressed that
"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". (41)
71. In the case of a programme, the Commission simply has to assess whether the programme is
"likely to benefit in particular undertakings engaged in trade between Member States". (42)
72. Owing to the imprecision of the criteria for the grant of aid, any undertaking engaged in such trade could claim the grant of aid.
73. I therefore conclude that this plea should be rejected.
D - Lack of a statement of reasons
74. As for the plea alleging lack of a statement of reasons, it is sufficient in order to reject it to observe that, in the decision at issue, the Commission listed at length the relevant economic and social data designed to
"allow the Court to review its legality and to provide the undertaking concerned with the information necessary to enable it to ascertain whether or not the decision is well founded". (43)
E - Entitlement to exemption under the provisions relating to aid schemes of minor importance
75. According to the applicant State, some of the aid granted falls within the scope of the Commission' s guidelines on aid schemes of minor importance, the most recent of which were published on 20 February 1990, (44) with the result that it should have been granted exemption.
76. Apart from the fact that notification is a condition precedent for authorization, it is expressly stated in that document that:
"In principle the Commission will not object to aid schemes of minor importance notified pursuant to Article 93(3) EEC" (45)
which meet certain criteria.
77. Accordingly, in addition to the requirement of prior notification, all the aid under the scheme must meet the criteria (size of the undertaking, intensity, etc). Likewise, the Commission continues to have a discretion.
78. Moreover, in the judgment in Case C-364/90 Italy v Commission, (46) which was given in a case in which the Member State increased the maximum intensity of the aid accepted by the Commission, on the ground that that increase was intended to benefit small and medium-sized undertakings which, under the Commission' s guidelines, are given more favourable treatment, the Court considered that:
"in any event, the interests specific to that class of undertaking entitle the Commission to be more flexible in assessing the compatibility of the aid with the Treaty, but they do not require it systematically to approve all aid schemes benefiting such undertakings". (47)
79. Consequently, that plea cannot succeed.
F - Compatibility of the programme with Article 92(3) of the Treaty
80. The Federal Republic of Germany agues that the programme is compatible with paragraph 3 of Article 92, more specifically with indent (c) thereof, in so far as it does not claim that the standard of living is abnormally low or that there is serious underemployment in Land Hamburg. Pleuger, for its part, alleges that there was an infringement of Article 92(3), without being any more specific. (48)
81. It appears from the judgment in Case 248/84 Germany v Commission, cited above, that
"When a programme of regional aid falls under Article 92(1) of the Treaty it must be determined to what extent it may fall within one of the exceptions in Article 92(3)(a) and (c). In that respect the use of the words 'abnormally' and 'serious' in the exemption contained in Article 92(3)(a) shows that it concerns only areas where the economic situation is extremely unfavourable in relation to the Community as a whole. The exemption in Article 92(3)(c), on the other hand, is wider in scope inasmuch as it permits the development of certain areas without being restricted by the economic conditions laid down in Article 92(3)(a), provided such aid 'does not adversely affect trading conditions to an extent contrary to the common interest' . That provision gives the Commission power to authorize aid intended to further the economic development of areas of a Member State which are disadvantaged in relation to the national average." (49)
82. As I wrote in my Opinion in that case, (50) the Commission' s method of comparing per capita gross domestic product ("per capita GDP") and unemployment in the areas concerned with the Community averages and then ranking regional aid needs in accordance with the disparities between the various areas of the country on the basis of economic indicators, taking care to approach the matter from a Community standpoint, seems to me consistent with the objective pursued.
83. It is precisely this method which was followed.
84. As regards its actual application, the Commission found, in accordance with the method for the application of Article 92(3)(a), (51) that the city of Hamburg could not qualify for an exemption under that provision, in so far as per capita GDP expressed in purchase power parities was not less than 75% of the Community average. The per capita GDP index was in fact 187.7 (the Community average being, of course, 100).
85. The method used by the Commission enables regions eligible under that provision to be determined using those criteria, which excludes the city of Hamburg, where there is neither serious underemployment nor an abnormally low standard of living compared with the Community average. Since these are objective criteria, the Commission' s task may not be pointlessly encumbered by requiring it to set out that evaluation where, as in this case, it refers expressly to its communication in the Official Journal, which moreover is amended in the light of changes in socio-economic data.
86. As regards the exemption set out in Article 92(3)(c), the method used by the Commission (52) consists of assessing, on the basis of various parameters, the socio-economic situation of a region in a national and a Community context in order to compare the levels of a given region in relation to the national average.
87. It appears from the first stage of analysis that both per capita GDP in 1983-87 (162.9) and the rate of unemployment (126.5) could not justify the grant of aid by the city of Hamburg (national average: 100).
88. In the second stage of analysis, the Commission examined the development of the rate of unemployment and GDP and supplemented its analysis by taking other socio-economic factors into account. It appears from this study that whilst the rate of unemployment deteriorated sharply in 1988 to exceed the reference value (143) by two points, on the other hand per capita GDP steadily increased in 1983-87 to 165 (national average: 100), which testifies to Hamburg' s economic prosperity.
89. However, the applicant State contests the basis for calculating the rate of unemployment. During the administrative procedure the Commission informed it by letter dated 6 January 1988 (53) that
"According to the Commission' s calculations, the federal average of the regional rates in 1986 was 10.0% and the employment situation in Hamburg was assessed on the basis of that figure. If the calculations of the Federal Government result in another figure, the Commission asks it to notify it."
There was no response to that request.
90. That evaluation was refined by socio-economic analysis of the Hamburg employment area, which showed GDP was above the national average and unemployment running below the average. (54)
91. As for the justification of the exception on the ground of an alleged deterioration in the social situation in the shipbuilding industry, the Commission observed that since 1988 the employment situation in that sector had improved after a period of dismissals between 1984 and 1986, in which 1 100 jobs had been lost.
92. In so far as the Commission did not exceed the discretionary power acknowledged by the Court (55) and it gave satisfactory reasons for its decision, it should be considered that it
"[has not] found any grounds establishing that the proposed aid" - here the aid programme - "meets the conditions laid down to enforce derogations pursuant to Article 92(3) of the EEC Treaty". (56)
93. Consequently, that plea must also be rejected.
G - Infringement of the prohibition of discrimination
94. As regards the alleged infringement of the prohibition of discrimination, I would first dismiss the argument to the effect that the contested aid is justified by the keen competition faced by Hamburg as a result of its proximity to the bordering regions of the former German Democratic Republic.
95. As the Commission points out in the contested decision, those regions benefit by the provisions of Article 92(2)(c), which legal basis excludes the city of Hamburg because it does not belong to the "Zonenrandgebiet".
96. To grant it an exemption under that head would entail in the first place the annulment of the advantages gained by an undertaking because it set up in a less-privileged area, with the result that any regional policy on its behalf would be destined to fail, and secondly pressure for outbidding the aid on offer, with the regions near Hamburg endeavouring to offset the differential. As a result, there would be a danger of a trend, which would be difficult to control, for subsidies undermining the drive to bring up to par the Community' s less-privileged regions to proliferate in all the Member States of the Community, particularly in those with a high budgetary capacity.
97. As for the second argument to the effect that the Commission authorized the grant of aid by the Kingdom of Denmark to Soenderjylland, a region near the "Zonenrandgebiet", even though its decision (57) was not based on socio-economic grounds, it is sufficient to observe that even if such an irregularity were proven it could not validate another aid granted contrary to the rules of the Treaty.
98. According, inter alia, to the Court' s judgment in Williams v Court of Auditors, (58)
"The principle of equality of treatment ... must be reconciled with the principle of legality, according to which no person may rely, in support of his claim, on an unlawful act committed in favour of another ...". (59)
99. In this context, the principle of legality requires that a decision on compatibility may be based only on objective "economic and social" (60) factors. Since such factors were correctly taken into account and analysed by the Commission in the contested decision, the principle of legality was complied with and hence the Federal Republic of Germany cannot effectively claim that there has been an infringement of the prohibition of discrimination.
II - Audi alteram partem
100. Since it has been found that the programme existed and was incompatible with the rules of the Treaty, it is necessary to assess the pleas based on the principle audi alteram partem specifically raised by Pleuger.
A - Infringement of Article 93(2) of the Treaty
101. It is alleged that the Commission disregarded Article 93(2) of the Treaty in so far as it did not give notice to Pleuger by name, as an undertaking in receipt of aid, to submit observations before it adopted the contested decision.
102. I would cite in this connection the judgment in Intermills v Commission: (61)
"Article 93(2) does not require individual notice to be given to particular persons. Its sole purpose is to oblige the Commission to take steps to ensure that all persons who may be concerned are notified and given an opportunity of putting forward their arguments. Under those circumstances, the publication of a notice in the Official Journal is an appropriate means of informing all the parties concerned that a procedure has been initiated". (62)
103. In view of the specific nature of regional aids, which concern disparate sectors of activity and recipients, a notice in the Official Journal of the European Communities is bound to be less precise than in the case of sectoral aids.
104. Besides, by indicating that the contested aid was granted by the city of Hamburg to undertakings in the Hamburg area essentially in the form of an investment subsidy, the publication in the Official Journal of the European Communities of the Commission' s notice of 8 December 1989 enabled Pleuger and the other undertakings concerned - which, I would call to mind, were not at that date all known to the Commission - to be sufficiently informed and to submit their observations.
105. Consequently, this plea must be rejected.
B - The requirement to state reasons for the repayment of the aid granted
106. The applicant undertaking considers that the decision at issue does not satisfy the requirement to provide a statement of reasons (63) as set out in the Court' s case-law, in particular in two judgments delivered on 21 March 1991, (64) and hence that it should be annulled.
107. That plea, which was raised in the rejoinder, is unquestionably a new plea. It cannot, however, be declared inadmissible, since Article 42(2) of the Rules of Procedure allows a new plea in law to be introduced in the course of proceedings if it is based on matters of law or of fact which come to light in the course of the procedure. In the event, those two judgments were not delivered until after the action was brought.
108. Before giving my views on any effect of those two judgments with regard to the obligation to state reasons for the repayment of aid incompatible with the rules of the Treaty, it is appropriate to recall the Court' s case-law in this sphere.
109. In the judgment in Case 70/72 Commission v Germany, (65) the Court held that the Commission was empowered to require the repayment of aid granted in breach of the Treaty even though Article 93(2) refers only to the abolition and alteration of such aid. That approach was based on the effectiveness of that provision.
110. In the Tubemeuse judgment, (66) the Court rejected the Belgian Government' s argument by which it claimed that the decision recovering the aid was disproportionate on the ground that
"recovery of unlawful aid is the logical consequence of the finding that it is unlawful". (67)
111. It might be inferred from the case-law that, where the decision that the aid was incompatible with the rules of the Treaty was reasoned, no additional formality was required with regard to the recovery of aid granted in breach of the Treaty rules. This was, moreover, the argument put forward by Mr Advocate General Van Gerven in his Opinion in the two cases cited above. (68)
112. However, the Court did not adopt an identical position in the two judgments and hence a distinction must be drawn between them.
113. In the judgment concerning aid to Alfa Romeo, (69) the Italian Republic based its challenge on the claim that the statement of reasons was defective with regard to the determination of the undertaking which had to repay the aid and on the Commission' s duty to show that if the aid were not recovered market stability would be undermined. The Court held, with regard to the first complaint, that the Commission had given a proper statement of reasons for its decision as regards the determination of the recipient of the aid and, with regard to the second complaint, the Court referred to its case-law according to which
"recovery of unlawful aid is the logical consequence of the finding that it is unlawful". (70)
114. In the judgment on the aid granted to ENI-Lanerossi, (71) the complaint was that insufficient reasons were stated for the recovery of the aid, the Commission having justified it on the grounds of "the seriousness and scale of the breach".
115. In the first place, the Court recalled the case-law on statements of reasons for measures having adverse effect, according to which
"the statement of reasons on which a decision is based must enable the Court to review the legality of the decision and provide the party concerned with details sufficient to allow that party to ascertain whether or not the decision is well founded". (72)
116. The Court concluded as follows:
"the recovery of the total amount of aid was ordered because of 'the seriousness and scale of the breach' . Although such a justification, viewed in isolation, may seem excessively laconic, it should be borne in mind that it is put forward in the context of a decision which explains in detail the impact of the aid in question on a sector in crisis ...". (73)
117. Does it have to be inferred that that judgment alters the Court' s case-law?
118. I have no reason to think that that is the case. Where the Commission finds that aid granted was unlawful, that indication should suffice as grounds for the requirement to recover the aid.
119. Where aid was granted in breach of the Treaty in that it was not the subject of prior notification, it would be excessive to require the Commission to give a statement of reasons other than the mere finding that the aid granted was incompatible with the Treaty. Such a requirement would undeniably put at an advantage States which, contrary to Article 93(3) of the Treaty, do not give prior notification of aid. Since that provision prohibits the Member State concerned from disbursing the proposed aid until the Commission has given its final decision, there is no requirement to state reasons for the repayment of the aid where the Commission finds it to be incompatible since, ex hypothesi, it has not yet been granted.
120. Since the Commission has found that the aid programme is incompatible with the Treaty and stated reasons for that incompatibility, the Commission' s decision appears to me to comply with the requirements of Article 190 of the Treaty.
121. In the event, however, that the Court should consider that such a formula does not sufficiently safeguard the rights of interested parties, it should be observed that when the procedure was initiated the Commission informed the German Government that any aid granted before the procedure was terminated might result in a demand for the aid to be repaid, and this was moreover reiterated in the Commission' s notice in the Official Journal of the European Communities.
122. In addition, the decision that the aid should be repaid is properly justified having regard to the decision that the aid was incompatible with the Treaty, which evidenced the risk that a harmonious regional policy would be impaired on account of the impact and magnitude of the amounts of aid granted.
123. I therefore propose that the applications should be dismissed and that the Court should order the costs to be paid by the Federal Republic of Germany in Case C-324/90 and by Pleuger Worthington GmbH in Case C-342/90.
(*) Original language: French.
(1) - Commission Decision 91/389/EEC on aid granted by the city of Hamburg (OJ 1991 L 215, p. 1).
(2) - Report for the Hearing: I. Facts.
(3) - Letter of 3 May 1989, ref. SG(89) D/5660. Annex 7 to the defence in Case C-324/90.
(4) - Notice C-11/89 (OJ 1989 C 309, p. 3).
(5) - Judgment in Case C-301/87 France v Commission [1990] ECR I-307, paragraphs 9 to 24.
(6) - Section 43 of the application.
(7) - Judgment in Case 290/83 Commission v France [1985] ECR 439, paragraph 13.
(8) - Judgment in Case 61/79 Amministrazione delle Finanze dello Stato v Denkavit Italiana [1980] ECR 1205.
(9) - Paragraph 31.
(10) - Application of the German Government, pp. 4 and 18 to 43.
(11) - Judgment in Case 234/84 Belgium v Commission [1986] ECR 2263, paragraph 16.
(12) - Third paragraph of Annex 7 to the defence in Case C-324/90.
(13) - OJ 1989 C 309, p. 3.
(14) - Section 2.
(15) - Annex 2 to the Commission' s defence in Case C-324/90.
(16) - Judgment in Case C-301/87, cited above.
(17) - Paragraph 19.
(18) - Letter of 3 May 1989, cited above.
(19) - Fourth paragraph, my emphasis.
(20) - Paragraph 22. See also the judgment in Case C-142/97 Commission v Belgium [1990] ECR I-959.
(21) - Judgment in Case 234/84, cited above.
(22) - Judgment in Case 248/84 Germany v Commission [1987] ECR 4013.
(23) - Paragraph 18.
(24) - Moreover, the fact that all the contracts contain a clause to the effect that the amount of the subsidy should be repaid in the event that the headquarters or activities of the undertaking are transferred or that staff is cut by more than 20% for reasons other than cyclical ones, supports the Commission' s arguments. Such a condition shows that the aid is granted for individual reasons and not on account of a higher general interest.
(25) - Decision 91/389/EEC, cited above, p. 5.
(26) - Paragraph 18.
(27) - Cited above.
(28) - Paragraph 33.
(29) - Judgment in Case 102/87 France v Commission [1988] ECR 4067.
(30) - Paragraph 6.
(31) - First resolution of the representatives of the Governments of the Member States meeting in the Council on regional aid schemes (OJ 1971 C 111, p. 1).
(32) - Section 6.
(33) - Judgment in Case 730/79 Philip Morris Holland BV v Commission [1980] ECR 2671.
(34) - Paragraph 11.
(35) - Judgment in Case 259/85 France v Commission [1987] ECR 4393.
(36) - Paragraph 24.
(37) - See also the judgment in Case C-303/88 Italy v Commission [1991] ECR I-1433, paragraph 27.
(38) - Paragraph 19.
(39) - Judgment in Case 730/79 Philip Morris v Commission, cited above, paragraph 11.
(40) - Judgment in Case C-142/87, cited above.
(41) - Paragraph 43.
(42) - Judgment in Case 248/84 Germany v Commission, cited above, paragraph 18.
(43) - Judgment in Joined Cases 296 and 318/82 Kingdom of the Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985] ECR 809, paragraph 19.
(44) - Notification of an aid scheme of minor importance (OJ 1990 C 40, p. 2).
(45) - Second paragraph, my emphasis.
(46) - Judgment in Case C-364/90 Italy v Commission [1993] ECR I-2097.
(47) - Paragraph 24.
(48) - Even where a region is regarded as less-favoured, it should be borne in mind, as J. Biancarelli writes, that ... if the region in question is recognized as being less-favoured, this does not entail any entitlement to the grant of aid. In addition, any aid must be of a structuring nature, which is tantamount to ruling out rescue aid (Actualité juridique, Droit administratif, 20 June 1993, No 6, p. 412 et seq., especially at p. 425.
(49) - Paragraph 19.
(50) - At the end of the fourth paragraph of section 10.
(51) - Commission communication on the method for the application of Article 92(3)(a) and (c) to regional aid, OJ 1988 C 212, p. 2.
(52) - Cited above, footnote 51.
(53) - Annex 9 to the defence in Case C-324/90.
(54) - Decision at issue, p. 7.
(55) - Judgment in Case 730/79 Philip Morris, cited above, paragraph 24.
(56) - Ibid., paragraph 18.
(57) - Commission Decision 87/573/EEC of 15 July 1987 on the redesignation of assisted areas in Denmark on 1 January 1987, OJ 1987 L 347, p. 64.
(58) - Judgment in Case 134/84 Williams v Court of Auditors [1985] ECR 2225. See also to this effect the judgment in Case 246/83 De Angelis v Commission [1985] ECR 1253, paragraph 17.
(59) - Paragraph 14.
(60) - Judgment in Case 730/79 Philip Morris, cited above, paragraph 24.
(61) - Judgment in Case 323/82 Intermills v Commission [1984] ECR 3809.
(62) - Paragraph 17.
(63) - As regards the repayment of the aid unlawfully granted, the decision in question is reasoned as follows: Since the aid in question granted by the city of Hamburg does not have any justification, it must, in so far as it has already been disbursed, be recovered from the recipient undertakings. As the demand for repayment is a logical consequence of the illegality and incompatibility of an aid and as especially the obligation provided for in Article 93(3) of the Treaty to notify a new aid is of a fundamental nature, any undertaking benefiting from State aids must be aware that prior notification of such an aid must be given to the Commission and that in the absence of notification repayment of the aid may be required. (second paragraph of section IV, 14).
(64) - Judgments in Case C-303/88 Italy v Commission [1991] ECR I-1433 (aid granted to ENI-Lanerossi) and in Case C-305/89 Italy v Commission [1991] ECR I-1603 (aid granted to Alfa Romeo).
(65) - Judgment in Case 70/72 Commission v Germany [1973] ECR 813.
(66) - Judgment in Case C-142/87 Belgium v Commission [1990] ECR I-959.
(67) - Paragraph 66.
(68) - In his Opinion in the case concerning aid granted to ENI-Lanerossi, Mr Van Gerven stated as follows: ... the Commission states in reply that it is immediately apparent from Article 93(2) of the Treaty - which provides for the abolition (or alteration) of aid - that the order for recovery does not need to be based on specific reasons. It can be inferred from the Court' s judgment in Case 70/72 that the reasons which the Commission must state in its decision relate to the incompatibility of the aid with the Treaty; if reasons are stated in that regard, the Commission can require the aid to be recovered at once. That is correct, in my view. (second paragraph of section 23). In his Opinion in the case concerning aid granted to Alfa Romeo, he stated that Recovery, the judgment in Case C-142/87 adds, is the logical consequence of a finding of invalidity, which, it may be inferred, thus requires no specific reasoning (section 21).
(69) - Judgment in Case C-305/89, cited above.
(70) - Paragraph 41.
(71) - Judgment in Case C-303/88, cited above.
(72) - Paragraph 52.
(73) - Paragraph 54.
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