C-99/98

AUSTRIA V COMMISSION

OPINION OF ADVOCATE GENERAL JACOBS delivered on 13 July 2000 1

Table of contents

I — Introduction I -1105 II — Facts and procedure I -1106 III — The applicable procedural rules I -1109 IV — Admissibility I-1114 V — Substance I-1115 A — Do the principles established in Lorenz apply? I-1117 B — When did the period laid down by the Court in Lorenz start to run? I-1119 (1) The requirement of a complete notification for the Lorenz period to start I-1121 (2) When is a notification complete? I -1124 (3) The Commission's right to request further information and the effects of a request for information on the start of the Lorenz period I -1126 (4) The burden of proof and the standard of judicial review I -1127 (5) In the circumstances of the present case when did the Lorenz period start to run? I -1129 C — Was the duration of the Lorenz period two months? I -1134 D — Could the Commission validly object to Austria's decision to put the aid into effect and, if so, did it object in the proper form and in good time? I-1137 VI — Conclusion I-1141

I — Introduction sion Decision SG(98) D/1124 2to open a formal investigation procedure under Arti- cle 93(2) of the EC Treaty (now Arti- cle 88(2) EC) in respect of State aid C 84/

1. In the present case the Republic of Austria seeks the annulment of Commis- 2 — The text of the contested decision is contained in a letter to Austria or 9 February 1998, which is reproduced in 'Commission notice pursuant to Article 93(2) of the EC Treaty to other Member States and interested parties concerning aid measures i nfavour of Siemens Bauelemente 1 — Original language: English. OHGI,OJ 1998 C 203, p. 7.

'If the Commission, after having been informed by a Member State of a plan to 4. In April 1996, press reports indicated grant or alter aid, fails to initiate the that the Austrian authorities intended to contentious procedure provided for in Arti- provide aid to Siemens for the modification cle 93(2), by giving notice to the Member of its semiconductor production site in State concerned to submit its comments, Villach. the latter may, at the expiration of a period sufficient to enable the aid to undergo a preliminary investigation, grant the pro- posed aid, provided that it has given prior notice to the Commission, and this aid will then come under the system of existing aid.' 5. By letter of 13 May 1996 the Commis- sion requested Austria to supply details of the planned aid. By letter of 5 June 1996 Austria confirmed that it contemplated granting research and development aid to Siemens. Furthermore it declared that it 3. Austria contends essentially that after would notify the planned measures in due the notification of the planned measure the course. Commission failed to initiate the procedure provided for in Article 93(2) within the period referred to in Lorenz and that Austria correctly gave notice of its inten- tion to implement the aid. Under the

6. By letter of 21 June 1996 Austria noti- 3 — Case 120/73 Lorenz v Germany [1973] ECR 1471. fied the aid for approval. According to the

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notification, the aid was to be granted to a their proposed measure into effect before Siemens project in the field of power the Commission has made its views known. semiconductors. The total project costs of ATS 4 563.7 million would be covered to the extent of ATS 371 million by State aid provided partly by the federal authorities and partly by the Bundesland Kärnten and the city of Villach. The biggest portion of the notified aid was reserved for research and development (ATS 348.2 million), the 9. Austria replied by letters of 2 January rest for environmental protection measures 1997, 19 March 1997, 13 June 1997, (ATS 17 million) and training (ATS 5.8 4 September 1997 and 20 November 1997. million).

11. In Austria's reply of 20 November 1997 to the Commission's fifth letter, the Austrian Government informed the Com- mission of its intention not to wait any longer and to implement the notified aid. In 8. The Commission requested further infor- its view, the question contained in the mation on the notified measure on five Commission's fifth letter could have been occasions by letters of 26 July 1996, answered easily from the documents and 17 February 1997, 2 May 1997, 6 August information already provided by Austria. 1997 and 10 November 1997 (hereinafter Furthermore, the questions contained in the the first, second, third, fourth and fifth third and fourth letters could also have letters). In each of those letters the Com- been asked earlier and did not concern mission pointed out that a request for essential elements of the project. Accord- further information 'cancelled' the start of ingly, the notification was completed and the two-month period allowed for proces- the Commission had been in possession of sing the notification and that according to the third sentence of Article 93(3) of the Treaty the Member States must not put 4 — See paragraphs 109 to 136.

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all the information necessary for its pre- 14. The letter containing the text of the liminary assessment at a much earlier stage. contested decision 6followed on 9 Febru- The fifth letter could thus not be taken as a ary 1998. It stated as its object request for necessary further information and could therefore not 'cancel' the start of the period within which the Commission had to take a position on the notified aid. At most it could be interpreted as a request for Austria's consent to an agreed extension 'State aid Nr. C 84/97 (ex N 509/96) — of the two-month period, which Austria Austria refused to give. According to the judgment in Lorenz the envisaged aid had thus come under the system for existing aid and Austria could therefore put the aid into effect. Measures in favour of Siemens Bauele- mente OHG'.

The Commission has therefore decided to open the procedure under Article 93(2). The Commission hereby gives the Austrian 17. By application of 6 April 1998, regis- Government the opportunity to present, tered at the Court on the following day, within one month of the receipt of this Austria introduced the present action for letter, any comments and further relevant annulment of the Commission's decision of information. 9 February 1998

The Commission reminds the Austrian authorities that under Article 93(3), the III— The applicable procedural rules Member State concerned [must] ... not implement the proposed aid until the procedure allowed for in Article 93(2) has resulted in a final decision. ...' 7 18. Article 92(1) of the EC Treaty (now Article 87(1) EC) provides: 'Save as other- wise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts competition... shall, in so fai- 16. By letter of 6 March 1998 Austria as it affects trade between Member States, submitted its comments to the Commission be incompatible with the common market.' as requested together with further docu- mentation on the substance of the case. However, it expressly reiterated its position on the illegality of the decision to open a formal procedure. Therefore, it stated, its comments and any further cooperation on the substance of the case were without 19. That prohibition is neither absolute nor prejudice to its main argument, namely that unconditional. Article 92(3) in particular in accordance with the Lorenz judgment confers on the Commission a wide discre- the Commission had lost the right to tion to allow aid by way of derogation. In institute formal proceedings. The com- that regard, the assessment of whether an aid measure is or is not compatible with the common market requires the examination 7 — At p. 10 of the notice cited in note 2. and appraisal of economic facts and con-

21. Under Article 94 of the EC Treaty (now 10 — See, for example, Council Regulation (EC) No 3094/95 of 22 December 1995 on aid to shipbuilding, OJ 1995 L 332, Article 89 EC) the Council, acting on a p. 1. proposal from the Commission and after 11 — See, for example, Commission communication in OJ 1983 C 318, p. 3. Many documents of that type were published consulting the Parliament, may adopt (some of them for the first time) in the book Competition law in the European Communities, Volume IIA, Rules appropriate regulations for the application applicable to State aid, Situation at 31 December 1994, Office for Official Publications of the European Commu- nities, Brussels Luxembourg, 1995. As regards documents not published in the Official Journal of the European Communities, I will quote from the updated version or that 8 — See, for example, Case C-39/94 SFEI and Others [1996] book which indicates on its cover Situation at 30 June ECR I-3547, paragraphs 35 and 36 of the judgment. 1998 and was published by the Office for Official 9 — See, for example, Case C-301/87 France v Commission Publications of the European Communities in 1999. See, [1990] ECR I-307, 'Boussac', paragraph 16 of the judg- for example, Commission letter to Member States SG(81) ment. 12740 of 2 October 1981, at p. 89 of that book.

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(EC) No 659/1999 laying down detailed Regulation is also intended to 'reinforce' rules for the application of Article 93 of the the former practice, which presumably EC Treaty 12 (hereinafter 'the Regulation'). means to strengthen the control of aid. In The Regulation contains legally binding fact the Regulation introduces new instru- general procedural rules applicable to aid ments into the control system 15 and modi- in all sectors. It was adopted in order to fies in several important respects the exist- 'codify and reinforce' the previous practice ing mechanisms. 16 of the Commission and to 'increase trans- parency and legal certainty'. 13

15 — Sec, for example, Article 5(3) and the third sentence of 12 — O J 1999 L 83, p. 1. Article 4(5) of the Regulation. 13 — See recitals 1 and 3 m the preamble to the Regulation. 16 — See, for example, the obligation to adopt a recovery 14 — See Article 30 of the Regulation. decision under Article 14 of the Regulation.

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law of the Court and communications from 33. The guide itself contains in an intro- the Commission. ductory section the following statements:

30. Since both parties also refer to a document published by the Commission '... [T]he procedural rules in State aid cases in 1995 and entitled 'Guide to procedures have never been codified. This brief guide is in State aid cases' (hereinafter 'the intended to make up for that deficiency. guide'), 17 I must make some preliminary The source materials — the Treaty arti- remarks about the status of that document. cles, Council and Commission legislation, communications from the Commission to the Member States and notices in the EC Official Journal — are reproduced — or in the case of Court judgments summar- ised — elsewhere in this volume. ... 31. The guide was apparently neither com- municated by letter to the Member States nor published as a communication from the Commission in the 'C' series in the Official journal of the European Communities. Legal status

32. The book in which the guide is con- tained states in its introduction as follows: The guide attempts to describe the current state of law and practice derived from these various sources. The Commission's under- standing of the law is, of course, subject to any different interpretation ultimately '... This volume is a collection of the basic given to it by the Court of Justice. Nor texts on State aid, showing how the Com- does the guide preclude the adoption of munity competition policy has developed in different procedural rules for State aid in this area. ... To provide as complete a particular sectors or circumstances at a picture as possible, the collection includes later date.' texts of different kinds, which have not necessarily been published in the Official Journal and naturally also have differing legal status. ...'

37. The procedural regime as laid down in Article 93 of the Treaty and developed through the Court's case-law is different in respect of existing and new aid. Whilst 35. Member States and other interested the former is subject to Article 93(1) and parties may however rely on the principles (2), the latter is governed by Article 93(2) of equal treatment and the protection of and (3) of the Treaty. legitimate expectations. One of the guide's objectives is to describe the current state of the Commission's practice. It was published in order to further transparency and to 'codify' the current state of the law. Even if the guide does not have the character of 38. Article 93(1) entrusts the Commission rules of law which the Commission is with the task of keeping existing aid under always bound to observe, it nevertheless constant review in cooperation with the sets forth rules of conduct indicating the Member States. In the framework of that practice to be followed. Therefore, as in the review the Commission proposes to the case of any other internal directive, the latter any appropriate measures required by Commission may not depart from the rules the progressive development or by the presented in the guide without giving functioning of the common market. Under reasons, since otherwise the principle of Article 93(2), if, after giving notice to the equal treatment would be infringed. 19 The parties concerned to submit their com- same follows from the principle of legit- ments, the Commission finds that aid is imate expectations. It is well established not compatible with the common market that the Commission may not depart with- having regard to Article 92 of the Treaty, or out an appropriate warning from a settled is being misused, it is to decide that the State concerned must abolish or alter such 18 — See, for example, Case C-325/91 France v Commission [1993] ECR I-3283, paragraph 26 of the judgment. 19 —Case 148/73 Lonwage v Commission [1974] ECR 81, 20 — Case 344/85 Ferriere Sim Carlo v Commission [1987] ECR paragraph 12 of the judgment. 4435, paragraphs 9 to 13 of the judgment.

aid within a period of time to be deter- expiration of a reasonable period, which mined by the Commission. the Court has considered should be two months (hereinafter 'the Lorenz period'), grant the proposed aid, provided that it has given prior notice to the Commission, and this aid will then come under the system of existing aid. 39. As regards new aid, Article 93(3) insti- tutes a system of preventive control. The Commission must be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compa- 41. Furthermore, according to the same tible with the common market having case-law, if, at the end of the preliminary regard to Article 92, it must without delay examination, the Commission considers open the contentious procedure under Arti- that the aid conforms with the Treaty, it is cle 93(2). The last sentence of Article 93(3) in the interest of good administration to prohibits the State concerned from putting inform the State concerned. The aid in its proposed measures into effect until that question, implemented by the State con- procedure has resulted in a final decision. cerned after it has been informed of the Commission's positive assessment, becomes existing aid subject to the system of per- manent control under Article 93(1) of the Treaty. If, however, the Commission con- siders that the aid in question is not compatible with the common market, it 40. In its judgment of 11 December 1973 must without delay open the contentious in Lorenz and in subsequent judgments the procedure under Article 93(2), which Court has held that the initial stage of implies the obligation to give notice to review under Article 93(3) has as its object interested parties to submit their comments to allow the Commission to form a prima within a determined period of time. facie opinion on the partial or complete conformity with the Treaty of the plans which have been notified to it. The objec- tive pursued by that provision, which is to prevent the implementation of aid contrary to the Treaty, implies that the prohibition laid down by the last sentence of Arti- cle 93(3) is effective during the whole of the preliminary period. Therefore, in order IV — Admissibility to take account of the interest of Member States of being informed of the position quickly in spheres where the need to intervene may be urgent, the Commission 42. As a preliminary point it must be must act diligently. If the Commission, after established whether Austria's action for having been informed by a Member State the annulment of the decision to open the of a plan to grant or alter aid, fails to contentious procedure under Article 93(2) initiate the contentious procedure provided of the Treaty is admissible in view of the for in Article 93(2), the latter may, at the fact that the final decision on the compat-

43. It follows from the judgments in Spain v Commission and in Italy v Commission21 that a Commission decision to initiate the procedure provided for in Article 93(2) 45. In the present case Austria considered may in certain circumstances be an action- that under the Lorenz principles the noti- able decision under Article 173 of the EC fied aid measure had come under the Treaty (now Article 230 EC). 22 system for existing aid. The Commission disagreed. In the contested decision it 'reminded' the Austrian authorities of the standstill obligation under Article 93(3). It thus by implication classified the aid as new aid, with the aforesaid potentially detri- mental legal consequences for Austria. 44. According to those judgments a Mem- Accordingly, Austria's action for annulment ber State must be able to challenge such a is admissible. decision where it classifies aid as new aid, thus determining the choice of the corre- sponding procedure. Such a decision has legal effects in that, in accordance with Article 93(3), it prevents the State from implementing the aid proposal submitted to the Commission. Moreover, those effects are irreversible: either the Member State complies with the standstill obligation, V — Substance with the consequence that the detrimental effects of the resulting delay cannot be effaced by a subsequent decision that the aid is compatible with the common market or by proceedings brought against a final decision of the Commission; or else it 46. As already stated, Austria essentially implements the aid, with the consequence argues that under the Lorenz principles the that even a final decision by the Commis- aid in issue became existing aid within the sion declaring the aid compatible with the meaning of Article 93(1). Consequently, the contested decision is invalid in that it wrongly treats the aid as new aid and 21 — Respectively Case C-312/90 [1992] LCR I-4117 and Case prohibits Austria from implementing the C-47/91 [1992] ECR I-4145. 22 — See, for the circumstances where such an action may not be admissible. Joined Cases T-126/96 and T-127/96 BFM and EFIM v Cmmmssum [1998] HCR II-3437, paragraph 43 of 23 — Case C-312/90 Spam v Commission, paragraphs 22 and 23 the judgment; and Case T-123/97 Salomon v Commission, of the judgment; and Case C-47/91 Italy v Commission, judgment of 6 October 1999, paragraph 54. paragraphs 28 and 29, both cited in note 21.

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A — Do the principles established in Lor- Aid is therefore deemed to have been put enz apply? into effect as soon as the legislative machin- ery enabling it to be granted without further formality has been set up. 26

52. It is well established case-law that a Member State cannot invoke the Lorenz principles where it has put a planned aid measure into effect before notification.24 The judgment in Lorenz was based inter alia on the interest of Member States in 55. Furthermore, the Commission argues being informed rapidly in situations where that under Austrian law a written promise an aid measure is urgently required. That to grant aid triggers the authorities' legal legitimate interest does not exist where a obligation to grant the aid. Such a promise State has put the measure into effect before therefore has the same effects as legislation notification. If a Member State wishes to instituting aid and puts aid into effect for implement measures as rapidly as possible the purposes of the last sentence of Arti- and has doubts as to whether a planned cle 93(3). measure is State aid, it may safeguard its interests by informing the Commission, thus placing the latter under an obligation to define its position within a period of two months. 25

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the Siemens semiconductor unit asks the as a necessary preliminary requirement. In Siemens board to release the necessary any event, it must be doubtful whether even funds for the investment in Villach and more detailed press reports could be regar- which refers to a recommendation by the ded as conclusive. competent Austrian authority to the Aus- trian Finance Ministry to grant aid of ATS 371 million.

60. Thirdly, throughout the administrative procedure the Commission referred to the 57. In my view, the evidence submitted to aid as 'notified aid' and registered it under the Court does not support the Commis- 'N' 509/96 (registration for notified aid) sion's contention that Austria had made a and not under 'NN' (registration for non- legally binding and unconditional promise notified aid). Even in the contested decision to grant the aid in question. Austria and the Commission refers to the aid as notified Siemens appear to have been always aware aid. of their obligations under the Community State aid rules. The evidence also suggests that throughout the procedure the Com- mission itself treated the aid as aid notified prior to implementation.

61. Finally, and most importantly, Austria has submitted to the Court a letter of 18 April 1996 in which the Austrian authorities informed Siemens that they intended to grant aid in favour of the 58. First, it is common ground that even at Siemens project in Villach to a maximum of the date of the introduction of the present ATS 371 million. That letter stated that the action for annulment the Austrian autho- envisaged aid was subject to Commission rities had not granted the envisaged aid. authorisation and would only be granted if compatible with Treaty obligations.

63. The parties disagree as to whether on 20 November 1997 — the date on which the Austrian Government informed the Commission of its intention to implement the aid — the period established by the 65. The Commission also claims that it Court in Lorenz had already expired. As alone is competent to decide on the need stated above 27 the Commission argues that for further information. It enjoys a wide the period in question began later than discretion when assessing which questions assumed by the Austrian Government and are necessary. Consequently, any judicial was in the circumstances of the case longer review touching on the relevance of those than two months. In the present section I questions must be limited to examining will deal with the first issue 28 and discuss infringements of essential procedural whether the Commission's fifth letter with requirements or misuse of power. Further- questions of 10 November 1997 could, as more, the burden of proof as regards the the Commission claims, 'cancel' the start of relevance of questions lies with the contest- the Lorenz period within which the Com- ing Member State. When assessing whether mission must terminate its initial assess- a request for further information is neces- ment of the aid. sary one must also take into account the collegiate nature of the Commission and the difficulties that it entails, the political sensitivity of a given case and the poten- tially dangerous effects of the application of the Lorenz principles. As to those dangerous effects the Commission warns 64. According to the Commission, the that the result may be that aid is granted Lorenz period starts to run only when it before a decision has been taken on author- has received a complete notification. A isation even though it may prove incompa- notification is incomplete when it does not tible with the common market; that that result cannot be corrected by a subsequent application of Article 93(1) of the Treaty; 27 — See paragraph 49 above. moreover competitors do not have an 28 — See for the second issue paragraphs 137 to 151 below. appropriate remedy and the Commission

68. Austria argues however that in view of — If so, when is a notification complete? the nature of the initial stage of the procedure neither the requirement of a complete notification nor the right to request further information should be con- strued too broadly. In its view, it is unacceptable that the Commission should — Once the notification is complete and artificially prolong the preexamination pro- the Lorenz period starts to run, can the cedure by asking new irrelevant questions, Commission 'cancel' the start by a each time shortly before the expiry of the request for further information with two-month period. In the circumstances of the result that it starts running afresh

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with the receipt of the Member State's of the Community, any plan to grant or reply? alter aid. 29 For the purposes of the initial review stage provided for by Article 93(3) the notification must enable the Commis- sion to distinguish, swiftly and on comple- tion of a simplified verification procedure, measures which as from their notification clearly appear to be compatible (or which — Which party has to prove the start of are manifestly not even in the nature of aid) the Lorenz period and what is the from measures which in contrast raise appropriate standard of judicial doubts as to their compatibility and there- review? fore require further investigation. 30

— In the circumstances of the present case, did the Lorenz period start to 72. Where a notification is fragmentary run, and if so, when? and incomplete in the sense that a Member State fails to provide information essential for that first evaluation, the Commission's task of concluding its initial review in a useful way is made impossible or at least much more difficult. If an incomplete notification were to trigger the start of the Lorenz period, the Commission would de facto be obliged to initiate the second stage (1) The requirement of a complete notifica- of the procedure, with its greater consump- tion for the Lorenz period to start tion of resources, in many unnecessary cases.

74. Secondly, where a Member State fails to provide a sufficiently complete notifica- tion, its interest in obtaining legal certainty and being able to implement the aid as rapidly as possible (the main rationale underlying the Lorenz principles) is not 77. That second consideration is the main worthy of protection. rationale for the Court's decision to impose on the Commission the precise and rela- tively short two-month time-limit for con- cluding the initial stage of the procedure. Clear-cut time-limits, such as the one established in Lorenz, are only necessary 75. The Court held in Lorenz that the where legal certainty is at stake. In circum- Commission must act 'diligently' and must stances where the Community Courts rely 'take account of the interest of Member on the principle of good administration States of being informed of the position alone, they do not usually postulate precise quickly in spheres where the necessity to time-limits. Instead, they determine the intervene can be of an urgent nature by reasonableness of the period needed reason of the effect that these Member according to the circumstances of the case States expect from the proposed measures and in particular in the light of the context, of encouragement'. The Court also held the various procedural stages followed by that the Commission could not be regarded the Commission, the conduct of the parties as acting with proper diligence if it failed to in the course of the procedure, the com- define its attitude within a reasonable plexity of the case and its importance for period of two months. 32 the various parties involved. 33

tence of Article 93(3). 34 Where a Member States concerned infringed both the obliga- State obstructs the Commission's initial tion to defer the implementation of the aid review by a fragmentary notification, its under the third sentence of Article 93(3) interest in rapid implementation of the aid and the obligation to make a sufficiently cannot be particularly strong and it cannot complete notification under the first sen- legitimately expect the Commission to tence. In both cases more than two months conclude the preliminary stage within two elapsed between the initial letter from the months. Such a Member State may rely notifying State and the Commission's deci- only on the first consideration, namely the sion to initiate the contentious procedure. principles of good administration, which None the less, the Court rejected the bind the Commission in all circumstances applicants' arguments that the Commission independently of the State's behaviour. had failed to initiate the procedure under Article 93(2) within a reasonable period of time. In doing so the Court did not rely exclusively on the breach of the standstill requirement under the last sentence of Article 93(3), but referred also to the breach of the notification requirement 79. That interpretation is confirmed by the under the first sentence of the same provi- parallel case-law on the failure to comply sion. The Court held in particular that the with the standstill requirement laid down information provided by the notifying State in the third sentence of Article 93(3). As was far from complete, that necessary already stated, 35 the Court has held on particulars and definitive information were several occasions that the strict Lorenz communicated only at a later stage 39 and principles do not apply where a Member that delays in the procedure were caused by State has implemented the aid before the State concerned not cooperating notification or before a positive decision actively during the administrative by the Commission. The Commission is inquiry.40 It may be deduced from that then bound only by its general obligation to reasoning that the same solution should act diligently and within a reasonable apply where the State concerned complies period of time. 36 with the standstill requirement but infringes the requirement of a complete notification.

86. In my view, in the field of State aid 83. Two alternative approaches are concei- control the Member States have a general obligation to provide the Commission in vable. good faith with all the necessary and relevant information at their disposal. That follows from the Member States' obligation to cooperate with the Commission as laid down in Articles 93(1) and 5 of the EC 84. On the first view, any notification Treaty (now Article 10 EC). 44 which allows the Commission to form a prima facie opinion and to decide whether the second, contentious stage of the proce- dure should be initiated is sufficient to trigger the beginning of the Lorenz period. 87. That does not however resolve the In line with that approach, the Commission more specific issue of the minimum require- stated in 1981 in a letter to the Member ments for an initial notification to start the States that a notification is incomplete for Lorenz period. It should not be forgotten the purposes of the Lorenz principles when that the initial notification is not the only it does not contain the information neces- opportunity for the Member States to sary for the Commission to form 'an initial provide and for the Commission to gather view' of the compatibility of the measure the necessary information for a final deci- with the Treaty. 41 sion.

85. Alternatively, taking a stricter 88. I consider that a notification which approach, only a notification which con- allows the Commission to form a prima tains all the information necessary for the facie opinion and to decide whether the Commission to take a final decision on the compatibility of the aid starts the period in question. Apparently more in line with that 42 — See 'Guide to procedures in State aid cases', contained in the book cited in note 11, at paragraph 22. approach, the Commission states in the 43 — See Articles 2(2), 4(5) and 7 of the Regulation, cited in note 12. 44 —Case 173/73 Italy v Commission [1974] ECR 709, paragraph 7 of the judgment; see also my Opinion in 41 — See Commission letter to Member States SG(81) 12740 of Case C-301/87 France v Commission, cited in note 9, 2 October 1981, cited in note 11. paragraph 19.

89. In order to conclude the first stage the Commission does not necessarily need the same amount and type of information as 91. For the same reasons the second for its final decision. The initial notification approach conflicts with the principle of must enable the Commission to distinguish legal certainty and introduces instability in measures which are manifestly compatible a mechanism designed to combat precisely with the State aid rules from measures that phenomenon. For the Lorenz princi- which raise serious doubts as to their ples to be effective the notifying State must compatibility. If the Commission has such be able to assess during the initial review doubts it may open the second stage of the stage whether its notification is sufficiently procedure by giving notice to the parties complete. Under the stricter second concerned to submit their comments. The approach, however, a Member State which second stage enables the Commission to during the first stage provided in good faith collect missing information in order to take all the information necessary for an initial a fully informed final decision. 45 evaluation of the aid might later and ex post be found unable to rely on Lorenz. Once the Commission has received the comments of third parties during the sec- ond stage, it might feel the need to request further information in order to take a final decision. I find it unacceptable that in such 90. The stricter second approach would a situation the notifying State should retro- also require something from the notifying actively lose its right to rely on Lorenz. State which might in many cases be impos- sible to deliver. Neither the notifying Mem- ber State nor the Commission knows ex ante what information will ultimately be necessary for a final decision on the com- patibility of the aid. The need for further information may only become apparent in the course of the second procedural stage after the Commission has received the comments of third parties. Circumstances in which the notifying State provides from 92. Accordingly, a notification is complete the outset all the information necessary for for the purposes of starting the Lorenz period where it contains all the information necessary for the Commission to form an 45 —Case 84/82 Germany v Commission [1984] LCR 1451, initial view of the compatibility of the paragraph 13 of the judgment. measure with the Treaty.

94. The parties agree on the legality and usefulness of that basic mechanism. Austria maintains however that the Commission's right to request further information must be subject to limitations. 97. It follows from that discussion that, where an initial notification is complete or has subsequently been completed by, for example, replies to requests for informa- tion, the Lorenz period must automatically start to run. Once a notification is suffi- ciently complete a request for further 95. To my knowledge the Court has not yet information cannot retroactively 'cancel' expressly confirmed or denied the compat- the beginning of the Lorenz period. The ibility of the Commission's practice with opposite solution would jeopardise the the Treaty. 4 7 It might even be inferred from notifying Member State's legitimate interest the case-law that the Court was reluctant to in obtaining legal certainty and being able address the issue.48 Advocate General Sir to implement the aid rapidly. If the Com- Gordon Slynn objected to it 'as otherwise mission were to have a boundless right to the administration could in all cases and prolong the initial review stage by new and ex hypothesi unnecessary requests for sup- plementary information, the danger of 46 — See 'Guide to procedures in State aid cases', paragraph 23; abuse would indeed be great and the and Commission letter to the Member States SG(81) 12740 of 2 October 1981, both contained in the book cited in note 11. 47 — See J.-P Keppenne, Guide des Aides d'État en Droit Communautaire, Bruylant Bruxelles, 1999, at paragraph 49 — See the Opinion in Case 223/85 RSV v Commission, cited 266. in note 36, p. 4647. 48 — See Case 84/82 Germany v Commission, cited in note 45, 50 — See the Opinion in Case C-198/91 Cook v Commission, paragraphs 2, 3, 8 and 11 of the judgment. cited in note 30, paragraph 11.

100. It follows from the foregoing analysis that the completeness requirement is the 98. Where, by contrast, a notification is decisive factor for the solution of the incomplete and does not enable the Com- present case. mission to form a prima facie opinion, the Commission has not only the right, but even an obligation, to investigate further and to request supplementary information from the notifying State. That follows from its general obligation under the first indent 101. The Commission argues that the bur- of Article 155 of the EC Treaty (now den of proof as regards the need for Article 211 EC) and its specific role under supplementary information lies with the Article 93. However, even in the case of an contesting Member State and that the incomplete notification a request for infor- Commission alone is competent to decide mation does not really 'cancel' retroactively whether a notification is complete and the start of the Lorenz period. There is no therefore whether further questions are need for any such retroactive effect because necessary. It also argues that it enjoys in in the absence of a complete notification that regard a wide discretion. Judicial the period in question never began to run. review of the need for further questions A request for further information must must be limited. therefore be analysed merely as a statement by the Commission that in its view the notification is not yet complete and that consequently the Lorenz period has not yet started to run. 102. In my view, as regards the first issue (the burden of proof), each party has to prove the facts on which its claim is based. Austria, which relies on the effects of the Lorenz doctrine, must therefore demon- strate either that its initial notification was complete or that it was subsequently com- pleted sufficiently early for the two-month 99. Accordingly, in the case of a complete period to be concluded before 20 Novem- notification a request for further informa- ber 1997.

107. Whether a Member State's notifica- 104. The notion of a 'complete notifica- tion enabled the Commission to form a tion' is thus not a precise one with clear prima facie opinion or not is an objective boundaries. Even a prima facie assessment question. Any subjective difficulties which of the compatibility of an aid measure with the Commission encounters and which are the Treaty entails complex economic and not caused by the notifying Member State social assessments. 51 The borderline should not influence the assessment of the between information necessary for such a completeness of the notification. That first assessment and insufficient informa- would run counter to the main rationale tion cannot be delimited exactly. underlying the Lorenz mechanism, namely to take account of the Member State's legitimate interest in obtaining legal cer- tainty and being able to implement the notified measure as rapidly as possible. That interest does not become less worthy 105. I accept therefore that the Commis- of protection where the Commission can- sion enjoys a wide 'margin of appreciation' not agree internally, where the question is as regards the necessity for further ques- politically sensitive or where a failure by tions and that the Court should intervene the Commission to act in time would have only where the Commission distorts the serious consequences. facts, commits a manifest error of assess- ment of the facts, misuses its powers or abuses the procedure. 52

108. Accordingly, first, Austria must prove that its notification was complete and that 106. Contrary to the Commission's conten- the Commission's requests for information tion, however, the collegiate nature of the were therefore not necessary. Secondly, the Commission, the political sensitivity of a Commission enjoys in that regard a wide case and the potentially dangerous effects margin of appreciation and is subject only to limited judicial review. Thirdly, the limitation of the review is justified only 51 — See, by analogy, Case C-225/91 Matra v Commission by the complexity of the assessment; it is [1993] ECR I-3203, paragraph 24 of the judgment. 52 — Ibidem, at paragraph 25 of the judgment. not justified by any political considerations.

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promotion of the labour market' (Arbeits- Commission pointed out that according to marktförderungsgesetz) . certain remarks made by the Austrian authorities the city of Villach had still to decide about its contribution to the Siemens aid and that the Commission was not sure whether the city's envisaged contribution had already been taken into account when notifying the aid. It thus requested Austria 116. In its reply of 13 June 1997 Austria to confirm that the notified aid correspon- stated that the training aid was to be ded to the total amount of aid to be granted granted on a different legal basis. by the three donors Austria, the Bundes- land Kärnten and the city of Villach.

•— As regards the environmental aid, it remained to be established whether the 124. In my view, Austria's analysis is funded project went beyond national correct. The evidence submitted to the and European legal requirements. Court shows that after receiving on 24 March 1997 Austria's reply to the second request for information, the Com- mission was in a position to form a prima facie opinion on the compatibility of the measure with the Treaty and that the Lorenz period therefore started to run on that date.

— As regards the training aid, it remained to be established whether the training project must be classified as specific oí- as general vocational training. 125. The first striking point in that regard is the very different nature of, on the one hand, the Commission's first and second letters with requests for information and, on the other hand, the third, fourth and fifth letters.

122. On the basis of those factual elements Austria contends that its notification was completed by its letter of 19 March 1997 126. The first letter contains more than 20 and at the latest by its letter of 4 September detailed questions. In those questions the 1997. The Lorenz period therefore started Commission refers extensively to state- automatically either on 24 March 1997 or ments made by the Austrian authorities in at the latest on '10 September 1997 (the the initial notification. Most of the ques- respective dates of receipt of the two tions are concerned with the largest ele- letters). It follows that the fifth letter with ment of the aid package, namely research questions of 10 November 1997 could not and development aid. Many of them affect the running of the Lorenz period. address core issues such as the incentive

129. The Commission mentions in its defence an internal memorandum of 28 April 1997 (approximately six weeks 127. By contrast, in its third, fourth and after Austria's reply to the second letter fifth letters the Commission asks only very with questions) submitted by Directorate few questions (respectively one, three and General IV to Commissioner Van Miert. one). The questions contained in the third The competent Directorate General and fifth letters concern only ancillary expressed in that memorandum doubts aspects of the notified project, namely the about the compatibility of the notified training aid (less the 2 % of the total measure with the applicable framework package) and the financial contribution by for State aid for research and development the city of Villach (at most 6% of the and about the necessity of the aid. The notified aid). They concern not so much the Directorate General suggested consultation compatibility of the notified measures, but with the other Directorates General on the rather the discovery and investigation of basis of a draft decision initiating the other unnotified measures (the abovemen- contentious procedure under Article 93(2) tioned Richtlinie and a presumed separate of the Treaty. aid by the city of Villach). In the light of convincing arguments advanced by Austria in the reply, the relevance of the three questions contained in the fourth letter is equally doubtful. None of the questions in the three letters refers directly to the 130. The Commission also mentions in its notification or to answers given on earlier defence 'comprehensive and very complex questions. Neither the questions in those discussions' between various services of the letters nor Austria's replies are reflected to Commission and within the college of any significant extent in the contested Commissioners on draft decisions regard-

133. I have already explained above 54 why neither the collegiate nature of the Com- 131. All those elements lead to the conclu- mission nor the political sensitivity of a sion that the fact-finding part of the given case, nor yet the potentially grave Commission's investigation was completed consequences of an application of the with the receipt in March 1997 of Austria's Lorenz doctrine, can be taken into account reply to the second letter with questions. when assessing whether or not a notifica- The Commission manifestly needed the tion was sufficiently complete to start the supplementary nine months until its deci- Lorenz period. In order not to repeat sion to open the second stage of the myself I would just add that the Commis- procedure in December not in order to sion had two perfectly legitimate options collect further information but to reach an when confronted with the present politi- (internally controversial) decision on the cally sensitive case. basis of information already at its disposal.

expected to agree to such an extension, if of the initial stage of the procedure posited there is a realistic chance that the Commis- in Lorenz is not a strict deadline and that sion will decide not to open the second its duration depends on the circumstances stage, more costly in terms of time and of the particular case. That follows, in its resources. view, from the formulation of the Lorenz judgment itself, from several statements in the Advocate General's Opinion in that case, from the fact that in certain cases the Commission is obliged to conclude the 135. Secondly, protracted discussions initial stage within a shorter period than within the Commission are an indicator of two months and, finally, from the need to serious difficulties in determining whether have flexible deadlines for the Commission a plan to grant aid is compatible with the to be able to take its often complex State common market. The best way to over- aid decisions. come those difficulties is to hear the views of other interested parties and therefore to consult other Member States and the sec- tors concerned. In that connection it must be kept in mind that the Commission is under no obligation at the preliminary stage to hear third parties. The Court has therefore held that whenever the initial examination does not enable the Commis- sion to overcome all the difficulties 138. The Commission also argues that in involved, the Commission is under a duty the particular circumstances of the present to obtain all requisite opinions and for that case the duration of the Lorenz period was purpose to initiate the procedure under longer than two months. During the whole Article 93(2). 55 procedure Austria never mentioned the urgency of the case. In any event, the case cannot have been urgent, because Siemens realised the planned investments without waiting for a decision on the aid. Finally, 136. I accordingly conclude that the Lor- Austria is barred from relying on the enz period started on 24 March 1997. Lorenz period because it was itself respon- sible for a major part of the total delay.

140. It is true that the Court uses in the 143. Unlike the Advocate General, the operative part of the judgment the see- Court was not ready to accept the disad- mingly open-ended concept of 'a period vantages of legal uncertainty and therefore sufficient to enable the aid to undergo a laid down the two-month time-limit in preliminary examination'. It is also true issue. Nor was it convinced by the idea of that in the body of the judgment the Court provisional statements by the Commission. refers to a 'reasonable period'. 56 Indeed the possibility of making such statements might have induced the Com- mission to prolong the initial stage artifi- cially. As regards respect for the legislative powers of the Council, the Court expressly pointed to the absence of a procedural 141. However, the Court gave a specific Regulation before positing the two-month definition of that concept for the purposes time-limit. 58 Respect for the institutional of the Lorenz situation and stated: 'It is balance is, in my view, also the explanation appropriate ... to be guided by Articles 173 for the Court's careful language ('it is and 175 of the Treaty which, in dealing appropriate ... to be guided by Articles 173 with comparable situations, provide for a and 175 of the Treaty'). period of two months.'

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that the aid has come under the system of initial review in complex cases, I have existing aid. Legal certainty and thus a already stated that the Commission can mandatory time-limit are particularly always ask the notifying State for an agreed important where the issue whether an aid extension of the two-month period and that has become existing aid arises in national the latter normally has a strong incentive to proceedings (as was the case in Lorenz). give its assent.

146. The Commission itself has always interpreted Lorenz as laying down a man- datory maximum time-limit. For example, 148. As regards the alleged lack of urgency in the abovementioned letter to Member and Austria's own failure to speed up the States the Commission states that it 'must' procedure, the Commission stresses that complete the initial stage within a period Austria took approximately five months to 'set at two months by the Court of respond to the first letter requesting further Justice'. 60 information and one and a half months to respond to the third letter. The latter delay was moreover caused by a mistake on the part of the Austrian Chancellery.

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150. Furthermore, in view of the interests 153. In its view, that right of objection at stake, a procedure for the approval of follows, first, from a passage in the Lorenz notified aid must be presumed to be urgent judgment itself in which the Court held that in all cases where the Member State aid which is implemented 'during the concerned has not expressly agreed to an Commission's silence' after a period neces- extension of the available period for the sary for its preliminary examination is initial review. Contrary to the Commis- subject to the rules on existing aid. 64 sion's view, that presumption is also valid Moreover, the obligation of a Member in cases where the investment is made State to give prior notice of its intention before the aid is granted. The notifying to implement the aid as established by the State and the undertaking concerned con- Court in Lorenz makes sense only if the tinue to have an obvious interest in rapid Commission has a right of objection. A clearance of the aid plan in order to limit right of objection is also essential in order the financing costs of the investment in to prevent the potentially serious conse- question. quences of the application of the Lorenz doctrine for the common market. 65 Finally, in the absence of a right of objection the notifying Member State could itself effec- tively determine the scope and outcome of the procedure. Thus, even in cases where the expiry of the time-limit is miscalculated 151. Consequently, the duration of the or where a notice has not reached the Lorenz period was two months. Commission (if wrongly forwarded, for example due to an error of transmission), the Commission would not be entitled to object and the aid would become existing aid.

156. The decisive passages of the Lorenz judgment 67 and later cases referring to it 68 mention only two conditions for the Lorenz effect to take place: the aid comes under the system for existing aid and may be granted by a Member State if (a) the Commission 158. Finally, if the Commission considers fails to initiate the contentious procedure that the Lorenz period has not expired (for under Article 93(2) within two months and example because the notification was never (b) the Member State concerned gives prior complete), it does not need a special right notice of the implementation of the aid. To of objection. Since one of the two above- postulate a right of objection would intro- mentioned conditions for triggering the duce a third condition never envisaged by Lorenz effect is not fulfilled, the aid does the Court, namely the absence of an not become existing aid but remains new objection by the Commission within a aid. Consequently the Commission may certain period of time. With that third validly take the decision to initiate the condition, legal uncertainty (as to what procedure under Article 93(2) of the Treaty form the objection should take, within and state in that decision that the standstill what period it should be raised or what obligation under Article 93(3) continues to its precise legal effects are) is reintroduced apply. Moreover, if there are doubts about into a mechanism designed to resolve the the expiry of the Lorenz period, the burden issue of uncertainty. of challenging the Commission's decision before the Court is on the Member State.

167. As regards the proper form, to raise an objection can only mean to initiate 162. By an undated fax which was appar- within a given supplementary period of ently received by Austria on 28 November time the Article 93(2) procedure. Mere 1997 the Commission objected to Austria's informal statements by the Commission plan to put the aid into effect and that it 'objects' to the Member State's announced that it would take a decision decision to implement the aid cannot have on the notified measure at the appropriate legal effects in the context of the Lorenz moment. principles. To take such informal state- ments into consideration would create legal uncertainty and provide the Commission with a further opportunity to prolong the initial stage of the procedure in situations where the notifying Member State consid- 163. By letter of 10 December 1997 Aus- ers that it has already lasted too long. That tria stated that the Commission's objection is also the position of the Commission in was unsubstantiated and could not be the abovementioned guide when it regarded as a proper one. Austria was thus describes the raising of an objection as still entitled to implement the aid. follows:

164. On 12 December 1997 a meeting 'The Commission understands the case-law took place between the Commission, Aus- to mean that after receiving notice from the tria and Siemens but did not produce any Member State that it intends to implement concrete results. the proposal, the Commission may still,

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171. The Commission's reaction on 16 December 1997 therefore came too late. It is accordingly unnecessary in my view to examine Austria's contention that the rele- 170. The fax of 16 December 1997 in vant date is not 16 December 1997 but which the Commission informed Austria 9 February 1998, the date of the Commis- that it had decided on that day to open the sion's letter containing the contested deci- procedure under Article 93(2) reached Aus- sion. If that date were taken into account, tria more than three and a half weeks after the delay would be manifestly excessive. It its letter of 20 November 1997 and there- seems to me however that in a case like the fore, in my view, out of time. The Commis- present where an urgent response from the sion itself mentions in the quoted passage Commission is required, it is appropriate to of the guide two weeks as an appropriate have regard to the date on which the

70 — Footnote 85 to the guide contained in the book cited in note 11. 71 — Article 4(6) of the Regulation, cited in note 12.

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Commission communicates its decision to 172. In any event the result in my view is the Member State, even informally; it is that, even if the Commission had a right of realistic to accept that the formulation of objection, it did not exercise that right in the decision may take a substantial time. It time. is unnecessary however to pursue that question in the present case.

VI — Conclusion