T-86/96

— Condor Flugdienst GmbH, a company incorporated under German law, established in Kelsterbach (Germany),

— Germania Fluggesellschaft mbH, a company incorporated under German law, established in Berlin,

— Hapag-Lloyd Fluggesellschaft mbH, a company incorporated under German law, established in Langenhagen (Germany),

* Language of the case: German.

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ARBEITSGEMEINSCHAFT DEUTSCHER LUFTFAHRT-UNTERNEHMEN AND HAPAG-LLOYD ν COMMISSION

Commission of the European Communities, represented by Paul F. Nemitz, of its Legal Service, acting as Agent, assisted by Georg Berrisch, Rechtsanwalt, Ham­ bourg and Brussels, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

defendants,

A P P L I C A T I O N for interim measures in relation to Commission Decision 96/369/EC of 13 March 1996 concerning fiscal aid given to German airlines in the form of a depreciation facility (OJ 1996 L 146, p. 42),

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T H E PRESIDENT O F T H E F O U R T H C H A M B E R ( E X T E N D E D C O M P O S I T I O N ) O F T H E C O U R T O F FIRST INSTANCE OF THE EUROPEAN COMMUNITIES

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ARBEITSGEMEINSCHAFT DEUTSCHER LUFTFAHRT-UNTERNEHMEN AND HAPAG-LLOYD ν COMMISSION

3 The provisions which led to the adoption of the contested decision, which are laid down in Paragraph 82f of the Einkommensteuer-Durchführungsverordnung (implementing regulation on income tax, hereinafter 'the EStDV), are additional to the straight-line depreciation scheme but exclude accelerated depreciation. Under those provisions specific categories of merchant ships, fishing boats and air- craft may, according to certain procedures and during a certain period following acquisition of the asset, be amortised at a higher rate than that provided for under the straight-line depreciation scheme.

4 The aircraft referred to are those used for commercial purposes for the interna- tional transport of goods or passengers or for other service activities performed abroad. They must be registered in Germany and must not be disposed of during the six years following acquisition. Provided that those conditions are met, Para- graph 82f provides that during the year of acquisition and the four subsequent years special depreciation of not more than 30% of the total cost of acquisition may be applied. That special depreciation amount may be used in full during the year of acquisition or spread, at the airline's discretion, over the whole five-year period. The present case concerns only the scheme applicable to aircraft.

5 The scheme dates from 1965 and was applied, after being extended in 1986, until the end of 1994 without any formal objection by the Commission. The procedure opened in respect of that extension was closed (Article 4 of the contested decision), having been accepted de facto by the Commission (sixth paragraph of Section II and first and second paragraphs of Section IV of the preamble to the contested decision).

9 O n 13 March 1996 the Commission adopted the contested decision.

10 Pursuant to Article 5 of the contested decision, the original decision was with- drawn, since, according to the final recital of the contested decision, the German version of the original decision contained numerous drafting errors.

1 1 Following the withdrawal of the original decision, and upon application by the Commission on 9 April 1996, the Court of First Instance (Fourth Chamber, Extended Composition) declared that it was unnecessary to proceed to judgment and ordered the Commission to bear the whole of the costs (Case T-25/96 Arbeitsgemeinschaft Deutscher Luftfahrt-Unternehmen and Hapag-Lloyd v Commission [1997] ECR 11-363).

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ARBEITSGEMEINSCHAFT DEUTSCHER LUFTFAHRT-UNTERNEHMEN AND HAPAG-LLOYD ν COMMISSION

12 Articles 1 to 3 of the contested decision correspond to the Articles 1 to 3 of the original decision. In particular, Article 1 of the contested decision states that the extension of the German scheme constitutes aid which is incompatible with the common market. Articles 2 and 3 call on Germany to take the same steps as those indicated in Articles 2 and 3 of the original decision (see paragraph 7 above).

ORDER OF 2. 4. 1998 — CASE T-86/96 R

17 An administrative directive of 17 February 1997 from the Federal Minister for Finance states: 'In the case of aircraft, the European Commission has ... approved the special depreciation facility only where the aircraft were acquired or built before 1 January 1995. By derogation from the provisions amended by the Jahr- essteuergesetz 1997, the special depreciation facility for aircraft can therefore be used only to the extent hitherto authorised by the Commission.'

The interlocutory proceedings

18 By a separate document lodged at the Court on 10 December 1997 the applicants sought suspension of operation of Articles 1 to 3 of the contested decision or, in the alternative, any other or additional interim measure which the Court might deem necessary or appropriate.

19 In its written observations, which were lodged at the Registry of the Court of First Instance on 28 January 1998, the Commission claimed that the interlocutory appli- cation should be dismissed in its entirety.

20 The parties presented oral argument on 3 March 1998.

2 4 Article 104(2) of the Rules of Procedure of the Court of First Instance provides that an application for interim measures is to state the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case for the interim measures applied for. Those measures must be provisional in that they must not prejudice the decision in the main proceedings (see, most recently, Case T-610/97 RCarlsen and Others v Council [1998] E C R II-485, paragraph 13).

Arguments of the parties

Preliminary observations on the objective of the application for interim measures

25 According to the applicants, the interim measures which they seek must permit them to benefit from Paragraph 82f of the EStDV until the end of its period of validity, namely for the 1997 and 1998 tax years, albeit only on a provisional basis, that is subject to recovery by Germany of the sums unduly received should the

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28 At the hearing the Commission expressed doubts as to whether, in the light of Paragraph 20(2) of the Standortsicherungsgesetz (see paragraph 6 above), the pro- visional authorisation applied for would be capable of leading to the application of Paragraph 82f. Such authorisation could not compel Germany (which, moreover, has made no application for interim measures) to apply that provision. The fact

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that as German law now stands the applicants cannot seek the application of that provision, even on a provisional or retroactive basis, does not entitle them to apply for an injunction against the Commission. In any event, the measure applied for should apply only to the applicants.

29 The applicants claimed at the hearing that Article 186 allows the judge hearing an application for interim measures to require the Commission to adopt positive mea­ sures (Case 809/79 R Pardini v Commission [1980] E C R 139; Case 118/83 R CMC v Commission [1983] E C R 2583). It is clear from Paragraph 20(2) of the Standort­ sicherungsgesetz and from the fact that Germany has challenged the contested decision before the Court of Justice (Case C-182/96) that Germany would apply Paragraph 82f if the measure applied for were granted. There is no reason to deny judicial protection in the present case merely because, in accordance with the applicable provisions, Germany has not granted the advantage in issue in the absence of a positive decision of the Commission or because Germany has made no application for interim measures.

32 Second, the statement of reasons of the contested decision is vitiated, according to the applicants, by the fact that Paragraph 82f of the EStDV has 'general' rather than 'selective' effect and therefore does not constitute State aid within the mean- ing of Article 92 of the EC Treaty. Any citizen might benefit as an investor, particularly in the case of German partnerships whose shares are available to the public and whose profits are taxed in the hands of their members (the investor- members). The same considerations apply to the acquisition of aircraft used for international transport for remuneration (where, for example, an individual oper- ates a transfrontier 'air taxi service') and the acquisition of shares in airlines by private persons.

33 Third, the applicants complain, with reference to the application and the reply in the main proceedings, of other manifest defects in the statement of reasons con- cerning the fact that the Commission simply made assertions without adducing evidence to support them, although the burden of proving the existence of State aid lies on the Commission. The Community judicature has full jurisdiction to determine that question. At the hearing the applicants further stated that the expert reports show that the German provisions in issue do not constitute State aid.

34 The Commission considers that the main action is both inadmissible and unfounded. It refers to its pleadings in the main proceedings.

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ARBEITSGEMEINSCHAFT DEUTSCHER LUFTFAHRT-UNTERNEHMEN AND HAPAG-LLOYD ν COMMISSION

Urgency

38 In that regard, the applicants claim, first, that the choice between accelerated depreciation and straight-line depreciation (the only method to which the special depreciation facility is applicable) must be made before a certain date. In their application for interim measures they claimed that the choice must be made 'in the year of acquisition' and referred, more specifically, to the balance-sheet date (31 December). At the hearing, however, they stated that the choice is made when the balance sheet is being prepared, after the end of the year of acquisition. The dead­ line for drawing up the balance sheet varies according to the type of company. At the moment the deadline for 1997 has not yet been exceeded in the case of certain small private companies. Those companies could therefore still choose between the two main types of depreciation for 1997. However, the applicants further stated at the hearing that in order to form an effective part of an undertaking's 'balance-

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sheet policy' the choice must be taken by the management well before the official deadline so that the other steps reflecting that policy can be taken in good time.

39 Second, once an undertaking has (formally) chosen accelerated depreciation, under the relevant legislation it cannot subsequently change over to straight-line depre- ciation together with the special depreciation facility. Paragraph 82f of the EStDV cannot be applied with retroactive effect where the annual accounts have already been closed and certified. In particular, a retroactive adjustment of those accounts would be incompatible with the rule of accuracy and veracity in accounting. The applicants further stated at the hearing that Paragraph 82f cannot be applied on a provisional basis. Such an accounting measure would prevent the undertaking con- cerned from obtaining the necessary auditor's certificate for the balance sheet in question. Thus Paragraph 82f has no longer been applied since 1995.

42 At the hearing the applicants pointed out that the member undertakings of the first applicant purchased a total of 50 aircraft in 1997 and 1998 for a sum of approxi­ mately USD 2 500 million. In that regard, they observed that although leasing plays an increasingly important role in the acquisition of aircraft, owing to the increases in manufacturers' prices, German undertakings, especially the members of the first applicant, have thus far been in a position to acquire aircraft themselves. For the rest, the applicants cannot be required to provide individual figures for each undertaking concerned; moreover, those figures are confidential and would make no useful contribution to the decision to be taken on the application for interim measures. Such a requirement would amount to imposing on them a greater degree of precision than that observed in the contested decision. Be that as it may, what matters in the present case is the loss of a tool which guarantees flexibility.

43 The fact that the application for interim measures was only submitted in December 1997 may be explained by the emergence at that time of the prospect that the advantage of Paragraph 82f of the EStDV would be definitively lost, since the 1997 Tax Law had reduced its period of validity by one year. The removal of the advan­ tage upon expiry of that period will have very serious consequences for the sector.

44 Last, with reference to the principle of proportionality and to German law, the applicants consider that the requirements associated with the criterion of urgency should not be defined too rigidly in the present case, since the illegality of the contested decision is manifest. In that regard, they refer to the first ground on which they rely to establish a prima facie case in the main action (see paragraph 31 above).

48 According to the Commission, the applicants should in any event have specifically explained, with supporting figures, the consequences which the loss of that oppor- tunity would entail for each of those undertakings and in respect of each of the aircraft concerned. The Commission disputes that the requirement to do so might give rise to serious problems of confidentiality, in any event in the second appli- cant's case.

49 At the hearing the Commission further claimed that the undertakings could rely on Paragraph 82f on a provisional basis for the purpose of their 1997 balance sheets in order to secure its definitive application by the national authorities when judgment has been given in the main proceedings.

50 As regards 1998, the occurrence of the harm is not sufficiently imminent to justify immediate measures (see Case T-88/94 R Société Commerciale des Potasses et de l'Azote and Entreprise Minière et Chimique v Commission [1994] E C R II-263,

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paragraph 39, and Case C-149/95 P(R) Commission ν Atlantic Container Line and Others [1995] E C R 1-2165, paragraph 38). The formal choice between the two depreciation methods need not be made for that year until the end of the year and the actual choice, according to the applicants' argument, should be made during the final quarter. It cannot be precluded, indeed it is probable, that judgment in the main proceedings will be given before then. If that were to appear unlikely the applicants could submit a fresh application for interim measures.

54 In the present case the applicants cannot be required to suffer the damage referred to above by definitively renouncing (for the last two tax years during which it is available) the opportunity to make use of the special depreciation facility. The Community would suffer no damage by waiting, after the adoption of the interim measure, for the judgment in the main proceedings, even if the main application were to be dismissed by the Court. Should that application be dismissed, it would mean that Paragraph 82f of the EStDV conferred a monetary advantage and there- fore constituted State aid. The Commission could then order Germany to recover the aid and the Community would thereby be compensated for any damage associ- ated with the interim measure. As regards the Community interest in there being no distortion of competition in the internal market (Article 3(g) of the E C Treaty) the applicants observe that to their knowledge during the 25 years that Paragraph 82f has been in force no competitor has ever complained to the competent authori- ties that German airlines were able to rely on it.

55 In the Commission's submission, the balance of interests does not favour granting the measure applied for. The fact that aid may be subsequently recovered does not prevent it from distorting competition in the mean time and does not even neces- sarily allow such distortion to be eliminated retroactively.

Findings of the President

56 In the light of the explanations which the applicants provided at the hearing, the President notes that they are now asking the Court to order the Commission to authorise the German measure in issue on a provisional basis for 1997 and 1998 or, in the alternative, to order its authorisation for the benefit of the applicants alone.

60 All the submissions which the applicants have put forward in order to show that there is a prima facie case in the main proceedings allege 'defects in the statement of reasons', including the complaint, on which particular emphasis is placed in the present context, that the contested decision contains no reference to the expert reports (see paragraphs 31 and 44 above). In the event that such defects were estab­ lished, they would not by their nature preclude the possibility that the Commis­ sion's finding in the contested decision that the German measure constitutes State aid which is incompatible with the common market is materially justified under Article 92 of the E C Treaty. They are therefore incapable of showing that the applicants have a particular legitimate interest in obtaining an injunction ordering the Commission to grant provisional authorisation pursuant to Article 92. In any event, none of the applicants' submissions justifies, at first sight, the conclusion that they were prevented by the allegedly incomplete nature of the statement of reasons from expressing their views on that point. Each of those submissions high­ lights errors which the Commission is alleged to have committed in examining the case-file (i) by failing to use the expert reports, (ii) by reaching the conclusion that the German rules were selective or (iii) by failing to prove its assertions.

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64 Second, to be able to determine whether the damage which the applicants fear is serious and irreparable and therefore provides grounds for, exceptionally, disapply- ing the contested decision, the judge hearing the application must have hard evi- dence allowing him to determine the precise consequences which the absence of the measures applied for would in all probability entail for each of the undertak- ings concerned.

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65 In the light of those criteria, the applicants should have provided detailed docu­ mentary evidence of, first, the aircraft purchased by each of the undertakings con­ cerned which fall within the scope of the German provisions. By virtue of the amendments introduced by the 1997 Tax Law (see paragraph 16 above), the con­ tracts relating to those purchases must have been concluded before 25 April 1996 and are therefore apparently identifiable for the entire remainder of the period dur­ ing which the provisions are applicable.

66 The application for interim measures contains no such information. The mere assertion at the hearing that all the member undertakings of the first applicant bought a certain number of aircraft for a given sum, stated in approximate terms, does not suffice for the purpose of evaluating the actual material interest of each of the undertakings concerned.

67 Such precise, individual and substantiated information was all the more necessary because the applicants acknowledged at the hearing that in addition to the pur­ chase of aircraft by airlines themselves, where their depreciation is shown in each airline's own accounts, leasing is of increasing importance owing to increases in manufacturers' prices.

70 Furthermore, the specific circumstances in which the present application was sub- mitted clearly disclose a number of factors which indicate that the matter is not urgent.

71 Paragraph 82f of the EStDV had no longer been applicable since the end of 1994 and it will no longer be applicable after 31 December 1998. The applicants have been unable to explain how the advantage which they associate with that provision is urgent as regards the acquisition of aircraft in 1997 and 1998 or, in particular, why they did not submit a similar application in respect of the 1995 and 1996 tax years in the context of Case T-25/96 or in the context of the main proceedings in the present case.

72 In so far as the applicants explain the date on which they chose to apply for interim measures by their fear of definitively losing that advantage, because of the danger that the advantage would no longer be available in any of the tax years under consideration, their argument cannot be accepted. As they themselves state, the present application was justified in order to enable them, within the period prescribed by national law and having regard to the irreversible nature of their choice, to choose straight-line depreciation for 1997 and 1998, while remaining assured of the possibility of subsequently making use of the special depreciation facility. However, that justification could have been invoked in the same way in relation to the corresponding periods for the previous years. The fact that the 1997 Tax Law brought forward the deadline for acquiring aircraft by one year does not

74 Since the condition relating to urgency is therefore not met, the balance of inter­ ests cannot in the circumstances of the case favour the measure applied for. The applicants have not adduced any evidence giving rise to particularly obvious doubts as to the validity of the classification of the national measure as State aid (see paragraph 61 above). Furthermore, Articles 92 and 93 of the E C Treaty are intended to prevent such aid from distorting competition within the Community. The final sentence of Article 93(3) protects competition by preventing payment of the aid before the Commission has been able to satisfy itself that it is compatible with the common market. That procedure implies the exercise of a wide discretion on the part of the Commission (see Case C-169/95 Spain ν Council [1997] E C R I-135, paragraph 18), whose role the judge hearing the application for interim mea­ sures cannot assume (see Case T-107/96 R Pantocbim v Commission [1996] E C R II-1361, paragraph 44). In the present case the Commission, exercising that power, declared that the aid was incompatible with the common market. In the absence of sufficient evidence to establish a danger of serious and irreparable harm, therefore, the judge hearing the application for interim measures cannot disapply the rules on the protection of competition laid down in Articles 92 and 93 of the E C Treaty. That finding is not affected by the applicants' claim that the German rules have not hitherto been the subject of a complaint.

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2. Costs are reserved.

Luxembourg, 2 April 1998.

H.Jung P. Lindh Registrar President

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