C-354/90

FNCE

O P I N I O N O F M R A D V O C A T E GENERAL JACOBS delivered on 3 O c t o b e r 1991 *

My Lords, No 84-1297 of 31 December 1984, which imposed parafiscal charges for the benefit of the Comité Central des Pêches Maritimes (Central Committee for Sea-Fishing), local committees for sea-fishing and the Institut Français de Recherche pour l'Exploitation 1. The background to these proceedings is de la Mer (French Research Institute for the the continuing reluctance of some Member Use of Marine Resources). I will later set States to comply with their obligations out, so far as is necessary, the background under the rules on State aid laid down in to these measures. Articles 92 to 94 of the EEC Treaty. The case has been referred to the Court by the French Conseil d'État, which asks for a preliminary ruling on the consequences in the national courts where State aid is introduced in breach of the procedural 3. The applicants claim that the contested requirements laid down by Article 93. In order was introduced in breach of the last particular, the Conseil d'État seeks guidance sentence of Article 93(3) of the Treaty. 'on the question whether the last sentence of Before considering the effect of that Article 93(3) of the Treaty . . . is to be inter- provision, it is appropriate to describe preted as imposing on the authorities of the briefly the Treaty rules on aid and the Member States an obligation which, if procedure for enforcing those rules, in so infringed, will affect the validity of the far as these matters are relevant to the measures giving effect to the aid, regard proceedings before the national court. being had infer alia to the supervening adoption by the Commission of a decision declaring the aid to be compatible with the common market'. The Treaty rules on aid

Anicie 92(2) gives three categories of aid 7. In Case 120/73 Lorenzv Germany [1973] which, notwithstanding Article 92(1), are to ECR 1471, paragraph 3, the Court held be regarded as compatible with the common that: market. Article 92(3) lists four further types of aid which may be considered compatible with the common market. 'In stating that the Commission shall be informed of plans to grant new or alter existing aid "in sufficient time to enable it to submit its comments", the draftsmen of 5. The main responsibility for ensuring that the Treaty have sought to provide this Article 92 is observed lies with the institution with sufficient time for Commission. Article 93(1) requires the consideration and investigation to form a Commission to 'keep under constant review prima facie opinion on the partial or all systems of aid' existing in the Member complete conformity with the Treaty of the States. Under Article 93(2), the plans which have been notified to it. Commission, after giving notice to the parties concerned to submit their comments, may, if it finds that such aid is incompatible with the common market within the It is only after being put in a position to meaning of Article 92, adopt a decision form this opinion that the Commission is requiring the State concerned to abolish or bound, if it considers the plan incompatible alter it within a specific period of time. If with the common market, to initiate without the State does not comply with the delay the contentious procedure, provided Commission's decision, the Commission for in Article 93(2), by giving notice to the may refer the matter directly to the Court. Member State to submit its comments.'

decision within the meaning of Article 189 93(3), I must set out briefly the background of the Treaty. Such a decision was only to the contested order. For a number of required at the end of the contentious years, the French Government was engaged procedure laid down in Article 93(2). in negotiations with the Commission over the compatibility with the Treaty of various types of aid granted to undertakings in the fisheries sector. By letter dated 15 June 1982, the Commission informed the French 8. The Court's decision in Lorenz was reit- authorities that it had decided to extend an erated in a number of other judgments given existing investigation under Article 93(2) of on the same day: see Case 121/73 the Treaty to certain aspects of that aid and Markmann v Germany [1973] ECR 1495; to open a new investigation in respect of Case 122/73 Nordsee v Germany [1973] certain other aspects. Then, early in 1984, ECR 1511; Case 141/73 Lohrey v Germany the French authorities sent to the [1973] ECR 1527. Several of the points Commission a note on the organization, made in those decisions were subsequently financing and activities of a body known as reaffirmed in Case 84/82 Germany v the Fonds d'Intervention et d'Organisation Commission [1984] ECR 1451. du Marché des Produits de la Pêche Maritime et des Cultures Maritimes ('FIOM'). The functions of FIOM included price support, directing production, under- 9. The role of the national courts in taking commercial studies, and providing an applying the Treaty rules on aid is an allowance for fishermen who were unable to important but subsidiary one. The national work because of the weather. courts have no jurisdiction to rule on the compatibility of aid with the common market for the purposes of Article 92. They may, however, 'have cause to interpret and apply the concept of aid contained in Article 92 in order to determine whether State aid introduced without observance of the preliminary examination procedure provided for in Article 93(3) ought to have been 11. By letter of 27 July 1984, the subject to this procedure': see Case 78/76 Commission informed the French author- Steinike und Weinlig v Germany [1977] ities that it had decided to commence a ECR 595, paragraph 14. The issue of the separate investigation under Article 93(2) jurisdiction of the national courts to apply into the activities of FIOM and gave the the last sentence of Article 93(3) is raised by French Government a deadline for the referring court's question and is submitting its observations. The Commission addressed below. was concerned about two aspects in particular of FIOM's activities. First, while the activities of FIOM were to a large extent designed to benefit French produce The background to the contested order and French producers, FIOM was in part financed by a parafiscal charge levied on imports. Secondly, the Commission took the view that FIOM's market support activities were incompatible with the Community 10. In order to explain why the applicants legislation on the common organization of seek to rely on the last sentence of Article the market in fishery products.

12. The French authorities subsequently instituted under Article 93(2) could only be informed the Commission of a number of terminated by the adoption of a decision alterations to the legislation relating to within the meaning of Article 189 of the FIOM. In particular, the rate of tax Treaty. Notwithstanding that ruling, the applied to imports was henceforth to be agent of the Commission explained at the lower than that applied to French produce hearing that formal decisions are only and the proceeds of the tax were to be used adopted when the Commission forms the to finance the promotion of sea food view that the aid in question is incompatible generally, regardless of its origin. Those with the common market or is only changes were implemented by Decree compatible with the common market if N o 84-1297 and by the contested order, the certain conditions are met. Both the texts of which were sent to the Commission, referring court and the Commission, via the French Permanent Representative to however, seem to regard the letter of 25 the Community, on 14 June 1985. By letter October 1985 as embodying a decision dated 25 October 1985, the Commission within the meaning of Article 189. The informed the French authorities that it was Commission finds support for that view in terminating the procedure instituted under the judgment in Case 169/84 Cofaz v Article 93(2) in respect of FIOM, with the Commission [1986] ECR 391, where the exception of certain aspects of FIOM's acti- Court accepted that a decision taken at a vities which are not at issue in the meeting of the Commission to terminate an proceedings before the referring court. That investigation initiated under Article 93(2) letter did not expressly state that the and notified to the Member State concerned Commission considered the aspects in by letter was susceptible to review under respect of which it was terminating the Article 173 of the Treaty. Nevertheless, the procedure compatible with the common question might arise whether in practice market, but it seems to have been inter- there need be any formal difference between preted in that sense by the referring court. A notification at the end of the preliminary decision finding the other aspects of examination that aid conforms with the FIOM's activities which were under investi- Treaty, which the Court held in Lorenz did gation incompatible with the common not have to be in the form of a decision market and requiring them to be abolished within the meaning of Article 189, and a was adopted on 9 October 1985, although it decision taken at the end of the contentious was not published until 23 May 1986: see procedure, which according to the Court Decision 86/186, Official Journal 1986 does have to take that form. Since the L 136, p. 55. validity of the Commission's letter has not been challenged, however, I am prepared, for the purposes of these proceedings, to accept the view of the referring court and of the Commission as correct.

recital of the preamble to Decision 86/186 16. The answer to that question might, until speaks of the French Government having recently, have been thought fairly clear. The 'notified the Commission . . . of its intention Court stated at paragraph 8 of the judgment to grant certain aids to sea-fishing under- in Lorenz that: takings', but later the preamble states (see p. 60) that some aspects of FIOM's activ- ities were only notified after the aids had been introduced and following a number of requests from the Commission. That 'the prohibition on implementation referred statement reiterates a complaint made by the to in the last sentence of Article 93(3) has a Commission in its letter of 17 July 1984, direct effect and gives rise to rights in where it claimed that the information favour of individuals, which national courts concerning FIOM supplied to it by the are bound to safeguard. French authorities was incomplete, frag- mented and overdue. Nevertheless, since the effect of the last sentence of Article 93(3) in circumstances such as those of the present The immediately applicable nature of this case is the same whether or not the plan to prohibition extends to the whole of the grant aid was notified, I do not consider it period to which it applies. necessary to pursue the matter.

Thus the direct effect of the prohibition extends to all aid which has been implemented without being notified and, in The effect of the last sentence of Article the event of notification, operates during 93(3) the preliminary period, and where the Commission sets in motion the contentious procedure, up to the final decision.'

must hold any measures taken in defiance of observations, to issue an interim decision the last sentence of Article 93(3) unlawful requiring it to suspend payment of the aid and grant all remedies necessary to ensure pending the outcome of an examination and the effectiveness of the prohibition to provide the Commission with all the contained therein. information necessary to enable the compat- ibility of the aid with the common market to be assessed. The Court added that the Commission had the same power 'in cases where it has been notified of aid but the Member State in question, instead of awaiting the outcome of the procedure 18. In this case, however, the French provided for under Article 93(2) and (3) of Government argues that the Court's the Treaty, has instead proceeded to put the judgment in the 'Boussac' case, the relevant aid into effect, contrary to the prohibition parts of which were reiterated shortly contained in Article 93(3)' (paragraph 20 of afterwards in Case C-142/87 Belgium v the judgment). Commission ('Tubemeuse') [1990] ECR 1-959, has impliedly qualified its earlier case-law on the direct effect of the last sentence of Article 93(3). A similar view was taken by the Commissaire du Gouvernement in his Opinion presented to the referring court before the reference was made. 21. The Court's ruling means that the Commission is obliged to examine the compatibility with the common market of any plans to grant or alter aid of which it is aware, even if the Member State concerned has, in breach of the last sentence of Article 19. In 'Boussac', one of the claims made by 93(3), implemented them without waiting the Commission was that it had the power for clearance. The Commission has no to find that aid which had not been notified power to declare aid unlawful solely for to it was for that reason alone unlawful, and breach of that sentence. that it was not entitled to consider the compatibility of such aid with the common market. The Court was not, however, prepared to accept that failure by a Member State to notify aid dispensed the Commission, once it became aware of it, from its duty to examine its compatibility with the common market. 22. In the view of the French Government, it follows from the Court's ruling in 'Boussac' that the national courts likewise have no jurisdiction to declare aid unlawful exclusively for breach of the last sentence of Article 93(3). That view is to some extent supported by the United Kingdom 20. The Court held that, where a Member Government, which did not submit written State had granted or altered aid without observations in these proceedings but which prior notification, the Commission had the was represented at the hearing. The United power, after giving the Member State Kingdom reiterated the argument it concerned the opportunity to submit its advanced in 'Boussac', that a breach of the

last sentence of Article 93(3) does not auto- theless complementary, since the exercise by matically make aid unlawful, although it the national court of its power to declare was prepared to recognize that national unlawful measures which are not notified, courts were entitled to grant interim relief in or which are implemented prematurely, will the event of such a breach to protect the help to ensure that Member States comply position of third parties pending the with their obligations and will facilitate the outcome of the Commission's investigation. Commission's task of examining the substance of proposed aids. It is for this reason that the national courts are required to enforce the last sentence of Article 93(3) in circumstances where the Commission would be required to examine the compat- 23. I am unable to accept the argument that ibility of aid with the common market. the Court's decision in 'Boussac' must be taken to have qualified its earlier case-law on the direct effect of the last sentence of Article 93(3). At paragraph 38 of my Opinion in 'Boussac', I ventured to suggest that, since national courts could declare aid 25. In my view, it is clear therefore that the unlawful for breach of the last sentence of Court's judgment in 'Boussac' has no Article 93(3), the Treaty must be interpreted bearing on its well established case-law as conferring on the Commission a similar concerning the direct effect of the last power. The Court's decision to the effect sentence of Article 93(3). Indeed, the that the Commission has no such power judgment contains no suggestion that that does not, in my view, have any bearing on case-law was intended to be qualified. On the powers and duties of the national courts. the contrary, the Court reiterated in that The Commission is required to examine on judgment its statement in Joined Cases 91 the substance the compatibility of the and 127/83 Heineken Brouwerijen v proposed measure with the common market, Inspecteurs der Vennootschapsbelasting [1984] while the national courts must ensure that ECR 3435, paragraph 20, that 'the final the proposed measure is not implemented sentence of Article 93(3) is the means of until that examination is complete. safeguarding the machinery for review laid down by that article, which, in turn, is essential for ensuring the proper functioning of the common market'.

they are compatible with the common the Commission finds the aid, although market, a practice which, according to introduced unlawfully, nevertheless figures produced by the Commission in this compatible in substance with the common case, remains unacceptably common. market? In my view, the national court may Because of the importance of the last still be required to declare measures adopted sentence of Article 93(3) in securing before that finding unlawful and to draw compliance by the Member States with the the necessary consequences. I would Treaty rules on aid, the Court has emphasize that, as the Commission points emphasized that an interpretation of Article out, a decision taken by the Commission at 93 is unacceptable if 'it would have the the end of the contentious procedure does effect of depriving the provisions of Article not have retroactive effect and cannot 93(3) of their binding force and even that of therefore cure procedural defects already encouraging their non-observance' (Case affecting the validity of any national 173/73 Italy v Commission [1974] ECR 709, measure giving effect to the aid prema- paragraph 8). turely. This is in my view so whether or not the aid is found compatible with the common market, for the object of the last sentence of Article 93(3) is to prevent Member States from giving effect to plans to grant aid until the Commission has reached a decision. If a breach of that 27. Thus, as the Court held in Lorenz, the provision were devoid of consequences direct effect of the prohibition laid down in where the Commission ultimately found the the last sentence of that provision extends to aid compatible with the common market, all aid which has been implemented without Member States would have an incentive not being notified and operates, in the case of to await the outcome of the Commission's aid which has been notified, throughout the investigation, since in that way aid could be preliminary period and, where the introduced more quickly. Such an outcome Commission sets in motion the contentious would considerably weaken the procedure procedure, up to the final decision. The for enforcing the Treaty rules on aid and national courts are required to draw the would confer an unfair advantage on under- appropriate consequences from that fact and takings which benefited from the aid. In must therefore take any steps which appear principle, therefore, the national courts must necessary in the circumstances to nullify the ensure the recovery of all aid paid prema- effects of the breach of the last sentence of turely. If it is necessary to allow an under- Article 93(3). Consequently, national courts taking to retain any aid paid prematurely, may be required to declare legislation giving such aid being set off against aid payable effect to the aid unlawful and to order the subsequently under a plan found compatible recovery of aid which has already been paid. with the common market, then an Where the aid has been financed by charges adjustment may have to be made to offset imposed on undertakings, the national any competitive advantage that would courts may be required to order that those otherwise accrue to the undertaking charges be refunded. concerned by reason of the early payment.

compatible with the common market cannot enable the national authorities to rely on be said to create a legitimate expectation their own illegal conduct in order to that any aid already paid out is lawful. The frustrate the effectiveness of Commission Commission published a communication in decisions adopted pursuant to the Treaty the Official Journal in 1983 (Official rules on aid (see also Case C-303/88 Italy v Journal 1983 C 318, p. 3) warning Commission, judgment of 21 March 1991, potential recipients of aid that it might have [1991] ECR 1-1433). It follows in my view to be refunded if it were found to have been that a Member State cannot point to the granted illegally. Moreover, the Court held alleged legitimate expectations of recipients in Case C-5/89 Commission v Germany in resisting an order made by a national [1990] ECR 1-3437, that, in view of the court that aid paid out prematurely be importance of the role played by the recovered. Commission under Article 93 of the Treaty, the recipients of aid can in principle only have a legitimate expectation that the aid is lawful if the procedural requirements of that article have been satisfied. The Court pointed out that a prudent economic operator would normally be in a position to ensure that those requirements had been 32. I accept that where, as in the present met. case, the Commission ultimately concludes that the plan in question is compatible with the common market, some inconvenience and delay may be caused if a national court declares that the aid was unlawful in the meantime for breach of the last sentence of Article 93(3). It is also true that, as the 30. The Court did not rule out the possi- Court acknowledged in Lorenz, aid cases bility that a recipient of aid paid out often involve sectors where the need to illegally might in some cases be able to rely intervene is of an urgent nature if the on a legitimate expectation that the aid was desired effect of the proposed measures is to lawful and so to resist recovery. The Court be achieved. Nevertheless, the way for made it clear, however, that this would only Member States to keep inconvenience and be possible in exceptional circumstances. delay to a minimum is for them to refrain Responsibility for examining the substance from giving effect to plans to grant or alter of such a claim was cast on the national aid before they have been cleared by the courts, who may seek guidance on the Commission. matter under Article 177 of the Treaty.

substance, it must make a fresh notification. that the effect of a decision of a national It is not the plan to grant aid which the court quashing a domestic measure for national court finds unlawful in such breach of the last sentence of Article 93(3) circumstances, but the national measures was to render null and void the plan to giving effect to the plan prematurely. Thus, which that measure purported to give effect, the decision of the national court does not it might be argued that such a decision affect the validity of the plan itself. Once relieved the Commission of its duty to the Commission has decided that the plan is consider the compatibility of the plan with compatible with the common market, the the common market where the decision of Member State concerned may therefore the national court was reached before the implement it without more ado. The Commission had concluded its investigation. argument of the Commission, if upheld, Such a conclusion, which might be difficult would lead to unnecessary procedural to resist, would in my view be inconsistent complexity. Moreover, if it were concluded with the Court's decision in 'Boussac'.

Conclusion

34. I am therefore of the opinion that the question referred by the Conseil d'État should be answered as follows:

(1) The last sentence of Article 93(3) of the EEC Treaty must be interpreted as meaning that a Member State may not give effect to a plan to grant or alter aid before the Commission has formed a view, either at the end of the preliminary period or at the end of the contentious procedure where that procedure is instituted, on the compatibility of the aid with the common market. That sentence confers rights on individuals which the national courts are bound to protect.