C-259/85

That system amended a system set up in 1. The action, lodged on 20 August 1985, 1982 which had also been held to conflict which is before the Court has been brought with Article 92 of the Treaty (Decision by the French Republic against the 83/486 of 20 July 1983, Official Journal Commission of the European Communities. 1983, L 268, p. 48). Upon being informed The French Government asks the Court of the new measures and of the setting-up to declare void Commission Decision of the Committee, the Commission sent a 85/380/EEC of 5 June 1985 (Official letter to the French Government (30 July Journal 1985, L 217, p. 20) which held to 1984) in which it charged it with reintro- be incompatible with the common market ducing aid which had already been held to two aid schemes for the textile and clothing be unlawful, and initiated the procedure industry provided for by Decrees Nos provided for in Article 93 (2) of the EEC 84-389 and 84-390 (Journal officiel de la Treaty. The French Government rejected République française 1984, p. 1651 et seq.). those charges but its arguments did not win over the Commission. Hence the decision at issue. The decision was also contested by the Committee (Case 282/85) but, by Those measures authorized the continued judgment of 10 July 1986 (DEFI v collection until 31 December 1985 of two Commission [1986] ECR 2469, at p. 2475), parafiscal charges levied, using VAT mech- the Court declared the latter's application to anisms, on sales in France of textile be inadmissible. products and clothing, with the exception of sales or transfers; of products originating in other Member States or in free circulation in those States. ! The revenue from those In the course of these proceedings the Court charges — which were introduced to foster authorized the Federal Republic of research, on the one hand, and the modern- Germany to intervene in support of the ization and renewal of industrial and Commission (order of 15 January 1986). commercial structures, on the other — was allocated to a body set up by Decree N o 84-388 {Journal officiel de la République 2. The French Government puts forward française 1984, p. 1650) known as the four submissions in support of its comité de développement et de promotion application : du textile et de l'habillement (CDPTH-DEFI) (Committee for the devel- opment and promotion of the textile and (a) misapplication of Article 93 (3) of the clothing industry, hereinafter referred to as EEC Treaty; 'the Committee'), for distribution among undertakings, joint promotion activities and technical centres of the industries concerned (b) infringement of the right to be heard;

(c) inadequate statement of reasons with The first objection is unfounded. The regard to the conditions set out in Commission points out that the broad Article 92 (1) and the refusal to apply thrust, at least, of its feelings has been Article 92 (3); known to the French Government ever since its Decision of 20 July 1983. In any event, whilst it is true that it sent the French Government an initial telex message on 21 June 1984 and a further communication on (d) erroneous statement of reasons in so 30 July 1984, the adversary procedure far as the Commission failed to commenced approximately one year before acknowledge that the aid was the contested decision was issued.

It must be the last two submissions jointly. I shall cover added — as the French Government itself the fourth when I deal with the third. recognizes — that the Commission always regarded the memorandum of 18 April 1985 as providing supplementary particulars in connection with the procedure initiated on 30 July 1984. Submission (b) is in two pans. In the first place, it is argued that the Commission adopted the contested decision without the preliminary of appropriate adversary proceedings or, at least, without going some Accordingly it is beyond doubt that on that way to meet the efforts made by the French date the French Government was fully Government to intensify the dialogue: for cognizant with the Commission's views; instance, a letter sent on 3 June 1985 by the neither can it be said that in the following French Minister for Labour, Mr Delebarre, 11 months the Commission changed its view did not receive an answer from the or added new aspects thereto.

OPINION OF MR MANCINI — CASE 259/85

Let us take, for example, the minutes of the meeting of 30 May 1985 (referred to in However, those arguments must be Annex IV of the defence). According to dismissed. According to an established line those minutes the discussion touched on of cases of the Court, compliance with the subjects such as the favourable trend in the right to be heard in administrative French textile industry, the French procedures, conducted by the Commission Government's intention not to increase means that the person concerned production capacity or employment in that must — even in the absence of any rules industry and the favourable outcome of the governing the procedure in question — have restructuring of the sector.

FRANCE v COMMISSION

facilitate the development of certain In my opinion, the statement of reasons of economic activities' (Article 92 (3) (c)). the contested decision is faultless. This is so, to start with, as regards the aid's distorting or threatening to distort competition. The Commission has derived from the case-law of the Court (see the judgment of 17 September 1980 in Case 730/79 Philip The final submission set out in the Morris Holland BV v Commission [1980] application concerns the merits of the ECR 2671, paragraph 11) the incontestable non-application of that exception. The principle that 'State financial aid [which] French Government maintains that, not only strengthens the position of an undertaking was the aid negligible in terms of amount, it compared with other undertakings was also 'neutral' with regard to intra- competing [with it] in intra-Community Community competition. Since the aid was trade' must be regarded as affecting those financed out of taxation levied on products other undertakings (see Decision 85/380, manufactured and sold in France, it resulted Official Journal 1985, L 217, at p. 22). But in a straightforward redistribution of that observation is not, as France maintains, resources within the textile and clothing merely a hypothetical proposition. It is suffi- sector and was designed simply to ciently substantiated by a series of facts; for encourage investment in the face of imports instance, the figure, which has already been from non-member countries with low labour quoted, for the impact of the aid on under- costs. Consequently, any tendency on the takings' costs (5.5%), the narrow margins part of the aid to affect trading conditions of competitiveness within the sector, the with the other Member States is to be ruled importance of the percentage indicated for out. that very reason and the very considerable market penetration of the French textile industry in the other Community markets.

provision it may—not shall — be they coincide with those provided by the considered to be compatible with the French Government — manifestly show the common market (see paragraph 17 of the better state of health enjoyed by the French judgment in the Philip Morris case, cited textile industry. For example, with the sole above). Accordingly, provided that they are exception of 1984-85 the level of unem- supported by a logical and adequate ployment in the industry has invariably been statement of reasons, decisions taken by the significantly lower in France than in the Commission cannot be challenged from the other Member States. point of view of expediency. Moreover, if that is the situation and if it is true that 'the compatibility... of the In my estimation the consistency and aid . . . must be determined in the context of adequacy of the reasons in question are the Community and not of a single Member undeniable. The Commission has shown State' (judgment in the Philip Morris case, with a wealth of detail and statistics that the cited above, paragraph 26) the statement of French textile industry has not gone reasons in question is not only adequate but through a dramatic period of crisis and that, also correct. As the decision states, because on the contrary, partly because of aid French textile undertakings are operating in received in the past, it is in a healthy a relatively flourishing sector they can invest condition, which is all the more enviable 'using their own financial resources without when compared with the situation of the State aid'. Consequently, that aid is not textile sector in the rest of the Community. intended 'to facilitate the development of That impression is supported by numerous certain economic activities' within the documents submitted by the German meaning of Article 92 (3) (c) thus Government (see, above all, the report of harmonizing trading conditions in the Professor Messerlin, 'Structural adjustments: various Member States; on the contrary, it Experience in France') and is further accentuates the disparities between trading confirmed by the data — which, albeit not conditions in the Member States and, to uniform, are not conflicting — which the utilize once again the terminology of the parties provided at the Court's request after Treaty, it does so 'to an extent contrary to the sitting. the common interest'. Nor can it be said that the aid distorts only competition from If those data are examined it will be non-member countries. The figures observed that France submitted figures provided by the Commission give the lie to relating only to the situation in France. For that argument; in any event, products from their part, the Commission's figures refer outside the Community usually show such a to the Community as a whole. Those great price differential that such effects are figures — which, it is stressed, are fully in practice ruled out as far as they are reliable since as far as France is concerned concerned.