C-171/83

APPLICATION, at the present stage of the proceedings, for the adoption of interim measures under Article 186 of the EEC Treaty, to restrain the implementation by the French Republic of aid to the textile and clothing industry,

THE COURT ,

composed of J. Mertens de Wilmars, President, P. Pescatore, A. O'Keeffe and U. Everling (Presidents of Chambers), Lord Mackenzie Stuart, G. Bosco, T. Koopmans, O . Due and Y. Galmot, Judges,

Advocate General: G. F. Mancini Registrar: P. Heim

makes the following

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1. On 19 February 1982, the French 3. The Commission, considering that Government notified to the Commission, such an arrangement constituted a pursuant to Article 93 (3) of the EEC system of aid which was incompatible Treaty, a draft order setting up a system with the common market for the of aids in favour of the textile and purposes of Article 92 of the Treaty, clothing industry, in which the State was took a decision on 12 January 1983, to take over a portion of the social under the first subparagraph of Article security contributions due from 93 (2) of the Treaty, calling upon the employers in that industry, such aid French Republic to abolish the system of representing up to 12% of the total aid within one month from the date remuneration serving as a basis for the of notification of that decision. The calculation of such contributions. That decision was notified on 21 January system of aid was established by Order 1983. No 82-204 of 1 March 1982, and the arrangements for its implementation, which were announced by the French Government at the same time as the notification of the draft order, were notified by the Commission on 16 April 4. On 23 February 1983, the French 1982 and.brought into force on the same Government sent a communiqué to the day by Decree No 82-340. Commission, stating that the contract- procedure guaranteeing employment and investment would be re-implemented, though degressively, for a second and final year. The Commission took the view that the issue of the communiqué was tantamount to a refusal on the part of the government to comply with its 2. Under Article 5 of the aforesaid decision, and, by application lodged at Order No 82-204, the taking over is the Court Registry on 30 March 1983, conditional on the conclusion between brought an action pursuant to the second the State and the employer for a subparagraph of Article 93 (2) of the duration of 12 months of a contract in Treaty. That action is the subject of Case which are set forth in particular the 52/83. commitments undertaken by the employer concerning the preservation or creation of employment and the carrying-out of investment programmes. Under the terms of the article, no 5. By a telex message of 5 May 1983, contract may be concluded later than the French Government transmitted to 31 December 1982, but contracts the Commission a draft decree intended concluded prior to that date may, if appropriate, be renewed, following to define the conditions governing amendment, for a fresh period of 12 renewal of the contracts concluded months. between the State and the employers. The Commission sent to the French

Government an acknowledgment of 82-204 of 1 March 1982 on the taking receipt of the draft in question and over by the State of certain social informed it that the two-month period security contributions in the textile and which it claimed, on the basis of the clothing industry, the French Govern­ case-law of the Court, to have at its ment brought into force the provisions disposal for forming an initial opinion on previously notified. The Commission whether or not the draft was compatible thereupon decided to commence with the common market, started to run proceedings against the French from 6 May 1983. After examining the Government under Article 169 of the relevant draft decree, the Commission Treaty, and it accordingly gave it notice, came to the conclusion that, apart from by a letter of 16 June 1983, to submit certain amendments, the machinery for its comments within 15 days of receipt the alleviation of social contributions, of the letter. Having received no reply, which would have been created by the the Commission delivered a reasoned implementation of the new decree, was opinion pursuant to the first paragraph still basically analogous to that resulting of Article 169, and communicated that from the implementation of the system opinion to the French Republic by a established in 1982, and that the letter of 12 July 1983, calling upon the proposed amendments to the previous latter to comply with the opinion within decree were not such as to satisfy the 10 days. The opinion failed to elicit a fundamental objections which had led reply and the Commission then brought the Commission, in its above-mentioned the matter before the Court by an decision of 12 January 1983, to the application lodged at the Court Registry conclusion that the system in favour of on 4 August 1983. In that application, the textile and clothing industry for the which is the subject of Case 171/83, the alleviation of social contributions was Commission claims that the Court incompatible with the common market should declare that the French Republic, for the purposes of Article 92 of the by bringing into force, by a decree of Treaty and should consequently be 7 June 1983 published in the Journal abolished. Officiel de la République Française [Official Journal of the French Republic] No 131 of 8 June 1983 under No 83-458, the measures granting aid to the textile and clothing industries, notified to the Commission on 5 May 1983, has failed to fulfil its obligations under 6. The Commission therefore decided Article 93 (3) of the EEC Treaty. on 7 June 1983 to initiate in respect of the draft decree the procedure laid down by Article 93 (2), and to that end it gave the French Government formal notice to submit its comments within one month. The decision was notified to the French 8. At the same time as submitting the Republic by a letter of 15 June 1983. above application, the Commission lodged an application for the adoption of interim measures under Article 186 of the EEC Treaty and Article 83 of the Rules of Procedure of the Court of Justice. As regards the subject of the 7. However, by Decree No 83-458 of interim measures, the Commission stated 7 June 1983 on the renewal of the that it was requesting the Court to contracts provided for by Order No require the French Republic:

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3 In its application the Commission points out that, according to the case-law of the Court, it enjoys a period of two months from the notification of the draft aid programme, within which to form an initial opinion on the compatibility of the draft programme with the Treaty and, if necessary, to initiate the procedure provided for in Article 93 (2). The Commission recalls that, in this case, it had sent an acknowledgment of receipt of the notification to the French Government, stating that the period in question started to run from 6 May 1983. However, the French Government implemented the measures planned by the decree published on 8 June 1983; hence, with effect from that date, it had been granting, in connection with the renewed contracts, aid which was illegal under Community law.

4 The French Government maintains that the two-month period cited by the Commission serves merely as a guideline. In this case it was essential, in the interests of the recipient undertakings and for the sake of the coherence of the aid scheme as a whole, that an extension should be effected, offering as it did a solution whereby continuity would be restricted to a minimum. In the circumstances, and regard being had to the fact that the Commission had been acquainted with the general structure of the relevant aid scheme since the publication of the order of 1 March 1982 establishing the scheme for the first year, the Commission needed less than a month to deliver its opinion on the contested decree. The French Government was therefore quite justified in implementing the decree when, a month later, the Commission had still not taken action under Article 93 (2) of the Treaty.

io In order to make the above-mentioned prohibition effective, Article 93 lays on the Commission a specific duty of supervision and, on the Member States, clear-cut obligations designed to facilitate the task of the Commission and to avoid the latter's being confronted with a fait accompli.

n As far as plans to grant or alter aid are concerned, Article 93 (3) states that the Commission is to be informed in sufficient time to enable it to submit its comments and further requires the Commission, if it considers that the plan notified is not compatible with the common market, to initiate without delay the procedure provided for in paragraph (2), which permits each party to state its case; lastly, paragraph (3) unequivocally prohibits any Member State from putting its proposed measures into effect until the procedure has resulted in a final decision.

i2 As the Court has stressed, inter alia in its order of 21 May 1977 (Cases 31/77 R and 53/77 R Commission v United Kingdom [1977] ECR 921), the final sentence of Article 93 is the means of safeguarding the machinery for review laid down by that article which, in turn, is essential for protecting the

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proper functioning of the common market. It follows, as the Court further held in the above-mentioned judgment, that, even if the Member State takes the view that the planned aid is compatible with the common market, that fact cannot entitle it to defy the clear provisions of Article 93.

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Commission establish a prima facie case for granting the measures sought, as is required by Article 83 of the Rules of Procedure.

17 It is appropriate to consider next whether the Commission has also been successful in demonstrating the urgency of the matter, that is to say, the need to order the measures requested, in order to prevent serious and irreparable harm due to the continuation of the disputed practices from occurring whilst the main proceedings are pending.

is In that connection, the Commission emphasizes that throughout the Community the textile and clothing industries are experiencing difficulties and competition between Member States is intense. Undertakings of both those industries in the other Member States which do not benefit from aid provisions comparable to the French measures are liable to encounter, on their domestic markets, competition which is distorted by those measures, and there is a danger that trade within the Community may be seriously affected. Moreover, it is impossible to rule out the threat of an exaggerated response from the other Member States in which a considerable sector of the economy is in danger of being disturbed by the French measures.

22 In order to demonstrate that the measures at issue constitute such a risk it is sufficient to observe both the size of the aid granted, which may amount to 12% of the total remuneration on the basis of which the social contributions payable by the employer in question are calculated, and the fact that the commitments entered into by the undertakings relate not only to the temporary maintenance of employment but also to investment and hence to irrevocable measures having long-term effects such as to make the establishment of a Community policy still more difficult.

23 The existence of the risk is not , at all events, belied by the statistics put forward by the French Government. As the Commission has rightly remarked, the period prescribed for the conclusion of contracts under the system at issue indicates that the effects of that system are felt after a lapse of time and, furthermore, the subsidies given to investment are only gradual in their effects.

24 It follows that the condition regarding the urgency of the interim measures sought is satisfied.

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25 The French Government raises the objection that the grant of interim measures is liable, in its turn, to cause grave and irreparable harm to those undertakings which have already honoured, in whole or in part, their commitments under the contracts concluded pursuant to the scheme in question, and which would find themselves deprived of the funds needed for financing those commitments.

26 With respect to that objection and with a view to appraising at the inter­ locutory stage the various interests involved, regard should be had, first, to the fact that French undertakings, during the procedure initiated by the Commission under Article 93 (2) in relation to the original scheme, cannot, especially after publication of the decision of 12 January 1983 have remained unaware of the precarious nature of the scheme, which the measures at issue here serve, in essentials, to extend; and secondly to the fact that even the provisional maintenance of the scheme would be liable to affect competitive relationships in the common market in a manner which would be more and more difficult to reverse. In those circumstances the French Government's objection cannot prevail.

1. Pending judgment in the main proceedings the French Republic shall:

(a) as from notification of this order, refrain from renewing any contracte concluded between the State and employers pursuant to Order No 82-204 of 1 March 1982 on the taking over by the State of certain social security contributions in industrial under- takings in the textile and clothing industries;

(b) within a period of one month from notification of this order, suspend the performance of contracts which have already been renewed.

2. Costs are reserved.

Luxembourg, 20 September 1983.

J. Mertens de Wilmars P. Heim President Registrar