C-261/89
ECLI:EU:C:1991:252
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OPINION OF MR VAN GERVEN —CASE C-261/89
O P I N I O N O F M R ADVOCATE G E N E R A L VAN GERVEN delivered on 12 June 1991 *
Mr President, The said aids shall therefore be abolished by Members of the Court, the Italian Government and recovered from the recipient undertakings.
1. In the action before the Court, the Italian Government is asking, in pursuance The Italian Government may not convert of Article 173 of the EEC Treaty, for a the two loans of LIT 70 000 million and declaration that Commission Decision LIT 30 000 million into equity capital. 90/224/EEC of 24 May 1989 on aid granted by the Italian Government to Alumínia and Comsal, two State-owned undertakings in the aluminium industry, ' (hereinafter referred to as 'the contested decision') is void. The contested decision is Article 2 based on the first subparagraph of Article 93(2) of the EEC Treaty and reads as follows :
The Italian Government shall inform the Commission within two months of the date of notification of this decision of the 'Article 1 measures it has taken to comply therewith.'
The two aids in the form of interest-free loans to be converted into equity capital In support of its action for a declaration amounting to LIT 70 000 million and LIT that the measure is void, the Italian 30 000 million, granted by the Italian Government claims, in its application and its Government to the undertakings Alumínia reply, first that the financial contributions at and Comsal, are incompatible with the issue come within the ceiling of the aid common market within the meaning of approved in the Commission decision of 17 Article 92(1) of the EEC Treaty given that December 1986, secondly that in the these aids have been granted in breach of contested decision the Commission wrongly the provisions of Article 93(3) of that regarded these contributions as State aid Treaty and of the conditions laid down in within the meaning of Article 92(1), and the Commission's decision of 17 December thirdly that the statement of the grounds on 1986. which the contested decision is based is defective because the Commission did not * Original language: Dutch. consider whether the conditions for the 1 — OJ 1990 L 118, p. 42. derogations from the prohibition of State
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aid under Article 92(3)(c) were satisfied. proposed considerably exceeded the During the hearing the Italian Government requirements of the aluminium plan. 2 withdrew the first-mentioned argument, However, after the Italian Government had which I shall therefore not consider further. made a number of amendments to the aluminium plan, and in particular had agreed to reduce the aid envisaged in the form of new capital by LIT 200 000 million, 3 the Commission, by decision of 17 December 1986 (of which the Italian Government was notified by letter of 13 In this Opinion, after a brief outline of the January 1987) decided to terminate the facts (paragraphs 2 to 4), I shall first discuss procedures it had initiated in 1984 and the question of whether the interest-free 1985. At the same time it approved aid, loans in 1987 to Alumínia and Comsal, to amounting to LIT 989 000 million in the be converted into equity capital, did in fact form of new capital and LIT 400 000 represent, as the Commission contends, million in the form of interest-free loans, for State aid within the meaning of Article the activities of the public holding company 92(1) (paragraphs 5 to 13). Then I shall E F I M 4 in the aluminium sector. It also gave consider whether the contested statement of its approval to grants amounting to LIT grounds is defective because the 48 100 million and an interest-free loan of Commission did not consider whether the LIT 7 900 million to the State-owned conditions for the application of the dero- aluminium smelter in Bolzano. 5 The gations from the prohibition of State aid in Commission, however, approved this aid Article 92(3)(c) were satisfied (paragraphs envisaged in the aluminium plan (1983-88) 14 to 16). only on the express condition laid down in the decision of 17 December 1986 that the Italian Government would provide no further aid in whatever form to the State-owned aluminium industry until the end of 1988. The background
3. On 18 September 1987 (by decision of 2. With a view to the economic recovery of the CIPE 6 ) the Italian Government the insolvent State-owned aluminium instructed the public holding company industry, in the early part of the 1980s the EFIM to grant loans amounting to Italian Government worked out a plan for LIT 100 000 million to two of its subsi- restructuring the industry. This restructuring diaries, Alumínia and Comsal, both plan (hereinafter referred to as 'the State-owned aluminium undertakings. 7 aluminium plan') envisaged for the period 1983 to 1988 public aid amounting to LIT 2 — Contested decision, Part I, first paragraph. 1 445 000 million in the form of new capital, 3 — See Iulian Government telex of 21 November 1986, annex subsidies and interest-free loans. On 5 II of the statement of defence. 4 — An abbreviation for 'Ente Participazioni e Finanziamenti December 1984 and 20 November 1985 the Industrie Manifatturiere'. Commission initiated the procedure under 5 — Contested decision, Part I, second and third paragraphs. Article 93(2) of the EEC Treaty with regard 6 — An abbreviauon for 'Comitato Interministeriale per la Programmazione Economica'. to this aid. The Commission took the view 7 — Contested decision, Part I, eighth paragraph; see also inter alia that the amount of the aid Annex I to the application.
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The Commission was not notified in Commission took the view that the loans in advance by the Italian Government of these question did indeed constitute State aid loans in accordance with Article 93(3) of incompatible with the common market the E E C Treaty. Only in answer to an because the Commission had not been express request from the Commission did informed of them in advance and because the Italian Government inform it by letter they constituted an infringement of the dated 28 March 1988 of the loans and conditions laid down in the decision of 17 attendant circumstances. In that letter the December 1986 and particularly of the Italian authorities stressed above all that the condition that no further aid in whatever two loans were intended for financing form was to be provided for the investments: the loan to Alumínia State-owned aluminium industry until the amounting to LIT 70 000 million was end of 1988. ' 2 T h e Commission required intended to finance investments for modern- the Italian Government to recover the aid ization, whilst in addition the loan to granted to the recipient undertakings, Comsal amounting to LIT 30 000 million Alumínia and Comsal, 1 3 and expressly was intended to finance investments for the prohibited the conversion of the loans into extension and diversification of production. equity capital. u T h e Italian Government further informed the Commission that the loans included a four-year period of grace and were to be reimbursed between 1991 and 1994. 8 The interest on both loans and the repayments Are the loans in question State aid within of the principal sum were to be paid by the the meaning of Article 92(1) of the EEC public authorities, in such a way that each Treaty? repayment of the loans would be converted into equity capital for EFIM. 9
5. In support of its application for a declaration that the contested decision is 4. O n the basis of the information from this void, the Italian Government claims that the and public sources, the Commission decided Commission's statement of the reasons on in September 1988 to initiate the procedure which its decision was based was incomplete under Article 93(2) in respect of the loans. and erroneous in contending that the T h e Commission took the view that the interest-free loans to be converted into payment of all interest by the State equity capital constituted State aid within constituted a clear case of State aid, 10 and the meaning of Article 92(1) of the EEC that the conversion of the two loans into Treaty. The Italian Government points out equity capital constituted the provision of in particular that in considering the loans in new capital which, in the light of the question the Commission took account only circumstances, might involve elements of of the very critical financial and economic State aid. " O n 24 May 1989 the procedure situation of the beneficiary undertakings in under Article 93(2) was concluded with the the period 1985 to 1987 and did not take adoption of the decision contested in this into account the results recorded in 1988. 15 action. As emerges from the portion of the The Italian Government also claims that in contested decision already referred to, the 12 — First paragraph of Article 1 of the contested decision. 8 — Contested decision, Part II, second paragraph. 13 — Second paragraph of Article 1 of the contested decision. 9 — Contested decision. Part II, third paragraph. 14 — Third paragraph of Article 1 of the contested decision. 10 — Contested decision, Part IV, second paragraph. 15 — In 1988 Alumínia recorded a profit, whilst Comsal halved 11 — Contested decision, Part IV, third, fourth and fifth para- its losses as compared with those suffered in 1987. See graphs. also footnote 21 infra.
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considering the loans in question the 7. That objection, in my opinion, is based Commission took no account of the fact on an erroneous interpretation of that that they were not intended to cover losses criterion. As the Court has already stated in suffered but to finance investments, as clear terms in its judgments in 'Meurd and already stated. In the case of Aluminia those 'Boch II, and has confirmed in subsequent investments were meant for modernizing judgments, the criterion of the extent to production and fell within the aluminium which 'the undertaking would be able to plan approved by the Commission. In the obtain the sums in question on the private case of Comsal the investments were capital markets' means that 'the test is, in intended for modernization, extension and particular, whether in similar circumstances diversification of production and formed [to those in which the authority has part of a restructuring plan specifically provided new capital] a private share prepared for that undertaking. I 6 holder . . . would have subscribed the capital in question'. 1 7 The criterion mentioned above therefore coincides with the criterion of the 'private shareholder'.
In its recent judgment in Case C-305/89 Italy v By failing to take these facts into account, Commission [1991] ECR 1-1603 ('Alfa the Italian Government states, the Romeo'), the Court elucidated this criterion Commission wrongly came to the of the private shareholder. The conduct of conclusion in the contested decision that a the private shareholder with which the 'private shareholder' would not have authority's conduct is to be compared is granted the loans in question and that these actually that of a private holding company loans therefore constituted State aid. or group of undertakings similar in scale to the relevant public holding company, pursuing a structural, global or sectoral policy and guided by longer-term prospects of profitability (paragraphs 19 and 20).
' 8 6. In addition the Italian Government The Court states expressly that in applying suggests that the criterion used by the that criterion the Commission is not Commission of determining 'to what extent infringing Article 222 of the EEC Treaty the undertaking would be able to obtain the (paragraph 24). sums in question on the private capital markets' is incompatible with the principle derived from Article 222 of the Treaty of equal treatment of private and public under takings. The Italian Government points out that private undertakings belonging to a large group do not necessarily have to seek new resources on the capital market but 8. Contrary to the Italian Government's 'may' resort to the financial resources of the argument and as the Commission rightly
group. By the application of the abovemen- observes, for a decision as to whether the tioned criterion public undertakings loans in question constitute State aid it is belonging to an important group are, not in itself important whether these loans according to the Italian Government, being are intended to finance investments or form subjected to a 'test' to which private under part of a restructuring plan. What counts is takings forming part of a large group are 17 — Judgment in Case 234/84 Belgium v Commission [19861 not subject, and the principle of equal ECR 2263 ('Meura'ļ, paragraph 14; see also the recent treatment is not being observed. judgment in Case C-142/87 Belgium v Commission [1990] ECR 1-959 CTubemeuse'l paragraph 29. 18 — See also my Opinion of 10 January 1991 in that case, 16 — Application, pages 7 and 8. paragraphs 11 and 12 [(1991] ECR 1-1616).
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whether a private investor would have been The Italian Government does not dispute ready to subscribe new capital — in this case these figures given in the contested decision in the form of interest-free loans to be but, as already stated, raises the point that converted into equity capital — account in considering whether the loans in question being taken of all information allowing him constitute aid, account must also be taken to assess the economic and financial of the results recorded in 1988. 21 The situation of the undertaking (including Commission does not agree: it states that in possibly the existence of a credible restruc- assessing an aid account may be taken only turing plan). ' 9 It is obvious that the answer of economic and financial facts known at to that question must be given in the light of the time the aid was granted, namely in the economic and financial situation of the September 1987. beneficiary undertakings at the time the aid is granted. Let us try to reconstitute the position at that time.
In my view the Commission is right. Since the Commission ought normally to have been notified of the aid in advance (but in this case was not) and the Commission's investigation would then have related to the facts known at that time, I think it is clear that in investigating aid which has not been notified the Commission must proceed on 9. When, in September 1987, EFIM granted the basis of the situation at the time the aid the loans to aluminium and Comsal, the was granted. If it were to take account of economic and financial situation of both information which has meanwhile come to undertakings was critical. It appears from light, it would be favouring Member States the contested decision that Alumínia which did not notify the aid in advance. 22 suffered losses of LIT 77 800 million in 1985, LIT 57 500 million in 1986 and LIT 98 300 million in 1987. Over the same years total indebtedness was LIT 943 300 million, or 155% of turnover, in 1985; LIT 989 300 10. However, the Italian Government million, amounting to 153% of turnover, in claims that the better (or less unfavourable) 1986; and LIT 1 189 800 million or 133% of turnover, in 1987. Comsal had losses of 21 — It appears from the contested decision that at the time of LIT 14 200 million in 1985, LIT 10 200 the procedure under Article 93(2), that is, at the beginning of 1989 (see infra paragraph 12), the Iulian Government million in 1986 and LIT 9 400 million in had informed the Commission that it was expected that in 1987. Total indebtedness amounted to LIT 1988 the State aluminium industry, with the exception of Comsal, would show a profit of LIT 3 000 million, 53 100 million, or 125% of turnover, in whereas the result expected for Comsal for that year would be a loss of LIT 4 600 million (contested decision, 1985, LIT 68 200 million, or 156% of Pan III, second paragraph). turnover, in 1986 and LIT 72 800 million, In its application and reply the Iulian Government confined itself to mentioning that in 1988 the Sute or 142% of turnover, in 1987. 20 aluminium industry as a whole, including Alumínia, made a profit and that Comsal more than halved its toss (application p. 16 and reply p. 14). Other or more precise 19 — See for example the judgments already cited in 'Mettra', information about the recovery of the two underukings is paragraphs 15 and 16, Tubemeuse', paragraphs 26 (and lacking. 29), and 'Alfa Romeo', paragraphs 19 and 20, and the The Iulian Government stated at the hearing that in 1988 judgments in Case C-301/87 France v Commission [1990] Alumínia had made a profit of 7 to 8 000 million. ECR 1-307 ('Boussac'ļ, paragraphs 39 and 40, and Case 22 — In the Alfa Romeo case too, in assessing aid granted in C-303/88 Italy v Commission [1991] ECR 1-1433 (ENI-Lanerossi), 1-1433 paragraphs 20 and 24. 1985 and 1986, the Court did not u k e into account the remarkable recovery of the motor-vehicle industry in 20 — Contested decision, Part IV, fourth paragraph. subsequent years.
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results for 1988 could already be foreseen in from a basic investigation of the September 1987, that is, at the time the loan aid — which it did indeed effect in this was granted, and that, as has been case — the burden of proof as regards the recognized by both the Commission 23 and foreseeability, at the time the aid was the Court 2 4 on several occasions, in granted, of any favourable future prospects decisions about the subscription of capital a rests upon the Member State itself. private investor will be guided above all by the undertaking's future prospects and the expected profitability of the funds subscribed.
So in this case it was for the Italian Government to put forward, in the course This observation of the Italian Government of the administrative procedure under seems to me correct in principle. In the Article 93(2), facts which the Commission application of the criterion of the 'private could then have taken into account in shareholder' account must indeed be taken adopting the decision now at issue and from of the future prospects of the undertaking which it would have appeared convincingly concerned. However, the question is that the improvement which appeared in whether the improvement in the 1988 in the performance of Alumínia and performance of Alumínia and Comsal Comsal could have been foreseen in shown in 1988 could already be foreseen in September 1987 and that the improvement 1987 and, if so, whether the improvement then to be expected was such that a private which could then be foreseen was of such a investor would have subscribed new capital kind as to encourage a reasonable investor for these loss-making undertakings. to subscribe new capital despite the critical financial situation of the undertakings.
11. In assessing the legality of aid which 12. From the documents before the Court it has already been granted, it is naturally cannot be seen that at the time of the difficult to prove subsequently what could procedure under Article 93(2) the Italian and what could not be foreseen at the time Government gave the Commission infor- the aid was granted. That difficulty would mation about the foreseeability of not have arisen if the Italian Government favourable future prospects which might had given notice of the aid at the right time have justified the provision of aid from the and had provided the Commission with all point of view of a private investor. From the information which would have allowed it to contested decision it appears only that the appraise at the appropriate time the future applicant informed the Commission in prospects of Alumínia and Comsal. In a case letters of 31 January and 17 March 1989 of this kind where the Member State has that the State aluminium industry, with the not given notice of the aid, and although exception of Comsal, was expected — for the Commission is not thereby absolved the first time for many years — to record a profit of 3 000 million for 1988, whilst the 23 — See inter alia the contested decision, Part IV, third paragraph, and the Commission Communication to the expected result for Comsal for that year Member Sutes of 17 September 1984, Bulletin of the EC, would show a loss of LIT 4 600 million. 25 N o 9-1984, point 2.5.1. 24 — See for example the Meura judgment, paragraph 14, already cited in footnote 17. 25 — Contested decision, Part III, second paragraph.
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However, it is not stated whether these Ought the Commission to have considered results could already be foreseen in whether Article 92(3)(c) of the EEC Treaty September 1987. Neither in its application is applicable in this case? nor in its reply does the Italian Government claim that it did actually make available to the Commission at the time of the procedure under Article 93(2) specific infor- mation with regard to the improved 14. In support of its application for a prospects for the future. It is true that at the declaration that the contested decision is hearing the Italian Government stated that void, the Italian Government further claims in 1987 clear signs of a coming recovery in that the statement of the reasons on which the aluminium sector could be seen. the decision is based is defective because the However, that was denied by the Commission did not consider whether the Commission and the Italian Government has aid granted was justified on the basis of provided no information showing the Article 92(3)(c) of the EEC Treaty. The accuracy of its statement. Italian Government points out that the aid envisaged under the aluminium plan had been justified by the Commission on the basis of Article 92(3)(c) of the EEC Treaty and in that regard the Commission had But even if it had done so, that still does not stated in its decision of 17 December 1986 mean that that expected recovery would that the aluminium plan contributed to the have been sufficient in magnitude or general restructuring of the aluminium duration to induce a private investor to sector. 27 But the Italian Government contribute new capital to undertakings observes that the aid to Comsal and which had been making a loss for so long. Alumínia was part of that restructuring The prospect of a merely cyclical recovery effort. Yet the Commission, after coming to of the sector is not enough for that. 2 6 the conclusion that the aid in question exceeded the maximum of the aid already approved, did not consider whether the loan to Comsal and Alumínia, just like the aid envisaged under the aluminium plan, might 13. On the basis of the foregoing consider- still be justified on the basis of Article ations I come to the conclusion that the 92(3)(c) of the EEC Treaty. The Italian Italian Government has not shown that the Government admits that the decision of 17 Commission wrongly failed to take account December 1986 contained by implication an of the improvement in the performance of unfavourable assessment of the permissibility Alumínia and Comsal which, according to of further aid, but takes the view that the the Italian Government, could already be Commission should nevertheless have foreseen in 1987, and that the Commission examined the aid in question in the light of therefore rightly concluded that the loans to Article 92(3)(c) of the EEC Treaty. It puts be converted into equity capital constituted forward three arguments on this point. state aid within the meaning of Article 92(1) of the EEC Treaty.
26 — Nor did it appear subsequently that the recovery announced by the Italian Government did in fact lead in First the Italian Government claims that it is subsequent years to a lasting» recovery of Alumínia and Comsal. As already stated in footnote 21, the Iulian not the purpose of decisions taken on the Government stated at the hearing that in 1988 Alumínia basis of the first subparagraph of Article made LIT 8 000 million profit, which is not impressive when it is realized that in the period 1982-87 that under- taking made a loss of almost 1 000 000 million and a loss 27 — Eleventh paragraph of the decision of 17 December 1986, of 98 300 million for 1987 alone. Annex II to the defence.
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93(2), like the contested decision, to find associate myself with a number of obser- that obligations flowing from a prior vations made by the Commission. decision, in this case the decision of 17 December 1986, have not been fulfilled. For such a finding the Commission must, under the second subparagraph of Article 93(2), refer the matter to the Court direct. As far as the first argument is concerned it Secondly, according to the Italian must be observed that under the first Government, the decision of 17 December subparagraph of Article 93(2) the 1986 does not prohibit it from providing Commission is empowered and required to further aid but simply requests it not to do decide whether an aid is or is not so. Thirdly, it adds, the said decision could compatible with the common market having not possibly involve an absolute prohibition regard to Article 92 and that in doing so the of future aid. Any new aid must be inves- Commission must consider all the legal and tigated in the light of its purpose and of the factual circumstances surrounding that aid economic and market situation at the time it (such as the decision of 17 December is granted. 1986). 29
As regards the second argument, we must 15. Before this argument is considered it bear in mind the fact that the Commission must be stated here that at no time during decision of 17 December 1986 is not a the administrative procedure under Article negative decision but a conditionally 93(2) of the EEC Treaty did the Italian positive decision which for that reason took Government claim that the aid to Alumínia the form of a letter to the Italian Minister and Comsal should be examined in the light for Foreign Affairs. Such letters are of Article 92(3)(c) of the EEC Treaty. N o r naturally couched in diplomatic terms, did it then advance any facts which might which does not mean that the request must be relevant or helpful for that purpose. not be regarded as prohibiting the granting According to the Court's consistent of aid. case-law the legality of a contested decision is to be assessed in the light of the infor- mation available to the Commission when the decision was adopted. 2 8 That is in itself sufficient to conclude that this argument And as regards the third argument, the cannot lead to a declaration that the position is that it was only if new facts had contested decision is void. arisen since the decision of 17 December 1986 that the Commission was required to consider the aid to Alumínia and Comsal in the light of Article 92(3)(c) of the EEC Treaty rather than in the light of the conditions laid down in that decision. The Italian Government correctly states that the 16. Nevertheless, I shall still discuss the decision of 17 December 1986 could not Italian Government's arguments briefly and involve an absolute prohibition of all future
28 — See for example the Meura judgment, paragraph 16, 29 — See the judgment in Case 47/69 France v Commission already cited in footnote 17. [1970] ECR 487, paragraph 7.
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aid. Indeed, new facts may arise, in which not simply have ignored a prohibition of case the legality of the aid will have to be further aid. In that case too it would have assessed in the light of those facts. In the had to notify the Commission of the aid to present case, however, the Italian Alumínia and Comsal and inform it of the Government in no way suggests that any new facts and could not provide the aid new facts have arisen. Moreover, even if it before the Commission had given its had done so, the Italian Government could decision on the legality of the aid.
Conclusion
17. I propose t h a t the C o u r t should dismiss the application for a d e c l a r a t i o n that the contested decision is void a n d o r d e r the Italian G o v e r n m e n t t o p a y t h e costs.
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