Court further defines concept op "state resources".
Measures financed by both State contributions and voluntary
contributions from professionals in a sector can constitute State aid within
the meaning of Article 107(1) TFEU.
>> Between 1992 and 2002,
French organisations of fruit and vegetable producers received aid paid by an
operational fund in an amount estimated by the Commission at over €330 million.
The fund was managed by approved economic agricultural committees, which consisted,
at the regional level, of farmers’ organisations. Between 30% and 50% of the
financing of the fund came from farmers’ voluntary contributions. Farmers who
did not pay the contribution could not receive aid. The remainder of the
financing of the fund came from a public industrial and commercial institution
under the supervision of the French State, called Oniflhor.
By its decision published in the
Official Journal 22 September 2005, the Commission requested interested parties
to submit their observations on the measures at issue carried out as part of
the contingency plans. The Commission received the observations of the French
authorities by letter of 4 October 2005. In addition, it received a letter of
20 October 2005 from the Fédération de l’organisation économique fruits et
légumes (Fedecom), an interested third party, describing in particular the
composition, financing methods and role of the approved agricultural economic
committees in the award of the aid at issue, which was sent to the French
authorities on 1 December 2005.
By decision of 28 January 2009, the
Commission held that the aid in question constituted unlawful State aid – as it
had not been notified to the Commission – that was incompatible with the common
market. It therefore ordered that the aid be recovered by France, with
interest, from its beneficiaries.
France, the Fédération de
l'organisation économique fruits et légumes (Fedecom) and Producteurs de
légumes de France had brought actions seeking the annulment of that decision
before the General Court, alleging inter alia an error of law in that the
Commission categorised measures financed by voluntary contributions from the
sector concerned as State aid within the meaning of Art. 107(1) EC.
>> Admissibility
As a preliminary point, the Commission
argued that the French Republic could not challenge before the General Court
comments made by Fedecom in its observations of 20 October 2005 concerning the respective
roles of the professionals and Oniflhor in defining the amount of the sectoral
contribution and the disputed measures and in the implementation of those
measures.
The Commission submitted that those
arguments were inadmissible, since the French Republic raised no objections to
the comments made by Fedecom in its observations of 20 October 2005 during the
formal investigation procedure.
The Court however reiterated that a
Member State which had granted or sought to be allowed to grant aid under one
of the exceptions provided for in the Treaty rules had a duty to cooperate with
the Commission in the proceeding in which it took part, pursuant to which it
must in particular provided all the information necessary to enable the
Commission to verify that the conditions for the derogation sought were fulfilled
(Case C‑364/90 Italy v Commission [1993];
Joined Cases T‑132/96 and T‑143/96 Freistaat Sachsen and Others v Commission [1999]; and Case T‑25/07 Iride and Iride Energia v Commission [2009]).
The Court held that the legality of
a decision concerning State aid fell to be assessed in the light of the
information available to the Commission at the time when the decision was
adopted (Case C‑197/99 Belgium v Commission [2003].
The Court thus concluded that since
the concept of State aid must be applied to an objective situation appraised on
the date on which the Commission took its decision, it was the appraisals
carried out on that date which must be taken into account in the conduct of the
review referred to above. Thus, where there was no information to the contrary
from interested parties, the Commission was empowered to take as its basis the
factual elements it had at the time it Adopted its final decision, even if they
were incorrect, provided that the factual elements in question were the subject
of an information injunction issued by the Commission to the Member State to
provide it with the necessary information (Case T‑318/00 Freistaat Thuringen v Commission [2005]).
The Court held that in the present
case, it was clear from the contested decision that Fedecom submitted its
observations on 20 October 2005 as an interested third party, describing, inter
alia, the composition, payment methods and the role of the approved economic
agricultural committees in the allocation of the aid in question, and that
those observations were sent to the French authorities on 1 December 2005 with
the information that they had a period of one month in which to submit their
own observations. The French authorities did not challenge those observations
in their letter of 28 December 2005, by which they also gave permission for
their letters of 26 December 2002 and 22 July 2003 to be sent to Fedecom and
made a correction as regards the amount of aid paid in 2002.
The Court held that it followed that
the French Republic could not for the first time at the judicial stage
challenge the contents of factual observations made by an interested third
party during the administrative procedure, when in fact the observations had
been sent to it. The mere fact that it did not react to those facts since it
shared the conclusions reached by Fedecom was not sufficient for it to avoid
the principle of effectiveness of the administrative procedure.
>> Concept of State resources
The Court subsequently reiterated
that under Art. 87(1) EC (now Article 107(1) TFEU), 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, in so far as it affected trade between Member States, was incompatible
with the common market. For advantages to be capable of being categorised as
aid within the meaning of that Article , they must, first, be granted directly
or indirectly through State resources, and, second, be imputable to the State
(Case C‑303/88 Italy v Commission [1991];
Case C‑482/99 France v Commission [2002];
Case C-126/01 GEMO [2003]).
The Court furthermore held that it
followed from the wording of Art. 87(1) EC that only advantages granted
directly or indirectly through State resources were to be considered aid. The
distinction made in that provision between “aid granted by a Member State” and
aid granted “through State resources” did not signify that all advantages
granted by a State, whether financed through State resources or not,
constituted aid, but was intended merely to bring within that definition both
advantages which were granted directly by the State and those granted by a
public or private body designated or established by the State (Case C‑379/98 PreussenElektra [2001]).
The Court furthermore reiterated that
Article 87(1) EC covered all the financial means by which the public
authorities might actually supported undertakings, irrespective of whether or
not those means were permanent asset of the public sector. Consequently, even
though the sums involved in the measure at issue were not held permanently by
the public authorities, the fact that they remained constantly under public
control, and therefore available to the competent national authorities, was sufficient
for them to be categorised as State resources (see, to that effect, Case C‑83/98 P France v Ladbroke Racing and Commission [2000] ). Similarly, the
originally private nature of the resources did not prevent them being regarded
as State resources within the meaning of Art. 87(1) EC (see, to that effect,
Case T‑358/94 Air France v Commission
[1996]).
In accordance with the case-law, the
mere fact that a subsidy scheme benefiting certain economic operators in a
given sector was wholly or partially financed by contributions imposed by the
public authority and levied on the undertakings concerned was not sufficient to
take away from that scheme its status of aid granted by the State within the
meaning of Art. 87(1) EC ( Case 173/73 Italy v Commission [1974]).
Conversely, funds collected by a
public body by way of contributions taken only from the economic operators who
benefit from the measures in question but which had never been made available
to the national authorities and which were used to finance specific actions by
those operators alone, could not be categorise as State resources (Case C‑345/02 Pearle and Others [2004]).
Thus, the relevant criterion in
order to assess whether the resources were public, whatever their initial
origin, was that of the degree of intervention of the public authority in the
definition of the measures in question and their methods of financing.
The Court held that the mere fact
that the contributions of the economic operators concerned to the partial
financing of the measures in question were only voluntary and not obligatory
was not sufficient to call that principle into question. The degree of
intervention of the public authority as regards those contributions might be
great, even where those contributions were not obligatory.
The Court thus concluded that in
order to ascertain whether the Commission erred in law by categorising the
disputed measures as state aid within the meaning of Art. 87(1), the role of
the public authority in defining those measures and their methods of financing
must be examined.
The Court held that as regards the
assessment of the role of the public authority in the definition of the
disputed measures, it was for the General Court to make an overall assessment,
without it being possible to draw a distinction according to their method of
financing, since the public and private contributions had been put together and
mixed in an operational fund.
The Court pointed out that it was
Oniflhor which decided unilaterally on the measures to be financed by the
contingency plans and how they should be implemented and that although the
approved economic agricultural committees had the task of managing the
operational funds intended to finance those measures, they did not, however,
had any discretion in their application.
The Court argued that the definition
of the disputed measures and how they were financed was carried out by
Oniflhor, a public industrial and commercial institution under the supervision
of the State. Conversely, the beneficiaries of the measures had the power only
to participate or not in the system thus defined by Oniflhor, by agreeing or
refusing to pay the sectoral contribution which Oniflhor fixed. Accordingly, according
to the Court, the disputed measures constituted State aid within the meaning of
Art. 87(1) EC.
