T-447/93

applicants,

* Languages of the case: English and French.

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AITEC AND OTHERS ν COMMISSION

V

Commission of the European Communities, represented by Xenophon A. Yata- ganas, Michel Nolin, Eric White and Daniel Calleja, of the Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Georgios Krem­ lis, of the Legal Service, Wagner Centre, Kirchberg,

JUDGMENT OF 6. 7. 1995 —JOINED CASES T-447/93, T-448/93 AND T-449/93

APPLICATION for the annulment of the decision of 1 August 1991 contained in Commission communication 92/C 1/03 pursuant to Article 93(2) of the EEC Treaty to other Member States and interested parties concerning aid to Heracles General Cement Company in Greece, published in the Official Journal of the Euro- pean Communities of 4 January 1992 (OJ 1992 C 1, p. 4),

T H E COURT O F FIRST INSTANCE O F T H E E U R O P E A N COMMUNITIES (First Chamber, Extended Composition),

composed of: J. L. Cruz Vilaça, President, B. Vesterdorf, A. Saggio, H. Kirschner and A. Kalogeropoulos, Judges,

Registrar: H . Jung,

having regard to the written procedure and further to the hearing on 17 January 1995,

measures included the adoption, on 5 August 1983, of Law 1386/83 for the orga­ nization for the financial reconstitution of undertakings (hereinafter 'Law 1386/83' or 'the Law'). That law created an organization known as 'Organismos oikonomikis Anasygkrotiseos Epicheiriseon' (Business Reconstruction Organiza­ tion, hereinafter 'BRO'). According to Article 2 of the Law, the purpose of the BRO was to 'contribute to the social and economic development of the country through the financial rejuvenation of undertakings, the import and application of foreign technology, the development of Greek-based technology and the establish­ ment and operation of socialized or mixed economy undertakings'. For the pur­ pose of carrying out those objectives, the BRO was empowered in particular to administer and manage undertakings, participate in the capital of undertakings and grant loans. Article 10 of the Law authorized the capitalization of the debts of the undertakings concerned by the issue of new shares.

2 By Ministerial Decree of 7 August 1986, the Greek Government applied Law 1386/83 to Heracles General Cement Company (hereinafter 'Heracles'), the bal­ ance sheet of which had shown a substantial deficit since 1983, by bringing it under public control and converting into capital its debts to Greek institutions amount­ ing to DR 27 755 million (approximately ECU 170 million).

3 Heracles occupies a very important position in the Greek cement market, in which there are four substantial producers: Heracles, the largest, with a workforce of over 3 500, Titan Cement Company SA (hereinafter 'Titan'), one of the applicants in this case, followed by Halkis Cement Company (hereinafter 'Halkis') and Halyps Cement Company.

7 The implementation of the Law was made subject, however, to a number of 'con- ditions', set out in Article 1 of the 1987 decision, and the Greek Government was inter alia required to notify individual cases exceeding certain thresholds.

8 In the preamble to that decision, the Commission found that the Law and the oper- ations of the BRO fulfilled the conditions for the application of the second part of Article 92(3)(b), particularly in view of Protocol N o 7 of the Act concerning the Conditions of Accession of the Hellenic Republic and the Adjustments to the Trea- ties, on the economic and industrial development of Greece (OJ 1979 L 291, p. 1, hereinafter 'Protocol N o 7'). That protocol provides that 'in the application of

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Articles 92 and 93 of the EEC Treaty, it will be necessary to take into account the objectives of economic expansion and the raising of the standard of living of the population'. After justifying the notification obligation by reference to the judg­ ment of the Court of Justice in Case 730/79 Philip Morris ν Commission [1980] ECR 2671, the Commission found that the Law fulfilled the conditions laid down by Article 92(3)(b), and reiterated that it must retain control over the application of the Law (part V of the decision).

9 The Greek Government was informed of that decision by letter from the Commis­ sion dated 17 November 1987. In response to that letter, it provided, by letter of 3 December 1987, detailed additional information concerning Heracles, while repeat­ ing its view that the intervention in question did not constitute State aid (Annex IV to the Commission's answers).

1 4 In response to that notice, several of Heracles' competitors, including the applicants in Cases T-447/93 and T-449/93 and the British Cement Association (hereinafter 'BCA'), acting on behalf of the 'United Kingdom cement manufacturers', which is one of the applicants in Case T-448/93, contacted the Commission, asserting that serious disturbance had been caused to the Community cement market as a result of the intervention by the Greek authorities, which had very greatly strengthened Heracles' competitive position. Thereafter, several meetings and exchanges of cor- respondence took place between, on the one hand, the Commission and the appli- cants and, on the other, the Commission and the Greek Government.

15 The administrative procedure terminated with the adoption of a decision to approve the aid, contained in a letter sent to the Greek Government on 1 August 1991 and published on 4 January 1992 as a Commission communication pursuant to Article 93(2) of the EEC Treaty to other Member States and interested parties concerning aid to Heracles General Cement Company in Greece (92/C 1/03, OJ 1992 C 1 , p. 4).

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16 It is that decision which is at issue in the present proceedings. In its decision, the Commission refers, first, to its 1987 decision, in which it had imposed 'an obliga­ tion to notify individual significant cases so that these may be considered from the point of view of their impact on intra-Community trade and competition'. Next, it regrets the failure of the Greek Government to notify 'the important application of Law 1386/83'. Finally, it examines the information provided in the interim by the Greek Government in relation to the 'conditions' contained in the 1987 decision. It concludes that 'the aid awarded to Heracles in 1986, by transforming part of its debts into capital, can now be considered to be in conformity with the Commis­ sion's decision of 7 October 1987 on Law 1386/83, referred to in the second para­ graph of this letter'.

20 The three cases, which were brought before the Court of Justice and numbered C-97/92, C-105/92 and C-106/92, were joined by order of the President of the Court of Justice dated 15 October 1992 for the purposes of the written procedure, the oral procedure and the judgment.

21 By orders of the President of the Court of Justice of 12 October 1992 and 24 March 1993 respectively, the Hellenic Republic and, subsequently, Heracles were given leave to intervene in support of the form of order sought by the defendant in the three cases, pursuant to applications lodged by them at the Registry of the Court of Justice on 14 August and 10 August 1992 respectively. They lodged their state- ments in intervention, which were common to the three joined cases, on 7 Decem- ber 1992 and 3 July 1993 respectively.

22 O n 27 September 1993, the Court of Justice referred the proceedings to the Court of First Instance pursuant to Article 4 of Council Decision 93/350/Euratom, ECSC, EEC of 8 June 1993 amending Decision 88/591/ECSC, EEC, Euratom establishing a Court of First Instance of the European Communities (OJ 1993 L 144, p. 21).

23 The written procedure followed the normal course and closed with the lodging by the Commission on 28 January 1994 of a common rejoinder in the three joined cases. Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (First Chamber, Extended Composition) decided to open the oral procedure and requested the parties, by way of measures of organization of procedure, to reply, in writing and prior to the hearing, to a number of questions.

— adopt measures of inquiry;

— annul the Commission's decision of 1 August 1991 concerning the grant of aid to Heracles, published on 4 January 1992;

— order the Commission to pay the costs;

— order the interveners to pay all the costs arising from their intervention.

The Commission contends in Case T-447/93 that the Court should:

— dismiss the action as inadmissible or unfounded;

— order the Commission to pay the costs;

— order the interveners to bear their own costs and to pay the costs incurred by the applicants in relation to their intervention.

The Commission contends in Case T-448/93 that the Court should:

— dismiss the action as inadmissible or, alternatively, unfounded;

— order the applicants to pay the costs.

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— dismiss the action as unfounded;

— order the applicant to pay the costs.

The Hellenic Republic, intervening in support of the form of order sought by the Commission, asks the Court in Cases T-447/93, T-448/93 and T-449/93 to:

— dismiss the actions in the three cases as inadmissible or, alternatively, unfounded;

— order the applicants to pay the costs.

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Arguments of the parties

26 The Commission does not comment on the admissibility of the action and leaves it to the Court to decide whether the applicant fulfils the conditions laid down in that regard in the judgment of the Court of Justice in Case 169/84 Cofaz and Others ν Commission [1986] ECR 391, namely, first, that the applicant must have played an active part in the pre-litigation procedure and, second, that its competitive position must be significantly affected.

27 The Hellenic Republic, intervening in support of the form of order sought by the Commission, maintains that the applicant has not produced sufficient evidence to show that its position as a competitor in the market has been directly and individ­ ually affected by the aid at issue and that it has suffered damage as a result. It con­ siders that the action is therefore inadmissible.

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28 Heracles denies that any of the applicants have a legitimate interest in the matter; in its view, they are using their actions to defend a European cement producers' cartel established in contravention of the Community competition rules. Contest­ ing the data provided by the applicants, it further states that their competitive pos­ ition has not been affected by the aid at issue, as is apparent from the improvement in their financial situation since 1986, despite the grant of the aid.

Findings of the Court

33 According to Article 173 of the Treaty, any natural or legal person may institute proceedings against a decision addressed to another person if that decision is of direct and individual concern to him. Consequently, the applicants' right to bring an action depends first of all on whether they are individually concerned by the decision addressed to the Greek Government.

34 It is apparent from the case-law of the Court of Justice that provisions of the Treaty concerning the right of interested persons to bring an action must not be inter­ preted restrictively. Persons other than those to whom a decision is addressed may only claim to be individually concerned within the meaning of Article 173 of the Treaty if that decision affects them by reason of certain attributes which are pecu­ liar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed (Case 25/62 Plaumann ν Commission [1963] ECR 95, at p. 107).

35 The Court of Justice has held in that regard that, where a regulation accords appli­ cant undertakings procedural guarantees entitling them to request the Commission to find an infringement of Community rules, those undertakings should be able to institute proceedings in order to protect their legitimate interests (see Cofaz and Others ν Commission, paragraph 23).

36 It is necessary, from that point of view, to examine the part played by the under­ taking in the pre-litigation procedure, since the Court of Justice has accepted as evidence that the measure in question is of concern to the undertaking, within the meaning of Article 173 of the Treaty, the fact that it was that undertaking which originally lodged the complaint leading to the opening of the investigation pro­

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cement producers, are in direct competition with each other as regards almost all of their sales, not only on the Greek market but also on export markets, which is confirmed by a document produced by Heracles, namely Annex 3 to its statement in intervention. The existence of that competitive relationship is also apparent from Annex 4 to that statement in intervention: 'In certain circumstances, Titan would pull out of the U K unilaterally ..., (although) knowing that Heracles would prob­ ably fill the void in Tilbury'.

40 Although there is no need for the Court, when considering whether the applica­ tion is admissible, to make a definitive finding on the competitive relationship between the applicant and Heracles, it is sufficient to note that, contrary to the assessments of the Greek Government and Heracles, the applicant has adduced per­ tinent reasons, with reference to specific circumstances, to show that the Commis­ sion's decision may adversely affect its interests by significantly jeopardizing its position on the market in question (see Cofaz and Others ν Commission, paragraph 28).

41 As to whether the applicant is directly concerned, suffice it to observe that the Commission's decision finding the aid at issue compatible with the Treaty has left intact all the effects of the contested aid, whereas the applicant had sought from the Commission a decision abolishing or amending the aid in question. In those circumstances, it must be held that the contested decision is of direct concern to the applicant (see Cofaz and Others ν Commission, paragraph 30).

44 The Commission relies on the judgment in Cofaz and Others ν Commission as support for its argument that the second criterion, whereby the applicant's com­ petitive position must be significantly affected by the contested decision, is not ful­ filled, because the applicant, as an association, does not have a competitive position on the market in question. In the Commission's view, that view is confirmed by the judgments of the Court of Justice in Joined Cases 67, 68 and 70/85 Van der Kooy and Others ν Commission [1988] ECR 219 and Case C-313/90 CIRFS and Others ν Commission [1993] ECR I-1125, in which it was held that the right of a professional body or association to bring an action is subject to extremely restric­ tive conditions which are not fulfilled by the applicant.

45 The Commission further denies that the applicant was a privileged intermediary in relation to it and observes that the applicant has not shown how its own interests as an association have been affected by the contested decision.

i6 The Hellenic Republic, as intervener, expressly maintains that the action is inad­ missible, for the same reasons. In its view, the applicant has not adduced sufficient

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JUDGMENT OF 6. 7. 1995 —JOINED CASES T-447/93, T-448/93 AND T-449/93

evidence to show that the measure at issue has directly and individually affected its competitive position in the market, or that it has suffered damage as a result.

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administrative procedure and they or the operators which they represent are in competition with the recipient or recipients of the contested aid. That development in the case-law is apparent from the judgment in VMI der Kooy and Others ν Com­ mission, cited above, which did not lay down the objective conditions needing to be fulfilled by applicant associations but made the admissibility of actions depen­ dent on the circumstances of each case. That more open approach originated with the order of the Court of Justice of 30 September 1992 in Case C-295/92 Land­ bouwschap ν Commission [1992] ECR 1-5003, was continued in the judgment in CIRFS and Others ν Commission, and was subsequently confirmed in Cases C-198/91 Cook ν Commission [1993] ECR I-2487 and C-225/91 Matra ν Commis­ sion [1993] ECR 1-3203 (see also Case 323/82 Intermills ν Commission [1984] ECR 3809). The last two judgments affirmed the right of any of the 'parties con­ cerned', within the meaning of Article 93(2), and thus professional organizations in particular, to bring an action for annulment.

51 The applicant considers that in the circumstances of the present case the Court must hold its action to be admissible. It points out that it referred in its application to the observations which it submitted during the procedure under Article 93(2) of the Treaty, especially those contained in its letter to the Commission of 7 June 1988 (Annex 4 to the application), and that it relied, in its reply, on various tables and statistics in order to show that its members are in competition with Heracles. In that context, it has explained that twelve of its members (individually identified), operating in ports where Heracles' exports were unloaded, lost market share equiv­ alent to the increase in Heracles' exports, amounting to an overall loss of approx­ imately LIT 186 000 million (see pp. 21 and 24 and footnote 26 in the reply).

55 The Court notes in that regard that the applicant relies on the fact that the com­ petitive position of some of its members has been significantly affected. The appli­ cant maintains that it established, by means of its observations during the admin­ istrative procedure, that specific interests of some of its members had been affected.

56 The Court finds that, in its observations sent to the Commission on 7 June 1988 (see Annex 4 to the application), the applicant explained, with reference to Table 3 (on p. 3), that the aid at issue had distorted competition and that the undertakings most affected, as referred to by way of example in Table 3, were having to halt cer­ tain burning processes and to close production units. Furthermore, that table con­ tains estimates, for the relevant unloading ports, of the potential imports from

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Greece compared to the output of the production units of the Italian companies in the area concerned. It thus compares, in particular, the individual cement produc­ tion in 1987 and numbers of employees of Italcementi, Cementir and Moccia with the estimates of potential imports channelled through the ports of Chioggia, Leg­ horn and Naples.

57 Similarly, the applicant maintains in its reply (p. 24 and footnote 26) that twelve of its members established in the areas in which Greek imports are unloaded, including Cementir, Moccia and Italcementi, have suffered losses estimated at L I T 186 000 million.

60 In those circumstances, it must be stated that the applicant has defended the indi- vidual interests of certain of its members whilst at the same time attempting to protect those of the sector as a whole. Unlike the applicants in the cases cited in paragraph 54, the applicant, in bringing its action, may be regarded as having sub- stituted itself for at least three of its members who could themselves — in view of the matters set out in the application — have brought an admissible action. In the present case, therefore, the Court considers that the collective action brought by the association presents procedural advantages, since it obviates the institution of numerous separate actions against the same decisions, whilst avoiding any risk of Article 173 of the Treaty being circumvented by means of such a collective action.

61 Moreover, in representing the interests of some of its members during the admin- istrative procedure and before the Court, the applicant has acted in accordance with Article 3 of its statutes, which provides that its object is in particular 'to protect the technical and economic interests of the trade as regards the economic develop- ment of the sector'.

62 It follows that, since, in the context of a procedure under Article 93(2) of the Treaty, the applicant has protected the interests of some of its members in accord- ance with the powers conferred on it by its statutes, without any objection from those members, and since it has shown that a decision of the Commission is of direct and individual concern to those members, the applicant must be regarded as individually concerned within the meaning of Article 173 of the Treaty, and cannot be treated as an association which has not taken part in the administrative pro- cedure or which, in that procedure, has defended only interests of a general nature.

64 This action has been brought by BCA and by three of its member companies: Blue Circle, Castle and Rugby. Those three companies are the three principal cement manufacturers, responsible for almost all cement production, in the United King­ dom. BCA is the successor of the Cement Makers Federation (CMF), which was, until 1987, the commercial association of the United Kingdom cement industry and of which the three undertakings were also members. The objects of BCA are, in particular, 'to represent, promote, advance and protect cement production and the interests of those engaged therein' and 'to act as a channel of communication between the Members of the Association and ... (any) supra-national organisation and the respective departments or agencies thereof' and, in addition, 'to promote, support or oppose by all available means legislative or other measures, whether in Great Britain or elsewhere' (see paragraph 3(b), (h) and (i) of the Memorandum of Association, annexed to the application).

65 The Commission expresses doubts as to the admissibility of the action, as in Case T-447/93 (see paragraphs 43 and 44 above).

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66 First, it questions whether the three applicants played an active role in the admin- istrative procedure and whether that role was sufficiently significant, inasmuch as it was only BCA which submitted observations which, moreover, consisted solely of a very short letter of 9 June 1988, which did not state the names of the undertak- ings represented by BCA.

70 As to the impact on their position in the market, the applicants refer to the Com­ mission's own finding that Heracles accounted, from 1986 onwards, for about half of all Greek cement exports, and for approximately 70% of Greek cement imports into the United Kingdom. Furthermore, the contested aid brought about an appre­ ciable increase in the volume of Heracles' exports to the United Kingdom: imports from Heracles rose from 12 500 tonnes in 1986 to 480 000 tonnes in 1990 (Annex 2 to the reply). The applicants infer from this that the aid to Heracles has signifi­ cantly affected their position, since it has seriously compromised their long-term position in the market in question. The facts disclosed in the procedure against a European cement cartel, referred to by Heracles, confirm their analysis of the effect of the aid, in that they show that, in a market such as the cement market, even a small change in import volumes has an appreciable effect on market prices.

71 BCA pointed out at the hearing that it represents all of the cement producers in the United Kingdom. The applicants stated that, by reason of the number and loca­ tion of its ports, the United Kingdom has one of the most competitive cement markets in Europe.

72 The applicants further state that the Court of Justice extended, in its judgment in Cook ν Commission, the criteria for the admissibility of actions laid down in its judgment in Cofaz by ruling that any interested party which played an effective part in a procedure initiated by the Commission pursuant to Article 93(2) of the Treaty has capacity to institute proceedings under Article 173 of the Treaty in rela­ tion to the Commission's decision to close the procedure.

76 As regards their participation in the preparatory steps to the procedure under Arti- cle 93(2), the Court finds that the applicants have asserted, on the basis of their own documentation, and without being challenged by the Commission, that their rep- resentatives and those of CMF took part in meetings with representatives of the Commission on 5 and 29 September 1986 and on 6 November 1986. The purpose of the meeting on 5 September 1986 was, in particular, to examine the aid granted to Greek producers by reductions in their debts to the national electricity compa- nies. At the meeting on 29 September 1986, the United Kingdom undertakings drew attention to the transformation of Heracles' debts into capital. Prior to the meeting on 6 November 1986, the directors of the undertakings and the represen- tative of CMF prepared a memorandum for use at that meeting, containing in par- ticular a detailed analysis of Heracles' position before and after the transformation of its debts and of all of the distortive effects brought about by the aid.

77 In the face of such specific statements on the part of the applicants, the Commis- sion cannot merely state that it is unable to confirm or deny that such meetings took place because it has been unable to find the slightest written record of them

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(see the Commission's answer of 14 December 1994), particularly since the letter of 9 June 1988 from BCA to the Commission confirms that there were contacts between the 'UK cement makers' and the Commission in 1986. In those circum­ stances, the Court finds that the applicants participated in the preparatory steps to the procedure under Article 93(2) of the Treaty.

Greek competitor Heracles, thus enabling it to export its products to the United Kingdom at more competitive prices than before. The Court finds, for the purposes of its examination of the question of admissibility, that the evidence adduced by the applicants is sufficient to show that the Commission's decision is liable to have a significant effect on their position on the market in question and is thus of indi­ vidual concern to them.

81 As regards the question whether the contested decision is of direct concern to the applicants, reference is made to paragraph 41 of this judgment.

82 Since the Court is here concerned with a single action, there is no need to examine the right of the applicant BCA to bring proceedings (see CIRFS and Others ν Commission, paragraph 31).

The legal interest of the three applicants in hringing proceedings

83 Lastly, the Court finds it necessary to examine Heracles' objection that the three actions are inadmissible, based on the illegal nature of the 'interest' of the appli­ cants, whose actions seek, according to Heracles, to protect an alleged European cement producers' cartel.

84 Heracles has not given details of any link between these actions and that alleged cartel. Since Heracles has not established that its arguments are of any relevance to the present proceedings, there can be no grounds for finding that the applicants have no legal interest in bringing proceedings. Furthermore, the Commission's decision regarding the existence of that cartel has not yet become final, since it is the subject of other proceedings before the Court.

88 BCA, Blue Circle, Castle and Rugby rely essentially on three pleas in support of their action for annulment. It is appropriate to examine, more specifically, the applicants' arguments relating to the lack of any analysis of the compatibility of the aid with the common market (the third limb of the first plea) and the erroneous assessment of the facts regarding, in particular, the 1987 decision, the Hallus decision and the shifting to other Member States of the burden caused by the struc­ tural over-capacity of the Greek cement industry (the fifth limb of the first plea).

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JUDGMENT OF 6. 7. 1995 —JOINED CASES T-447/93, T-448/93 AND T-449/93

Pleas and arguments of the parties in Case T-449/93 (Titan)

1. Inapplicability of the derogations provided for in Article 92(2) of the Treaty and of the general principles of Article 92(3) of the Treaty

89 The applicant states, first of all, that the conversion of Heracles' debts into capital by the Greek Government, through the intermediary of the BRO, constitutes aid within the meaning of Article 92(1) of the Treaty. It claims that that aid is discrim- inatory, that it distorts competition between Heracles and other producers, both in Greece and in the common market, and that it affects trade between Member States.

94 T h e applicant maintains that t h e 1987 decision and t h e conditions i m p o s e d b y it constitute an insufficient a n d inadequate framework for assessing t h e compatibility of t h e aid w i t h C o m m u n i t y law. I n its view, t h e C o m m i s s i o n , in concluding that 'the aid ... can n o w be considered t o be in c o n f o r m i t y ' w i t h t h e 1987 decision, failed t o take i n t o consideration t h e effect of t h e aid o n c o m p e t i t i o n and intra- C o m m u n i t y trade, since it merely noted, b y w a y of justification for t h e change in its attitude since 1987, t h a t t h e G r e e k G o v e r n m e n t h a d replied t o t h e objections raised b y t h e C o m m i s s i o n .

95 The applicant states in its reply that the fact that the framework law was declared compatible with the Treaty generally, when it did not itself have any tangible effect, did not relieve the Commission of its obligation to examine whether specific actions undertaken by the BRO were compatible with the 1987 decision and the Treaty. In the 1987 decision, the Commission, far from seeking to establish an exhaustive general framework, required, on the contrary, that it be given individual notification of significant cases. It is apparent from the preamble to the decision that the Commission proposed to assess such cases in accordance with the princi­ ples traditionally applied by it in matters of State aid.

96 The Commission concedes that the aid to Heracles 'distorted or threatened to dis­ tort competition within the meaning of Article 92(1) of the Treaty', but it consid-

99 It further maintains that the Commission examined the respective competitive posi­ tions of Heracles and its main European competitors after the aid at issue was decided on. It found that, after 1985, the markets on which Heracles operated in non-member countries shrank significantly, and that Heracles therefore sought new

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markets. However, it found that Heracles held only a limited share, namely 34%, of total Greek cement exports to Italy, the remainder being held mainly by Titan. The Greek Government infers from this that the claim that there was no investi- gation of the competitive position of Heracles by comparison with other produc- ers is unfounded.

100 The Greek Government states in addition that it is apparent from the fifth para- graph in Part V of the preamble to the 1987 decision that the risk of disturbance in the Community cement market was adequately taken into consideration in the con- text of that decision.

101 Heracles maintains that the Commission established, in the context of a procedure against a cartel of European cement producers, that its exports constituted the prin- cipal threat to European producers and 'threatened' to create an intra-Community cement trade which had not hitherto existed. The existence of trade between Mem- ber States is a precondition for Article 92 of the Treaty to apply. Heracles concludes that, in the absence of intra-Community trade, Article 92 of the Treaty was not applicable. It adds that Greek cement exports to other Member States did not com- mence until 1986.

104 The Commission maintains that the aid at issue could be covered by the deroga- tion provided for by Article 92(3)(b) of the Treaty, since it fulfilled the conditions laid down in its 1987 decision authorizing the general scheme, particularly as regards the monitoring of the effect of the aid.

105 With regard to the Halkis decision, the Commission points out, as do the inter- veners, that the facts giving rise to that decision were different from those of the present case.

106 In its reply to the questions put by the Court, the Commission repeats that, when adopting the 1987 decision, it did not examine the compatibility with the common market of specific aids which had already been granted, but reserved that exami-

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JUDGMENT OF 6. 7. 1995 —JOINED CASES T-447/93, T-448/93 AND T-449/93

108 The applicant emphasizes the fact that the Commission proceeded, in its 1987 decision, on the basis that the application of that decision to individual grants of aid must not have the effect of strengthening the competitive position of the recip- ient undertakings vis-à-vis undertakings in other Member States. Yet the applica- tion of the 1987 decision to the aid granted to Heracles precisely strengthened Her- acles' competitive position by comparison with that of the Italian undertakings.

109 The Commission argues that, since the aid to Heracles was granted pursuant to a previously approved aid scheme, its only duty was to verify whether the aid at issue fulfilled the conditions laid down in Article 1 of the 1987 decision. Its only obli- gation, therefore, was to ensure that Heracles was not in a stronger competitive position than would have been the case if the difficulties which prompted the 1987 decision had not existed. It considers that it fulfilled that task to the letter, as is evi- denced by the contested decision.

110 The applicant considers that the Commission cannot claim to have assessed the validity of the contested decision solely in the light of the 1987 decision, since that decision did not exist when the aid was granted in 1986. In its reply, it states that the Commission's obligation to examine the impact of the aid derives exclusively from Article 92 of the Treaty. The fact that, in its application, the applicant also based that obligation on the 1987 decision merely reflects its plea in the alternative in the event that the Court holds that decision to be the sole legal framework for assessing the aid at issue. The Court finds that, in so doing, the applicant has added to its plea of omission on the part of the Commission a supplementary argument showing the Commission's duty to act.

JUDGMENT OF 6. 7. 1995 —JOINED CASES T-447/93, T-448/93 AND T-449/93

Pleas and arguments of the parties in Case T-448/93 (BCA and others)

1. Infringement of Article 93(2) of the Treaty, in that the Commission did not examine the compatibility of the aid with the common market

1 1 3The applicants maintain that the Commission wrongly considered that the com- patibility of the aid at issue resulted automatically from its compatibility with the 1987 decision. The 1987 decision was adopted in the context of a quite exceptional economic situation. The fact that it was justified at the time is not, therefore, such as to justify all aid subsequently granted. Moreover, taking into account the improvement in the Greek economy, the Commission had itself ordered the pro- gressive reduction, and ultimate elimination before January 1990, of other export aid (see Commission Decision 86/614/EEC of 16 December 1986 amending Com- mission Decision 85/594/EEC authorizing Greece to take certain safeguard mea- sures under Article 108(3) of the EEC Treaty, OJ 1986 L 357, p. 28).

1 1 4The applicants further state that there is a manifest contradiction between the con- tents of the communication relating to the opening of the procedure and those of the contested decision. In the former, the Commission proceeded on the basis that the compatibility of the aid did not fall to be assessed solely in the light of the 1987 decision but also in the Community context, at least in significant cases where noti- fication was required.

1 1 5The Commission refers, first, to the reasoning advanced by the applicants them- selves in connection with another limb of this plea, namely that the aid should have been assessed in the light of the conditions prevailing at the time when it was granted. The Commission observes in that regard that the Greek producers' tradi- tional export markets were located primarily in the Middle East, North Africa and the United States. It was only from 1985 onwards, when those markets slumped, that the Greek cement producers started to seek outlets on the Community mar- ket. Before that time, however, trade between Greece and the rest of the Commu- nity had been practically non-existent.

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further point out that the Commission found, in the Halkis decision, that aid sim- ilar to the aid at issue was incompatible with the common market.

119 The applicants further stated at the hearing that the geographical configuration of the United Kingdom is such that it is particularly exposed to imports of cement by boat.

1 2 0The Commission, supported by the interveners, rejects those contentions. It gives details of the various particular aspects of the Greek cement market on which it based its decision, and points out that its powers in the matter are discretionary and its exercise thereof may be censured only in cases of manifest error.

121 Lastly, the Commission repeats that the increase in Greek cement exports to the Community is attributable to the slump, from 1985 onwards, in exports by Greek producers to their traditional markets, namely the Middle East, North Africa and the United States. Heracles' position in that regard was no different from that of the other producers, save perhaps that the aid at issue enabled it to re-establish its financial position and thereby to seize the opportunities offered by the market in the same way as its Greek competitors.

The scope of the 1987 decision

124 The Court finds that, in the 1987 decision, the Commission approved the imple­ mentation of Law 1386/83 on the ground that it fulfilled the conditions of the sec­ ond part of Article 92(3)(b) of the Treaty, read in conjunction with Protocol N o 7, since it was intended to remedy a serious disturbance in the economy of the Hel­ lenic Republic. Having set out the economic situation of that Member State, the Commission noted that the BRO had made individual interventions pursuant to that law covering 45 undertakings, of which 23 companies (including Heracles) which had not been put into liquidation accounted for approximately 20% of industrial employment in the Hellenic Republic. Consequently, the decision recog­ nized that the operations of the BRO were capable, in general, of remedying that disturbance.

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125 It should be noted, however, that although the 1987 decision approved the imple­ mentation of Law 1386/83, it did not approve all of the individual interventions by the BRO. In Article l(2)(a) of its decision, the Commission subjected the imple­ mentation of Law 1386/83 to the following condition:

'The Greek Government shall notify the individual cases of intervention in firms made subject to the law employing 300 or more persons in the case of non-sensitive branches and 100 or more persons in the case of sensitive branches'.

enough to legitimate the aid in question. The Commission therefore considered, without calling in question the future existence of the general aid scheme approved by reason of the serious disturbance in the Greek economy, that interventions by the BRO on a certain scale should be subjected to a specific examination, first, of whether the grant of the aid fulfilled the 'conditions' imposed by the 1987 decision and, second, of whether or not it resulted in the undertakings concerned 'being left in a stronger competitive position vis-à-vis industries in other Member States than would otherwise occur had those difficulties not arisen in the first place' (see part V of the decision). The fact that the Commission itself considered that it was obliged to assess the effect on intra-Community trade of the aid granted by the BRO is borne out by the reference in the decision (part V) to the judgment in Philip Moms ν Commission, in which the Court of Justice approved the fact that the Commission had carried out such an examination (paragraphs 11 and 12 of the judgment). The Court concludes, moreover, that the need for such an examination, as provided for by the 1987 decision, accords with the purpose of Article 92 of the Treaty, which seeks in principle, as a rule of competition, to prevent aid granted by Member States from distorting competition or affecting intra-Community trade.

1 2 8 It follows from the foregoing that in the 1987 decision the Commission itself con­ sidered that, depending on the circumstances in which the aid scheme in question was approved, the second part of Article 92(3)(b) of the Treaty may require a spe­ cific examination of the compatibility of individual cases of aid going beyond the finding that there exists a serious disturbance in the economy of the Member State concerned. In the present case, moreover, the Commission stated that the existence of a serious disturbance in the Greek economy was not enough to justify the view that significant cases of individual aid granted pursuant to Law 1386/83 were com­ patible with the second part of Article 92(3)(b) of the Treaty.

1 3 0As to the fact that the specific intervention by the BRO in favour of Heracles had already taken place prior to the adoption of the 1987 decision, it should be recalled that the Commission was aware of that fact when it adopted its decision (see its telex of 18 September 1986). In that regard, the Commission regrets in the con­ tested decision the fact that the Greek Government 'failed to notify the important application of Law 1386/83 in favour of Heracles'. It has rightly pointed out that it did not in 1987 examine the individual cases of aid already granted but deferred that examination until it received notification of individual grants of aid pursuant to the notification obligation referred to in the 1987 decision. That interpretation of the decision is confirmed by the wording of Article 1(2), which states that the condi­ tions laid down by that provision are to apply to 'any interventions of the BRO', which indicates that the Commission wished to receive subsequent 'notification' of cases of aid already granted, in order that they 'may be considered from the point of view of their impact on intra-Community trade and competition' (see part V of the 1987 decision). It follows that although the aid to Heracles pre-dated the 1987 decision, it was subject to the obligation laid down by Article l(2)(a) of that decision.

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the Commission merely considered the consequences of the aid on the territory of the Hellenic Republic, basing its approach on the Greek Government's answers to the objections initially raised by the Commission.

134 It follows that the contested decision is vitiated by a contradiction in the reasoning given on that point (see, to the same effect, the judgment of the Court of Justice in Joined Cases C-278/92, C-279/92 and C-280/92 Spain ν Commission [1994] ECR I-4103).

135 The Court further points out that, in the present case, the Commission merely found that the aid at issue fulfilled the conditions of the 1987 decision, particularly as regards the absence of any increase in production capacity and the viability of the undertaking. Whilst it was indeed necessary for those factors to be taken into consideration for the purposes of examining the compatibility of the aid with the common market, the fact remains that they are not enough for any conclusion to be reached in that regard, since the 1987 decision also required the Commission to examine the extent to which competition might be distorted or intra-Community trade might be affected. N o such examination was undertaken in any way by the Commission, as it has, moreover, admitted.

136 As to the Greek Government's objection that the applicants' argument ignores Pro­ tocol N o 7, which provides that 'in the application of Articles 92 and 93 of the EEC Treaty, it will be necessary to take into account the objectives of economic expan­ sion and the raising of the standard of living of the population', the Court observes that that provision does not constitute an exception to Articles 92 and 93 of the Treaty but merely requires the Commission to take into consideration, when assessing the effects of aid to a Greek undertaking, the objectives set forth in that protocol. It in no way relieves the Commission of its duty to undertake the exam­ ination provided for by Articles 92 and 93 of the Treaty and, in particular, to exam­ ine the impact of the aid on competition and intra-Community trade.

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140 In those circumstances, the Commission was required to examine the effects which the aid was likely to have on intra-Community trade and competition.

1 4 1 It is apparent from the contested decision that the Commission did not carry out any examination of the foreseeable effects of the aid, at the time when it was granted, on competition and intra-Community trade. N o r did it examine the actual effects of the aid, which it could have taken into consideration as factual evidence, since it did not decide on the compatibility of the aid with the Treaty until five years after it had been paid.

142 In the light of all of the foregoing considerations, the Court finds that the Com­ mission committed an error of law by failing to examine the impact of the aid at issue on intra-Community trade and competition (see La Cinq ν Commission, paragraphs 94, 95 and 96).

143 Consequently, the contested decision must be annulled, without there being any need to rule on the other pleas relied on or to adopt the measures of inquiry applied for by the applicants.

hereby:

1. Annuls the decision of 1 August 1991 contained in Commission communi­ cation 92/C 1/03 pursuant to Article 93(2) of the EEC Treaty to other Mem­ ber States and interested parties concerning aid to Heracles General Cement Company in Greece, published in the Official Journal of the European Com­ munities of 4 January 1992;

2. Orders the Commission to bear its own costs and pay the costs of the appli­ cants apart from those caused by the interventions;

3. Orders the interveners to bear their own costs and pay the costs incurred by the applicants in the context of the interventions.

Cruz Vilaça Vesterdorf Saggio

Kirschner Kalogeropoulos