C-213/85

OPINION OF SIR GORDON SLYNN —CASE 213/85

OPINION OF ADVOCATE GENERAL SIR GORDON SLYNN delivered on 2 April 1987

My Lords, 6 June 1985, the Commission asked for more details of the proposed new tariff, specifying in particular that it should be calculated in an objectively verifiable manner and be capable of adaption to changing circumstances and noted that the telex of 31 May 1985 made no reference to the period elapsed since 22 February 1985. In Joined Cases 67, 68 and 70/85 Van der The Netherlands Government's reply of 11 Kooy and Others v Commission the Court is June 1985 spelt out the new tariff in more concerned with a challenge to the validity of detail and informed the Commission that Decision 85 / 215 / EEC of 13 February 1985 the agreement in principle had become a (Official Journal 1985, L 97, p. 49). For the contractual commitment. reasons given in my Opinion in that case ([1988] ECR 219, at p. 240) I am of the view that that decision does not fall to be annulled.

COMMISSION v NETHERLANDS

comment that negotiations between the addressed and shall take effect upon such parties to the agreement had been notification'. Article 1 of the decision completed very rapidly following the provides : President's order and that the new tariff had been introduced at the earliest possible moment from a legal and technical point of view and had been implemented on 1 June 'The aid represented by the preferential tariff for natural gas applied in the whereas normally it was only amended Netherlands in respect of glasshouse quarterly (in October, January, April and growers from 1 October 1984 is incom­ July)· patible with the common market within the meaning of Article 92 of the Treaty and must be discontinued.' The Commission considers that the measures which I have just described do not amount to full compliance with its decision. Article 2 provides: It therefore applies to the Court under the second paragraph of Article 93 (2) of the EEC Treaty, the first two paragraphs of which provide as follows: 'The Netherlands shall inform the Commission before 15 March 1985 of the action it has taken to comply with Article 1.'

'If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a The new tariff, replacing that in force since State or through State resources is not 1 October 1984, applied from 1 June 1985 compatible with the common market having with a refinement applying from 1 October 3 regard to Article 92, or that such aid is 1985 that the ceiling of 45 cents/m only being misused, it shall decide that the State applied to growers using gas to the concerned should abolish or alter such aid exclusion of other energy sources. within a period of time to be determined by the Commission.

decision itself. The Commission, rightly, 171/83R Commission v France [1983] ECR does not seek a declaration that the 2621) and no date is set or order made for Government was in breach of the terms of the recovery of aid paid prior to a date the decision by failing to recover aid paid specified, then it seems to me that the aid prior to the date of the decision. The fact must be discontinued as soon as possible. If that the Commission could have taken monies are being paid out directly by the different steps or may now be able to take State, no more monies should be paid. If the steps for the recovery of the aid does not aid takes the form of a tariff laid down then affect the present application. that tariff must be abolished and a new one substituted; such a process cannot neces­ sarily be effected on the date of notification of the Commission's decision. It must, The Commission contends that there was a however, be effected 'with the required failure to comply with the decision firstly, in speed' and the necessary steps put in that the very aid ordered to be discontinued motion. was continued in force until the first week of June 1985 and, secondly, that the new tariff put into effect from that date was itself a State aid. An order in the form adopted in the present decision does not mean either that any benefits resulting from the tariff during the The decision, taken following the procedure period necessary to discontinue the aid with under Article 93 (2) of the Treaty, does not reasonable speed must be recovered by the in Article 1 specify a period within which State under that order. It was for the the aid is to be withdrawn. The Court has Commission to order recovery or to take recognized that the date does not neces­ subsequent steps for recovery, as the last sarily have to be specified — see Case paragraph of the reasons for the decision 173/73 Italy v Commission [1974] ECR 709 contemplated that it might. where at p. 717 it is said:

In the telexes to which I have already The Netherlands Government contends that referred and again in its pleadings, the it was entitled to wait until after the deter­ Netherlands Government appears to mination of its application for the consider that it, as well as Gasunie, the annulment of the decision or at least until Landbouwschap and Vegin acted with speed the determination of its application for when they moved following the President's interim measures, which were refused by the order. It seems to have taken the parties a President's Order of 3 May 1985. The month (from 3 May to 4 June 1985) to Government considers that it would have reach a new agreement and obtain been illogical to amend the tariffs whilst at government approval. According to the the same time seeking interim measures Netherlands Government there were designed to avoid the damage which would technical and legal reasons why such a be caused to the horticulture sector and to length of time was necessary. The technical Gasunie by the increase of the tariff. reasons were in particular that all the meters had to be read on site in order to apply the new tariff. The legal reasons were that the distribution companies and the growers had to be informed in writing of the new tariff before any increase could be agreed contractually. Furthermore, it was impos­ Article 185 of the Treaty, however, provides sible to apply the new tariff retroactively: that 'actions brought before the Court of that would have exposed the suppliers and Justice shall not have suspensory effect'. distributors to legal risks (presumably of The Court may, of course, suspend the being sued by the growers). operation of contested acts and award other interim measures by virtue of Articles 185 and 186 : until it does so, those acts must be complied with by virtue of Article 185 read in conjunction with Article 191. The fact that it will take time to obtain such an order These arguments are not entirely does not give the addressee of a decision an convincing, in particular since, if the price automatic extension. Steps must be taken to under the tariff introduced in October 1984 implement the decision meanwhile. This was supposed to be fixed until October argument of the Netherlands Government 1985, the legal risks run in imposing a retro­ must therefore be rejected. active increase would apply equally to the

period from 1 June to the end of September Decision which required that 'the aid 1985. Furthermore, the tariff was said to be consisting in a preferential tariff for horti­ agreed on 4 June and to be effective from 1 culture shall be abolished by 1 October 1982 June 1985, in other words with a short by alignment of the horticultural tariff on retroactive element. Be that as it may, a new the industrial tariff. tariff was able to be implemented within one month: there is nothing to suggest that it could not have been implemented within one month of notification of the decision. In my opinion, the Netherlands Government did not comply with the decision with the required speed in that it implemented In fact four changes were made: (i) the measures effective only from 1 June 1985; 3 price was fixed at 45 cents/m from 1 June nor has it shown that it began to take the to 1 October 1985 and for the 1985-86 necessary steps immediately on notification season the ceiling was raised from 42.5 of the decision. To that extent it failed to 3 3 cents/m to 45 cents/m , the ceiling to be comply with the decision. reconsidered in the light of prevailing circumstances for the 1986-87 season; (ii) the ceiling was to apply for two years rather than one; (iii) it was to apply only to growers who used only gas; (iv) the set-off or compensation clause in the earlier agreement was removed. The final and most important question is whether, by abolishing the tariff in operation from 1 October 1984 and substi­ tuting the new tariff, the Netherlands Government can be said to have failed to comply with Decision 85/215. That is not necessarily the same question as whether the The second change was specifically made to new tariff itself independently constitutes an counter the Commission's charge that one aid. year was too short a period to have the necessary effect on growers' plans but this change seems to me to be of peripheral importance. I doubt whether the third change amounted to very much since the large majority of horticulturalists fall into that category and the fourth change may The answer seems to me to depend firstly not have had much practical effect. on the nature of the obligation laid down. Was it to abolish all aid to glasshouse growers or was it to abolish a specific aid? In my view it was the latter — it was 'the aid represented by the preferential tariff for natural gas applied ... from 1 October 1984' which was to be discontinued. Such The question really turns on the first tariff constituted an aid in the finding of the change. As to this there is, it seems to me, Commission and, in my opinion, that force in the contention that to have taken finding stands. It was that tariff which had and retained tariff D applicable to industrial to be discontinued. No other steps were users was itself preferential for horticultu­ prescribed, as they had been in the 1981 ralists, since on the figures given they

consume far less than the quantity required equally be applicable to horticulturalists. to be consumed by industrial users if they Accordingly no objective criteria have been were to enjoy tariff D . The Commission has shown to justify the new tariff which is still not, however, complained of this as such an aid. Moreover, the ceiling was not to be and it was accepted as the basis of the reconsidered with sufficient frequency in settlement for the period ending on 1 order to take account of changing circum­ October 1984. The real complaint of the stances. Further, as the United Kingdom Commission as to the tariff condemned in also points out, the existence of a ceiling the decision was that the ceiling of 42.5 shields Dutch growers from the effects of 3 sharp rises in oil prices and enables them to cents/m was below the equilibrium price at which competition between gas and coal plan ahead with more confidence than their was in balance without either being competitors in other Member States. advantaged or disadvantaged, namely 43 3 and 44.3 cents/m , and well below the lowest price which would cause a significant switch to coal (namely 46.5 cents/m3 for an 3 average-sized holding and 47.5 cents/m for a larger holding). The new ceiling, however, was between 2 and 0.7 cents above the range taken as the equilibrium price; on the 3 other hand it was 1.5 and 2.5 cents/m below the price at which medium and larger On the other hand, it is to be noted that the holdings would switch significantly to coal. decision estimated that the prices in the 3 range of 46.5 cents/m for the average sized 3 holdings and 47.5 cents/m for the larger holdings would result in 30 % of the natural gas consumed in the horticultural sector being replaced by coal in less than three years. The range of prices is thus not the range at which growers would begin to convert to coal, but the range within which 3 in a three-year period Gasunie would or The Commission contends that 45 cents/m is still too low in relation to the figures of would be likely to lose one-third of its sales 3 46.5 and 47.5 cents/m and in view of the to the horticultural market. fact that coal prices have allegedly increased. In the result, the ceiling of 45 3 cents/m , it is argued, represents an 3 advantage of 5.8 cents/m for the second 3 quarter of 1985 and 4.3 cents/m for the third quarter of 1985 over the figure resulting from the application of tariff D plus 0.5 cents. The Netherlands Government could not show that comparable steps were taken in respect of The decision does not expressly require the the price for industrial users who might be ceiling to be fixed at or above that level; nor liable to convert to coal, nor could it show does it seem to me that it should be inter­ what the risk of such users converting preted as implicitly requiring prices to be to coal really was. The Netherlands fixed at or above that level, by which Government has not shown either why the Gasunie was estimated to lose such a tariff applicable to industrial users could not substantial amount of trade.

I accept that the Commission does not Such a result does not mean that the new necessarily have to fix the level of prices at tariff was not an aid. On the contrary, there which there ceases to be an aid element but is material relied on by the Commission and if it requires specific aid to be abolished the two intervening Member States which without doing so then it must be open to a may point to the new tariff constituting a Member State to show that by discontinuing State aid. If the Commission considered that the specific aid and adopting a new price a new aid had been notified it could have level it has complied with the decision to instituted the procedure available under discontinue the specific aid complained of. Article 93 (2); if it had not been notified This does not mean that a token change of then it could have taken steps (by, for a fraction of a cent without any apparent example, applying to the Court) to prevent justification would amount to a bona fide the proposed measures being put into effect discontinuance of the existing tariff. It must contrary to the last sentence of Article be a genuine discontinuance and fixing of a 93 (3). On such an application different new tariff. On the facts of the present case, considerations would have arisen from those the new tariff was fixed above the equi­ which arise in the present limited librium price accepted by the Commission application and it would be necessary to and below the figure taken as likely to lead have regard to any change of circumstances to a substantial reduction in gas sales by the time the new tariff was implemented. because of the attractiveness of coal to the horticultural industry. On that basis since the Commission accepts that in principle a tariff differential may be adopted if objec­ It is obviously still open to the Commission tively justified, it cannot, in my view, fairly to consider whether the sums which it be said that the Netherlands Government regards as having been given by way of aid failed to discontinue the specific tariff in with serious effects on competitors in other force from 1 October 1984. This is the only Member States can be recovered and matter in issue in these proceedings and the whether, as part of its duty to keep all aids Commission is accordingly not entitled to under constant review pursuant to Article the declaration it seeks in respect of the 93 (1), it should use the procedures and period subsequent to 1 June 1985. powers available to it under Article 93 (2) and (3).