T-244/93

JUDGMENT OF 13. 9. 1995 — JOINED CASES T-244/93 AND T-486/93

JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber, extended composition) 13 September 1995 *

In Joined Cases T-244/93 and T-486/93,

TWD Textilwerke Deggendorf GmbH, a company incorporated under German law, established in Deggendorf (Germany), represented by Walter Forstner, Lutz Radtke and Karl-Heinz Schupp, Rechtsanwälte, Deggendorf, assisted by Michael Schweitzer, Professor at the University of Passau, with an address for service in Luxembourg at the office of M. Stein, Bayerische Landesbank International SA, 7-9 Boulevard Royal,

applicant,

supported by

Commission of the European Communities, represented by Antonino Abate, Principal Legal Adviser, Bernhard Jansen and Bernard Langeheine, of the Legal Service, and by Claus Michael Happe, national official seconded to the Com- mission, acting as Agents, assisted by Meinhard Hilf, Professor at the University of Hamburg, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

defendant,

A P P L I C A T I O N for annulment of Article 2 of Commission Decision 91/391/EEC of 26 March 1991 on aid granted by the German Government to Deggendorf G m b H , a producer of polyamide and polyester yarns located in Deggendorf (Bavaria) (OJ 1991 L 215, p. 16), and of Article 2 of Commission Decision 92/330/EEC of 18 December 1991 on aid by Germany to the Deggendorf textile works (OJ 1992 L 183, p. 36),

T H E C O U R T O F FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber, extended composition),

composed of: J. Biancarelli, President, R. Schintgen, C. P. Briët, R. García- Valdecasas and C. W. Bellamy, Judges,

Registrar: H.Jung,

1 During the period from 1981 to 1983 the applicant, T W D Textilwerke Deggendorf G m b H (hereafter 'TWD'), a company active in the synthetic fibre sector, received State aids, initially not notified to the Commission, consisting of a subsidy of D M 6.12 million from the Federal German Government and a loan on preferential terms of D M 11 million from the Land of Bavaria (hereafter 'the T W D I aid'). Fol- lowing late notification by the German authorities in March and July 1985 after repeated requests from the Commission, the Commission adopted, on 21 May 1986, Decision 86/509/EEC on aid granted by the Federal Republic of Germany and the Land of Bavaria to a producer of polyamide and polyester yarn situated in Deggendorf (OJ 1986 L 300, p. 34, hereafter 'the T W D I decision'), in which it found that the aids in question were unlawful, on the ground that, in breach of Article 93(3) of the E E C Treaty, they had not been notified to the Commission, and on the ground that they were incompatible with the common market because they did not satisfy any of the conditions laid down in Article 92(2) and (3) of the E E C Treaty, owing in particular to the fact that they were contrary to the synthetic fibre and yarn aid code. The decision ordered the aid in question to be recovered. N o legal challenge was mounted against the T W D I decision, which thus became definitive.

2 O n 19 March 1987 the Federal German Ministry for Economic Affairs withdrew the certificates concerning the subsidy of D M 6.12 million granted by the Federal German Government, in order to recover that subsidy in accordance with the T W D I decision. However, the applicant challenged that step before the national administrative courts by lodging an appeal before the Verwaltungsgericht (Admin- istrative Court) Cologne and then appealing against that court's judgment to the Oberverwaltungsgericht (Higher Administrative Court) for the Land North Rhine-Westphalia.

The German authorities are hereby required to suspend payment to Deggendorf of the aid referred to in Article 1 of this decision until such time as they have recov- ered the incompatible aids referred to in Decision 86/509/EEC.'

4 The T W D II decision has not been challenged by the Federal Republic of Germany but, by application lodged at the Registry of the Court of Justice on 19 June 1991, the applicant brought an action, registered under N o C-l61/91, for annulment of Article 2 of that decision.

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5 In the meantime, on 25 February 1991, the German authorities had notified the Commission of a third plan to grant aid to the applicant in the form of 'soft' loans (hereafter 'the T W D III aid'). That aid concerned investments to be made in the Pietsch undertaking specializing in the manufacture of textile curtains, which had been acquired by the applicant. On 18 December 1991 the Commission adopted Decision 92/330/EEC on aid by Germany to the Deggendorf textile works (OJ 1992 L 183, p. 36, hereafter 'the TWD III decision') whose operative provisions are in similar terms to those contained in the T W D II decision. The operative part of the T W D III decision reads as follows:

'Article 1

The German Government shall inform the Commission within two months of the date of notification of this Decision of the measures taken to comply therewith.

j

6 By application lodged at the Court Registry on 6 April 1992 the Federal Republic of Germany brought an action, registered under N o C-110/92, for annulment of Articles 2 and 3 of the T W D III decision.

7 By application lodged at the Court Registry on 18 May 1992, the applicant brought an action, registered under N o C-220/92, for annulment of Article 2 of the T W D III decision.

s By order of 12 March 1993, Cases C-161/91 (concerning the T W D II decision) and C-110/92 and C-220/92 (concerning the T W D III decision) were joined for the purposes of the oral procedure and the judgment.

9 Pursuant to Council Decision 93/350/Euratom, ECSC, E E C of 8 June 1993 amending Decision 88/591/ECSC, EEC, Euratom establishing the Court of First Instance of the European Communities (OJ 1993 L 144, p. 21), the Court, by order of 15 September 1993, disjoined Case C-110/92 (Germany v Commission) from Cases C-161/91 and C-220/92 (TWD v Commission) and, by order of 27 September 1993, referred Joined Cases C-161/91 and C-220/92 to the Court of First Instance. Those cases were registered at the Court of First Instance under Nos T-244/93 and T-486/93 respectively.

i2 By order of 22 March 1994 made by the Court of First Instance pursuant to the second paragraph of Article 42 of the Statute (EC) of the Court of Justice the Federal Republic of Germany was granted leave to intervene in Case T-486/93 in support of the applicant.

1 3 U p o n hearing the report of the Judge-Rapporteur the Third Chamber (extended composition) of the Court of First Instance decided to open the oral procedure in Joined Cases T-244/93 and T-486/93 without any prior measures of inquiry. H o w - ever, as a measure of organization of procedure the Court of First Instance put cer- tain questions in writing to the Commission in order to clarify the Commission's calculations concerning the amount of aid in question. The Commission replied by letter of 14 December 1994.

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14 The Court of First Instance heard oral argument from the parties and their replies to the Court's oral questions on 10 January 1995.

Forms of order sought by the parties

— order the Commission to pay the costs.

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i7 In the latter case the intervener submits that the Court should:

— annul Article 2 of the Commission's decision of 18 December 1991;

— order the Commission to pay the costs.

TWD v COMMISSION

20 In its reply in Case T-244/93 the applicant essentially makes two further pleas: at least part of the T W D I aid satisfied the substantive conditions for it to be declared lawful and, secondly, the principle of proportionality was infringed in that the Commission did not authorize payment of the balance of the T W D II aid after deduction of the amount of the T W D I aid.

21 In its application in Case T-486/93, the applicant essentially advances six pleas. The first is that the Commission was not empowered to adopt Article 2 of the T W D I- II decision. The second plea alleges misuse of powers on the ground that, by adopt- ing Article 2 of the T W D III decision, the Commission sought to exert pressure on the applicant so that it could not rely on the rights it has under the national legal system, thus usurping the powers of a Member State. Thirdly, the applicant main- tains that it derives no competitive advantage from the T W D I aid since the requirements of the T W D I decision have been observed and it has established reserves in anticipation of the possible outcome of the national proceedings. Fourthly, the applicant pleads infringement of the principle of proportionality, in particular on the ground that the Commission did not authorize payment of the difference between, on the one hand, the total amount of the T W D II and T W D I- II aid and, on the other, the amount of T W D I aid. The fifth plea is that at least part of the T W D I aid satisfied the substantive conditions for it to be declared law- ful. Finally, as its sixth plea, the applicant contends that recovery of the T W D I aid is precluded under German law, which is the sole law applicable to the claim for repayment.

— fourthly, the pleas of lawfulness of the T W D I aid.

The pleas of the Commission's lack of competence and of infringement of the prin- ciples governing the division of powers between the Community and the Member States

Summary of the parties' arguments

23 The applicant submits that there is no legal basis for the suspension of payment of the T W D II and T W D III aid ordered in Article 2 of the operative parts of the decisions in question. Furthermore, it alleges essentially that the Commission infringed the principles governing the division of powers between the Community and the Member States. It maintains, in particular, that Article 2 of the operative parts of the decisions constitutes an unwarranted interference in the national legal system.

24 In its view, when the Commission takes a decision under Article 92(3)(c) of the Treaty, it certainly has a wide discretion, but that discretion must be exercised in accordance with the procedural requirements of Community law. If it wished to use coercion in order to make the Federal Republic of Germany take action to recover the T W D I aid, the Commission was obliged to use the procedure provided for in Article 169 of the E E C Treaty, or the procedure provided for in the second subparagraph of Article 93(2) of the Treaty, to the exclusion of a conditional auth- orization procedure, not provided for in the Treaty (see the judgment of the Court

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27 With regard to its position in national law, the applicant states that restitution is now impossible in so far as the two loans granted by the Land of Bavaria are con- cerned. Since the Land has not claimed repayment of the aid in question, such res- titution is now precluded by Paragraph 48 of the Verwaltungsverfahrengesetz (Law

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o n Administrative Procedure, hereinafter 'the VwVfG'), which requires an unlaw- ful administrative act to be withdrawn within a period of one year from the time when the administrative authorities became aware of the circumstances justifying that step.

28 As regards the aid granted by the Federal Government, the applicant states that, in its action before the Verwaltungsgericht, Cologne, and then in its appeal to the Oberverwaltungsgericht for the Land N o r t h Rhine-Westphalia, it claimed protec- tion of its legitimate expectations and relied on the provisions of the VwVfG. At n o time was it informed that the T w D I aid ran counter to provisions of Com- munity law so that, when the investment was made and the relevant national administrative decisions adopted, it was entitled to expect that they would not be overturned. Moreover, the period of one year provided for in Paragraph 48 of the VwVfG expired with regard to the federal German authorities, which knew that the decisions granting the T W D I aid were unlawful as soon as they were adopted.

significance. Since the T W D III decision found the T W D III aid to be compatible with the common market, it was not possible for its implementation to be prohib- ited. The suspensory condition is therefore without legal foundation; as a measure restricting the rights of those concerned, it needed authorization under the Treaty (judgment of the Court of Justice in Case 111/63 Lemmerz-Werke v High Authority [1965] ECR 677, at p. 699), since the Commission is not authorized to apply procedures not provided for therein (see the judgment in Case C-294/90 British Aerospace and Rover v Commission, cited above, paragraph 14). The effect of the first subparagraph of Article 93(2) and Article 92(3)(c) of the Treaty is that a Member State must abolish or alter aid found to be incompatible with it, and not that it should refrain from disbursing aid found to be compatible.

3i Moreover, the benefit conferred on the applicant by the T W D I aid, on the assump- tion that it still subsists, is merely the consequence of its right to challenge recov- ery of that aid, and the link established by the Commission is incompatible with the principles of the rule of law, should the applicant be successful in the national proceedings which it has commenced. Since recovery is subject to national law, the Commission should accept the consequences thereof; it may not circumvent them by means of procedures which are not provided for in the Treaty. At the most it could bring proceedings against the Federal Republic of Germany for a declaration that it has failed to fulfil its obligations.

35 The judgment in the British Aerospace case, cited above, had indeed adverted the Commission to the possibility of bringing the matter before the Court under the second subparagraph of Article 93(2) of the Treaty but also, at paragraph 10 of the judgment, to the possibility of altering the aid in question, provided for in the first subparagraph of that same paragraph. Alteration of the new aid, consisting in sus- pending its disbursement until the unlawful competitive advantage enjoyed by the applicant no longer existed, was the appropriate solution in the present case.

36 The T W D II and T W D III decisions do not contain two separate decisions, one declaring the aid compatible, the other suspending its payment. In both cases there is a single decision finding that the T W D II aid and the T W D III aid respectively are not compatible and only disbursable if the applicant has first repaid the T W D I aid, the objective being to restore the pre-existing situation, in accordance with the judgment of the Court of Justice in Case C-142/87 Belgium v Commission [1990] E C R 1-959, paragraph 66.

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37 Conditional authorization of the T W D II and T W D III aid is neither a coercive measure nor a means of exerting economic pressure nor a misuse of powers. The only means of actually enforcing implementation of the T W D I decision, which has now become definitive, would be to bring proceedings for breach of the Treaty. The T W D II and T W D III decisions were intended only to prevent the payment of new aids distorting competition in the common market and therefore unlawful. The Commission cannot be obliged, just because certain expectations may be held to be legitimate under national law, to infringe the provisions of the Treaty by autho- rizing payment of new aids which, if the T W D I aid were maintained, would dis- tort competition and would not be compatible with the common market.

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It is also clear from paragraph 14 of the judgment in Commission v Germany, cited above, that a trader may not legitimately rely on aids granted if the procedure pro- vided for in Article 93(3) of the Treaty has not been followed.

4i In any event, a legitimate expectation in the maintenance of aid contrary to Com- munity law cannot be upheld by the national court without a reference to the Court of Justice (Commission v Germany, cited above, paragraph 16). If the Court had ruled, in proceedings for a preliminary ruling, that the applicant could legiti- mately have entertained an expectation that the T W D I aid was lawful, even under Community law, the suspension of payment of the T W D II and T W D III aids would automatically have become nugatory. However, that has not happened in the present case.

Findings of the Court

42 The questions raised by these pleas must be examined in two stages; first, the ques- tion of the Commission's competence to adopt Article 2 of the T W D II and T W D III decisions and, secondly, the question of the alleged infringement of the principles governing the division of powers between the Community and the Mem- ber States.

45 Given those arguments and in order to decide whether the Commission had the power to adopt the contested decisions, it is first necessary to determine the mean- ing and effect of those decisions. In particular, the relationship between the oper- ative parts and the grounds of the decisions must be examined.

46 The operative part of an act must be interpreted by having regard to the reasoning which led to its adoption (see the judgment of the Court of First Instance in Joined Cases T-68/89, T-77/89 and T-78/89 SIV and Others v Commission [1992] ECR 11-1403, paragraph 320).

47 As regards the T W D II decision, after finding at the end of Part IV, that the T W D II aid measures 'are eligible for exemption pursuant to Article 92(3)(c)' of the Treaty, the Commission continues in these terms in the first recital in Part V:

'When deciding whether one of the exemptions provided for in Article 92(3) of the Treaty can apply to an aid, the Commission must take into account all relevant

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Furthermore, the Commission does not have the power to enforce the speeding up or implementation of its 1986 decision, which makes it all the more necessary to suspend payment of the aid in question.

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It should also be noted that, in its notice pursuant to Article 93(2), the Com- mission referred to the doubly distorting effect on competition caused by the failure of [TWD] to repay the earlier incompatible aids. Yet neither the German Government nor the company in question have submitted any arguments or comments on this matter' (ninth to twelfth recitals).

49 The Commission concludes that

' [the T W D II aid] is compatible with the common market but may not be granted until [TWD] has repaid the aid received illegally between 1981 and 1983 referred to in Commission Decision 86/509/EEC' (thirteenth recital).

53 In those circumstances, it must be examined, secondly, whether the Commission had power to adopt decisions subject to conditions relating to the grant of aids under Article 92(3)(c) of the Treaty.

54 According to Article 92(1) of the Treaty, all State aids referred to by that provision are incompatible with the common market, subject to the derogations provided for in Article 92(2) and (3). According t o the first paragraph of Article 93(2), if the Commission finds, after giving notice to the parties concerned to submit their com- ments, that State aid is not compatible with the terms of Article 92, it is to decide that the State concerned must abolish or alter such aid within a period of time to be determined by the Commission.

55 That power of the Commission, to decide that aid must be 'altered', necessarily implies that a Commission decision, authorizing aid under Article 92(3)(c) of the Treaty, may be made subject to conditions for ensuring that authorized aid does not alter trading conditions in a way contrary to the general interest.

56 Furthermore, as the Court of Justice held at paragraph 20 of its judgment in Italy v Commission, cited above, when the Commission considers the compatibility of a State aid with the common market, it must take all the relevant factors into account, including, where relevant, the circumstances already considered in a prior decision

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so It follows that the Commission did not follow procedures not provided for by the Treaty and that the infringement proceedings were not the only remedies available to the Commission in this case.

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6i As regards the arguments of the applicant and the intervener according to which the Commission committed a misuse of power, having regard, in particular, to the fact that in the contested decisions it stated that it 'does not have any means of coercion at its disposal to accelerate or enforce the implementation of its 1986 decision', which 'makes it all the more necessary to suspend payment of the aid in question' (see paragraph 26 above), it is clear from settled case-law that the con- cept of misuse of power has a very precise meaning and encompasses the use by an administrative authority of its powers for a purpose other than that for which they were conferred upon it. A decision is vitiated by misuse of power only if it appears, on the basis of objective, relevant and consistent factors, to have been taken with the purpose of achieving ends other than those stated (see, for example, the judg- ment of the Court of Justice in Case C-331/88 Fedesa and Others [1990] ECR 1-4023 and the judgment of this Court in Case T-106/92 Frederiksen v Parliament [1995] ECR-SC 11-99).

62 The Court has already found here that the purpose of Article 2 of the operative parts in question is to ensure that competition in the common market is not dis- torted by payment of the new TWD II and T W D III aids before the old T W D I aid is repaid (see paragraph 59 above). It follows that the contested decisions were not taken for achieving purposes other than those stated and are not therefore viti- ated by misuse of power (see also paragraphs 64 to 68 below).

65 The question to be examined therefore is whether the existence of national pro- ceedings, in which such questions of national law are in point, can affect the legal- ity of the T W D II and T W D III decisions.

66 The Commission's competence to adopt Article 2 of the contested operative parts cannot be called in question merely by reason of the fact that national proceedings are in progress. The legality of the T W D II and T W D III decisions cannot depend on questions of domestic German law, such as observance by the German author- ities of Paragraph 48 of the VwVfG. Furthermore, the fact that domestic proceed- ings are in progress cannot affect the Commission's power to adopt all measures necessary to ensure that competition in the Community is not distorted.

67 As the Court has already found (see paragraphs 59 to 62 above), the aim of Article 2 of the operative parts of the decisions in question is to ensure that competition in the common market is not distorted by the accumulated effect of the aids in ques- tion, and not to prevent the applicant from relying on its rights in the national legal system. Accepting the applicant's argument would mean accepting that the Com- mission was obliged to infringe the Treaty by authorizing new aid capable of accen- tuating the distortion of competition arising from the fact that the old unlawful aid had not been repaid.

68 Moreover, the decisions in question do not prevent the applicant from pursuing the proceedings in progress before the national court, which the applicant has in fact done in this case. N o r can the applicant complain of any 'pressure' since it was the

7i The Court considers that, in those circumstances, the Community legal system did not oblige the Commission to await the outcome of the national proceedings — in which in fact the alleged legitimate expectation of the applicant has still not been

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established after more than eight years of proceedings — before adopting Article 2 of the operative parts in question. Any other interpretation would deprive Articles 92 and 93 of the Treaty of their practical effect.

72 It must be borne in mind in any event that the national proceedings relied on by the applicant do not concern the T W D I aid granted by the Bavarian authorities. According to the applicant's own statements, which have not been contradicted either by the intervener or by the defendant, the Bavarian authorities allowed the one-year period provided for by Paragraph 48 of the VwVfG to expire without taking any steps to recover the aid in question. Moreover, the applicant stated at the hearing that the Bavarian authorities do not wish to claim back the aid in ques- tion and that they refused to issue the necessary notice of repayment.

73 In those circumstances, the Court considers that the applicant may not in any event legitimately rely, in Community law, on legitimate expectation based on the fact that the Bavarian authorities did not demand repayment of the T W D I aid in the period laid down by national law. As the Court of Justice held in its judgment in the Commission v Germany case, cited above, paragraph 19, a provision laying down a time-limit for the revocation of an administrative act creating rights must be applied in such a way that the recovery required by Community law is not ren- dered practically impossible and the interests of the Community are taken fully into consideration.

76 In Case T-486/93, the applicant, supported by the intervener, further submits that the Commission overestimated the competitive advantage afforded by the T W D I aid because the applicant formed a reserve of D M 6.12 million, plus annual inter- est, in anticipation of the possible outcome of the national proceedings. The T W D I aid has not therefore had an effect contrary to the Community interest.

77 The Commission states that it has t o decide whether aid is compatible with the common market in the light of factors relating to the Community as a whole (judg- ments of the Court of Justice in Case 730/79 Philip Morris v Commission [1980] E C R 2671 and in Case 310/85 Deufil v Commission, cited above, paragraph 18) and taking account of all the relevant facts. It maintains that its decision is not vitiated b y any error of assessment.

78 In the contested decisions the Commission considered it necessary to take account of all the factors which might influence the effect of the T W D II and T W D III aid and in particular the fact that the applicant was still in possession of the T W D I aid. The accumulated effect of the two packages of aid distorted competition and seriously affected the general interest, especially on a market in polyamide yarn

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already characterized by keen competition, stagnant demand, capital-intensive investments and reduced profit margins.

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Findings of the Court

82 It is settled case-law that Article 92(3) of the Treaty confers on the Commission a discretion the exercise of which entails complex assessments of an economic and social nature which must be made in a Community context (see the judgment of the Court of Justice in the Deu fil v Commission case, cited above, paragraph 18). The Court must therefore limit its review of such an assessment to ascertaining that the rules of procedure have been complied with, that the reasoning is sufficient, the facts are correct, and that there is no manifest error of assessment or misuse of power.

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provision is not the same as repaying the aid in question. Secondly, the applicant has not provided evidence to show that the provision in question has the effect of removing the unlawful competitive advantage which it derives from the T W D I aid. Thirdly, that provision does not cover the advantages arising from the interest-rate subsidy on the loans granted by the Bavarian authorities.

ss It follows that the applicant has not demonstrated that the Commission committed a manifest error of assessment and that the submissions to the effect that the T W D I aid gave the applicant no competitive advantage must therefore be dismissed.

The pleas of breach of the principle of proportionality

Summary of the parties' arguments

89 In Case T-486/93, the applicant contends in its reply that in order to calculate the value of the aid consisting of loans on preferential terms, the Commission ought to have taken the reference rate of 7.5% used by the Federal Government at the time, and not the rate of 9.5%.

90 In its rejoinder in Case T-244/93, the Commission doubts whether the principle of proportionality can apply to a decision not entailing any sanction. The T W D II decision simply means that new aid, t o which the applicant has no right, could only be paid to it if it no longer involved any distortion of competition. Since the amount of the T W D I aid to be repaid is in any event higher than the amount of the T W D II aid, there is clearly no infringement of the principle of proportional- ity. The value of the T W D I aid was D M 11.2 million and the value of the T W D II aid was D M 5.77 million on 31 December 1993 (Annex I to the Commission's let- ter of 14 December 1994).

9i In its defence in Case T-486/93, the Commission contends that the applicant's cal- culations meant to demonstrate a breach of the principle of proportionality (see paragraph 88 above) are incorrect, in particular because the applicant added together the investment grant and the total amounts of the loans, when it was the investment grant and the interest-rate subsidy granted in relation with the loans which it ought to have taken into account. Similarly, the calculation of the appli- cant's losses is wrong, in particular because it took no account of the continuing

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95 As regards Case T-486/93, the Court finds that the calculations on which the appli- cant bases its argument (paragraph 88, above) are incorrect. As the Commission has rightly pointed out, in order to arrive at the value of the aid in question, the invest- ment grant must be added to the interest-rate subsidy, whereas the applicant, in its calculations, has added the investment grant to the total amount of the loans. Sim- ilarly, the applicant's alleged losses take no account of the fact that it has continued to enjoy the unlawful competitive advantage afforded by the T W D I aid.

96 Consequently, the calculations put forward by the applicant do not at all demon- strate that the amount of the TWD II and T W D III aid exceeds the T W D I aid. O n the contrary, at the hearing, Counsel for the applicant did not dispute that, at the time when the T W D II and TWD III decisions were adopted, the value of the aid considered in those decisions was lower than the value of the unlawful com- petitive advantage afforded by the T W D I aid. Moreover, according to the Com- mission's figures, which the applicant has not contradicted, the value of the unlaw- ful competitive advantage afforded by the T W D I aid remains clearly higher than the value of the T W D II and T W D III aid even if a reference rate of 7.5% is used.

97 Since the applicant has not established the correctness of the premiss on which its argument is based, namely that the total of T W D II and T W D III aid exceeded the value of the T W D I aid, it follows that the pleas of breach of the principle of pro- portionality must be dismissed in any event.

99 Furthermore, other aid granted in 1988 for investments of the same kind, between 1985 and 1987, was approved by the Commission. The applicant purports to prove this by producing a note made on 7 April 1988 by the Federal Ministry for Econ- omic Affairs reporting a telephone conversation with a Commission official. In 1988, the Commission thus decided that aid which was, according to the applicant, identical to the T W D I aid, fell into the 'textile' sector and not into the 'fibre' sec- tor.

100 In so far as the unlawfulness of the T W D I aid was based purely on the ground of lack of notification, the attempt to compel its repayment constitutes a misuse of power since the Commission has never required repayment of aid in such circum- stances.

101 The applicant considers that it may still raise the issue of the unlawfulness of the T W D I decision at this stage of the proceedings since, in its view, Article 184 of the E E C Treaty is applicable by analogy (see, in particular, the judgment of the Court of Justice in Case 92/78 Simmenthal v Commission [1979] ECR 777). It maintains that, even though it could have mounted a direct challenge to the T W D I decision, it was not informed of its real economic implications until it acquired knowledge of the T W D II decision.

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102 The Commission maintains that the T W D I decision has been definitively enforce- able since the period for bringing proceedings laid down by Article 173 of the Treaty expired on 1 November 1986. Since the applicant did not bring proceedings within the prescribed period against the T W D I decision, its arguments are inadmissible and irrelevant. In the alternative, it maintains that the T W D I aid was unlawful not only on procedural grounds but also on substantive grounds. The T W D I investments increased the applicant's yarn production capacity, in breach of the sectoral code, whilst the TWD II and T W D III investments concerned sup- plementary outlets for yarn.

Costs

loe Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for. Since the applicant has failed in its submissions, it must be ordered to pay the costs. In accordance with Article 87(4) of the Rules of Procedure, an intervener is to bear its own costs.

O n those grounds,

T H E C O U R T O F FIRST INSTANCE (Third Chamber, extended composition)

hereby:

1. Dismisses the actions;

Delivered in open court in Luxembourg on 13 September 1995.

H. Jung J. Biancarelli

Registrar President

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