State aid – Agreement between Hungary and the oil and gas company MOL relating to mining fees in connection with the extraction of hydrocarbons

Judgment

C-15/14  04/06/2015

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Reference for a preliminary ruling

 European Commission V MOL Magyar Olaj-és Gázipari Nyrt Court of Justice First Chamber F. Biltgen N. Wahl  State Aid

Key-words

 State aid – Agreement between Hungary and the oil and gas company MOL relating to mining fees in connection with the extraction of hydrocarbons – Subsequent amendment to the statutory rules increasing the rates of the fees – increase in fees is not applied to MOL – Decision declaring the aid incompatible – Selective nature

Summary

 The Court of Justice (CoJ) confirms the judgment of the General Court by ruling that the agreement between the Hungarian State and the oil company MOL does not constitute State aid. The combination of that agreement (signed in December 2005) and the increase in the rate of mining fees resulting from the amendment of the Mining Act (amended in 2007, with effect from 8 January 2008) did not confer a selective advantage on MOL.

By a decision of June 2010,[1] the Commission considered that the combination of the 2005 agreement (fixing the rate of the mining fee with respect to MOL for the following 15 years) and the increase of the mining fee (not applied to MOL due to the agreement) resulting from the 2007 amendment of the Mining Act had the effect of favouring MOL over its competitors. Considering the two events as part of the same measure, the Commission considered this measure constituting unlawful State aid. By its judgment of 12 November 2013,[2] the General Court annulled the Commission’s decision on the ground that there were no elements which proved that MOL had benefited from a favourable treatment compared to its competitors regarding the payment of the mining fees (§10-42).According to the CoJ the requirement of selectivity under Article 107(1) TFEU must be distinguished from the detection of an economic advantage, at least when a general scheme of aid is at stake (§59-64).Subsequent, the CoJ holds that the mere fact that the Hungarian authorities enjoy limited discretion, defined by law, to determine the rate of the extension fee is not sufficient to establish that certain undertakings might gain a selective advantage therefrom. The given margin allows the fixing of an additional charge imposed on economic operators in order to take account of the imperatives arising from the principle of equal treatment, and can therefore be distinguished from cases in which the exercise of such discretion is connected with the grant of an advantage in favour of a specific economic operator (§65).Likewise, the fact that the rates set by the 2005 agreement were the result of negotiation between MOL and the Hungarian authorities did not suffice to confer on that agreement a selective character. The authorities exercised their discretion to set the rate of the mining fee objectively, without discrimination and in compliance with the legal framework governing the conclusion of agreements extending mining rights which does not present any element of selectivity and, therefore, they did not favour MOL over its competitors (§66-71).

Although is not inconceivable that several consecutive measures of State intervention should have, for the purposes of Article 107(1) TFEU, to be regarded as a single intervention, there are no such links between the 2005 agreement and the 2007 amendment of the Mining Act. The increase in the level of the mining fees, resulting from the amendment of the Mining Act, occurred in a context of an increase in international crude oil prices. The Commission did not argue that the 2005 agreement had been concluded in anticipation of such an increase (§88-102).

Important to notice is the fact that external conditions to an agreement change in such a way that the operator in question is in an advantageous position vis-à-vis other operators, that have not concluded a similar agreement, is not a sufficient to conclude that the agreement and the subsequent modification of the external conditions, taken together, can be regarded as constituting State aid. Unless in the situation where the State acts in such a way as to protect one or more operators already present on the market, by concluding with them an agreement granting them fee rates guaranteed for the entire duration of that agreement, while having the intention at that time of subsequently exercising its regulatory power, by increasing the fee rate so that other market operators are placed at a disadvantage, be they operators already present on the market on the date on which that agreement was concluded or new operators.

In addition is the fact that only one operator concluded an agreement of that type is not sufficient to establish the selective nature of the agreement, since the criteria for concluding such an agreement are objective and applicable to any potentially interested operator, and the absence of other agreements may result from, inter alia, lack of interest on the part of any other operator (§66 and 91).

[1] Commission Decision 2011/88/EU of 9 June 2010 on State aid C 1/09 (ex NN 69/08) granted by Hungary to MOL Nyrt.

[2] T-499/10, MOL Magyar Olaj- és Gázipari Nyrt. v Commission, 12 november 2013.

Noteworthy

 This Judgment of the CoJ provides indirectly (by confirming the GC’s statements) valuable insights on the notion of selectivity in state aid matters. Notably, in line with the Autogrill and Santander case law of the GC (and, currently challenged by the EU Commission before the CoJ), a general measure which does not exclude categories of undertakings on the basis of their specific features does not constitute state aid. The very fact that not all undertakings susceptible to benefit from this measure have not done the necessary steps to enjoy it, actually does not alter such conclusion.