C-102/87

FRANCE v COMMISSION

OPINION OF MR ADVOCATE GENERAL LENZ delivered on 7 June 1988 *

Mr President, than the market rate. The incentive to Members of the Court, investors to place their funds at the State's disposal at low interest rates was that income from the Codevi was not subject to tax. The State was thus forgoing a portion A — Facts of its tax revenue.

OPINION OF MR LENZ — CASE 102/87

6. On 18 December 1985 the Commission 9. Furthermore, the Commission described formally initiated the review procedure in the situation in the beer market in the respect of State aid in accordance with Community as follows: consumption of beer Article 93 (2) of the EEC Treaty. in the Member States was either stagnating or falling slightly. External trade between Member States accounted for about 4 % of all beer sales in the Community. The market 7. On 14 January 1987, in its final decision in France accounted for approximately 9 % under that procedure, 2 the Commission of all sales in the Member States of the observed : Community (minus Greece). France imported just over 10% of its requirements from the other Member States. French 'Article 1 exports to other Member States represented about 1.5% of French production.

The FIM loan of FF 40 million, containing elements of aid within the meaning of Article 92 (1) of the EEC Treaty in view of the interest subsidy of 4.75 percentage points, granted to a brewery and notified to 10. According to the Commission, the the Commission by letter dated 30 April undertaking in receipt of the FIM loan was 1985, was granted unlawfully in wholly owned by a French group whose infringement of Article 93 (3) of the Treaty beer production accounted for over 50 % of and is incompatible with the common total French production and which market within the meaning of Article 92 of participated in intra-Community trade in the Treaty. beer. The brewery itself held about 20 % of the French market.

13. The French Republic considers that the 17. The defendant contends that: Commission's decision is unlawful. It claims that the conditions of Article 92 (1) are not satisfied, because the loan at issue cannot be regarded as aid incompatible with the The action should be dismissed as common market. The State's role in the unfounded and the applicant ordered to pay FIM system is limited; the forgoing of tax che costs. revenue can be disregarded. In view of the minimal amount of the aid, it cannot affect trade between Member States. 18. The Commission considers that its decision is, in principle, legally valid. It states in addition that the loan was made at 14. Furthermore, the duty to state reasons an interest rate of 9.25%, whereas the as laid down in Article 190 of the EEC market rate for a comparable loan was Treaty has not been complied with, because 14%. That represented an interest subsidy the Commission makes no mention of the of 4.75 percentage points. The market rate amount of the société européenne'sexports used for the calculation was that of the to other Member States and gives no expla­ credit national for plant and equipment nation as to the alleged interest subsidy of loans, which, with the agreement of the 4.75 percentage points. French Republic, was fixed as the reference rate in the Commission's Communication on the principles of coordination of regional 4 aid systems. The Commission thus used data which were familiar to the French 15. The provision in Article 2 of the authorities. decision that the aid in question must be recovered infringes the general principle of legal certainty, because it is not clear. That provision does not enable the French 19. I shall give further details of the facts as Republic to determine the actual amount of related by the parties where necessary in the the aid declared illegal which is to be course of my analysis. recovered.

25. In respect of the second part of the 21. The applicant does not accept that the French Republic's argument — that the aid FIM loan should be regarded as aid which is insignificant, of no appreciable effect and infringes Article 92 (1) of the EEC Treaty therefore not such as to distort compe­ because both the State contribution tition — it must be observed that the involved — the forgoing of tax on the criterion of appreciable effect has played a Codevi — and the extent of the advantage role in the applicability of Article 85 of the conferred on the borrower undertaking are EEC Treaty in the Commission's practice, insignificant and therefore cannot affect which has been approved by the Court. trade between the Member States. Nevertheless, it would seem inappropriate to extend that principle of appreciable effect to the prohibition on aid in Article 92 of the EEC Treaty. It cannot be inferred either from the wording of the relevant provisions or from the case-law of the Court of 6 Justice that there should be such an 22. Here it should be observed that, in exception to the fundamental prohibition on accordance with the Court's case-law, aid State aids. Since State aid undermines the granted by a State or through State system of undistorted competition envisaged resources of whatever kind is to be judged by the Treaty and since, under Article 5 of by its effects. 5The question is not therefore the EEC Treaty, Member States are under whether a specific undertaking has been an obligation to facilitate the achievement favoured directly through State resources, of the Community's tasks, it is in principle but whether, on the basis of a State system, justified to apply a stricter standard as that undertaking has received an advantage. regards the conduct of Member States than as regards the conduct of undertakings. Article 92 (2) and (3), moreover, sets out more differentiated provisions on exceptions than, for instance, Article 85 (3) of the EEC Treaty. Thus, under Article 92 (2) certain kinds of aid are, in principle, compatible with the common market, and 23. That is precisely what happened in this certain other kinds of aid may, under case because, by the French Republic's Article 92 (3) (a) to (c), be considered by forgoing of tax revenue, which benefits the the Commission to be compatible with the Codevi account holders, the FIM is put in a common market. Furthermore, under position to grant credit to certain under­ Article 92 (2) (d) the Council may, on a takings on preferential conditions. proposal from the Commission, decide that other kinds of aid are permissible, which in 5 — See judgment of 2 June 1974 in Case 173/73 Italy v Commiision [1974] ECR 709, and judgment of 22 March 1977 in Case 78 / 76 Steimke and Weinlig v Germany [1977] 6 — See especially judgment of 17 December 1980 in Case ECR 595, at p. 611. 730/79 Philip Morrisv Commiuion [1980] ECR 2671. .

2. Infringement of essential procedural requirements — Breach of Article 190 of the EEC Treaty 32. It is more difficult to deal with the argument that the Commission did not indicate how it actually ascertained the 29. In this connection the French Republic amount of the interest subsidy. There is in claims that the Commission, in its contested fact no indication of the method of calcu­ decision, did not state the volume of the lation in the Commission's Decision of 14 borrower undertaking's exports to other January 1987. Indeed, it was in the Member States or establish that there was proceedings before the Court that the

OPINION OF MR LENZ — CASE 102/87

33. It would certainly have been expedient to state the method of ascertaining the interest subsidy in the contested decision. 34. Nor can there be any objection to the However, I do not believe that the absence fact that the Commission used a reference of such explanations can be regarded as rate which was to be applicable only in the an infringement of essential procedural context of regional aids, but not other kinds requirements. According to the Court's of aid. The Commission correctly pointed case-law, the statement of reasons for a out that the prohibition on aid in Article 92 decision adversely affecting an undertaking of the EEC Treaty is essentially based on a must be such as to allow the Court to uniform concept of aid and distinctions are review the legality of the decision and to drawn only as regards derogations under provide the undertaking concerned with the paragraphs 2 and 3. If, in order to information necessary to enable it to determine whether a particular interest rate ascertain whether or not the decision was is to be regarded as entailing an interest well founded. In principle the duty to state subsidy and thus an aid within the meaning reasons must be assessed having regard to of Article 92 (1) of the EEC Treaty, a the context of the decision and what was specific reference rate has been established, raised by the parties in the administrative it seems justifiable to use it even if it was proceedings. 8In view, in particular, of the originally intended only to be applied in the fact that the banking system in France is in framework of certain derogation provisions. large measure nationalized, the French Republic was best placed to obtain infor­ mation regarding normal and preferential interest rates and since it had itself suggested the inclusion of the crédit national's interest rate in the Commission's 1978 Communication and moreover it is not 35. Since the French Republic itself put the reference rate to the defendant and did not 7 — Ibid., footnote 4, p. 9 (14). quote any other interest rates in the aid 8 — See ¡n particular judgments of 10 July 1986 in Cases 234/84 and 40/85 Commission v Belgium [1986] ECR 2263 review proceedings, it cannot object to use and 2321. See also judgment of 17 November 1987 in of that reference rate. It can be left Joined Cases 142 and 156/84 British-American Tobacco Company Ltd and Others v Commission [1987] ECR 4487, undecided whether the borrower under­ paragraph 72. taking could have contested the reference