C-70/72
ECLI:EU:C:1973:87
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JUDGMENT OF 12. 7. 1973 — CASE 70/72
interim measures, where necessary, Member State concerned the aspects
decisions taken under Article 93 (2) of the aid regarded as incompatible
only take full effect on condition that with the Treaty and therefore subject the Commission indicates to the to abolition or alteration.
In Case 70/72
Commission of the European Communities , represented by its Legal Adviser, Jochen Thiesing, acting as agent, with an address for service at the office
of its legal adviser Pierre Lamoureux, 4 boulevard Royal,
applicant,
v
The Federal REPUBLIC of Germany , represented by Martin Seidel, Regierungs- direktor in the Federal Ministry of Economics, acting as agent, with an address for service in Luxembourg at the Embassy of the Federal Republic of
Germany, 3 boulevard Royal,
defendant,
Application for a declaration that the Federal Republic of Germany has disregarded the Decision of the Commission of 17 February 1971 on aid
granted under Article 32 of the Law on the Adaptation and Rationalization
of the German Mining Industry and Mining Regions,
THE COURT
composed Lecourt, President, R. Monaco and P. Pescatore (Rap of: R.
porteur), (Presidents of Chambers), A. M. Donner, J. Mertens de Wilmars, H. Kutscher, C. Ó Dálaigh, M. Sørensen and A. J. Mackenzie Stuart, Judges,
Advocate-General: H. Mayras Registrar: A. Van Houtte
gives the following
COMMISSION v GERMANY
JUDGMENT
Issues of fact and of law
I —
Summary of facts construction, in the form of a deduction from income tax or corporation tax.
By letter of 15 June 1967 the This limited to investments grant was Government of the Federal Republic of made after 30 April 1967 and prior to 1 Germany notified the Commission of the January 1970 (incentive period). European Communities of a draft Law The Government of the Federal Republic on the Adaptation and Rationalization German of Germany, by Note Verbale of 16 July of the Mining Industry and 1969, informed the Commission that in Mining Regions. the course of the debate on the Tax By letter of 30 November 1967 the Modification Law of 1969 the Bundestag Commission informed the Government had on 18 June 1969 decided to extend
of the Federal Republic of Germany that by two years the period of application
it into was not opposed to the entry originally due to terminate on 31 —
force of the measures proposed with a December 1969 — of the system of
view to improving the economic incentives in the form of investment German mining grants, provided for in Article 32 structure of the regions of the
and, in arriving at this point of view, the Law of 15 May 1968. Commission had taken account of the The Commission intimated to the fact that it was necessary to maintain a Federal Government of Germany by balanced development of the different letter of 1 August 1969 that in regions of the Community. accordance with the first sentence of
On 15 May 1968 the Federal Republic of Article 93 (3) of the EEC Treaty it Germany enacted the Law, known as the should have been informed in sufficient
'Kohlegesetz', on the Adaptation and time of the alteration planned and it Rationalization of the German Mining asked to be notified of the details of and Industry and Mining Regions (Bundesge the reasons for the extension of the
setzblatt I, p. 365). period.
law On 18 June 1969, the Federal Republic This contains measures designed, enacted the Law regarding the grant of first, to adapt the production of the
for that investment subsidies, which also mining industry and the market
in amended certain provisions relative to product to the changing situation the the taxation system and the system of energy sector and, secondly, to improve the economic structure of the grants (Tax Modification Law, 1969; mining regions. Bundesgesetzblatt I, p. 1211).
last measures, Article 9 of that Law amended Article 32 In connection with these of the Law of 15 May 1968 on the paragraph 1 of Article 32 of the 'Kohlegesetz' Adaptation and Rationalization of the provides that taxpayers
in German Mining Industry and Mining who calculate their profits accordance
with the acknowledged principles of Regions, substituting, in the first sentence of the first paragraph of the latter, the business accountancy and who construct '1972' '1970' year for the year and thus or enlarge an industrial establishment in
prolonging the original incentive period a zone may obtain, on request, mining 10 % from 1 January 1970 to 1 January 1972. an investment grant representing of the expenses of purchase and By Note Verbale of 1 October 1969, in
JUDGMENT OF 12. 7. 1973 — CASE 70/72
reply to the letter from the Commission August 1970 (C 104, p. 1) invited the
of 1 August, the Federal Government respective Member States and other
had stated in particular that an interested parties to submit their
amendment of Article 32 of the comments on the extension of the period 'Kohlegesetz' had not been provided for awarding investment grants
for in the Government's proposal and authorized by Article 32 of the
that it had therefore been impossible to 'Kohlegesetz'. notify the Commission at that stage of The Federal Government delivered its the proceedings: Article 9 of the Tax Commission comments to the by Note Modification Law, 1969, had been Verbale of 5 November 1970. initiated by the Bundestag itself. Following bilateral discussions on 8 It emerges from an extract from the December 1970 the Federal Government written report of the Finance Committee laid fresh considerations before the
of Bundestag, which was appended the Commission by Note Verbale of 6 to the Note Verbale, that when the Tax January 1971. Modification Law 1969 established a By Decision of 17 February 1971, system of investment subsidies for the regarding the subsidies granted under region bordering on East Germany and Article 32 of the Law on the Adaptation other regions requiring assistance, the and Rationalization of the German Committee had considered whether the Mining Industry and Mining Regions mining regions should also be allowed to (OJ L 57, p. 19), the Commission participate in these subsidies and that required the Federal Republic to take with the exception of the mining region without delay all necessary measures to of the Saar, the Committee was of the put an end, in the mining regions of opinion that it would be sufficient to North Rhine-Westphalia, to the prolong the validity of Article 32 of the basis awarding on a non-selective of 'Kohlegesetz' by two years. investment grants provided for by the
By letter of 30 July 1970, the first paragraph of Article 32 of the Law Commission notified the Federal on the Adaption and Rationalization of
Government in particular that owing to the German Mining Industry and Mining the new circumstances in the Regions (Kohlegesetz), as amended by coal-mining sector and to the favourable Article 9 of the Law of 18 August 1969 economic progress which had been (Steueränderungsgesetz).
'Land' recorded in the under The Federal Government was notified of consideration, the non-selective award of this decision by letter of 19 February investment grants in all the mining 1971 which it received on 24 February. 'Land' regions of the of North Rhine-Westphalia longer be Following another bilateral meeting on 4 could no
the May 1971 and further correspondence considered as compatible with (letter of 18 May; Notes Verbales of 29 Common Market and in particular with June and 3 September 1971 from the Article 92 (3) of the EEC Treaty. German Government; telex message of The Commission consequently requested 14 letter October July and of 4 1971 the Federal Government to ensure that from the Commission), the Commission from 1 December 1970 no new decisions informed the Federal Government by to award investment grants were taken letter of 16 December 1971 that the in North Rhine-Westphalia, and invited selective award of investment grants in it to submit its comments in accordance certain defined of North clearly zones with Article 93 (2). Rhine-Westphalia could be considered as In accordance with tne first sentence or compatible with the Common Market Article 93 (2), the Commission, by letter until the expiry of the extended incentive of 30 July, and by communication period (31 December 1971), but it published in the Official Journal on 14 opposed the issue outside these areas by
COMMISSION v GERMANY
the Federal Delegate for the The Advocate-General presented his Coal-Mining Industry, under Article 32 opinion at the hearing on 19 June 1973. of the 'Kohlegesetz', of certificates for investments undertaken or for applica
tions made after 20 August 1970 (6 days after the publication of the Commis III — Submissions of the
sion's communication in the Official parties
Journal).
On basis information The Commission submits that the Court the of supplied to should it by the Federal Government, in
particular, a telex message of 22 — declare that the Federal Republic of
December 1971 and letters of 16 Germany has not complied with the February and 22 June 1972, the Decision of the Commission of 17 Commission, by letter of 1 August 1972, February 1971 (71/121/EEC) in that, took formal note of the fact that the after 24 February 1971, it granted German authorities had continued, after subsidies under Article 32 of the Law 24 February 1971, to grant aid covering on the Adaption and Rationalization a total investment of DM 133 million, of the German Mining Industry and
for applications lodged after 20 August Mining Regions (Kohlegesetz) for 1970 in respect of investments in zones investments made after 1 January where these aids were no longer 1970 in North Rhine-Westphalia justified. outside the following towns and
The Commission consequently informed districts: (Landkreis), Bek Aachen kum (Landkreis), Bottrop, Castrop- the Federal Government that it had Rauxel, Dortmund, Ennepe-Ruhr decided to refer the matter to the Court (Landkreis), Erkelenz (Landkreis), of Justice in accordance with the second subparagraph of Article 93 (2), in order Essen, Gladbeck, Herbede, Herne, Lüdinghausen (Landkreis), Lünen, that these infringements might be placed Moers (Landkreis), Oberhausen, on record and that the Federal Republic be Recklinghausen (Landkreis), Teck of Germany might caused to
withdraw the certificates for the lenburg (Landkreis), Unna (Land payment of aid which had been kreis), Wanne-Eickel, Wattenscheid; improperly granted. — order the Federal Republic or
Germany to require repayment of
grants awarded after 24 February 1971, unless the investments which
benefited therefrom were commenced II — Procedure prior to 21 August 1970 or unless the application for the issue of the The application of the Commission was referred to in the second certificate lodged at the Court Registry on 2 paragraph of Article 32 of the October 1972. ('Kohlegesetz') was made prior to 21 The written procedure followed the August 1970;
normal course. — order the defendant to pay the costs.
Upon hearing the report of the The Government of the Federal Republic Judge-Rapporteur and the opinion of the Court of Germany submits that the
Advocate-General, the Court decided to should
open the oral procedure without any — reject the action as inadmissible or, preparatory inquiry. as alternatively, unfounded; The oral observations of the parties were — order the applicant to pay the costs
made at the hearing on 22 May 1973. of the action.
JUDGMENT OF 12. 7. 1973 — CASE 70/72
delay' IV — Pleas and arguments 'without the measures which it of the parties calls upon the latter to take, it had fixed a period of time. As it is generally The pleas and arguments of the parties understood, this concept involves a
in determinate units of may be summarized as follows: period expressed
time; and it is also to be understood in A this sense in Community law under —
Admissibility Regulation No 1182/71 of the Council The Government of the Federal Republic of 3 June 1971 determining the rules
of Germany disputes the admissibility of applicable to periods, dates and time
the action as a whole on various limits (OJ L 124, p. 1). grounds: It was necessary in this case to fix a
(a) The Decision of the Commission of period of time: the Decision of the
17 February 1971 was expressly founded Commission does not establish the
on Article 93 (2) of the EEC Treaty; criteria on which the grant of the aid
owing to the circumstances in which it referred to in Article 32 of the 'Kohlegesetz' was taken, it cannot be considered as could lawfully have
anything but a decision within the continued and almost a year would have meaning of that provision; the elapsed before the criteria defining the Commission itself did not, at the time, geographic scope of the Decision could
consider the extension of the system of have been defined and laid down by the aid provided for by Article 32 of the Commission in agreement with the 'Kohlegesetz' as the alteration of an Government of the Federal Republic; it already existing measure relating to aid would, moreover, have been impossible within the meaning of Article 93 (3). to modify the detailed practical
There was therefore no doubt that this procedures for aid and to adapt them to was a case for the application of Article the Decision of the Commission at short
93 (2). notice.
(b) A decision taken by the The passage of time could not affect the Commission under Article 93 (2) of right to invoke this point. It is of little importance that the decision in dispute necessity involves the fixing of a period
of time within which the Member State has become final; it is not a question of concerned shall abolish or alter the aid disputing its validity, but of establishing which is considered to be incompatible whether the period of time which is with the Common Market; the text itself categorically by Article 93 (2) required
that this period of time as a condition of bringing the action has clearly stipulates shall be determined, and it is only such indeed been prescribed and whether it
determination which makes possible the has expired. Furthermore, whilst the
Council for Federal Republic was disposed to appeal to the provided by the third subparagraph of Article 93 (2); comply with the Decision as it
it accounts also for the right conferred interpreted it, it did not thereby intend to its to the on the Commission, in derogation from renounce right plead
Article 169 Court direct absence of a period of time. to refer to the
the shortcomings of a Member State: the The text of the enacting formula and the requirement for an action based on legal basis quoted for the Decision of the Article 93 (2) is that the State has failed Commission do not make it possible to to act the period time within of construe the Decision as having been prescribed. taken in application of Article 93 (3). On The Decision of 17 February 1971 lays any interpretation the objection based on down no period of time; the Article 93 (2) is equally valid if the
Commission could not claim that, by Decision must be regarded as having ordering the Federal Republic to enact been taken on the basis.of "Article 93.(2)
COMMISSION v GERMANY
in conjunction with Article 93 (3). In fact Member State; such a finding is reserved where the obligation not to put a to the Court of Justice. Moreover Article proposed measure into effect, prescribed 93 (2) of the Treaty does not give the by the latter provision, is not observed, Commission powers to prohibit the
the Commission may either call upon the granting of aid, and thus to take a
Member State in question, by way of decision equivalent to an injunction, Decision, to abolish totally or partially until the expiry of the investigation in future the aid introduced without the procedure.
prior authorization of the Commission, The head (d) second of the or action may be taken on grounds of an is submissions of the applicant equally infringement of the Treaty. In the former inadmissible in that it is designed to case, the Commission would take its cause the Federal Republic to be ordered decision in pursuance of the power to carry out specific domestic measures, conferred upon it under Article 93 (1); which would be contrary to Article 171 with regard to the implementation of the EEC Treaty. In terms of that procedure, Article 93 (3) refers on this provision the Court of Justice must limit point to Article 93 (2); in so far as it itself to finding that a Member State has concerns the decision to be taken by the failed to fulfil an obligation under the Commission, this reference also Treaty; it is for that State to draw its categorically requires that a period of conclusions from the judgment and to time be established. In the second case enact necessary measures to make the the Commission acts within the good the failure; in particular the Court framework of its general task of may not order the Federal Republic to supervising compliance by the Member repay aid the grant of which is alleged to States with their obligations, on the basis have infringed Community standards. both of Article 169 and of subsequent Article 171 is to be applied in this case: Articles; the Commission must, the second subparagraph of Article 93 therefore, comply with the requirements (2) derogates only from Articles 169 and of the preliminary procedure laid down 170. categorically by Article 169. In neither Moreover it is necessary to bear in mind case can the Commission initiate legal that if the Court were to find against the proceedings unless the Member State in Federal Republic in accordance with the question has been allowed a period of second head of the submissions, this time to eliminate the measures relating to aid which are contrary to the Treaty. would result in 18 undertakings being obliged to repay aid they had which
(c) The object of the Decision of 17 received. Thus the judgment of the
February 1971, as it is now interpreted Court would affect the interests of third
to the by the Commission, is to declare that persons, who were not parties
there has been an alteration of aid present case and who could not even
carried out in contravention of the intervene. An action between a
Treaty and in the meantime to prohibit Community institution and a Member State the of the Federal Republic of Germany from on content and scope an
investment the obligation of that State towards the making any grants; Decision therefore involves noting an Community must affect only the two
parties to the action. infringement of the Treaty and a
prohibition limited in duration for the The Commission disputes the relevance
time being of incentive measures. of these inadmissibility which pleas of
Article the Government of the Federal Republic According to 169 of the EEC Treaty, the Commission does not have of Germany has put forward. the power to establish by way of (a) The prolongation by two years of decision that an infringement of the the incentive period initially provided for 'Kohlegesetz' Treaty has been committed by a by Article 32 of the
JUDGMENT OF 12. 7. 1973 — CASE 70/72
undoubtedly constitutes an alteration of which had been contemplated by aid within the meaning of Article 93 (3). initiating proceedings in accordance with With regard to that alteration, which Article 93 (2). was effected in August 1969, the
Commission initiated the procedure (b) In fact, in the view of the provided for by Article 93 (2), not Commission, it is impossible to claim delay' that the Decision of 17 February 1971 'without in accordance with the does not include any period of time. The second sentence of Article 93 (3) but first subparagraph of Article 93 (2) does only in July 1970. This delay is to be not contain any rule as to the length of explained by the fact that the the period of time which the Commission did not possess precise Commission is to allow the State information which could justify the concerned to abolish or alter aid which extension of the incentive period; since it is incompatible with the Common had been unable to obtain this
information from the Federal Republic Market; in particular, it does not oblige the Commission to fix a period of Germany, the Commission decided to expressed in determinate units of time. proceed in accordance Article 93 (2) and, The period of time must be adapted to by the Decision of 17 February 1971, to the requirements of each case. Article put a stop to the award of investment 155 of the EEC Treaty obliges the grants on a non-selective basis until it Commission to ensure that the harmful was certain that the scheme could be effects of the long-term grant of aid operated on a selective basis. The incompatible with the Common Market Decision in dispute must therefore be are kept to the minimum possible. The considered as a Decision having as its Commission is required to make the object the alteration of existing aid period of time specified in the first within the meaning of the first subparagraph of Article 93 (2) as long as subparagraph of Article 93 (2). necessary and at the same time as short
This legal classification, however, has no as possible. When it is possible for the
bearing on the admissibility of the Member State to conform with the even in the case of Decisions decision domestic action: by a administrative
which to aid already in existence, act, the Commission it relate must require that the Commission may refer the matter to comply without delay with this the Court direct in accordance with the obligation. This is what it had done in second subparagraph of Article 93 (2). It the present in which the case, is therefore irrelevant to know whether Government of the Federal Republic of
the Decision rests on Article 93 (2) alone Germany was able and was required, by both that provision and on Article or on issuing the necessary instructions to the 93 (3). Federal Delegate for the Coal-Mining
On any interpretation, in the case of an Industry, to ensure without delay that
infringement of the obligation to provide the award on a non-selective basis of
investment grants in North Rhine-West information laid down by Article 93 (3), Commission itself phalia was stopped pending the the cannot content
preparation of an taking amendment with requiring the Member State in account of the rules of the Treaty, in the question to undertake an alteration of
the illegal aid for the future. Such an light of regional criteria. interpretation would benefit the Member A longer period of time for State which failed to comply with implementing the Decision was not obligations, practising the policy of the required by reason of the fact that the fait accompli as against the state which, Member States could appeal to the
by informing the Commission a Council. The third subparagraph of
sufficient time in advance, allowed it to Article 93 (2) permits a Member State to prevent the grant or alteration of aid have the procedure initiated by the
COMMISSION v GERMANY
Commission suspended, but this does Moreover the essential precedence of
not apply in the case of a Decision Community law requires not only that
which the Commission has already taken Member States should allow their
after having given all the parties nationals to enjoy the advantages
concerned an opportunity to submit conferred upon them by such
their comments. After the Decision has Community law, but that they must also been notified the general provisions of withdraw from certain undertakings
the Treaty apply: the Member State in advantages which they have allowed
question is then only entitled to bring them in breach of Community law. The the matter before the Court of Justice in necessity for a uniform application of
accordance with Article 173. the Community rules with regard to
competition must take precedence over (c) The substance of the Decision of 17 In purely individual interests. this case
February 1971 was limited to requiring there can be no question of retroactivity that the award of investment grants be or of the infringement of rights already terminated pending a decision establish
acquired: all the undertakings concerned
ing a geographical differentiation with a were informed by the publication in the view to a selective application of the Official Journal of the Communities on scheme. The Commission was conscious 14 August 1970 of the communication of of the fact that the non-selective award Commission the that the payment on a of grants in North Rhine-Westphalia basis investment non-selective of grants distorted competition; it could have in all the mining areas of North required complete cessation of the Rhine-Westphalia could no longer be subsidy and left it to the Federal considered as compatible with the Republic to submit fresh proposals. The Common Market. purely temporary suspension of aid was
not therefore cf such a nature as to
prejudice the Federal Republic. B — Merits
(d) Since the Commission had brought First head of submissions the case directly before the Court on the basis of the second subparagraph of The Commission points out that, under Article 93 (2), there were no grounds for the terms of Article 191 of the EEC the application of Articles 169 et seq. As Treaty, decisions take effect upon their the reference of the matter to the Court notification to those to whom they are direct was intended to secure not only The Decision 17 addressed. February of the most rapid cessation of the grant of 1971 was notified on 24 February to the aid regarded by Decision as incompatible Federal Republic of Germany which with the Common Market but also the failed to comply therewith. most complete elimination of the effects
of this it would be lawful for the (a) The first Article of the Decision aid, Court to order the State in question to called upon the Federal Republic to take
take specific measures to this end. without delay all measures necessary to put an end, in the mining regions of However in this case the Commission North Rhine-Westphalia, to the does not ask that the Federal Republic non-selective payment of investment of Germany be ordered to carry out for first grants provided by the specific domestic measures; the method of Article 32 paragraph of the of carrying out its obligation, that is to 'Kohlegesetz'. The meaning of that
say the repayment of the aid granted in provision is perfectly clear, above all breach of the Decision of the when taken in conjunction with Section Commission, is left to its discretion. The V of the preamble to the Decision and
Commission has therefore restricted with the accompanying letter of 19 itself to the limits implied by Article 171. February 1971: the Commission required
JUDGMENT OF 12. 7. 1973 — CASE 70/72
the Federal Republic of Germany to of 17 February 1971. Moreover, these
suspend without delay the payment of statements are not at all convincing.
grants pending the alteration of the aid
scheme on the basis of a geographical (c) The Federal Republic of Germany differentiation in order to prevent the could and should have complied with
continued distortion of competition the Commission's decision by instructing within a part of the Common Market. the Federal Delegate, without delay, not to issue additional certificates until The federal Government failed to issue further notice. No amendment of the instructions in this sense to the Federal law would have been necessary for this; Delegate for the Coal-Mining Industry; this view is confirmed by the fact that the latter therefore continued to issue after the receipt of the letter from the certificates after 24 February 1971 and Commission of 16 December 1971, the did not conform to the geographical Federal Delegate, according to the criteria which the Commission had laid Federal Government, applied to the issue down until after the letter of 16 of certificates the regional criteria December 1971 had been received. specified in that letter. As soon as it was (b) On a technical level, the notified of the Decision of 17 February Commission submits, it is of little 1971, the Federal Government could
importance whether the grant of aid is therefore have issued instructions to the
effected by an alteration of fiscal Federal Delegate to suspend the issue of
indebtedness in the field of income tax certificates pending a decision with
or in that of corporation tax. The regard to the regions which could still
decisive factor is the issue by the Federal benefit from the measures concerning Delegate of the certificate mentioned in aid.
the second paragraph of Article 32 of the (d) The Commission submits that the 'Kohlegesetz'. The revenue authorities Federal Republic of Germany therefore automatically deduct the amount of the failed to comply with the Decision of the investment grant, namely 10 % of the Commission of 17 February 1971; it expenses of purchase or of construction, cannot justify this disregard of its from the tax due from the taxpayer to
whom such certificate has been granted. obligations under the Treaty by invoking the principles allegedly applicable in its In fact therefore by issuing this national legal system. The uniform certificate the Federal Delegate settles the grant of the aid. application of Community law would be compromised if the Member States were The ract that this aid is not granted in in a position to invoke such principles so the form of budgetary credits but is as to refuse to apply the decisions of the deducted from the tax due does not Community. affect the legal position with regard to The Government of the Federal Republic Articles 92 et seq. of the Treaty. Owing to the procedure adopted by Article 32 of Germany raises preliminary objections to both heads of the submissions of the of the 'Kohlegesetz', the use of the application on the ground that owing to resources of the state was hidden as it their imprecise wording they go beyond did not appear under any budgetary item but took as a the material aim of the Commission's of expenditure, effect
diminution of public revenue. The application. The payment of investment
statements of the Federal Government grants is effected by a reduction in the
on the importance of aid from the point tax due from the taxpayer; the first head of view of the national political structure of the submissions, taking 24 February are irrelevant at the present stage of the 1971 as the reference date, therefore
proceedings: it would have been possible implies that the Decision of the
to dispute the Commission's appraisal of Commission has been disregarded even
this aid in an appeal against the Decision in those cases where the certificate
COMMISSION v GERMANY
provided for in Article 32 of the not be regarded as a decisive criterion, 'Kohlegesetz' was issued prior to that taking account first of the structure of
date but in which the amount of the tax the aid process, and secondly of the
was only subsequently ascertained. The principle of equality of treatment. The same observation holds good for the Federal Government therefore had to
second head of the submissions. In the rely on objective criteria: the date when present case the sole point at issue is the the applications were received by the
grant of certificates after 24 February Federal Delegate and the date when the 1971. investments were put in hand. A date prior to 24 February 1971 could not, by (a) With regard to the extent and scope reason of the structure of the aid of the Decision of the Commission of 17 process, have been adhered to in this February 1971, it must be noted first connection, since it would violate the that the prohibition which the principles of legal certainty, of the Commission imposes is limited to the retention of public confidence and of granting of aid for investments begun equality of treatment, by giving after 24 February 1971 and for which an retroactive effect to the Decision in application for the issue of a certificate dispute. was made after that date; and secondly For their the part, undertakings that the prohibition must be viewed in concerned could not have given a the light of the legal concept of the issue different interpretation to the Decision of investment grants within the meaning of the Commission. The communication of the 'Kohlegesetz'. This is a published on 14 August 1970 in the complicated process comprising a Official Journal did not affect the legal programme of private investment carried position of these undertakings on the out by an undertaking and an basis domestic law; in it of particular administrative procedure of public law. decision is was not capable of destroying the An undertaking's to invest confidence which these undertakings had decisively linked with the availability of in long-term the nature of the aid. aid offered, in the public interest, by the
development programme Nothing had led them to imagine that regional of the investment aids would no longer be State, and with its permanent nature. permitted by Community law after the The issue by the Federal Delegate of the publication of the said communication. certificate provided for by Article 32 of 'Kohlegesetz'
only constitutes one of the (b) After the notification of the
factors in this process of canalizing Decision of the Commission, the Federal investments made by private undertak Government had complied with it in the
ings in the public interest. As it does not light of the interpretation which it had occur at the beginning of the process, of necessity to give it: it had no longer nor does it coincide with its end; it does adjudicated on applications made after
not indicate any precise stage in the aid 24 February 1971 or in connection with
process. The Government of the Federal investments undertaken after that date; Republic of Germany was bound to take it had not thus continued the grant of
The Federal Govern account of the complex structure of this non-selective aid.
process in ascertaining the precise extent ment could not have forseen that the
and scope of the obligation which was Commission, whilst retaining the same
imposed upon it by the Decision of the objective criteria of definition, would in Commission of 17 February 1971. its notification of 16 December 1971
In this connection it emerged clearly that take another date, namely 20 August
had 1970, as the reference date. the order to end the award of grants
no retroactive effect but related only to (c) In its implementation of the
the future, and that the issue of a Decision of the Commission the Federal certificate by the Federal Delegate could Government did not disregard either the
JUDGMENT OF 12. 7. 1973 — CASE 70/72
principle of the uniform application of be effective: it would have required
Community law nor that of its almost a year of discussions before the
precedence. This would only be the case Commission, in agreement with the
if the legal principles of equality of Federal Government, could have laid treatment and of legal certainty were not down the criteria applicable to selective
applied as scrupulously in Community aid.
law as in national law; it is clear The Government of the Federal Republic however from the decisions of the Court of Germany did not, therefore, infringe that these two principles are to be the Decision of the Commission of 17 the foundations of simply imposed considered as part of February 1971, which a
Community law. prohibition on adjudicating on
The Decision of the Commission for its investment schemes embarked upon after part does not enunciate any legal the day of notification of the
principle whose uniform application and prohibition.
precedence is assailed by the (e) The defendant further submits that Government of the Federal Republic of alternatively there are grounds for Germany: the decisions arrived at by the finding that, moreover, the decision in Commission in implementation of dispute has not been infringed if its aim Article 93 (2) of the EEC Treaty are not was to provide a legal basis for a general aimed at standardizing either the legal structure of national aid more temporary prohibition of the application or, 'Kohlegesetz' of Article 32 of the in particularly, laws affecting the national North Rhine-Westphalia. economy.
Moreover, since the Decision of the (d) In conclusion, the Government of Commission totally lacking in any was the Federal Republic of Germany retroactive effect it is impossible to find, considers that it was both able and as the first head of submissions requests, required to interpret the Decision of the Federal Republic that the Germany of Commission as meaning that the infringed Decision the by issuing prohibition in Article 1 thereof did not certificates after 24 February 1971, not apply to investment arrangements for for investments only commenced prior which were set in hand prior to 24 20 August but for to 1970, also February 1971 or in connection with investment schemes between commenced which an application for the issue of a 1 20 August 1970. A January and certificate had been made prior to that retroactive effect beyond 20 extending date. In accordance with a general August 1970 would contradict moreover
principle of law, also recognized by the argument of the Commission on the
Community law, in cases of a decision of effects of its communication of 14 thiskind, requiring an interpretation and August 1970. imposing an obligation to abstain from an act, a decision-making authority must
accept the interpretation which the
person to whom it is addressed can and Second head of submissions must give to that decision, having regard to a reasonable appraisal of the facts and The Commission stresses that the aim
taking account of the interests of the which its Decision of 17 February 1971 decision-making authority. In this had be in view cannot attained by a connection it must be recalled that in the Federal mere finding that the Republic present case the Decision in dispute of Germany has not complied with it; required an interpretation not only as to the Federal Republic must also be the objective scope of the prohibition on required to bring about the legal the allocation of grants but also as to the position which would have existed if it geographical area within which it was to had complied with the Decision without
COMMISSION v GERMANY
delay. Consequendy it should obtain Republic of Germany is not even repayment of the aid which it granted in justified by the case law of the German disregard of that Decision. It would only courts. The Commission respects the
be possible waive the enforcement of principle of the retention of public
that obligation with regard to recipients confidence: the Decision in dispute has who commenced their investments prior no retroactive effect.
to 20 August 1970 or who, prior to that The Commission takes note of the date, applied for the issue of the information made available by the certificate referred to in the second Federal Government regarding the actual paragraph of Article 32 of the amount of the aid granted after 24 'Kohlegesetz'. February 1971 but stresses that the
The method or complying with that outcome of this action does not depend obligation is left to the choice of the thereon, since the second head of the
Federal Republic of Germany; various submissions indicates neither the number solutions are possible depending on of cases nor the amount of the aid of
whether the taxpayers have or have not which repayment was demanded, and
already availed themselves of the the Federal Government does not deny certificates, issued in breach of that in a certain number of cases it Community law, to obtain a tax granted aid after 24 February 1971 for deduction. investments commenced after 20 August 1970 in regions of North Rhine-West The Federal Government could have
avoided the difficulties to be expected in phalia which no longer required aid. The its obligation if, in accordance second head of the submissions fulfilling is therefore well founded. with the Decision, it had suspended the grant of aid without delay in North The Government of the Federal Republic Rhine-Westphalia and if, further, it had of Germany claims that the second head limited the aid to investments made in of the submissions is unfounded, by the regions indicated by the reason of the legal considerations set
Commission. forth in connection with the first head. It was only in the course of the Moreover according to the defendant no discussion of 4 May 1971 that the provision of Community law establishes Commission learned that the Federal any obligation to require the Republic had purely and simply ignored reimbursement of payments which the the Decision and continued to allow the Commission considers as contrary to the issue of certificates before the Treaty. Member States are no doubt geographical differentiation, which the obliged to end a situation which is Decision indicated as necessary, had contrary to Community law but they been effected. may do so in such a manner and by such
The Commission in no way fails to means as they think fit; this obligation
recognize that respect for fundamental does not extend to requiring the
rights forms part of the common legal Member State in question to undertake a specific measure. principles which the Community institutions must safeguard; but the In fact, it would be appropriate to put
application of legal principles which are the actual extent of the alleged
recognized only in certain Member infringement of the Decision of the
States cannot be allowed to endanger the Commission of 17 February 1971 by the uniform and equal application of Federal Republic of Germany into its Community law. For the application of proper perspective: certificates for the Decision of 17 February 1971 investments undertaken after 20 August Community law alone is decisive; it 1970 were issued only for a sum of DM would be merely superfluous to note 33 million, which was the equivalent of
also that the point of view of the Federal investment grants of DM 3-3 million.
JUDGMENT OF 12. 7. 1973 — CASE 70/72
Grounds of judgment
By an application lodged at the Registry on 2 October 1972, the Commission, under Article 93 (2) of the EEC Treaty, brought an action before the Court for
a declaration:
1. that the Federal Republic of Germany has disregarded the Decision of the Commission of 17 February 1971 on aid granted under Article 32 of the
Law of 15 May 1968 on the Adaptation and Rationalization of the
German Mining Industry and Mining Regions (termed 'Kohlegesetz', Bundesgesetzblatt 1968 I, p. 365), extended by Article 9 of the Law of 18 August 1969 on the grant of investment subsidies, which also amended
certain provisions relative to the taxation system and to the system of
grants (termed 'Steueranderungsgesetz 1969', Bundesgesetzblatt 1969 I, p. 1211);
2. that the Federal Republic of Germany is obliged to require repayment
from the recipients of certain grants awarded in disregard of the Decision referred to.
The subject of the action
2 Article 32 of the Law of 15 May 1968 (Kohlegesetz) made it possible to grant, for a fixed period, aid in the form of a reduction of taxation making certain investments attractive so as to improve the economic structure of the German
regions affected by the coal crisis.
The draft of that Law was duly notified to the Commission on 15 June 1967 and the Commission stated on 30 November 1967 that it had no objection to
put forward.
3 The effects of paragraph 32 of the Law of 15 May 1968 were extended for a period of two years under Article 9 of the Law of 18 August 1969
(Steueränderungsgesetz), following an amendment proposed by a Committee of the Bundestag which was adopted by the latter on 18 June 1969 and
approved by the Bundesrat on 10 July 1969.
The Government of the Federal Republic of Germany notified the
Commission of this fact on 16 July 1969.
COMMISSION v GERMANY
While the said Government was late in fulfilling the obligation imposed on
Member States by the first sentence of Article 93 (3) to provide information, the Commission, for its part, did not exercise the powers conferred upon it by the second and third sentences of Article 93 (3) but confined itself in a
communication dated 1 August 1969 to protesting and to requesting further information.
In these circumstances, the legislation approved by the Bundestag came into force as a result of the promulgation of the Law, which took place on 18
August 1969.
By Note Verbale of 1 October 1969 the German Government supplied the
Commission with brief explanations of the circumstances in which the
amending law had been approved.
4 Only by letter of 30 July 1970 did the Commission give the German Government notice under Article 93 (2) of the Treaty, requesting it in
addition not to take any further decisions on the grant of aid in North
Rhine-Westphalia from 1 Decmeber 1970.
5 The Commission published a communication in the Official Journal of 14
August 1970 giving notice to all interested persons — other than Member
States — to submit their comments on the extension of the period for the
award of the investment grants in question.
In the view of the Commission this notification took effect, with regard to the
persons to whom it was directed, on 20 August 1970.
6 On 17 February 1971 the Commission took the Decision which it accuses the Federal Republic of Germany of disregarding; this Decision took effect on 24
February 1971, upon its notification to the German Government.
Article 1 of the Decision provides that 'the Federal Republic shall take
without delay all necessary measures to put an end, in the mining regions of
North Rhine-Westphalia, to the non-selective award of investment grants
provided for by the first paragraph of Article 32 of the Law on the
Adaptation and Rationalization of the German Mining Industry and Mining Regions (Kohlegesetz), as amended by Article 9 of the Law of 18 August 1969
(Steueränderungsgesetz)'.
JUDGMENT OF 12. 7. 1973 — CASE 70/72
7 Subsequently, the Commission commenced discussions with the German Government with a laying down the criteria for the 'selective award'
view to
of subsidies, in order to enable the defendant to comply with the obligations
arising out of the Decision of 17 February 1971. Although these discussions ended in a solution by mutual agreement with regard to the geographical field of application of the Decision, this was not the case with regard to the timing of its application by the German authorities. In implementing the Decision of 17 February 1971 the latter adopted a transitional procedure which the
Commission regards as a failure to comply with the obligations arising from the said Decision.
Admissibility
8 The Federal Republic of Germany disputes the admissibility of the action, which has been brought on the basis of the first subparagraph to Article 93 (2), on the ground that the Decision of the Commission of 17 February 1971, contrary to a formal requirement of the Treaty, does not fix a period of time for compliance, but requires the system of aid in dispute to be ended 'without delay'; and that according to the categorical requirements of Article 93 (2) the determination of such a period of time is a necessary condition precedent to the reference of the matter to the Court in accordance with the special
requirements of the provision in question.
9 In reality this plea is concerned not with the admissibility of the action but with the validity of the Decision of 17 February 1971. The plea of
inadmissibility must therefore be rejected.
10 In the second place the defendant pleads in particular the inadmissibility of the second head of the action under which the defendant is to be ordered to require from the recipients the repayment, within certain time limits, of the grants awarded after the Decision of 17 February 1971. According to the
defendant it follows from Article 171 of the Treaty that in the course of an action directed against a Member State, the Court of Justice must limit itself to finding a failure to fulfil an obligation, and has no power to order the Member State to take any specific steps, so that it is in fact the responsibility of the Member State alone to determine the necessary measures to comply with the judgment of the Court so as to eliminate the results of its failure to comply.
COMMISSION v GERMANY
By the second subparagraph of Article 93 (2) 'if the State ... does not comply with this decision within the prescribed time, the Commission.. may refer
the matter to the Court of Justice direct'.
12 The head of submissions in question requests the Court to find that the
defendant, by its failure to require the repayment by the recipients of the aid wrongly received, has not fulfilled an obligation incumbent upon it by virtue of the Decision of 17 February 1971.
13 Such a request is admissible since the Commission is competent, when it has found that aid is incompatible with the Common Market, to decide that the State concerned must abolish or alter it. To be of practical effect, this
abolition or modification may include an obligation to require repayment of
aid granted in breach of the Treaty, so that in the absence of measures for recovery, the Commission may bring the matter before the Court. Moreover an application from the Commission, within the scope of the procedure under Articles 169 to 171, for a declaration that in omitting to take specific
measures, a Member State has failed to fulfil an obligation under the Treaty, is equally admissible.
Since the aim of the Treaty is to achieve the practical elimination of
infringements and the consequences thereof, past and future, it is a matter for the Community authorities whose task it is to ensure that the requirements of the Treaty are observed to determine the extent to which the obligation of the Member State concerned may be specified in the reasoned opinions or
decisions delivered under Articles 169 and 93 (2) respectively and in
applications addressed to the Court.
This plea must therefore be rejected.
Merits
14 The infringement with which the Federal Republic of Germany is charged
consists in having continued to award, by virtue of the amending Law of 18 August 1969, investment grants in regions of North Rhine-Westphalia which
no longer qualified for the grant of aid provided for under the Law of 15 May 1968.
JUDGMENT OF 12. 7. 1973 — CASE 70/72
15 In the course of the proceedings the Commission referred to different dates on
which the prohibition on the granting of this aid was to become effective.
16 In its formal notice of 30 July 1970 addressed to the German Government, the Commission required the latter to 'ensure that new decisions on the
granting of aid in accordance with paragraph 32 of the Law relating to Coal
Mining in North Rhine-Westphalia are no longer taken after 1 Decmeber
1970'. The Commission does not however appear to have insisted that that
time limit be observed.
17 On the other hand the Commission attaches legal consequences to the
communication published in the Official Journal of 14 August 1970, in the
sense that from the date when the parties concerned were in a position to
acquaint themselves with that they could no longer rely on a communication
legally enforceable interest in the continuance of the legal provisions granting and extending the system in dispute. To ascertain the effect of the Decision of 17 February 1971 in point of time it is appropriate to consider that question as a preliminary point.
18 The communication published in the Official Journal of 14 August 1970
intimates, in the first place, that the Commission has started the procedure
provided for by the first subparagraph of Article 93 (2) of the EEC Treaty against the schema of aid in question 'as the non-selective award of such
investment grants in all the mining regions of North Rhine-Westphalia can no longer be considered as compatible with the common market'. In the second
place the communication invites all persons concerned to submit to the
Commission their comments on the extension of the period for awarding the investment grants in question.
19 In accordance with the first sentence of Article 93 (2) the sole aim of this
communication is to obtain from persons concerned all information required
for the guidance of the Commission with regard to its future action.
Taking account both of this intention and furthermore of the extremely summary nature terminology used for the description and explanation of the
of the system of aid in question, it is impossible to deduce that the effect of
that communication on the rights of individual persons would be that claimed
by the Commission. The date in question must not therefore be taken into
COMMISSION v GERMANY
consideration in ascertaining the effect of the Decision of 17 February 1971, the information contained in which thus constitutes the sole factor to be taken into account in adjudicating on the infringement alleged against the Federal Republic of Germany.
20 Under Article 93 (2) if the Commission finds that aid granted by a State is not compatible with the Common Market, it shall decide that the State concerned 'shall abolish or it. alter'
By contrast with Article 93 (3) which involves the power of the Commission to take immediate interim measures, where necessary, decisions taken under Article 93 (2) can only take full effect on condition that the Commission indicates to the Member State concerned the aspects of the aid which are
regarded as incompatible with the Treaty and therefore subject to abolition or
alteration.
21 In this connection it appears from the operative portion of the Decision of 17
February 1971 that the Commission has required the Federal Republic of 'non-selective'
Germany to take all necessary measures to end the award of
investment grants in the mining regions of North Rhine-Westphalia, without
specifying the time by which, or the criteria on the basis of which, the
defendant is to abolish or alter the aid in question.
The evidence available from the preamble to and the background of the
Decision gives grounds for finding at the most that the criteria of selection were to be of a territorial nature, in the sense that the extension of the system of aid was to benefit only certain regions which had been particularly affected
by the coalcrisis.
22 The desired clarification of the geographical scope of the Decision of 17
February 1971 was only arrived at in the course of meetings which the
Commission had with the representatives of the German Government
subsequent to the date of the Decision.
It was only in a communication of 16 December 1971 that the Commission
set out the geographical criteria for selection in the granting of aid by laying down certain rules of an economic nature which could be used to that end, and by enumerating the territorial divisions within which the continued
award of investment grants might be considered as compatible with the
Treaty.
JUDGMENT OF 12. 7. 1973 — CASE 70/72
The definitive list of these divisions — larger than that envisaged by the
communciation of 16 December 1971 —
only appears in the submissions of
the application which commenced this action.
23 It therefore appears that in the absence of sufficient details with regard to one of the essential factors in the Decision taken under Article 93 (2), the
subject-matter of the obligation imposed on the Federal Republic of Germany
remained indeterminate until, on the completion of the work carried out in
collaboration with the representatives of the German Government, the
Commission was in a position to specify to the latter, with the required
precision, the scope of the aid referred to by the Law extending that of 15 May 1968 and correspondingly, the limits within which this extension was
not applicable.
Faced with this uncertainty regarding one of the essential factors of the
prohibition declared by the Commission, the German authorities cannot be blamed for having taken the necessary steps to take account of the legitimate interests of investors operating within areas which were ultimately to be
excluded from benefiting from the aid in question.
24 The action must therefore be dismissed.
Costs
25 By Article 69 (2) of the Rules of Procedure, the unsuccessful party shall be ordered to pay the costs;
the applicant has failed in its plea.
On those grounds,
Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur;
Upon hearing the oral observations of the parties; Upon hearing the opinion of the Advocate-General;
Having regard to the Treaty establishing the European Economic Community, especially Articles 93, 169 and 171;
Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community;
Having regard to the Rules of Procedure of the Court of Justice of the
European Communities;
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THE COURT
hereby:
1. Dismisses the action;
2. Orders the applicant to pay the costs.
Lecourt Monaco Pescatore
Donner Mertens de Wilmars Kutscher
Ó Dálaigh Sørensen Mackenzie Stuart
Delivered in open court in Luxembourg on 12 July 1973.
A. Van Houtte R. Lecourt
Registrar President
OPINION OF MR ADVOCATE-GENERAL MAYRAS
DELIVERED ON 19 JUNE 1973 1
Mr President, lead to 'the institution of a system
Members of the Court, ensuring that competition in the
common market is not distorted'.
I — Introduction This principle does not only result in the prohibition of understandings, i.e. If the attainment of the Common Market between and agreements undertakings, entails in many fields the implementation concerted practices likely to prevent, of a common economic policy and for restrict or distort competition (Art. 85) this reason allows interventions by the and also of the abuse by undertakings of institutions in certain circumstances to dominant (Art. it is positions 86); control the economy, the Treaty of equally applicable to Member States. Rome, a liberal concept, relies no less on They intervene in fact for their own freedom of competition. advantage in their national economies, in The activities of the Community must, particular by granting aid to
according to Article 3 (f) of the Treaty, undertakings having regard either to
1 — Translated from the French.