T-95/96

Commission of the European Communities, represented initially by Gérard Rozet, Legal Adviser, and Fernando Castillo de la Torre, of its Legal Service, and then by Mr Rozet and Juan Guerra Fernández, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

defendant,

supported by

French Republic, represented by Catherine de Salins, Deputy Director of the Department of Legal Affairs at the Ministry of Foreign Affairs, and Gauthier Mignot, Secretary for Foreign Affairs, acting as Agents, with an address for service in Luxembourg at the French Embassy, 8B Boulevard Joseph II,

intervener,

* Language of the case: Spanish.

having regard to the written procedure and further to the hearing on 10 March 1998,

gives the following

Judgment

Background to the dispute

1 There are 10 television companies in Spain, of which three are in the private sector and seven of which are public service broadcasters.

II-3411

6 O n 25 November 1992, the applicant sent a letter to the Commission with a view to obtaining information on progress in relation to its complaint. In a letter dated 3 December 1992, the Commission informed it that, by letter dated 28 October

II - 3412

GESTEVISIÓN TELECINCO ν COMMISSION

1992, it had reminded the Spanish authorities of their duty to reply to the request for information which had been sent to them.

7 O n 12 November 1993, the applicant lodged another complaint seeking to have the subsidies granted by the central Spanish State to the public body RTVE declared incompatible with the common market under Article 92 of the Treaty (hereinafter 'the second complaint').

8 O n 24 November 1993, the applicant sent a letter to Mr Van Miert, the member of the Commission with responsibility for competition matters, informing him of the existence of the two abovementioned complaints, of the fact that the aid being challenged in those complaints had not been notified, and of the irreversible con­ sequences of the Commission's slowness in dealing with those complaints.

13 In a letter dated 20 February 1996, the Commission replied as follows:

'Having considered your complaint in the light of Article 92 et seq. of the Treaty and following completion of a study commissioned in December 1993 on the funding of public television in other Member States, the Directorate-General for Competition, by letters dated 18 October 1995 and 14 February 1996, requested the Spanish authorities to provide a number of further details and explanations necessary for investigating this case'.

1 4 After that letter, the Commission did not adopt a decision on the two complaints filed by the applicant.

Procedure

15 The applicant brought this action by an application lodged with the Registry of the Court of First Instance on 17 June 1996.

1 6 By application lodged with the Registry of the Court of First Instance on 8 November 1996, the French Republic applied to intervene in support of the defen- dant. That application was granted by an order of the President of the Third Chamber (Extended Composition) dated 4 February 1997.

— declare that the Commission failed to fulfil its obligations under the Treaty by not adopting a decision on the two complaints lodged by it and by not initiat­ ing the procedure laid down in Article 93(2) of the Treaty;

— alternatively, annul the Commission's decision contained in its letter of 20 Feb­ ruary 1996;

— order the defendant to pay the costs;

— order the intervener to pay its own costs and the costs incurred by the appli­ cant as a result of its intervention.

II-3415

JUDGMENT OF 15. 9. 1998 — CASE T-95/96

Arguments of the parties

Admissibility

22 The Commission states first of all that the decision it will adopt at the end of the administrative procedure, pursuant to Article 92 et seq. of the Treaty, will be sent to the Kingdom of Spain. The procedure for supervising State aid is based on dia­ logue between the Commission and the Member State concerned, unlike the pro­ cedure for applying Articles 85 and 86, which follows different rules under which a complainant has a decisive role (judgment of the Court of First Instance in Case T-277/94 AITEC ν Commission [1996] E C R II-351, paragraph 71). Since the com­ plainant does not have any status in this context, it is inconceivable that a decision

II - 3416

GESTEVISIÓN TELECINCO ν COMMISSION

should be addressed to it directly (Opinion of Advocate General Tesauro in Case C-198/91 Cook ν Commission [1993] ECR I - 2487).

II - 3417

JUDGMENT OF 15. 9. 1998 — CASE T-95/96

26 The applicant observes that, more than four years after the lodging of the first complaint and more than two and a half years after the second, the Commission's failure to define its position in relation to the two complaints and to initiate a pro­ cedure under Article 93(2) of the Treaty persists.

27 It points out that, in a letter dated 6 February 1996, received on 8 February 1996, it formally called upon the Commission to take action under the second paragraph of Article 175 of the Treaty. It considers that, in view of the excessive length of time which elapsed from the time when the two complaints were lodged, the Commission wrongfully failed to act and was under a duty to define its position within two months. That period expired without the Commission having defined its position.

28 In its letter of 20 February 1996, the Commission did not adopt a position. O n the contrary, it avoided taking any position on the basis that it had requested supple­ mentary information from the Spanish Government and that the complaints were still being examined. The Court has ruled in this regard that where an institution is called upon to define its position, a letter from that institution stating that the questions raised are in the process of being considered does not amount to the definition of a position releasing the institution from its wrongful failure to act (judgment of the Court in Joined Cases 42/59 and 49/59 Snupat ν High Authority [1961] E C R 99).

29 The applicant further observes that the Commission seeks to justify its inaction by the unacceptable argument that the preliminary investigation into the State mea­ sures to which the complaints relate is not yet complete. Such a method of pro­ ceeding infringes the fundamental right to effective legal protection.

32 It also takes the view that there is no possibility of bringing an action before the national court in this case since the aid of which it complains is granted pursuant to budgetary laws against which an individual cannot bring an action under Span­ ish law. Furthermore, the fact that the beneficiaries of the aid are public companies means that the instruments implementing those laws are internal and unpublished and also incapable of challenge. Even if that were not the case, no national court would be bold enough to hold that the grants made to the public television com­ panies amounted to State aid, knowing that the matter had been before the Com­ mission for four years without it having initiated an inter partes procedure under Article 93(2) of the Treaty. Finally, because of the attitude of the Commission in this case, no national court could require the grants concerned to be repaid if they were found to be incompatible (judgment of the Court of Justice in Case 223/85 RSV v Commission [1987] E C R 4617).

33 The French Republic, as intervener, referring to the operative part of the judgment in SFEI and Others, cited above, challenges the applicant's argument that no national court would be minded to classify a measure which has been the subject of investigation by the Commission for several years as State aid. Under the opera­ tive part of that judgment, a national court may rule on such a question even if it is pending before the Commission at the same time. Moreover, the national court may request clarification from the Commission or refer a question to the Court of Justice for a preliminary ruling under Article 177 of the Treaty.

37 In adopting the attitude which it has assumed in this case, the Commission is also failing to observe its procedural rights under the Treaty in the context of the pro­ cedure under Article 93(2) of the Treaty. The applicant's rights can only be

II - 3420

GESTEVISION TELECINCO ν COMMISSION

respected if it is able to challenge decisions made by the Commission without ini­ tiating the procedure under Article 93(2) (judgments of the Court of Justice in Cook ν Commission, cited above, and judgment of the Court in Case C-225/91 Matra ν Commission [1993] E C R 1-3203). Those procedural rights are also mean­ ingless if the Commission is allowed to prolong its preliminary investigation into State measures indefinitely.

38 The applicant further disputes that the obligation to initiate an administrative pro­ cedure under Article 93(2) is subject to a prior rinding of aid under Article 92(1) of the Treaty. The Commission's administrative practice shows that it has in the past initiated such procedures where it was in doubt as to whether the State measures in question could be regarded as aid (judgment in Sytraval and Brink's France ν Commission, cited above, paragraph 79). In any event, in its judgment in Case T-106/95 FFSA and Others ν Commission [1997] E C R 11-229, the Court of First Instance stated that granting public funds to a company constituted State aid even if Article 92 might subsequently prove to be inapplicable by virtue of Article 90(2) of the Treaty.

39 Finally, the applicant considers that account must be taken of the fact that, since no procedure has been initiated under Article 93(2), the Spanish authorities are still disbursing the contested grants to the Spanish public television companies even though those grants were challenged several years ago. The applicant submits that, in these circumstances, the Commission was under a duty to act which it has failed to fulfil contrary to the Treaty.

43 The Commission points out that neither the Treaty nor secondary legislation pro- vides for a time-limit within which it is obliged to react to a complaint relating to non-notified State aid.

44 In this case, account must also be taken of the complexity, both legal and political, of the matter in question. The manner in which this case was dealt with called for a particularly cautious approach because of the recent opening-up of televisual activity to competition. The first complaint was the first ever of its kind and related to seven different regional grants. The complaints lodged by the applicant furthermore raised delicate problems relating to effects on intra-Community trade, offsetting the cost of public service obligations and classification in terms of aid, particularly because of the lack of accounting transparency prevailing at times in the public companies in question.

45 The time taken in dealing with this case cannot therefore be considered as consti- tuting a wrongful failure to act, contrary to the rules of the Treaty and in particular to the obligation to initiate the procedure under Article 93(2) of the Treaty.

II - 3422

GESTEVISION TELECINCO ν COMMISSION

46 The Commission also draws attention to the serious repercussions which a deci­ sion to initiate the procedure under Article 93(2) of the Treaty would have on pub­ lic television companies throughout the Community. Indeed, in such a case, the grant of such aid would have to be suspended (judgment of the Court of Justice in Case C-312/90 Spain ν Commission [1992] E C R I-4117), a step which would be contrary to the principle of sound administration.

JUDGMENT OF 15. 9. 1998 — CASE T-95/96

considered properly granted and the Commission must be informed of any plans to grant or alter aid prior to such plans being put into effect.

50 The Commission then proceeds to carry out a preliminary investigation into the planned aid. If, at the end of that investigation, it appears that a plan is not com­ patible with the common market, it must initiate the procedure provided for in the first subparagraph of Article 93(2) of the Treaty forthwith.

51 In the context of that procedure, a distinction must therefore be drawn between, on the one hand, the preliminary stage of investigating aid, instituted under Article 93(3) of the Treaty, whose aim is solely to enable the Commission to form an ini­ tial view on the compatibility, in part or in whole, of the aid in question and, on the other hand, the analysis stage referred to in Article 93(2) of the Treaty, which is intended to give the Commission full information on all the details of the case (see the judgments in Cook ν Commission, cited above, paragraph 22, and Matra ν Commission, cited above, paragraph 16).

54 Finally, it must be remembered that the Commission has exclusive jurisdiction to determine whether aid is incompatible with the common market (judgments in Steinike and Weinlig, cited above, paragraphs 9 and 10, and Fedération Nationale du Commerce Extérieur des Produits Alimentaires and Syndicat National des Négociants et Transformateurs de Saumon, cited above, paragraph 14).

55 It follows from all those rules that, at the end of the preliminary stage of the inves- tigation into a State measure, the Commission has a duty to adopt one of the fol- lowing three decisions vis-à-vis the Member State concerned: it may decide that the State measure at issue does not constitute 'aid' within the meaning of Article 92(1) of the Treaty; or it may decide that the measure, although constituting aid within the meaning of Article 92(1), is compatible with the common market under Article 92(2) or (3); or it may decide to initiate the procedure under Article 93(2).

56 As the law so stands, it is appropriate first of all to consider whether the claim for a declaration that the Commission has failed to act is admissible and then, if appropriate, whether it is well founded.

Admissibility

57 Under the third paragraph of Article 175 of the Treaty, any natural or legal person may complain to the Court of Justice that an institution of the Community has failed to address to that person any act other than a recommendation or an opinion.

II - 3425

62 As to whether it is individually affected, it is settled case-law that natural or legal persons are individually concerned by a decision where that decision affects them by reason of the attributes peculiar to them or by reason of factual circumstances differentiating them from all other persons (judgment of the Court in Case 25/62 Plaumann ν Commission [1963] E C R 197, 226; judgments of the Court of First Instance in Joined Cases T-481/93 and T-484/93 Exporteurs in Levende Varkens

II - 3426

GESTEVISION TELECINCO ν COMMISSION

and Others ν Commission [1995] E C R 11-2941, paragraph 51, and in Case T-266/94 Skibsværftsforeningen and Others ν Commission [1996] E C R 11-1399, paragraph 44).

63 It is therefore appropriate to consider in this case whether the applicant would be individually affected by a decision which the Commission might adopt in relation to the Member State concerned at the end of the preliminary stage of investigation, to the effect that the State measure at issue does not constitute aid, or to the effect that it does constitute aid but is compatible with the common market, or to the effect that it necessitates the procedure under Article 93(2) of the Treaty to be initi­ ated.

II - 3427

JUDGMENT OF 15. 9. 1998 — CASE T-95/96

66 In the present case, the Commission has not disputed that the applicant is a party concerned within the meaning of Article 93(2), this position ensuing from its status as manager of one of the three private television channels in competition with the public television channels to which the contested grants were made and from the fact that both complaints lodged by it prompted the preliminary investigation car­ ried out by the Commission in relation to those grants.

67 Furthermore, the applicant properly brought an action before the Community judicature which has sole jurisdiction, to the exclusion of any national court, to determine whether the Commission failed, in breach of the Treaty, to initiate the procedure under Article 93(2) of the Treaty, which is a necessary precondition for the adoption of a final decision which would be of direct and individual concern to the applicant, such as a decision declaring compatible with the common market, an aid whose classification has until that point raised serious difficulties.

68 In that connection, the possible existence of a remedy at domestic level, whereby the applicant could challenge the grant of the disputed allowances to the public channels, cannot affect the admissibility of the applicant's claim for a declaration of failure to act (see the judgment in Kahn Scheepvaart ν Commission, cited above, paragraph 50).

69 Accordingly, the failure by the Commission to take any decision following its ini­ tiation of the preliminary investigation procedure in relation to the grants made by the various Spanish State bodies to the public television companies must be con­ sidered to be of direct and individual concern to the applicant.

73 As regards the period within which the Commission must rule on such a com­ plaint, it is appropriate to note that, in relation to Article 85 of the Treaty, the Court of First Instance has already ruled that the Commission cannot postpone indefinitely defining its position in relation to an application for clearance under Article 85(3) (judgment in Joined Cases T-213/95 and T-18/96 SCK and FNK ν Commission [1997] E C R II-1739, paragraph 55), an area in which it has exclusive jurisdiction. In that case, the Court of First Instance held it to be a general prin­ ciple of Community law that the Commission must act within a reasonable time in adopting decisions following administrative procedures relating to competition policy (ibid., paragraph 56, and the cases cited therein).

74 It follows that the Commission cannot prolong indefinitely its preliminary inves­ tigation into State measures in relation to which there has been a complaint under Article 92(1) of the Treaty where it has, as in this case, agreed to initiate such an investigation.

II - 3429

JUDGMENT OF 15. 9. 1998 — CASE T-95/96

75 Whether or not the duration of an administrative procedure is reasonable must be determined in relation to the particular circumstances of each case and, especially, its context, the various procedural stages to be followed by the Commission, the complexity of the case and its importance for the various parties involved (judg­ ments of the Court of First Instance in Case T-73/95 Oliveira ν Commission [1997] E C R 11-381, paragraph 45, and in SCK and FNK ν Commission, cited above, paragraph 57).

80 Next, it is appropriate to note that the applicant's first complaint was lodged on 2 March 1992 and the second complaint on 12 November 1993. It follows that, at the time when the Commission was formally called upon to act pursuant to Article 175 of the Treaty, that is to say on 8 February 1996, the date when the applicant's letter of 6 February 1996 inviting the Commission to act was received, the Com­ mission's preliminary investigation had so far taken 47 months for the first com­ plaint and 26 months for the second.

81 Those periods are so long that they should have been sufficient to enable the Com­ mission to close the preliminary stage of investigation into the aid in question and thus be in a position to adopt a decision thereon (see paragraph 55 above), unless it could show exceptional circumstances justifying such periods.

82 In that connection, the Commission points out that the first complaint was the first of its kind it had ever received, that Member States may legitimately pursue non-commercial aims in the televisual sector and that delicate problems were raised in relation to the effect on intra-Community trade and the offsetting of costs of performing public-service obligations under Article 90(2) of the Treaty. At the hearing, it referred to the existence of the Protocol on the System of Public Broad­ casting in the Member States annexed to the E C Treaty by the Treaty of Amster­ dam of 2 October 1997 (OJ 1997 C 340, p. 109).

83 However, it is apparent from the submissions and pleadings of the parties that the only real difficulty facing the Commission in this case relates to the extent to which the disputed grants made to the Spanish public television companies are intended to compensate them in respect of specific public-service obligations imposed upon them by national legislation. When assessing that issue, the Protocol cited above cannot be taken into consideration as it was adopted almost 19 months after the applicant called upon the Commission to act, which was even before the opening, on 29 March 1996, of the inter-Governmental conference which led to the Treaty of Amsterdam being concluded.

86 However, those steps in no way justify the Commission having prolonged to the extent that it did its preliminary investigation into the aid in question, thereby considerably exceeding the period of deliberation reasonably necessary to assess the aid under Article 90(2) of the Treaty. Accordingly, and even if it is accepted that the above Protocol annexed to the EC Treaty by the Treaty of Amsterdam shows the politically sensitive nature of the subject-matter in question for the Member States, the Commission should, at the time when it was called upon to act, have been in a position to adopt a decision declaring that the grants in ques­ tion did not constitute aid, or that they did constitute aid but were compatible with the common market or that serious difficulties obliged it to initiate the pro­ cedure under Article 93(2), thus allowing all parties concerned, and in particular the Member States, to submit their observations. Furthermore, it could equally have adopted within the periods concerned, a hybrid decision combining, accord­ ing to the circumstances, one or more of the decisions of principle set out above in respect of different aspects of the State measures in question (see, on this point, the judgments in Case 74/76 Iannelli & Volpi [1977] E C R 557, paragraphs 14 to 17, and Case T-107/96 Pantochim ν Commission [1998] E C R II-311, paragraph 51).

87 At this stage, it is now appropriate to consider further the extent to which the Commission defined its position upon the applicant's request to act contained in its letter of 20 February 1996.

91 Therefore, the claim for a declaration of failure to act must be considered to be well founded.

92 Accordingly, as it was only made in the alternative, there is no reason to rule on the claim for annulment.

II - 3433

JUDGMENT OF 15. 9. 1998 — CASE T-95/96

Costs

93 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 in the successful party's pleadings.

II - 3434

GESTEVISION TELECINCO ν COMMISSION

2. Orders the Commission to pay the applicant's costs other than those incurred as a result of the intervention by the French Republic;

3. Orders the French Republic to bear its own costs together with the costs incurred by the applicant by reason of its intervention.

Tiili Briët Lenaerts

Potocki Cooke