CJEC, March 20, 1984, No 84-82

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES,

1. By an application lodged on 9 March 1982 the Government of the Federal Republic of Germany claimed that the Court should :

(i) pursuant to the first paragraph of article 173 of the EEC treaty, declare the authorization, limited to a period of one year, given on 18 November 1981 by the Commission to the Government of the Kingdom of Belgium to implement the plan for restructuring the Belgian textile and clothing industry submitted to the Commission on 28 July 1980 to be void on the ground that it infringes the second sentence of article 93 (3) and article 92 (1) and (3) (c) of the treaty ;

(ii) in the alternative, declare, pursuant to article 175 of the treaty, that the Commission has infringed article 92 (1) and (3) and the second sentence of article 93 (3) of the treaty by failing to initiate the main review procedure referred to in article 93 (2) and by failing to adopt a formal decision declaring the Belgian plan incompatible with the Common Market.

2. By letters dated 22 July and 11 August 1980 the Belgian Government notified the Commission of the general outline of a plan for restructuring the Belgian textile and clothing industry. The Commission treated that plan as having been notified pursuant to article 93 (3) of the treaty and by a letter dated 15 September 1980 requested the Belgian Government to supply additional information, which it received only at the beginning of 1981.

3. It is apparent from the documents before the court that the preliminary examination of the plan in question gave rise to much correspondence between the Commission and the Belgian Government which led to the drafting of a new plan on 5 August 1981. By a letter of 18 November 1981, addressed to the Belgian Government, the Commission stated that it did not object to implementation of the restructuring plan for one year, subject to observance of the limits and conditions laid down by it and accepted by the Belgian Government.

4. It is not denied that the contested decision was taken after the other member states had been consulted in multilateral meetings held periodically and devoted to all the cases pending. Within that framework the German Government had requested the Commission not to authorize implementation of the plan on the ground that its sole effect would be to unload the problems of the Belgian industry onto the corresponding industry of the other member states.

The claim for a declaration that the Commission decision of 18 November 1981 is void

5. In support of its claim for a declaration that the decision is void the Government of the federal republic of Germany makes two submissions, namely that the procedural rules laid down in article 93 (2) and (3) of the treaty for the review of aids were infringed and that the Belgian restructuring plan is incompatible with the Common Market.

Infringement of the procedural rules

6. In the view of the German Government, the Commission was bound to initiate the procedure for the review of aid referred to in article 93 (2) of the treaty and could not, as it did, confine itself to the preliminary stage of review provided for in article 93 (3).

7. In support of that submission the German Government contends that the various steps in the preliminary examination conducted by the Commission and the terms of its declaration of 18 November 1981 show that it entertained doubts about the compatibility of the scheme in question with the Common Market. In disregarding the obligation laid down in such a case by the second sentence of article 93 (3) of the treaty to initiate the procedure referred to in article 93 (2) the Commission confused the object and nature of the two stages of the procedure for reviewing aid, excessively extended the period for the investigation which it could undertake in the preliminary stage and failed to fulfil its obligation under article 93 (2) to consult the other member states and the economic and social sectors concerned.

8. The Commission argues as follows : according to article 93 (3), it is necessary to initiate the main stage of the procedure only if at the end of the preliminary examination the plan notified is considered incompatible with the Common Market. However, the period within which it is required to carry out that examination begins to run only from the time when it is in a position to form a view on the plan notified, that is to say after it has obtained necessary supplementary information and established appropriate contacts with the member state concerned capable, perhaps, of leading to the preparation of an amended aid scheme. However, the aforesaid period begins to run from notification of the plan if the Commission maintains silence.

9. Article 93 (3) of the treaty 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.''

10. In the absence of the implementing regulations which article 94 of the treaty empowers the council to adopt, the court has already had occasion to explain the object and scope of article 93 (3).

11. Thus in judgments of 11 December 1973 (case 120-73, Lorenz v Germany, (1973) ecr 1471 ; case 121-73, Markmann v Germany, (1973) ecr 1495 ; case 122-73, Nordsee v Germany, (1973) ecr 1511 ; and case 141-73 Lohrey v Germany, (1973) ecr 1527) the court recognized that the preliminary stage of the procedure for reviewing aids under article 93 (3) is intended merely to allow the Commission to form a prima facie opinion on the partial or complete conformity with the treaty of the aid schemes notified to it. The purpose of that provision, which seeks to prevent the implementation of aid contrary to the treaty, requires that the prohibition laid down in that respect by the last sentence of article 93 (3) should be effective during the whole of the preliminary stage. Therefore the Commission must act with due expedition in order to take account of the interest of the member states in obtaining clarification in cases in which there may be an urgent need to take action ; otherwise, after the expiry of an appropriate period, which the court set at two months, the member state concerned may implement the measures in question after giving the Commission prior notice thereof.

12. According to those same judgments, the Commission must inform the member state concerned if, after the preliminary examination, it comes to the conclusion that the system of aid notified is compatible with the treaty. If, after notification of a positive decision by the Commission, the aid in question is implemented it becomes as an "existing aid'' and as such is subject to the constant review provided for in article 93 (1). If, on the other hand, the Commission considers that the aid is not compatible with the Common Market it must without delay initiate the procedure provided for in article 93 (2), which involves the obligation to give the parties concerned notice to submit their comments.

13. The arguments put forward in the present case by the German Government lead the court to add that one of the main characteristics distinguishing the examination under article 93 (2) from the preliminary examination under article 93 (3) resides in the fact that the Commission is under no obligation at the preliminary stage to give notice to the parties concerned to submit their comments. However, such a procedure, which guarantees the other member states and the sectors concerned an opportunity to make their views known and allows the Commission to be fully informed of all the facts of the case before taking its decision, is essential whenever the Commission has serious difficulties in determining whether a plan to grant aid is compatible with the Common Market. It follows that the Commission may restrict itself to the preliminary examination under article 93 (3) when taking a decision in favour of a plan to grant aid only if it is convinced after the preliminary examination that the plan is compatible with the treaty. If, on the other hand, the initial examination leads the Commission to the opposite conclusion or if it does not enable it to overcome all the difficulties involved in determining whether the plan is compatible with the Common Market, the Commission is under a duty to obtain all the requisite opinions and for that purpose to initiate the procedure provided for in article 93 (2).

14. The application of those principles to the facts of the present case leads to the conclusion that, in the first place, the Commission was not able to accept the Belgian plan as notified to it and was led to enter into extensive bilateral negotiations with the Belgian Government aimed at making substantial amendments to the original plan in order to make it compatible with the Common Market. Thus the Belgian Government agreed inter alia to amend all the rules governing the financing of its plan, not to allow the beneficiaries of the plan to receive any other form of aid, to exclude certain branches of the Belgian textile and clothing industry from its scope and to give prior notice to the Commission of any measures of aid contemplated in favour of undertakings belonging to certain other branches, a list of which was drawn up by common agreement.

15. In the second place, it must be pointed out that by reason of those very negotiations 16 months elapsed between notification of the plan and the favourable decision of the Commission ; that well exceeds the period normally required for a preliminary examination under article 93 (3).

16. Finally, it must be observed that although the Commission ultimately agreed to recognize the amended Belgian plan as compatible with the Common Market, subject to compliance with the conditions laid down, it did not consider that all the difficulties raised by the case had been resolved. In the contested decision of 18 November 1981 the Commission stated that despite the important amendments made to the original plan it'' remains very concerned about the effects which application of the plan may have on competition within the community'' and therefore restricted the duration of its application to a single year.

17. The various factors referred to above lead to the conclusion that the Commission encountered serious difficulties in considering whether the plan for restructuring the Belgian textile and clothing industry notified to it on 28 July and 11 August 1980 was compatible with the treaty. The Commission was therefore under an obligation to initiate the consultation procedure provided for in article 93 (2) before taking its decision.

18. Although it is true that the Commission kept the other member states informed through multilateral meetings of the negotiations with the Belgian Government, it is clear from the argument before the court that those consultations did not offer those concerned or the Commission itself the same guarantees and advantages which the formal consultations provided for in article 93 (2) offer.

19. In view of the foregoing it must be recognized that the Commission' s decision of 18 November 1981 infringed an essential procedural requirement and must be declared void on that ground without its being necessary to consider the other submission pleaded in the application.

The alternative claim for a declaration that the Commission wrongfully failed to act

20. It must be observed that the alternative claim was made in view of the possibility that the court might declare the contested decision of 18 November 1981 void for infringement of procedural rules without ruling on the submission that the Belgian restructuring plan is incompatible with the Common Market. Since that is precisely what has happened it is necessary to give a ruling on that claim in spite of the declaration that the contested decision is void.

21. The Commission considers that the claim is inadmissible since the conditions laid down by article 175 of the treaty are not satisfied.

22. The German Government points out that at a meeting on 4 December 1981 between the German federal minister for the economy and the member of the Commission responsible for competition matters it informed the latter that it expected the Belgian plan for restructuring to be declared incompatible with the Common Market ; it also contends that the letter of 7 January 1982 with which the Commission forwarded to the other member states a copy of the letter sent on 18 November 1981 to the Belgian Government cannot be regarded as a definition of its position within the meaning of article 175 of the treaty.

23. The second paragraph of article 175 provides that an action for failure to act "shall be admissible only if the institution concerned has first been called upon to act". Although it is apparent from the documents before the court that the German Government expressed the opinion that the Belgian plan was incompatible with the Common Market, it did not expressly call upon the Commission to act. The first condition required by article 175 is therefore not satisfied.

24. Accordingly, the alternative claim for a declaration that the Commission wrongfully failed to act is inadmissible and must be dismissed.

Costs

25. Pursuant to article 69 (2) of the rules of procedure, the unsuccessful party is to be ordered to pay the costs.

26. Since the defendant has been unsuccessful it must be ordered to pay the costs.

On those grounds,

The court

Hereby :

1. Declares void the Commission decision of 18 November 1981 ;

2. Dismisses the remaining claims in the action brought by the Government of the Federal Republic of Germany ;

3. Orders the Commission to pay the costs.