C-55/97

appellants,

APPEAL against the judgment of the Court of First Instance of the European Communities (Fifth Chamber, Extended Composition) in Case T-380/94 AIUF- FASS and AKT y Commission [1996] ECR 11-2169, seeking to have that judgment set aside

* Language of the case: French.

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the other party to the proceedings being:

Advocate General: C. O. Lenz, Registrar: R. Grass,

after hearing the Advocate General,

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makes the following

Order

3 The Court of First Instance made the following findings:

'7. O n 21 December 1992 the United Kingdom Government notified to the Com- mission a proposal to grant aid to the Hualon Corporation, ... a newly established textile undertaking, for its plant at Belfast in Northern Ireland. Hualon is owned by the Taiwanese Hualon Group, which operates in the synthetic fibres sector, mainly producing polyamide.

8. The proposed aid, of an intensity of 38%, was to amount to £61 million, for a total investment of £157 million.

9. It was proposed that the investment should be carried out in four phases, phased over seven years, with the aim of producing approximately 23 000 or 23 500 tonnes of finished polyester, polyamide and polycotton fabrics, represent- ing between 140 million and 200 million metres, a year...

10. By notice published in the Official Journal of the European Communities of 5 October 1993, the defendant gave Member States and interested parties notice to submit their observations on the proposed measures in accordance with Article 93(2) of the Treaty (Commission Notice 93/C 269/06 pursuant to Article 93(2) of the EEC Treaty to other Member States and interested parties regarding aid which the United Kingdom plans to grant to Hualon Corporation, OJ 1993 C 269, p. 8).

11. All the observations submitted by interested parties and Member States other than the United Kingdom mainly raised problems of excess capacity and wide- spread stagnating demand for textiles in the Community.

15. In considering the project from the point of view of Article 92(3)(a) and (c) of the Treaty, the Commission states that it balanced the positive regional effects of the proposed investment against its potential negative effects on overall productive capacity and competition (64th paragraph). It considers that the positive regional effects of the assisted project (described in the preceding paragraph of this judg- ment) outweigh its negative effects on capacity and competition in view of the probable change in the economic context for Hualon's new capacity when it places its products on the market. According to the decision, Hualon will produce mass- produced fabrics with low value added, "a niche that otherwise would be covered by imports, without notably affecting the evolution of installed capacities" (59th paragraph of the notice).

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16. The project should even have a "positive reversing effect on the derealization of the European textile industry towards low factor cost countries" outside t h e . Community (64th paragraph). The defendant considers that, although it is likely to affect trading conditions in the European Community, the aid is not expected to do so to an extent contrary to the common interest (64th paragraph). After com- paring the expected effects of the proposed investment on competition in the Community and its paramount effect on the economic development of the area concerned, the Commission concluded that the conditions to benefit from the exemptions provided for in Article 92(3)(a) and (c) of the Treaty and Article 61(3) of the EEA Agreement were fulfilled (65th paragraph).'

AIUFFASS AND AKT v COMMISSION

and would not make for further excess capacity, the applicants accused the Com- mission, inter aim, of not taking account of the effects of the investment in the high range products sector, in which Community producers specialized, according to the Decision. First, they took issue with the Commission's assertion that Hua- lon would confine itself to manufacturing low range fabrics (paragraph 123 of the judgment appealed against) and, second, they complained that the Commission did not take account of the fact that air-jet or water-jet looms (such as those used by Hualon) could be — and actually were — currently used profitably to manufac- ture high range fabrics or of the fact that Hualon was, therefore, likely to produce such fabrics (paragraphs 143 and 144).

The judgment of the Court of First Instance

8 The Court of First Instance dismissed the application on the ground that the appli- cants had not proved the existence of manifest errors of assessment such as to require the annulment of the Decision.

9 In particular, as regards the complaints relating to the effects of the investment at issue in the high range products sector, the Court of First Instance stated:

O n the distinction between low range and high range

98. Consequently, the defendant cannot be accused of failing to define the criteria distinguishing low range from high range products.

Hualon's production

— Arguments of the parties

123. The applicants take issue with the assertion contained in the 21st and 43rd paragraphs of the notice that Hualon will confine itself to manufacturing low range fabrics. Hualon's President allegedly stated in an interview given to the BBC on 13 November 1994 that Hualon's aim was to produce fabrics with high value added.

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Use of the different types of loom

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148. The applicants' arguments, which chiefly seek to show that it is common and viable to produce high range articles on jet looms, do not invalidate the defen- dant's proposition that it is more viable to produce low range fabrics on jet looms rather than on rapier or projectile looms. N o r do those arguments weaken the considerations relating to the tendency for Community producers to abandon the low range market.

149. The applicants merely go on to assert that there is no clear correlation between the type of loom used and the type of fabric manufactured, without adducing any evidence of this. In particular, they have not contested or under- mined the technical and economic explanations of the various looms set out in the report by Kurt Salmon Associates which was produced by the intervener.

150. Consequently, the applicants have not proved that the defendant made a manifestly erroneous assessment of the facts in finding that low range products manufactured on rapier looms cannot compete with products imported from third countries which are manufactured on air-jet or water-jet looms, owing to the char- acteristics of those types of loom, and in using that finding as the basis for analys- ing the expected development of competitive conditions.'

12 Under Article 119 of its Rules of Procedure, where the appeal is clearly inadmis- sible or clearly unfounded, the Court may, at any time, dismiss the appeal by rea- soned order without opening the oral procedure.

1 3 Before the pleas raised by the appellants are considered, it should be noted that the Court has consistently held that, under Article 168a of the EC Treaty and the first paragraph of Article 51 of the E C Statute of the Court of Justice, an appeal may be based only on grounds relating to the infringement of rules of law, to the exclusion of any appraisal of the facts (see, in particular, Case C-283/90 P Vidrányi v Com- mission [1991] ECR 1-4339, paragraph 12, and the order of 17 September 1996 in Case C-19/95 P San Marco v Commission [1996] ECR 1-4435, paragraph 39).

On the erroneous interpretation of the decision

M Under their first plea the appellants complain that the Court of First Instance rejected the claim that there was no guarantee that Hualon would exclusively pro- duce low range fabrics and thus not enter into direct competition with Commu- nity textile producers in the high range fabrics sector solely on the ground that the fact that the company would produce only low range fabrics was one of the condi- tions for authorization of the aid by the Commission. According to the appellants, who refer to a letter the Commission sent to them on 17 January 1997, the decision contained no such condition. The Court of First Instance thus misinter- preted the decision and thereby infringed Community law.

is In that connection, it should be observed that the Court of First Instance noted in paragraph 95 of the judgment appealed against, that the decision stated that Hua-

16 Contrary to the appellants' assertion, paragraph 128 of the judgment appealed against does not call into question the scope of the decision as defined in paragraph 126. Since the fact that Hualon's production would concentrate on the market for low range fabrics was a determining factor in the Commission's authorization to grant the aid in issue, the Court of First instance could validly characterize the case as 'a decision authorizing the grant of aid' ... 'one of the conditions' of which was not complied with by the recipient undertaking. In that case, as in the case of Hualon's production not corresponding to that taken into account in the grounds of the decision, it would, as stated in paragraph 128 of the judgment appealed against, be for the Member State to make sure that the decision was properly car- ried out and for the Commission to assess whether it was appropriate to demand that the aid be repaid.

17 It follows that the Court of First Instance interpreted the scope of the decision correctly. The first plea must therefore be dismissed as clearly unfounded.

Inadequate statement of reasons

18 In their second plea the appellants claim that the Court of First Instance did not give sufficient reasons for rejecting their complaint that the Commission did not consider the question whether air-jet and water-jet looms were suitable for the manufacture of both low range and high range products.

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22 The Court of First Instance concluded, in paragraph 150 of the judgment appealed against, that 'the applicants have not proved that the defendant made a manifestly erroneous assessment of the facts in finding that low range products manufactured on rapier looms cannot compete with products imported from third countries which are manufactured on air-jet or water-jet looms, owing to the characteristics of those types of loom, and in using that finding as the basis for analysing the expected development of competitive conditions'.

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23 It follows that, contrary to what is claimed by the appellants, the Court of First Instance did address the complaint relating to the possibility of producing high range fabrics on jet looms and the consequent possibility that Hualon may com- pete with Community textile producers in this sub-sector, and therefore did give reasons for its conclusion that the appellants had not proved that there had been a manifest error of assessment which vitiated the Commission's case.

24 The substance of those reasons is based on questions of fact which are not subject to review by this Court, since, as pointed out in paragraph 13 of this order, the Court of First Instance alone has jurisdiction, first, to find the facts, save where a substantive inaccuracy in its findings is attributable to the documents before it and, second, to assess those facts.

28 Under Article 69(2) of the Rules of Procedure, applicable to the appeals procedure by virtue of Article 118, the unsuccessful party is to be ordered to pay the costs, if they have been applied for in the successful party's pleadings. Since the appellants have been unsuccessful, they must be ordered to pay the costs of the appeal.

O n those grounds,

T H E C O U R T (First Chamber)

hereby:

1. Dismisses the appeal;

2. Orders the appellants to pay the costs.