C-62/87

A — Facts of the case 3. In the course of the procedure which was then opened to examine the aid, obser- vations were submitted by the Belgian Government, the governments of two other Member States, an industry federation, a manufacturing group in the sector 1. The two joined cases on which I propose concerned and the assisted undertaking to give my Opinion today are concerned itself. with whether the Commission of the European Communities (the defendant) was entitled to prohibit the Kingdom of Belgium from granting investment aid to Glaverbel SA (the applicant in Case 72/87) through 4. By a decision of 3 December 1986 1 the one of its regional bodies, the Exécutif Commission of the European Communities régional wallon (Walloon Regional concluded that the proposed investment aid Executive), the applicant in Case 62/87. should not be granted. It maintained that the proposed aid would adversely affect trade between Member States and would distort competition. Thus, according to Article 92 (1) of the EEC Treaty such aid 2. During 1982 and 1983 Glaverbel SA was fundamentally incompatible with the carried out a programme of investments common market; the conditions for an totalling BFR 1 200 million at its factory at exemption under Article 92 (2) and (3) Moustier in order to renovate a flat-glass thereof were, furthermore, not satisfied. production line, modernize another, and expand the production capacity of a line for pyrolytically coated glass. In order to assist those investments the Belgian State offered Glaverbel, subject to the prior approval of 5. The Exécutif régional wallon, which is the European Economic Community, the now the body responsible for promoting the grant of an interest subsidy, a further regional economy in the Walloon region of subsidy and an exemption from land tax Belgium, and Glaverbel SA itself, consider pursuant to a Law of 17 July 1959, repre- that decision illegal. As regards the senting in all an equivalent net subsidy of substance, they complain that Article 92 (1) 5.8% of the investments made. In of the EEC Treaty was wrongly applied and November 1984 a definitive undertaking to the exemptions provided for in Article 92 grant the aid was given. In November 1985 (3) (b) and (c) were not applied; they also the Belgian Government informed the complain that the obligation under Article

7. The applicants therefore claim that the defendant's decision of 3 December 1986 should be declared void and that the defendant should be ordered to pay the 13. However, that is not true of all the costs. objections which it has raised. Although vested with sovereign powers, an organ of a Member State may not, even if it performs 8. The defendant claims that the State functions, be regarded as a Member applications should be dismissed as State for the purposes of the first paragraph unfounded and the applicants ordered to of Article 173 of the EEC Treaty. pay the costs. Therefore, as a legal person within the meaning of the second paragraph of that article, it must show that it has an interest in 9. The defendant considers its decision of 3 bringing proceedings. 2The legal interest of December 1986 to be lawful; it submitted the Exécutif régional wallon is clearly not some further observations to explain that open to doubt as far as the substantive decision. objections are concerned; however, as regards the objection that the right to a fair hearing was infringed by the Commission in 10. I propose in the course of my Opinion the administrative procedure, the Exécutif to examine the disputed decision and régional wallon has not satisfied those various points of the parties' submissions. requirements. The Commission's decision For the rest, reference should be had to the was not addressed to it, nor did it take part Report for the Hearing. in the administrative procedure mentioned above, not even by submitting observations. Thus none of its rights can have been B — Discussion infringed in the administrative procedure. In this connection the question may be left open whether the Kingdom of Belgium, as I — Admissibility the addressee of the decision, could have complained of any infringement of Glaverbel's right to a fair hearing; since the 11. (1 ) The admissibility of the application Exécutif régional wallon cannot in any by Glaverbel SA cannot be disputed. As the event be regarded as a Member State for the prospective recipient of the contested aid purposes of the first paragraph of Article the company is directly and individually 173 of the EEC Treaty, the objection affected by the defendant's decision for the concerning infringement of the right to a purposes of the second paragraph of Article fair hearing, which it 'alone has raised, 173 of the EEC Treaty. cannot be considered admissible.

16. It should first be noted that the proposed subsidy, amounting to 5.8% of the 17. In view of those wide-ranging investment costs of BFR 1 200 million, exemptions it cannot be assumed that there would relieve the recipient of part of the are still more, unwritten, derogations from investment costs which it would normally the prohibition of aid. For those reasons the have to bear, to the extent of about argument that it is only 'appreciable' BFR 70 million. 3 Even if it must be impediments to competition and trade acknowledged that in the context of the within the Community which are covered by rules on competition laid down in Article 85 Article 92 of the EEC Treaty cannot be of the EEC Treaty the Court of Justice has accepted. approved the Commission's practice of exempting from the prohibition laid down in Article 85 undertakings' restrictions on 18. Likewise, the Commission Decision of competition having no appreciable effect on 17 June 1975, 5under which aid pursuant to competition or on trade between Member the Belgian Law of 17 July 1959 may be States, I do not consider it appropriate to granted only if 'individual significant cases' transpose that trend to the prohibition on are notified in advance to the Commission, aid laid down in Article 92 of the Treaty. cannot be construed as meaning that the Neither the wording of the relevant Commission attaches to the concept of provisions nor the previous decisions of the 4 — See in particular the judgment of 17 September 1980 in 3 — That is about ECU 1.6 million at the exchange rate Case 730/79 Philip Morris Holland B V v Commission prevailing on 28 November 1986; see EC Bulletin 11/86, p. [1980] ECR 2671. 144. The contested decision is dated 3 December 1986. 5 — Official Journal 1975, L 177, p. 13.

19. In any event, should it be decided, contrary to the opinion expressed above, t o attach any material significance to the aforesaid decision, the aid at issue here would fall under the first indent of Article 21. That initial conclusion is not shaken by 2, read in conjunction with the second the fact that the defendant made certain indent of Article 1, and would therefore evaluations in this connection which were have to be treated as 'appreciable'. possibly not warranted by the facts of the case. The defendant has in fact explained that the difficulties in the flat-glass industry due to stagnant demand and under-utili- zation of capacity had had an adverse effect on the company finances and led to job cuts 20. Since the defendant points out that the and plant closures. It also estimated that manufacturer which is to receive the aid between 1982 and 1984 unused capacity in exports about 50% of its flat-glass output t o the Community of Ten in that sector ranged the other Member States and 20% t o from about 10% to 16% of total capacity. non-member countries and that the remaining 30% is sold or processed within the Benelux Economic Union, that is to say an area covering three Member States of the Community, it is indisputable that the manufacturer is engaged in intra- 22. The statements about the utilization of Community trade. If that manufacturer is capacity were not fundamentally attacked relieved of investment costs which it would by the applicant, and certain divergences normally have had to bear and of which its have to be accepted in view of the methods unaided competitors are not relieved, it is used for determining capacities. On the perfectly obvious that its competitive other hand, the defendant's view that a rate position is thereby improved and that of capacity utilization of between 84% and competition within the common market is 9 0 % should be considered low is immaterial thus distorted. In view of the volume of in this case; if those figures had represented products exported by the manufacturer in a low rate of utilization, then the

defendant's decision would not be open to 2. Article 92 (3) (c) of the EEC Treaty challenge; if, on the other hand, they repre- sented a normal or even a high rate of utili- zation, this would only demonstrate that the granting of aid would be superfluous and 24. The next objection relates to the fact that the defendant was therefore even more that the defendant has not granted an justified in refusing to allow it. exemption from the prohibition of aid on Furthermore, the observations submitted by the basis of Article 92 (3) (c) and has not the applicant Glaverbel SA in the adminis- supplied a proper statement of the reasons trative procedure indicate that it, too, was for that refusal. obliged to close down certain areas of

forthcoming. The investment project could Treaty, the exemptions from Article 92 (1) therefore have been carried out on the sole thereof must be construed restrictively in basis of market conditions, so that there was any examination of a provision regarding no need for State aid at all. If, however, the aid or an individual aid scheme. Adhering to aid were granted now, it would only affect that fundamental view the defendant stated the future and improve the general financial that the renovation of a 'float line', which position of the recipient undertaking but it must be carried out every six to nine years, could no longer be assigned to a specific must in principle be considered a use. replacement investment, the cost of which is an element of the operating costs.

the EEC Treaty. sector in question. The fact that the defendant may have included incorrect or even superfluous observations in its decision cannot adversely affect the validity of the decision, inasmuch as the factually correct 26. In assessing whether those arguments part of the statement of reasons is sufficient offer sufficient support for the refusal to to justify the decision. That is so in this case grant an exemption from the general because the defendant has demonstrated prohibition of aid it should first be noted that the projected aid fits the criteria laid that consent to an exemption of that kind down in Article 92 (1). lies within the Commission's discretion.

T h a t is so even though, once it has been (3) (c) of the EEC Treaty is not fulfilled, it established that the case falls within the no longer had to examine the second scope of Article 92 (1) of the EEC Treaty, criterion. None the less, in a manner which consideration must be given to the question is perhaps not fully understandable on first whether the exemptions under Article 92 (3) reading, the defendant examined whether thereof may apply. 6 the aid would adversely affect trading conditions to an extent contrary to the common interest. Since that examination was unnecessary, as mentioned above, then, even if some of the defendant's arguments were incorrect, the legality of the refusal to 27. The exercise of that discretion is subject grant an exemption would not thereby be only to limited review by the Court. If the impaired. conditions set out in Article 92 (3) of the EEC Treaty are satisfied, the Commission may declare the aid compatible with the common market; there is, however, no legal right to the grant of the exemption. That is clear from the fundamental prohibition of 30. Since the applicant Glaverbel itself aid laid down in Article 92 (1) of the submitted in the administrative procedure Treaty. that in the past numerous plants producing flat glass have had to be closed down and since it is also indisputable that even after those closures the remaining surplus capacity within the Community still amounted to between 10% and 16%, the 28. The defendant's argument that the costs defendant's view that the proposed aid of the periodically necessary renovation of a would adversely affect trading conditions to flat-glass plant, being an investment in the an extent contrary to the common interest, replacement of a capital asset, in principle even if the investments did entail technical form part of an undertaking's operating innovations, cannot be rebutted. Since the costs is indisputable; periodic renovation intended recipient of the aid exports a large using the most modern and productive tech- proportion of its total output, the subsidy niques and materials must be regarded as a alters trading conditions in relation to the perfectly normal economic procedure. Such situation which would prevail if no aid was investment is normally carried out without granted; in view of the fact that capacity in State intervention; this rules out the possi- this industrial sector 8of the Community is bility of regarding the projected State still only partially utilized, even after the subsidy as facilitating the development of an closure of numerous planu, a unilateral aid economic sector. 7 measure of a single State cannot be in the common interest because the inevitable consequence would be that other under- takings in other Member States would have to receive comparable aid in order to 29. Since the defendant has thus set out the maintain their competitive position vis-à-vis grounds on which it considers that one of the assisted undertaking. Here again, there the two cumulative conditions in Article 92 is no need for a detailed examination of the

extent to which the assisted product 34. With regard to this undoubtedly terse competes with other products since, as was statement of reasons the defendant shown above, regard must be had to the submitted in the procedure before the Court general financial situation of the assisted that a project could be designated as being undertaking, which would undoubtedly be of common European interest if it was one eased by the proposed aid. of the European transnational programmes and was supported jointly by the various governments acting in concert or formed part of a campaign agreed between the 31. As regards the applicants' further Member States. The renovation or moderni- objection that the defendant in its decision zation of one of the 25 flat-glass production ignored the fact that the proposed aid lines in the Community could not be envisaged a restructuring of the under- regarded as a project of that nature. taking, it must be conceded that the term 'restructuring' does not appear in the decision. But the same is true of the documents which the Kingdom of Belgium and the applicant Glaverbel SA submitted to 35. The Court has consistently held that the the Commission. In substance, however, the statement of reasons for a decision adversely defendant's statements concerning the tech- affecting an undertaking must be such as t o nological innovations associated with the allow the Court to review its legality and to investment deal in part with the question of provide the undertaking concerned with the restructuring. It should also be pointed out information necessary to enable it to that, according to the applicant Glaverbel, ascertain whether or not the decision is well the measures for restructuring the under- founded. 9 taking were essentially completed by 1983 and predated the investment which was to be promoted by the contested aid.

of common European interest' was involved. 39. Glaverbel's collaboration in the devel- It was merely suggested that the investment opment of 'cellules voltaiques' as part of the served to strengthen the position of the Esprit programme 9 likewise does not justify Community on export markets and to a different assessment. Naturally, that ensure its independence with regard to programme as a whole may be regarded as imports. 'an important project of common European interest'. But that does not automatically apply to each of the 220 Esprit projects 38. If, according to Article 3 (b) of the which the Commission has selected, of EEC Treaty, the principles of the which 201 are being pursued. 12 The Community include the establishment of a applicants themselves should have explained common commercial policy towards why this particular project should be of non-member countries and, according to 'common European interest', and how, if at Article 110 of the Treaty, the common all, it could be identified with investments commercial policy serves inter alia to carried out in 1982 and 1983. They have contribute to the harmonious development not done so. of world trade, then it does indeed seem clear that the attempt to achieve self-suffi- ciency and to conquer world markets cannot be treated as an important project 40. In view of the apodictic brevity of the of common European interest. A more applicant's reference, the equally apodictic extensive statement of reasons was not in rejection by the defendant is not open to fact required. criticism.