Category Archives: State aid

Rules relating to Services of General Economic Interest in the postal sector : high evidential threshold for contesting actions of Member States and lack of objections raised by European Commission

Joined cases T-282/16 and T-283/16
PartiesCourtChamberJudge-RapporteurAdvocate GeneralSubject-matter
AppealInpost Paczkomaty and Inpost v European CommissionGeneral Court3rd Chamber (Extended Composition) E. Perillo/State aid – SGEI – Compensation – Universal postal service
KeywordsState aid – Postal sector – Compensation for the net cost resulting from universal service obligations – Decision declaring the aid compatible with the internal market – Action for annulment – Interest in bringing proceedings – Obligation to state reasons – Equal treatment – Proportionality – Right to property – Freedom of enterprise
SummaryThe source of this dispute is a Commission decision not to raise objections to the measure notified by Polish authorities concerning the aid granted to Poczta Polska ("PP") in the form of compensation for the net cost of fulfilling its universal postal service obligations for the period between 1 January 2013 and 31 December 2015 (Case SA.38869). The aid scheme concerned, on the one hand, a mechanism for sharing the net cost of universal service obligations and, on the other hand, a compensation fund which was partly financed by contributions from certain postal operators, a system open to Member States under the Postal Directive 97/67/EC, amended in particular by Directive 2008/6/EC (the "Postal Directive"). The Commission considered that the operating principles of the compensation fund were compatible with Article 106(2) TFEU. Two competing companies on the postal services market, which were subject to this contribution to the compensation fund, challenged the decision.

In the case at hand, the applicants' request was only considered admissible for the year in which the device was activated.

On the merits, the applicants raised seven pleas in law alleging, in substance, an infringement of Article 106(2) TFEU, in particular the Commission communication on Services of General Economic Interest (the “SGEI Framework”) and Articles 7 and 8 Postal Directive, as well as an infringement of Articles 16 and 17 Charter of Fundamental Rights and the obligation to state reasons.

By their first plea, the applicants contested the method of allocating the universal postal services to PP. The General Court (the “GC”) pointed out in this regard that neither Article 7(2) of the Postal Directive nor the SGEI Framework obliges the Member State concerned to use a public procurement procedure. This is only one option among others (para. 35). The essential condition remains that the principles of transparency, equal treatment and non-discrimination are duly respected (para. 35). In this respect, a direct and exclusive designation by legislative means is, of itself, compatible with these principles (para. 39). This is an important point for Member States contemplating an appropriate method for choosing their future universal service obligation providers. However, the GC was careful to point out in advance that the designation of PP as a universal postal service provider for a given period had already been considered during the public consultation in September 2010, which took place precisely in the context of the relevant national legislative process (para. 38). Moreover, the GC highlighted that the fact that PP's capital is wholly owned by the State has no impact on the outcome (para. 40).

The second plea concerned the transparency required by the SGEI Framework. According to the applicants, the public consultation requirements in the allocation of the universal postal service were not respected. The GC stated that the organisation of a public consultation is not compulsory if other appropriate means exist for users and service providers to make their comments known, as mentioned in point 14 of the SGEI Framework (para. 45-46). In this case, a public consultation was held (para. 47).

The central element in the Court's reasoning on this plea concerned the terms of the fund for compensating the net cost of the universal postal service obligations entrusted to PP (para. 56 et seq.). The legal problem at stake was mainly based on the contribution of the taxable companies. First, regarding the principle of non-discrimination, the GC note that the Commission could consider that Polish authorities had correctly defined taxable persons in an equivalent situation, as well as interchangeable services, and considered that express courier services did not fulfil these conditions (para. 90-97). Secondly, the applicants contested the maximum amount of the contribution and the income threshold set for being subject to it. As a preliminary remark, the Court referred to the limit of its review of proportionality in the context of SGEIs (para. 115), which is limited to verifying the necessity of the measure for the performance of the task or, conversely, its manifestly inappropriate nature. Thus, in its analysis of the proportionality of the percentage determining the maximum amount of the contribution, the GC allows some leeway. It referred in this instance to a number of economic findings made by the Commission and considered that the arguments put forward by the applicants were not sufficient to call into question the plausibility of those findings.

Thirdly, the GC discussed at length the definition of unfair financial burden (para. 147 et seq.) and the case law of the Court of Justice of the European Union (the “CJEU”) on the matter. According to the latter, "the assessment of the unfair nature of the burden associated with the provision of universal service requires a specific examination both of the net cost which provision of that service represents for each operator concerned and of all the characteristics particular to each operator, such as the quality of its equipment, its economic and financial situation and its market share" (CJEU, 6 October 2010, Commission v Belgium, C-222/08, EU:C:2010:583, para. 59 and Base and others, C-389/08, EU:C:2010:584, para. 51).

The GC concluded that, under the Postal Directive, it is for the Member States to determine what constitutes an unfair burden in the context of universal service obligations (para. 153) but that any net cost does not automatically fulfil that criterion (para. 155). In the present case, PP will only receive compensation for ex-post accounting losses resulting from the provision of universal service. This method is stricter than the SGEI Framework, which allows full compensation for the total net cost of these obligations (para. 156). Efficiency adjustments are also provided for and PP is required to submit a corrective action plan each year to eliminate or, at least, limit losses resulting from its universal service provision in order to avoid encouraging any mismanagement of the service.

The GC deals much more rapidly with the fourth, fifth and sixth pleas because of the lack of precision in the applicants' arguments.

Finally, the GC did not deal with the obligation to state reasons. It justified this approach by the fact that the applicants confused, in substance, the validity of the factual and legal elements underlying the contested decision with the insufficient statement of reasons for that act. It therefore found that the applicants’ complaints must be considered ineffective (para. 184).

At the end of its analysis, the GC dismissed the actions and confirmed the Commission's decision not to raise objections, considering that the system, although constituting State aid, is compatible with the internal market under Article 106(2) TFEU.
CommentaryFirst, this judgment is of interest in that it deals with the combined application of the horizontal SGEI Framework, which concerns the SGEIs that are potentially most restrictive of competition, particularly in view of the amount of compensation paid to their operator (more than €15 million per year), and the postal sector rules. Admittedly, its interpretation is difficult, considering the specificities of the case and what seems to constitute certain limits of the appeal lodged. However, it provides guidance on the conditions to be met by the award procedure (public consultation or other appropriate means of taking into account the interests of users and service providers, transparency, equal treatment and non-discrimination). This judgment also provides insights into the extent to which competitors of the SGEI operator can be called upon to finance the fulfilment of its public service obligations, as well as into the significant room for manoeuvre that States retain on these points.

In this respect, the judgment also reveals that competitors must, in addition to solid legal arguments, develop a well-founded and convincing economic analysis in order to have a chance of their arguments being accepted by the Commission or by the EU courts. Admittedly, the concept of unfair financial burden for a universal service operator and the criteria for determining which competitors are subject to the financing of the compensation fund require an approach that closely combines law, economics and finance. In the case at hand, it seems that the applicants were not in a position to produce arguments capable of undermining the presumption of legality enjoyed by the Commission's decision not to raise objections to the aid scheme in question.

Règles sectorielles relatives aux SIEG postaux : une solide analyse économico-juridique est nécessaire pour contester les choix de l’Etat et une décision de non objection de la Commission européenne

Affaires jointes T-282/16 et T-283/16
PartiesJuridictionFormationJuge RapporteurAvocat GénéralSujet
AppelInpost Paczkomaty et Inpost contre Commission européenneTribunal de l’Union européenne3ème Chambre élargie E. Perillo/Aides d’Etat – SIEG – Compensation Service postal universel
Mots-clésAides d’État – Secteur postal – Compensation du coût net résultant des obligations de service universel – Décision déclarant l’aide compatible avec le marché intérieur – Recours en annulation – Intérêt à agir – Obligation de motivation – Égalité de traitement – Proportionnalité – Droit de propriété – Liberté d’entreprise
RésuméÀ l’origine de ce litige se trouve une décision de la Commission de ne pas soulever d’objections à l’égard de la mesure notifiée par les autorités polonaises relative à l’aide octroyée à Poczta Polska (« PP ») sous la forme d’une compensation du coût net résultant de l’accomplissement de ses obligations de service postal universel pour la période comprise entre le 1er janvier 2013 et le 31 décembre 2015 (Affaire SA.38869). Le régime d’aide concernait, d’une part, un mécanisme de répartition du coût net des obligations de service universel, et, d’autre part, un fonds de compensation qui était financé pour partie par les contributions de certains opérateurs postaux, une formule ouverte aux États membres par la directive postale 97/67/CE, modifiée notamment par la directive 2008/6/CE (la « directive postale »). La Commission avait considéré que les principes de fonctionnement du fonds de compensation étaient compatibles avec l’article 106§2 TFUE. Deux sociétés concurrentes sur marché des services postaux, qui étaient soumises à cette contribution au fonds de compensation, ont attaqué cette décision.

En l’espèce, la demande des requérantes n’a été jugée recevable que pour l’année où le dispositif a été actionné (pt 27).

Sur le fond, les requérantes soulèvent sept moyens tirés en substance de la violation de l’article 106§2 TFUE, notamment en ce que l’encadrement SIEG et les articles 7 et 8 de la directive postale n’ont pas été respectés, ainsi que d’une violation des articles 16 et 17 de la Charte des droits fondamentaux et de l’obligation de motivation.

Aux termes de leur premier moyen, les requérantes contestent la méthode d’attribution à PP des services postaux universels. Le Tribunal rappelle que ni l’article 7§2 de la directive postale, ni l’encadrement SIEG n’obligent l’Etat membre à recourir à une procédure de passation de marché public. Il ne s’agit que d’une option parmi d’autres (pt 35). La condition essentielle demeure que « les principes de transparence, d’égalité de traitement et de non-discrimination soient dûment respectés » (pt 35). À cet égard, la désignation directe et exclusive par la voie législative est jugée ne pas violer par elle-même ces principes (pt 39). Cette mention est importante à relever pour les Etats membres qui s’interrogent sur la méthode appropriée pour choisir leurs futurs prestataires d’obligations de service universel. Toutefois, le Tribunal avait pris le soin de souligner au préalable que la désignation de PP en tant que prestataire des services postaux universels pendant une période déterminée avait déjà été envisagée lors de la consultation publique de septembre 2010, intervenue précisément dans le cadre du processus législatif national pertinent (point 38). Par ailleurs, le fait que le capital de PP soit intégralement détenu par l’Etat n’a pas d’incidence sur la solution (pt 40).

Le deuxième moyen porte sur la transparence exigée par l’encadrement SIEG. Selon les requérants, les exigences de consultation publique dans l’attribution du service postal universel n’ont pas été respectées. Le Tribunal leur oppose que l’organisation d’une consultation publique n’est pas obligatoire si d’autres moyens appropriés existent pour que les utilisateurs et prestataires de services puissent faire valoir utilement leurs observations, ainsi que cela ressort du point 14 de l’encadrement SIEG (pts 45-46). En tout état de cause, une consultation publique a eu lieu en l’espèce (point 47).

L’élément central du raisonnement du Tribunal porte sur les modalités du fonds de compensation du coût net des obligations de service postal universel confiées à PP (pts 56 et s.). Le problème juridique repose principalement sur la contribution des entreprises assujetties. Premièrement, sur le principe de non-discrimination, les juges de l’UE constatent que la Commission a pu considérer que les autorités polonaises avaient correctement défini les assujettis se trouvant dans une situation équivalente, ainsi que les services interchangeables, et estimé que les services de courrier express ne remplissent pas ces conditions (pts 90-97). Deuxièmement, les requérants contestaient le montant maximal de la contribution et le seuil de revenus fixé pour y être assujetti. A titre liminaire, le Tribunal évoque la limite de son contrôle de proportionnalité dans le contexte des SIEG (pt 115) qui se limite à vérifier la nécessité de la mesure pour l’accomplissement de la mission ou inversement son caractère manifestement inapproprié. Ainsi, dans son analyse de la proportionnalité du pourcentage déterminant le montant maximal de la contribution, le Tribunal conserve une certaine réserve. Il relève un certain nombre de constatations économiques effectuées par la Commission dont il considère que les éléments avancés par les requérants n’ont pas suffi à remettre en cause la plausibilité, après un examen circonstancié de ceux-ci. Troisièmement, le Tribunal revient longuement sur la définition à donner à la charge financière inéquitable (pts 147 et s.) et à la jurisprudence de la CJUE en la matière. Cette dernière exige de chaque Etat membre que « l’appréciation de ce caractère excessif de la charge liée à la fourniture du service universel suppose un examen particulier à la fois du coût net que représente cette fourniture pour chaque opérateur concerné et de l’ensemble des caractéristiques propres à cet opérateur, telles que le niveau de ses équipements, sa situation économique et financière ainsi que sa part de marché » (CJUE, 6 octobre 2010, Commission contre Belgique, C-222/08, EU:C:2010:583, pt 59 et Base e.a., C-389/08, EU:C:2010:584, pt 51).

Il en conclut qu’aux termes de la directive postale, il revient aux Etats membres de déterminer ce qui constitue une charge inéquitable dans le contexte des obligations de service universel (pt 153) mais que tout coût net ne remplit pas automatiquement ce critère (pt 155). En l’espèce, PP ne recevra une compensation que pour les pertes comptables ex post, résultant des prestations de service universel. Cette méthode est plus stricte que l’encadrement SIEG, qui permet une compensation totale pour l’ensemble du coût net de ces obligations (pt 156). Des ajustements d’efficacité sont également prévus et PP est tenue de présenter chaque année un plan d’actions correctives visant à éliminer ou, du moins, à limiter les pertes résultant de ses prestations de service universel afin d’éviter d’encourager toute mauvaise gestion de celui-ci.

Le Tribunal traite beaucoup plus rapidement les quatrième, cinquième et sixième moyens à cause de leur manque de précision dans l’argumentation des requérants.

Enfin, de manière originale, le Tribunal finit par la méconnaissance de l’obligation de motivation. Il justifie cette approche par le fait les « requérants confondent, en substance, le bien-fondé des éléments de fait et de droit se trouvant à la base de la décision attaquée avec le défaut ou l’insuffisance de motivation de cet acte, de sorte que de tels griefs doivent être considérés comme étant inopérants » (pt 184).

Au terme de son analyse, le Tribunal rejette les recours et confirme l’analyse de la Commission dans sa décision de ne pas soulever d’objection, considérant que le système bien qu’il constitue une aide d’Etat, est compatible sur la base de l’article 106§2 TFUE.
CommentaireL’arrêt présente en premier lieu l’intérêt de porter sur l’application combinée de l’encadrement SIEG de portée horizontale, qui concerne les SIEG potentiellement les plus attentatoires à la concurrence, compte tenu notamment du montant de la compensation versée à leur exploitant (plus de 15 millions d’euros par an) avec les règles sectorielles dans le domaine postal. Certes, son interprétation est délicate, compte tenu des spécificités de l’espèce et de ce qui semble constituer certaines limites du recours introduit. Toutefois, il fournit des enseignements sur les conditions auxquelles doit répondre la procédure d’attribution (consultation publique ou autres moyens appropriés de tenir compte des intérêts des utilisateurs et des prestataires de services, transparence, égalité de traitement et non discrimination) et sur la mesure dans laquelle des concurrents de l’exploitant du SIEG peuvent être mis à contribution pour financer l’accomplissement de ses obligations de service public, de même que sur les marges de manœuvre non négligeables que les Etats conservent sur ces points.

À cet égard, l’arrêt révèle en second lieu que les concurrents doivent, en plus d’une argumentation juridique solide, développer une analyse économique très étayée et convaincante pour avoir une chance de se voir donner raison par la Commission européenne ou par le Tribunal de l’Union européenne. Il est vrai que les concepts de charge financière inéquitable pour l’exploitant du service universel et les critères de détermination des concurrents assujettis au financement du fonds de compensation en fonction des activités poursuivies de même que du niveau des contributions nécessitent une approche combinant étroitement droit, économie et finance. Il semble que les requérants n’aient pas été en mesure de produire un tel argumentaire de nature à ébranler la présomption de légalité dont bénéficiait la décision de la Commission de ne pas soulever d’objection à l’égard du régime d’aides en cause.

Une remise en question par le Tribunal de l’Union européenne de la méthodologie de la Commission européenne et, implicitement, de son impartialité et du respect du principe de bonne administration, dans les affaires d’aides d’Etat de nature fiscale à l’occasion du dossier concernant le régime belge relatif aux bénéfices excédentaires

Affaires T-131/16 et T-263/16
PartiesJuridictionFormationJuge RapporteurAvocat GénéralSujet
AppelRoyaume de Belgique et Magnetrol International contre Commission européenneTribunal de l’Union européenne7ème Chambre élargie V. Tomljenović/Aides d’Etat – Décision fiscale anticipée – Régime d’aides
Mots-clésAides d’État – Régime d’aide mise en exécution par la Belgique – Décision déclarant le régime d’aides incompatible avec le marché intérieur et illégal et ordonnant la récupération de l’aide versée – Décision fiscale anticipée (tax ruling) – Exonération des bénéfices excédentaires – Autonomie fiscale des États membres – Notion de régime d’aides – Mesures d’application supplémentaires
RésuméSi l’on excepte le premier moyen tiré de l’atteinte à la compétence exclusive des Etats membres en matière de fiscalité directe, qui s’opposerait à un contrôle de la Commission au titre des aides d’Etat, qui a été balayé car outrancier, l’objet immédiat de l’arrêt rendu par le Tribunal de l’Union européenne (le « TUE ») le 14 février 2019 dans les affaires T-131/16 et T-263/16, opposant respectivement la Belgique et Magnetrol International à la Commission européenne était technique puisqu’il portait sur la notion de régime d’aides par opposition à celle d’aide individuelle. Toutefois, l’arrêt rendu revêt de l’importance dans l’offensive lancée par la Commission européenne contre ce qu’elle considère comme des cadeaux fiscaux de certains Etats membres aux groupes multinationaux. Au travers d’une motivation précise et fouillée, il met, en effet, en évidence certains manquements méthodologiques des services de la Commission dans ses investigations au titre des règles relatives aux aides d’Etat dans le domaine fiscal.

La Commission avait-elle pu à bon droit identifier un régime d’aides concernant l’exonération des bénéfices excédentaires en droit belge ? Les enjeux pratiques étaient substantiels. L’existence d’un régime d’aides dispensait la Commission européenne d’examiner toutes les mesures individuelles octroyées à des entreprises sur la base du supposé régime. Elle pouvait prendre une seule décision sur le régime, interdisant son maintien. C’était donc toute une législation qui cessait de s’appliquer. L’atteinte à la politique fiscale de la Belgique était bien plus substantielle et rapide, au prix d’un investissement en travail nettement moindre de la Commission européenne. Pour la même raison, une telle qualification était de nature à permettre à la Commission européenne, dès l’ouverture de la procédure formelle d’investigation, d’ordonner la suspension de l’application de la législation concernée dans son ensemble. Si, en l’espèce, elle ne l’avait pas requis expressément, la Belgique, consciente des risques encourus, avait opté pour une telle suspension.

Pour retenir la présence d’un régime d’aides et non d’un faisceau d’aides individuelles disparates, la Commission européenne n’avait pas pu identifier un acte juridique instituant un tel régime d’aides. Comme la jurisprudence l’y autorise dans un tel cas, elle avait cherché à se fonder sur un ensemble de circonstances de nature à déceler l’existence en fait d’un tel régime. A cet effet, elle avait retenu pas moins de quatre éléments juridiques, de nature différente et s’échelonnant dans le temps : une disposition légale (l’article 185, paragraphe 2, sous b), un extrait de ses travaux préparatoires (l’exposé des motifs de la loi du 21 juin 2004), une circulaire administrative (du 4 juillet 2006) et, enfin, les réponses du ministre des Finances aux questions parlementaires sur l’application de ladite disposition légale. Selon elle, ceux-ci constituaient les actes sur la base desquels l’exonération des bénéfices excédentaires est accordée.

Le TUE a toutefois mis en lumière que plusieurs des éléments essentiels du prétendu régime d’aides, dégagés par la Commission européenne, ne découlaient pas des bases du régime retenues par la Commission mais provenaient de l’examen d’un échantillon des mesures individuelles. Autrement dit, elle avait bâti, à partir de certaines mesures individuelles, un prétendu régime général qu’elle avait cherché à rattacher à des fragments juridiques de portée générale du droit fiscal belge. Bref, elle avait construit un dossier à charge de l’Etat belge. Les éléments essentiels en question prêtés au régime postulé étaient la méthode de calcul en deux étapes des bénéfices excédentaires et certaines formes d’intensification de la présence en Belgique.

Dans un ordre d’idées proche, le TUE a également relevé que la catégorie des bénéficiaires identifiée par la Commission ne correspondait pas à celle figurant dans la disposition légale retenue par elle comme l’une des bases du régime. Ceci constituait une nouvelle distorsion du cadre juridique belge par la Commission et confirmait que le rattachement du régime qu’elle prétendait avoir identifié aux bases qu’elle avait retenues était forcé.

Le TUE a également relevé que l’un des éléments présentés comme essentiels par la Commission, la méthode de calcul en deux étapes des bénéfices excédentaires, n’avait pas été systématiquement adoptée.

Par ailleurs, le TUE a souligné que l’administration fiscale belge disposait d’une marge d’appréciation substantielle pour déterminer s’il y avait lieu à ajustement des bénéfices, ce qui contredisait la thèse d’un régime général donnant lieu à de simples mesures individuelles d’application.

D’une part, l’approche était au cas par cas. L’ajustement ne nécessitait pas l’attribution des bénéfices concernés à une autre société. Contrairement au prescrit de la disposition légale, le montant à exonérer et les bénéfices excédentaires ne faisaient pas l’objet d’une définition dans les actes de base. Seuls 50 % des dossiers soumis à l’administration donnaient lieu à une décision anticipée.

D’autre part, il n’y avait pas une ligne systématique de conduite de l’administration fiscale, que la Commission, dans une attitude de repli devant le TUE, avait cherché à présenter, à titre subsidiaire, comme la base du prétendu régime général. Non seulement le Tribunal a fort logiquement écarté cette prétention, en indiquant qu’il ne pouvait pas accepter une motivation postérieure à l’adoption de la décision de la Commission, mais il s’est employé à démonter les faiblesses méthodologiques de la Commission dans l’invocation de cette prétendue ligne systématique. C’est ainsi que celle-ci avait cherché à asseoir l’existence d’une telle constance sur un échantillon couvrant un tiers des décisions individuelles de l’administration fiscale belge sans préciser le choix de cet échantillon ni les raisons pour lesquelles il avait été considéré comme représentatif de l’ensemble des décisions individuelles. Pour un autre point, elle s’était contentée de se référer à un onzième des décisions sans aucune précision sur le caractère suffisamment représentatif de l’échantillon.
A retenirLe Tribunal a mis en lumière de substantielles erreurs de la Commission européenne dans l’analyse des éléments de droit fiscal belge concernés comme constituant un régime général d’aides. Celles-ci confinent à l’arbitraire. Leur multiplication donne l’impression que, pour certains services de la Commission, la fin (lutte contre l’optimalisation fiscale et la concurrence fiscale dommageable, recherche d’une imposition plus substantielle des multinationales, harmonisation fiscale au sein de l’Union européenne) justifie les moyens (la dénaturation des faits, distorsion de la réalité). Au terme d’une démonstration magistrale, le Tribunal rappelle que l’instrumentalisation politique a des limites dans une Union de droit. Que la Commission développe des thèses juridiques nouvelles et ambitieuses est une chose, qu’elle prenne des distances avec la réalité et plie les faits à ses désirs en est une autre.

Ce manque de rigueur, cette dérive de la Commission amènent à s’interroger sur la fiabilité du traitement qu’elle a réservé à d’autres affaires d’aides d’Etat de nature fiscale, encore en cours. Les prochains arrêts du Tribunal en la matière sont attendus avec impatience.

Par ailleurs, le souci du Tribunal et le contrôle par celui-ci d’une analyse rigoureuse du droit fiscal national en cause par la Commission européenne procède peut-être d’une volonté de trouver un point d’équilibre entre, d’une part, la compétence exclusive des Etats membres en matière de fiscalité directe et, d’autre part, le fait que le droit des aides d’Etat a néanmoins vocation à s’appliquer à cette matière. Le respect par la Commission de la compétence des Etats membres à continuer à développer une politique fiscale vis-à-vis des entreprises requiert, à tout le moins, qu’elle traite le droit fiscal d’un Etat membre comme il l’est, sans a priori défavorable.

The methodology of the EU Commission and implicitly its impartiality and its good admnistration questioned by the General Court in the tax state aid investigations in the Belgian excess profit regime case

Cases T-131/16 and T-263/16
PartiesCourtChamberJudge-RapporteurAdvocate GeneralSubject-matter
AppealKingdom of Belgium and Magnetrol International v European CommissionGeneral Court7th Chamber (Extended Composition) V. Tomljenović/State aid – Aid scheme – Tax ruling
KeywordsState aid – Aid scheme implemented by Belgium – Decision declaring the aid scheme incompatible with the internal market and unlawful and ordering recovery of the aid granted – Tax ruling – Excess profit exemption – Fiscal autonomy of the Member States – Concept of an aid scheme – Further implementing measures
Significant pointsApart from the first plea alleging infringement of the exclusive competence of Member States in the field of direct taxation, which would preclude the Commission’s control of State aid, and which was dismissed by the General Court (“GC”), the object of the judgment delivered was technical. It concerned the concept of an aid scheme as opposed to that of an individual aid measure. The judgment is important with regard to the Commission's offensive against what it considers to be tax gifts granted by certain Member States to multinational groups. By means of a precise and detailed statement of reasons, it highlights certain methodological shortcomings by the Commission in its investigations in this area.

Could the Commission have correctly identified an aid scheme concerning the exemption of excess profits under Belgian law? The practical stakes were substantial because the existence of an aid scheme exempted the European Commission from examining all individual measures granted to companies on the basis of the alleged scheme. The Commission could instead take a single decision on the regime as a whole, prohibiting its continuation. Such a classification enabled the Commission to order the suspension of the legislation concerned as a whole as soon as the formal investigation procedure was opened. While the Commission had not expressly requested it in the case at hand, Belgium opted for such a suspension considering the risks at stake.

In determining the existence of an aid scheme and not of a range of individual aid measures, the Commission had been unable to identify a legal act establishing such a scheme. On the basis of established case law allowing it to do so, the Commission had sought to rely on a set of circumstances likely to demonstrate the existence of the scheme. To this end, the Commission had identified four legal elements: a legal provision (Article 185(2)(b)); an extract from its preparatory work (the explanatory memorandum of the law of 21 June 2004); an administrative circular (of 4 July 2006); and, finally, the responses of the Minister of Finance to parliamentary questions on the application of the abovementioned legal provision. In the Commission’s view, these were the acts on the basis of which the excess profits exemption was granted.

However, the GC pointed out, first, that several essential elements of the alleged aid scheme did not actually stem from the bases of the scheme identified by the Commission but were derived from the examination of a sample of individual measures. In other words, the Commission had built, on the basis of certain individual measures, an alleged general scheme which it sought to link to elements of Belgian tax law. The essential elements of the alleged scheme in question that were not present in the bases of the scheme were the two-step method of calculating excess profits and certain forms of intensification of the companies’ presence in Belgium].

In a similar vein, the GC noted that the category of beneficiaries identified by the Commission did not correspond to that contained in the legal provision considered by the Commission as one of the bases of the alleged scheme. This constituted a further distortion of the Belgian legal framework by the Commission and confirmed that the connection established between the alleged aid scheme and the elements identified as the bases of that scheme was erroneous.

The GC also considered that one of the elements presented as essential by the Commission, the two-step method of calculating surplus profits, had not been systematically adopted in the decision.

In addition, the GC pointed out that the Belgian tax administration enjoyed a substantial margin of discretion in determining whether or not a profit adjustment was necessary, which contradicted the hypothesis of a general scheme giving rise to simple individual implementing measures.

On the one hand, the approach by the Belgian taw authorities was done on a case-by-case basis. The profit adjustment did not require the allocation of the profits concerned to another company. Contrary to the requirement of the legal provision, the amount to be exempted and the excess profits were not defined in the basic acts. Only 50% of the files submitted to the administration gave rise to an advance ruling.

On the other hand, the tax administration’s systematic approach presented in the alternative by the Commission as the basis of the alleged general scheme was inexistent. Not only did the GC logically dismiss this claim, indicating that it could not accept a justification provided only subsequent to the adoption of the Commission's decision, but it also sought to demonstrate the Commission's methodological weaknesses in invoking this alleged systematic approach. In particular, the Commission had sought to establish the existence of such a consistent treatment on a sample covering one third of the Belgian tax administration's individual decisions without justifying the choice of this sample or specifying the reasons why it had been considered representative of all individual decisions. On another point, it had simply referred to one eleventh of the decisions without any clarification on the sufficiently representative nature of the sample.
NoteworthyThe GC found substantial errors on the part of the Commission in its analysis of the elements of Belgian tax law considered as constituting a general aid scheme. The assessment was regarded as arbitrary by the GC. Their multiplication gives the impression that, for the Commission, the ends (i.e. the fight against tax optimisation and harmful tax competition, increased taxation of multinationals, tax harmonisation within the European Union) justified the means (i.e. distortion of facts, distortion of reality). At the end of a masterful demonstration, the GC recalls that political instrumentalisation has limits in a Union governed by the rule of law. It is one thing for the Commission to develop new and ambitious legal arguments, but it is another to distance itself from reality and manipulate the facts in order to serve specific purposes.

The Commission's drift and lack of rigour in the decision raise questions as to the reliability of the way in which it has handled other tax-related state aid cases, which are still ongoing. The GC's forthcoming judgments in this area are eagerly awaited, therefore.

Moreover, the GC's concern and its scrutiny of the Commission’s analysis of the national tax law at stake may stem from a desire to strike a balance between, on the one hand, the exclusive competence of the Member States in the field of direct taxation and, on the other hand, the fact that State aid law is nevertheless intended to apply in this area. The Commission's respect for the competence of the Member States to continue to develop tax policies towards companies requires, at the very least, that it treats the tax law of a Member State as it is, without pre-conceived bias.

Le périmètre des services d’intérêt économique général doit être défini clairement et précisément

Affaires jointes T-202/10 RENV II and T-203/10 RENV II
PartiesJuridictionFormationJuge RapporteurAvocat GénéralSujet
AppelStichting Woonlinie e.a. contre Commission européenneTribunal de l’Union européenneHuitième Chambre élargieG. De Baere /Aides d’Etat – SIEG
Mots-clésAides d’État – Logement social – Régime d’aides en faveur des sociétés de logement social – Aides existantes – Engagements de l’État membre – Décision déclarant l’aide compatible avec le marché intérieur – Service d’intérêt économique général (SIEG) – Définition de la mission de service public
RésuméLe 15 novembre 2018, le Tribunal de l’Union européenne (le "Tribunal") a rejeté au fond un recours contre une décision de la Commission européenne relative à un régime d'aides au profit de sociétés de logement social néerlandaises.

Par une décision de 2009, partiellement modifiée en août 2010, la Commission avait accepté les propositions de mesures utiles présentées par les Pays-Bas concernant un régime de financement de logements sociaux considéré comme un régime d'aides existant. Le constat essentiel de la Commission était que la mission de service public pour laquelle une compensation avait été accordée aux sociétés de logement social n'était pas définie avec suffisamment de précision.

Stichting Woonlinie et d'autres sociétés de logement social à but non lucratif néerlandaises ont demandé l'annulation de la décision de la Commission devant le Tribunal. Ce dernier a déclaré leurs recours irrecevables (affaires T-202/10 et 203/10). Sur pourvoi, la Cour de justice de l’Union européenne (CJUE) a jugé les recours recevables et renvoyé les affaires devant le Tribunal pour qu'il statue sur le fond (affaires C-132/12 P et C-133/12 P). Le Tribunal a rejeté les recours comme étant manifestement non fondés (affaires T-202/10 RENV et T-203/10 RENV). Toutefois, ses ordonnances ont été annulées par la CJUE par arrêts du 15 mars 2017 (C-414/15 P et C-415/15 P). Celle-ci a, à nouveau, renvoyé les affaires devant le Tribunal, donnant lieu à l'arrêt en cause.

Dans son arrêt du 15 novembre 2018, le Tribunal a rejeté les recours au motif principal que la définition du service d'intérêt économique général ("SIEG") de logement social en cause était insuffisamment précise (deuxième au sixième et huitième moyens). Il a également écarté les moyens relatifs aux notions de régime d’aides et d’aides existantes (premier et septième moyens).

Le Tribunal a rappelé qu’une compensation publique pour un SIEG échappe à la qualification d’aide d’Etat moyennant le respect des quatre conditions développées par la CJUE dans son célèbre arrêt Altmark. La première de ces conditions est que l'entreprise bénéficiaire soit chargée de l’exécution d’obligations de service public clairement définies. Celle-ci doit également être remplie dans les cas où la dérogation prévue à l'article 106, paragraphe 2, du TFUE a vocation à être appliquée, c'est-à-dire lorsque certaines des autres conditions de la jurisprudence Altmark ne sont pas remplies.

Le Tribunal a également rappelé que les Etats membres jouissent d'un large pouvoir d’appréciation dans la définition de ce qu'ils considèrent comme un SIEG. Par conséquent, cette définition ne peut être remise en question par la Commission qu’en cas d’erreur manifeste. A cet égard, les Etats membres doivent démontrer que le périmètre du SIEG est nécessaire et proportionné par rapport à un besoin réel et actuel de service public. L'absence de la preuve que ces critères sont satisfaits peut constituer une erreur manifeste d'appréciation.

En l'espèce, le Tribunal a considéré que la définition du SIEG en cause était entachée d’une erreur manifeste car elle prévoyait de donner la priorité aux personnes "qui avaient des difficultés à trouver un logement adéquat", sans définir précisément le groupe cible de personnes défavorisées (deuxième moyen).

Le Tribunal a estimé que, contrairement à ce qu’alléguaient les requérants, la Commission n'avait pas exigé une définition du SIEG fondée sur une limite de revenus et qu'elle était tout à fait en droit d'exiger une définition plus précise du groupe cible que celle retenue par le droit néerlandais (quatrième et sixième moyens).

Le Tribunal a également estimé que la Commission n'avait pas commis d'erreur dans son appréciation du périmètre du SIEG. Au contraire, cette dernière avait correctement constaté que l'absence d'une délimitation précise du SIEG comportait le risque que les compensations octroyées aux sociétés de logement bénéficient également à leurs activités accessoires (rentables), qui ne seraient donc pas exercées aux conditions du marché (troisième moyen).

Le Tribunal a par ailleurs jugé que, si la Commission ne peut faire dépendre la définition du SIEG de son mode de financement, une définition claire du SIEG est néanmoins nécessaire pour garantir le respect de la condition de proportionnalité de la compensation à la mission de service public et pour éviter que les activités exercées par les sociétés de logement en dehors du SIEG ne bénéficient d’aides d'État ( risque de subventions croisées) (cinquième moyen).

En outre, le Tribunal a estimé que, contrairement aux allégations des requérants, la Commission n'avait pas imposé une liste exhaustive de bâtiments pouvant être qualifiés de "sociaux". La liste avait en réalité été établie par les autorités néerlandaises afin de répondre à la crainte, exprimée par la Commission au cours de la procédure, que l'aide accordée pour le financement du SIEG ne bénéficie à des bâtiments dans lesquels sont exercées des activités commerciales (huitième moyen).

S’agissant du premier moyen selon lequel certaines mesures auraient été considérées à tort comme faisant partie d'un régime d'aides par la Commission, alors qu'il s'agissait d'aides individuelles non prévues par un texte législatif, le Tribunal a opposé que le fait que des aides individuelles soient accordées n'exclut pas l'existence d'un régime sur le fondement duquel ces aides sont octroyées. En outre, le règlement 659/1999 ne requiert pas qu’un régime d’aides soit fondé sur une disposition législative.

Les requérantes avançaient également que la Commission avait commis une erreur en n'examinant pas l'existence d'une surcompensation dans le système initial de financement du logement social. Cependant, le Tribunal a opposé qu’un tel examen n’est pas, en soi, indispensable pour évaluer correctement, à propos d’un régime d’aides existant, des mesures utiles pour l’avenir (septième moyen).

Par conséquent, le Tribunal a rejeté les recours interjetés par les requérants.
A retenirCet arrêt est le dernier épisode en date du dossier des organismes de logement social à but non lucratif néerlandais.

Il en ressort que si la Commission n'est pas compétente pour définir un SIEG, cette tâche revenant à l'Etat membre concerné, les SIEG doivent toutefois être clairement et précisément définis.

A cet égard, il appartient à l'Etat membre de démontrer que le périmètre du SIEG est nécessaire et proportionné par rapport à un besoin de service public qui doit être réel et actuel. Une définition précise garantit l’absence de surcompensation et permet d’assurer que les activités accessoires des entreprises responsables du SIEG ne bénéficient pas d'aides d'Etat. En outre, les autorités nationales doivent fournir des informations sur tous les coûts supplémentaires encourus par les entreprises chargées des missions de service public.

Il n'appartient pas à la Commission de donner des indications ou de proposer des éléments de définition concernant le mode de détermination des bénéficiaires du SIEG. Le Tribunal a également jugé qu'il n'était pas nécessaire d'indiquer une limite de revenus. En sens inverse, réduire la valeur maximale des logements pouvant être considérés comme des logements sociaux ne permet pas d’identifier les personnes auxquelles les SIEG sont ouverts.

Enfin, une activité accessoire rentable est autorisée aux opérateurs en charge des SIEG. Dans le cas présent, par exemple, en cas de surcapacité des logements sociaux, l'opérateur pourrait louer un logement à des personnes qui n'entrent pas dans la catégorie des personnes cibles. Toutefois, l'activité accessoire ne sera pas considérée comme un service public et ne pourra pas être incluse dans le périmètre du SIEG. En outre, elle doit faire l'objet d'une comptabilité séparée afin de refléter l'absence de subventions croisées. Enfin, elle doit être menée aux conditions du marché.

The GC underlines the importance of clearly and precisely defining the scope of Services of General Economic Interest

Joined cases T-202/10 RENV II and T-203/10 RENV II
PartiesCourtChamberJudge-RapporteurAdvocate GeneralSubject-matter
AppealStichting Woonlinie and Others
European Commission
General Court8th Chamber, Extended
G. de Baere/State aid - SGEI
KeywordsState aid — Social housing – Aid schemes in favour of social housing corporations – Existing aids – Member State commitments — Decision declaring the aid compatible with the internal market — Article 17 of Regulation (EC) No 659/1999 — Service of general economic interest — Article 106(2) TFEU — Definition of the public service mission
Significant pointsOn 15 November 2018, the General Court (the “GC”) dismissed an appeal against a Commission decision on a Dutch aid scheme in favour of social housing corporations.

By decision in 2009, partially modified in August 2010, the Commission had accepted proposals for appropriate measures submitted by the Netherlands concerning a social housing financing scheme considered as an existing aid scheme by the Commission. The Commission’s main finding was that the public service mission for which compensation was granted was not defined precisely enough.

Stichting Woonlinie and other Dutch non-profit social housing corporations sought the annulment of the Commission’s decision before the GC. The latter declared their actions inadmissible (cases T-202/10 and 203/10). On appeal, the Court of Justice of the European Union (the “CJEU”) found the actions admissible and referred the cases back to the GC for judgment on the merits (cases C-132/12 P and C-133/12 P). The GC dismissed the actions as manifestly unfounded (cases T-202/10 RENV and T-203/10 RENV). However, its judgments were annulled by the CJEU by judgments of 15 March 2017 (C-414/15 P and C-415/15 P). The Court again referred the case back to the GC, giving rise to the judgment at hand.

In the judgment on 15 November 2018, the GC dismissed the actions on the main ground that the definition of the service of general economic interest (“SGEI”) for social housing at stake, which was provided for in Dutch legislation, was insufficiently precise (2nd to 6th and 8th pleas). It also dismissed the pleas relating to the concepts of aid scheme and existing aid (1st and 7th pleas).

The GC recalled that public compensation for SGEIs does not constitute State aid if four conditions are fulfilled as per the Altmark judgment. The first of these conditions is that the recipient undertaking must have public service obligations which are clearly defined. This condition must also be fulfilled in cases where the derogation provided for in Article 106(2) TFEU is to be applied, i.e. when some of the other Altmark conditions are not met.

The GC also recalled that Member States enjoy broad discretion as to the definition of what they consider to be an SGEI. Therefore, this definition can only be called into question by the Commission in the event of a manifest error. In this regard, Member States must demonstrate that the scope of the SGEI is necessary and proportionate in relation to the public service need, which must be genuine. The absence of evidence that these criteria are met may constitute a manifest error of assessment.

In the case at hand, the GC considered that the definition of the SGEI was vitiated by a manifest error because it provided that housing for rental be prioritised for people “who had difficulty in finding suitable housing", without precisely defining the target group of disadvantaged people (2nd plea).

The GC found that the Commission did not require a definition of the SGEI based on an income ceiling as alleged by the applicants and was entitled to demand a more precise definition of the target group than that provided for by Dutch legislation (4th and 6th pleas).

The Court also found that the Commission had not erred in its assessment of the scope of the SGEI. On the contrary, it had correctly noted that the absence of a precise delimitation of the SGEI entailed the risk that the compensation granted to housing companies would also benefit their ancillary (profitable) activities, which would therefore not be exercised under market conditions (3rd plea).

The Court also held that, although the Commission cannot make the definition of the SGEI dependent on its method of financing, a clear definition of the SGEI is nevertheless necessary to ensure compliance with the condition of proportionality of the compensation to the public service mission and to avoid that the activities carried out by housing companies outside the SGEI do not benefit from State aid (risk of cross-subsidies) (5th plea).

In addition, the GC found that, contrary to the applicants’ allegations, the Commission had not imposed an exhaustive list of buildings that could be qualified as "social”. The list was established by the Dutch authorities in order to address the concern, expressed during the procedure, that the aid granted for the financing of the SGEI could benefit buildings in which commercial activities were carried out (8th plea).

As regards the first plea according to which certain measures were wrongly considered by the Commission to form part of an aid scheme even though they were individual aid measures not provided for in a legislative text, the GC objected that the fact that individual aid was granted did not exclude the existence of a scheme on the basis of which such aid was granted. Moreover, Regulation 659/1999 does not require that an aid scheme be based on a legislative provision.

The applicants also argued that the Commission erred in failing to examine the existence of overcompensation in the original system of financing social housing. However, the GC objected that such an examination is not, in itself, necessary to properly assess appropriate measures for the future in respect of an existing aid scheme (7th plea).

As a result, the GC dismissed the appeals brought by the applicants.
NoteworthyThis judgment is the latest episode in the case of Dutch non-profit social housing organisations.

It follows that, although the Commission is not competent to define a SGEI since this task falls to the Member State concerned, SGEIs must nevertheless be clearly and precisely defined.

In this regard, it is for the Member State to demonstrate that the scope of the SGEI is necessary and proportionate in relation to the public service need, which has to be genuine. A precise definition ensures that there is no overcompensation and that the ancillary activities carried out by the companies in charge of the SGEI do not benefit from State aid. Moreover, national authorities must provide information on any additional costs incurred by the companies in charge of the public service missions.

It is not for the Commission to give indications or propose elements of definition concerning the method of determining the beneficiaries of the SGEI. The GC also judged that there is no requirement to indicate an income ceiling. Conversely, reducing the maximum value of housing that can be considered as social housing does not make it possible to identify the persons to whom the SGEI is opened.

Finally, an ancillary profitable activity is permitted for operators in charge of SGEIs. In this case, for example, in the event of overcapacity in housing, the operator could rent housing to people who did not fall within the category of target persons. However, the ancillary activity will not be regarded as a public service and may not be included in the scope of the SGEI. In addition, it must be subject to separate accounting to reflect the absence of cross-subsidy. Finally, the activity must be carried out under market conditions.

Services of general economic interest are only valid where the public service obligation is clearly and precisely defined

C-91/17P & C-92/17P
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Preliminary rulingCellnex Telecom SA and Telecom Castilla-La Mancha, SA v European CommissionCourt of Justice ninth ChamberK. JürimäeE. SharpstonState aid – Service of general economic interest
KeywordsAppeal - State aid - Digital Television - Deployment of terrestrial digital television in areas remote and less urbanized of the Comunidad autonomous of Castilla - La Mancha (autonomous community of Castile - La Mancha, Spain) - Grant for the digital terrestrial television platform operators - Decision declaring partially measures of aid incompatible with the internal market - Service of general economic interest (“SGEI”) - Definition
Significant pointsBy judgment on April 26, 2018, the Court of Justice put an end to proceedings concerning a measure of support for the development of digital television in a region of Spain with a low level of urbanisation. As a result of this judgment, the development in question cannot be considered a SGEI due to the lack of a clear definition of the service provided.

In 2016, the Commission considered that this measure amounted to State aid and that it was incompatible with the internal market. In its reasoning, the European Commission considered that, in the absence of both a sufficiently precise definition of terrestrial platform exploitation as a public service and an act awarding the public service contract to an operator of a designated platform, the measure in question could not fall into the ambit of Article 106(2) TFEU relating to SGEI.

An appeal against this decision was lodged before the General Court notably on the ground that the European Commission had infringed Articles 106 and 107 TFEU as well as its obligation to state reasons. The General Court rejected the appeal and upheld the European Commission’s decision, confirming notably that the definition of the SGEI by the Spanish authorities was not clear.

Considering that the Commission’s control over the way in which a Member State defines a SGEI should be limited to verifying that the Member State had not committed a manifest error, the applicants argued that the General Court was mistaken when it found that the definition of the SGEI by the Spanish authorities was not clear enough.

In its judgement, the Court of Justice first recalled that, in principle and subject to the manifest error of assessment, Member States have a wide discretion regarding the scope and organisation of the SGEI that they decide to implement in their territory.

However, the Court also recalled that the power of the Member States concerning the definition of the SGEI was not unlimited. This is because the first Altmark condition is essentially intended to determine whether, first, the recipient undertaking actually has public service obligations to discharge and, second, whether those obligations are clearly defined in national law.

The Court considered in this respect that this requirement implies meeting at least the following minimum criteria: the existence of one or more acts of public authority specifying the nature, duration and scope of the public service obligations.

In that respect, a law identifying telecommunications services, including broadcast radio and television networks as a service of general interest is too general to conclude that terrestrial network operators are responsible for the execution of public service obligations clearly defined within the meaning of the first criterion of Altmark.

In addition the Court of Justice pointed out that the definition of a SGEI can be included in an act that is different from the act by which the public authority entrusts a company with the execution of the SGEI.
NoteworthySince the definition of SGEIs forms part of the first Altmark condition, it leaves real room for its judicial review.

The judgement of the Court of Justice is in line with the judgement dated 20 December 2017 (C-66/16P to C-69/16 P) according to which the definition of a SGEI has to be clear and meet minimum listed requirements.

This judgement confirms that the review of the EU Commission and of the EU courts in SGEI matters is not limited to the mere control of manifest errors in any respect. Distinctions have to be made. For example, the requirements for a clear definition of the SGEI and its public service obligations (“PSO”) and for an entrusting act (which form parts of the first criterion) as well as the need for objective, transparent and prior parameters of the compensation (second criterion) are subject to an in-depth scrutiny. More generally, it seems to us that the trend is towards a more stringent control by the EU Commission and the EU courts of the actions of the Member States in SGEI matters, however without jeopardizing their room for political manoeuvre. The EU Commission and the EU Courts only ensure that once a Member State decides to pursue an objective of general interest by setting up a SGEI, it designs it in a correct, serious and – to some extent - efficient way. This entails that the objective of general interest as well as PSOs must be genuine, the undertaking in charge of the SGEI must be capable of fulfilling the objectives assigned (that is to say being economically viable), there must be a genuine market failure, no overcompensation can be paid, the proceeding by which the undertaking is chosen has to be carefully designed and implemented, …. Fulfilling all of these conditions requires serious and significant preparation by the Member States and the other national and subnational public bodies involved. Public authorities should therefore adequately design their SGEI taking into consideration the decision-making practice of the EU Commission and the principles laid down in the EU courts’ case law. Otherwise, the SGEI may be subject to criticism and annulment by the EU Commission and the undertakings allegedly assigned with a SGEI risk being forced to pay back all the money granted by public bodies.

Application of State aid and Competition law rules to the health sector reinforced by the General Court

PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Non-contractual liabilityDôvera zdravotná poist'ovňa et al v European CommissionGeneral CourtSecond ChamberM. J. Costeira-State aid - Health insurance bodies
KeywordsState aid — Health insurance bodies — Capital increase, debt repayment, subsidies and Risk Equalisation Scheme — Decision finding no State aid — Concept of State aid — Concept of undertaking and economic activity — Principle of solidarity — State supervision — Activity that is economic in nature — Competition on quality — Presence of operators seeking to make a profit — Pursuit, use and distribution of profits — Error of law — Error of assessment
Significant pointsThe General Court has annulled a decision of the EU Commission finding no state aid because the recipient of the measure, a Slovak health insurance body was not an undertaking.

According to the General Court, a health insurance body has to be considered an undertaking and is therefore susceptible to benefit from State aid where it offers goods and services on a market and is in competition as regards the quality and scope of services with operators seeking to make a profit and has the ability to make, use and distribute part of its profits, notwithstanding the social and solidarity nature of certain other features of the health system.

The General Court reached this conclusion after having checked first whether the health insurance body met three cumulative criteria which would mean that it should be considered as not pursuing an economic activity. These are: the existence of a social aim of a health insurance scheme, the implementation of the principle of solidarity by this scheme and the supervision by the State.

In this respect, the General Court found that the second criterion was not fulfilled.

On the one hand, health insurance companies’ ability to seek and make a profit showed that, regardless of the performance of their public health insurance task and of State supervision, they were pursuing financial gains and, consequently, their activities in the sector fell within the economic sphere. Therefore, the strict conditions framing the subsequent use and distribution of profit which may result from those activities does not call into question the economic nature of such activities.

On the other hand, the existence of a certain amount of competition as to the quality and scope of services provided by the various bodies within the Slovak compulsory health insurance scheme also had a bearing on the economic nature of the activity. Indeed, the companies could freely supplement the compulsory statutory services with related free services, such as better coverage for certain complementary and preventive treatment in the context of the basic compulsory services or an enhanced assistance service for insured persons. They compete through the ‘value for money’ over the cover they offer and, therefore, on the quality and efficiency of the purchasing process.

Second, the General Court added that, assuming that some health insurance bodies were not seeking to make a profit, they amount to undertakings all the same, provided that the offer exists in competition with that of other operators that are seeking to make a profit. Where other operators on the market in question are seeking to make a profit, the entities involved would have to be considered undertakings too ‘by contagion’.
NoteworthyThere are several lessons to be learnt from this judgment.

First, the delineation between the economic activity of health insurance and social security schemes, which do not fall within the ambit of Competition and State aid law, was once again at stake, (cf caselaw Poucet & Pistre, C-159/91; FFSA and Others, C-244/94; Cisal, C-218/00; AOK Bundesverband and Others, C-355/00; AG2R Prévoyance, C-437/09) and, In accordance with well-established case law, the General Court resorted to the body of evidence technique to reach the overall conclusion that the entity at stake behaves like an undertaking. Key elements were the commercial and managerial autonomy and the competition with profit-driven operators.

Second, after the Iris Judgment (T-137/10), where a decision of the EU Commission not to open formal proceeding against public hospitals in relation with alleged over-compensation was annulled, the General Court confirms its principle in favour of the full application of State aid law to the health sector. By contrast, the EU Commission appears more inclined to close its eyes to and ignore distortions of competition in light of social considerations.

The stringent approach of the General Court is likely based on the belief that social and solidarity goals should not be a blanket for excessive expenses, unnecessary competition distortions, hurdles to innovation and, at the end of the day, stagnation and a poor level of services. In its view, the Commission may not purely abstain from monitoring whether a public financing to health insurance bodies (like in the case at hand) or hospitals is indeed necessary, justified and limited to what is required.

Third, the judgment appears unclear, however, as to the respective weight of the criteria taken into account by the General Court and notably the one on the existence on the concerned market of profit-driven operators. It cannot be ruled out that the General Court paid attention to strengthen the reasoning of its decision to minimize the risk of appeal and possible annulment by the ECJ.

Certainly, the existence on the concerned market of profit-driven operators makes the other operators become undertakings ‘by contagion’. However, the judgment leaves unanswered the question to what extent operators are undertakings when on the contrary none of them is profit driven.

In this respect, the General Court seems to have been ill at ease in rebutting arguments raised from the AOK judgment (referred to above). According to this judgment, where bodies have a degree of freedom to compete to a certain extent in order to attract persons seeking insurance, that competition does not automatically call into question the non-economic nature of their activity, particularly where that element of competition was introduced in order to encourage the sickness funds to operate in accordance with principles of sound management. In our opinion, the General Court has overstated the scope of the AOK case law. In this case, the sickness funds were not competitors since there was a system of neutralisation and compensation between each other so that they were deprived of financial autonomy and were part of a single system of sickness funds. In addition, they did not compete with private operators. Put in other words, they did not form separate entities enjoying autonomy (one of the constituting elements of an undertaking) and there was not a market for services open to competition.

In our opinion, it would have been more appropriate for the General Court to rule that, as soon as bodies have some freedom to compete, for example as regards the offer of services and/or the quality of the services and form distinct and autonomous entities, they amount to undertakings, no matter whether they or some of them are able to seek and make a profit or not.

Fourth, on a more general level, it cannot ruled out that the rather extensive notion of undertaking developed by the General Court in this judgment could have an impact going beyond the matter of health insurance. It might be of relevance to other areas where entities are assigned tasks of general interest while providing goods or services on a market where other independent operators are active.

The Commission must explain in its State aid decisions why a sector-specific grant constitutes a selective advantage

C-70/16 P
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Non-contractual liabilityComunidad Autónoma de Galicia and Retegal SA v CommisisonCourt of Justice 4th ChamberK. JürimäeM. WatheletState aid
KeywordsAppeal — State aid — Digital television — Aid for the deployment of digital terrestrial television in remote and less urbanised areas — Subsidies granted to operators of digital terrestrial television platforms — Decision declaring the aid incompatible in part with the internal market — Concept of ‘State aid’ — Advantage — Service of general economic interest — Definition — Discretion of the Member States
Significant pointsIn order to achieve the coverage objectives set out for digital terrestrial television (DTT), the Spanish authorities made provision for the grant of public funding in order, inter alia, to support the terrestrial digitalization in less urbanised areas of Spain, known as “Area II”. After receiving a complaint from a private company in Spain, the Commission decided to open a State aid investigation into the public funding. It reached the conclusion that the measure granted to the operators of the terrestrial television platform for the deployment, maintenance and operation of the DTT network in Area II infringed Article 108(3) TFEU and was incompatible with the internal market. Therefore, the Commission ordered the recovery of the incompatible aid from the DTT operators.

The appellants brought actions for the annulment of the Commission’s decision before the General Court. The latter rejected each of their pleas and dismissed their actions.

This present judgment was one of several joined appeals brought before the Court of Justice asking to set aside the judgment of the General Court. However, only in this particular appeal, brought by the Comunidad Autonoma de Galicia and Regetal SA, did the Court of Justice annul the judgment of the General Court. The Court of Justice found that both the judgment of the General Court and the Commission’s decision did not contain an adequate statement of reasons to support the selectivity of the measure at stake (one of the necessary conditions for finding State aid). On this point, the Court of Justice first recalled that according its settled case law, the selectivity criterion requires the EU Commission to explicitly determine whether under a particular legal regime, a national measure is such as to favour “certain undertakings or the production of certain goods” over others which, in the light of the objective pursued by that measure, are in a comparable factual and legal situation.

In this respect, the Court has already held that that examination must be supported by sufficient reasoning to allow full judicial review, in particular of the question whether the situation of operators benefiting from the measure is comparable with that of operators excluded from it.

In its statement of reasons, the General Court solely indicated that the measure at stake benefited only the broadcasting sector and that, within that sector, the measure at issue concerned only the undertaking active on the terrestrial platform market. However, it did not give any indication of the reasons why undertakings active in the broadcasting sector should be regarded as being in a factual and legal situation comparable to that of undertakings active in other sectors or why undertakings using terrestrial technology should be regarded as being in factual and legal situation comparable to that of undertakings using other technologies. According to the Court, this is important because such a measure is selective only if this latter condition is met. The Court has already held that a measure which benefits only one economic sector or some of the undertakings in that sector is not necessarily selective. Therefore, according to the Court, the third ground of appeal must be upheld.
NoteworthyThe Court in this judgment has clarified the Commission’s burden of proof in establishing that a measure is selective within the meaning of Article 107 TFEU.

The reasoning of the Commission must contain sufficient information for the addressees and court to find out to what extent the undertaking active in a specific sector should be regarded as being in a factual and legal situation comparable (or not) to that of undertakings active in other sectors or why using certain technologies instead of others could place the undertakings in a different or comparable legal and factual situation.

Contrary to what the Commission argued, therefore, the Court of Justice has stated that a measure which benefits only one economic sector or some of the undertakings in that sector does not necessarily imply that it is selective. There is no automatic presumption that the selective condition is fulfilled.

Annulment of Commission’s decision finding subsidy of Deutsche Post pension scheme to be State aid

PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
AppealPollmeier Massivholz GmbH & Co. KG
Federal Republic of Germany
European Commission
General Court8th Ch.M. Wetter/State aid
KeywordsPublic measures concerning the State aid – Postal sector - Funding the wages and social rights additional costs concerning part of Deutsche Post’s workers by means of subsidies and revenues by the remuneration of services at regulated rates – Commission’s decision finding an aid to be incompatible with the internal market - Concept of advantage - Judgement ‟Combusˮ– Burden and level of proof of the existence of an economic and selective advantage - Absence of advantage
Significant pointsFollowing the privatisation of Posdienst in Germany, Deutsche Post - a public limited company - was required to maintain the employment of Postdienst postal service workers and to contribute to a pension fund for them.

By a decision of 2011 the Commission held that the public financing of pensions constituted unlawful State aid and ordered Germany to recover the corresponding amounts from Deutsche Post.

Germany brought an action before the General Court seeking the annulment of the Commission’s decision, arguing that the Commission had incorrectly classified as State aid the public co-financing of pensions.

The General Court, when analysing whether the measure involved within the meaning of Article 107(1) TFEU, conferred a selective advantage to the beneficiary, emphasised that the measure must give the recipient a “selective economic advantage over its competitors” (para. 106).

In this respect, the Court stated that the mere fact that Germany partially covered the cost of pensions for former civil servant postal workers was not sufficient in itself to show that Deutsche Post had an advantage over its private competitors (para. 142). The GC deemed it is possible that, as a result of the public co-financing of pensions, Deutsche Post continued to be at a disadvantage in relation to its competitors or it was at parity with them, without therefore enjoying any advantage (para. 143). That is because the cost covered were not costs that its competitors face.

In relation to the Commission’s reasoning, the General Court held that merely stating the existence of an advantage was not enough (para. 154 - see judgement of the GC of 16 March 2004, Danske Busvognmænd v Commission, T-157/01, “Combus”).

Moreover, the Court held that the Commission wrongly assessed the existence of a selective economic advantage when analyzing whether the aid was compatible with the internal market. The General Court confirmed that the Commission should have established instead the existence of a selective economic advantage at the prior stage of the assessment of the very existence of State aid. (para. 150)

Finally, the General Court concluded that since the Commission did not show that Deutsche Post enjoyed such an advantage when analysing the existence of State aid in its decision, the Commission committed an error of law. Thus, the Court annulled the Commission’s decision insofar as it related to the pension-related subsidies.
NoteworthyAny decision of the EU Commission not to In this judgment, the GC confirmed that in order to classify state intervention as State aid, a real economic and selective advantage for the undertaking over its competitors has to be demonstrated.

The mere existence of financial support without a potential effect on competition in the beneficiary’s market was not considered enough to constitute a selective advantage and therefore State aid. This explicit reference to a competitive advantage is demonstrative of a quite demanding approach by the GC in the definition of a selective advantage and the notion of State aid. The specific circumstance of the case may have encouraged the GC to take this line and it must be seen whether the judgement will be followed on this point in a potential appeal or other cases. However, it can already be mentioned that this judgement is in line with another recent judgement of the General Court of 11 September 2014, Greece v Commission, T-425/11 (“Greek casinos”).

There is also a useful clarification from the General Court on the conceptual aspects of State aid, since the Court confirmed that the real economic advantage for the undertaking needs to be assessed while analysing the very existence of State aid, prior to the assessment.