C-378/98

OPINION OF MR TIZZANO — CASE C-378/98

OPINION OF ADVOCATE GENERAL TIZZANO delivered on 23 January 2001 1

1. By an action brought on 21 October Facts and procedure 1998 under the second paragraph of Arti- cle 93(2) of the EC Treaty (now the second paragraph of Article 88(2) EC), the Com- mission has applied for a declaration that the Kingdom of Belgium has failed to comply with Commission Decision 97/239/EC of 4 December 1996 concerning 3. As may be seen from the Decision, in the aid granted by Belgium under the 1981 Belgium adopted requirements on the Maribel bis/ter scheme 2 (hereinafter the 'general principles of social security for 'Decision'). wage earners', on the basis of which 'undertakings employing manual workers [enjoyed] a reduction in social security contributions for all such workers' (the 'Maribel' scheme). It should be noted that, 'since it was general and automatic, that measure was not deemed to constitute aid falling within the scope of Article 92(1) of the EC Treaty'. 3In 1993 and 1994, this measure underwent a series of amendments to increase the contribution reductions for undertakings in the sectors most exposed to international competition (Maribel bis/ter).

2. More specifically, the Commission has complained that the Kingdom of Belgium failed to adopt within the period prescribed the measures necessary to recover from the recipient undertakings the aid unlawfully granted under the scheme. In this way, according to the applicant institution, it 4. These additional reductions were failed to fulfil its obligations under the brought to the Commission's attention by fourth paragraph of Article 189 of the EC a number of undertakings, which com- Treaty (now the fourth paragraph of Arti- plained that they were State aid incompa- cle 249 EC) and Articles 2 and 3 of the tible with the common market. Following Decision. an initial assessment evaluation, the Com- mission therefore, in consultation with the

6. The Decision was notified to the Belgian authorities on 20 December 1996. It was challenged by the Kingdom of Belgium in good time in its action brought on 19 Feb- ruary 1997 (Case C-75/97) but no applica- tion was made for precautionary suspen- 5. This procedure concluded with the Deci- sion under Article 185 of the EC Treaty sion of 4 December 1996. In the decision, (now Article 242 EC). For the present the Commission declared that the measures purposes, it should be stressed that among constituted unlawful State aid, in that prior the grounds put forward in support of the information concerning it had not been action was the absolute impossibility of given to the Commission in accordance recovering the Maribel bis/ter aid. with the provisions of Article 93(3) of the EC Treaty (now Article 88(3) EC). The aid was also held to be incompatible with the common market within the meaning of Article 92(1) of the EC Treaty (now Arti- cle 87(1) EC), since it could not qualify for the derogations laid down in paragraphs 2 and 3 of that Article (Article 1 of the 7. While the action was pending before the Decision). Consequently, the Decision Court, on 5 March 1997 the Belgian Gov- imposed upon the Kingdom of Belgium ernment informed the Commission of its '[the obligation to] take appropriate mea- intention to modify the scheme of contri- sures to terminate forthwith the granting of bution reductions under Maribel bis/ter, by the increased reductions in social security introducing a new system ('Maribel ana- contributions referred to in Article 1' and ter) that was capable of eliminating the to 'recover the illegal aid from the recipient selective nature of the scheme complained undertakings'. Repayment was to be made of in the Decision. The Commission in accordance with the procedures and expressly approved this system, in a letter provisions of Belgian law, with interest of 15 April 1997, regarding it as a general payable from the date on which the aid was measure and as such not subject to Arti- granted up to the date of actual repayment, cle 92(1) of the EC Treaty (now Arti- calculated at a rate equal to the reference cle 87(1) EC). The Commission therefore rate used to calculate the equivalent sub- agreed with the Belgian authorities that the sidy net of the regional aids in Belgium in introduction of Maribel qitater put an end force at the date such aid was granted to the scheme of aid complained of in the (Article 2). Lastly, the Kingdom of Belgium Decision.

10. For its part, the Commission, while not in principle rejecting the application of the de minimis rule or the possibility of a set- off between the amount to be repaid and the amount of the new reductions under Maribel quater, more than once, it asked the Belgian authorities to present a concrete proposal for recovery of the aid concerned. In particular, the Commission objected to the extremely vague nature of the hypothe- 9. First, the Belgian authorities claimed tical flat-rate calculation of the amount to that a precise calculation of the amount to be recovered and, in any case, ruled out any be recovered from each undertaking was possible calculation that ignored the made extremely difficult by a number of amount of contribution reductions actually circumstances. These principally included: enjoyed by the various undertakings. the closure or insolvency of some under- takings; confusion as between the reduc- tions under Maribel bis and Maribel ter; consideration of the various forms of financing to which the undertakings would have been entitled had they not enjoyed the reductions; the accounting difficulties relat- ing to possible deduction of the amount to be repaid from the new Maribel quater reductions; the large number of recipient 11. It is important to note that the negotia- undertakings, for which the reductions tions on compliance with the Decision would have to be calculated quarter by stretched over many months and that quarter on the basis of the number of during that time, the Belgian authorities workers employed; and, essentially, the do not appear to have made any attempts high cost and intolerable burden of work to recover the aid concerned and certainly that such an operation would involve for submitted no concrete proposal to over- the relevant administration. In order to come the difficulties which they claimed overcome these difficulties, the Belgian they were encountering in calculating this authorities concluded it was necessary to use a flat-rate calculation of the amount of 4 — On this, reference was made to the Commission's commu- aid to be recovered, but they failed to nication on de minimis aid, published in OJ 1996 C 68, p. 9.

14. The Kingdom of Belgium responded with a defence dated 4 February 1999, in which it claimed that it had taken diligent action to recover the aid concerned but had 12. In order to find a way out of this encountered insurmountable difficulties in impasse, therefore, in two successive let- the precise, quarter-by-quarter, calculation ters, of 10 March and 4 May 1998, the of the reductions in contributions that the Commission called upon the Belgian autho- various undertakings had enjoyed. These rities to submit within a brief period (20 difficulties could, according to the Belgian and 15 working days respectively) concrete authorities, be overcome only by a flat-rate proposals on recovering the aid. It was calculation of the amount to be recovered, stated in each of the letters that, if it did not but the Commission had rejected that receive such a proposal within the period approach. In its defence, the defendant set, the Commission would be forced to government also complained that the Com- bring an action to the Court for failure to mission had not collaborated constructively comply with the Decision. in seeking an acceptable solution to the problem of recovery, stressing that the obligation of sincere cooperation is binding on the Community institutions as well as the Member States. Lastly, the Belgian Government stressed that, in the absence of a general solution to this problem, it could not take action only against some of the recipient undertakings without breach- 13. The Commission was not satisfied with ing the principle of equality of treatment. the Belgian Government's responses to those requests and, on 21 October 1998, decided to bring the present case. In the application, it complains that the Kingdom of Belgium: (a) has not fully fulfilled the obligation of sincere cooperation set out in Article 5 of the EC Treaty (now Arti- cle 10 EC) in seeking, jointly with the Commission, a satisfactory solution for 15. These issues are the subject of the recovery of aid under Maribel bis/ter; (b) present dispute and will be examined below has not taken any action to seek to recover in the legal section of this Opinion. How- that aid from the recipient undertakings; ever, for the sake of completeness, I must and (c) has proposed no alternative mea- note that, after the case was brought, the sures to comply with the Decision and to parties have continued to negotiate on

16. In its latest version, of 19 May 1999, 18. Provision was then made in the Law of this document essentially provided: (a) that 24 December 1999 5 for the Maribel bis/ter recovery would be carried out over three aid to be recovered and, it appears, that is years (from 1 April 2000 to 1 April 2003) now proceeding; according to information but there would be no recovery where the from the Belgian authorities, on 3 Novem- reductions in contributions were below the ber 2000, recovery had already been de minimis thresholds; (b) that, in calculat- effected from three-quarters of the under- ing the amount to be recovered, it would be takings concerned. However, the Commis- taken into account that contributions not sion has objected to some arrangements for paid because of the Maribel bis/ter reduc- recovery and has pointed out to the Belgian tions were tax-deductible, and this amount authorities the need to make some changes would therefore be reduced correspond- to the text of the law. At the moment, it ingly; (c) that interest accruing from the seems, the parties have not yet reached date of grant of the aid would be calculated agreement on only two specific aspects of at the average reference rate of 6.36%; (d) this law: on the possibility of applying the that the circumstances of undertakings in de minimis rule by means of an automatic difficulties or undergoing restructuring and generalised deduction of EUR 100 000 would be subjected to special examination; from the sum which each undertaking is (e) that much of the amount to be recov- required to repay; and on an ambiguity in ered would be re-distributed by means of a the law itself, which appears to allow the generalised reduction in social security undertakings concerned double tax deduc- contributions and a further portion would tion from the sum to be repaid. be used within the limits permitted by the de minimis thresholds.

dispute were still continuing, the Court identify its precise extent and consider the gave its decision on the application by the relevance of the events occurring after the Belgian Government for annulment of the case was brought. This Court has consis- Decision (Case C-75/97). In its judgment tently held that, in the context of cases given on 17 June 1999, 6it dismissed the under Article 169 of the EC Treaty (now application and — inter alia — rejected Article 226 EC), 'whether a Member State the argument based on unlawful imposition has failed to fulfil its obligations must be of an obligation to recover 'whose imple- determined by reference to the situation in mentation would, from the beginning, be the Member State as it stood at the end of impossible in objective and absolute the period laid down in the reasoned terms'. 7 The Court held in particular that opinion, and the Court cannot take account 'the administrative and practical difficulties of any subsequent changes'. (...) 'It follows which will incontestably arise owing to the that the laws or regulations adopted after large number of undertakings involved' do that period cannot be taken into account'. 9 not 'warrant regarding recovery as techni- cally impossible. Despite the incontestable existence of the difficulties referred to by the Belgian Government at the time when the Commission ordered the aid to be recovered, there is nothing to prove that it is absolutely impossible for recovery to be carried out and that such absolute impos- sibility already existed when the Commis- sion took its contested decision.' 8 21.1 consider that this settled case-law has to apply also in an action under the second paragraph of Article 93(2) of the EC Treaty (now the second paragraph of Article 88(2) EC), which the Court has itself described as 'a variant of the action for a declaration of failure to fulfil Treaty obligations, specifi- Legal analysis cally adapted to the special problems which State aid poses for competition within the common market'. 10 If the obvious parallel which the Treaty establishes between both types of proceedings is to be meaningful, it is clear that the principle according to Subject-matter of the case which the Court must assess the situation as it existed at the end of the period laid down for fulfilment of the obligation must apply also in actions under the second 20. In undertaking an examination of the present dispute, it is necessary first of all to 9 — Judgment in Case C-58/99 Commission v Italy [2000] ECR I-3811, paragraphs 17 and 19. On this point sec also (among many others) the judgments cited there: i n Case C-289/94 Commission v Italy [1996] ECR I-4405, para- graph 20 and in Case C-302/95 Commission v Italy 119961 6 — E C U I-3671. ECR I-6765, paragraph 13. 7 — Paragraph 86. 10 — Judgment in Case C-301/87 France v Commission [1990] 8 — Paragraph 90. ECR I-307, paragraph 23.

22. Turning to the case in point here, and considering that, in any event, the failure to fulfil an obligation still existed when the 23. As has been seen, it is not in dispute in Commission brought its action, I would this case that the Belgian authorities have point out that, under Article 2 of the not proceeded to recover the Maribel bis/ Decision, the Belgian Government was ter aid within the period set by the Com- required to terminate the granting of aid mission; the argument turns rather on the 'forthwith' and to proceed to recover it. justifications produced by those authorities Then, under Article 3, it was required to for not doing so. inform the Commission within two months from notification of the Decision of the measures adopted to comply with it. Fur- thermore, it has already been stressed that the Commission had twice (on 10 March and 14 May 1998) given the Belgian authorities a period (20 and 15 working 24. Here it is appropriate to note that, days respectively) to submit a concrete 'according to consistent case-law, the only proposal for recovery of the aid, stating defence available to a Member State in that, if they did not, it would bring the opposing an application by the Commis- matter before the Court. I therefore con- sion under Article 93(2) of the Treaty for a sider that existence of the failure to fulfil an declaration that it has failed to fulfil its obligation, as alleged in the present case, Treaty obligations is to plead that it was has to be established at the latest upon absolutely impossible for it to implement expiry of the period set by the Commission the decision properly. (...). However, that in the letter of 4 May 1998. For this condition is not satisfied where the defen- purpose no account should be taken of dant government merely informs the Com- the steps taken by the Belgian authorities mission of the legal and practical difficul-

ties involved in implementing the decision, in those undertakings. But it is not shown without taking any step whatsoever to that they have taken 'any steps whatsoever recover the aid from the undertakings in to recover the aid from the undertakings in question, and without proposing to the question' and that 'attempts made in good Commission any alternative arrangements faith to recover illegal aid' have failed. for implementing the decision which would have enabled the alleged difficulties to be overcome'. 1 1 'Absolute impossibility, therefore, cannot be merely surmised, but, rather, must be demonstrated by the failure of attempts made in good faith to recover illegal aid, and must be accompanied by cooperation with the Commission, in accordance with Article 5 of the Treaty, with a view to overcoming the difficulties encountered'. 12 26. On the other hand, it should also be stressed that this Court has already had occasion to make it clear that difficulties of a technical and administrative nature, of the type referred to by the Belgian autho- rities, do not of themselves make it abso- lutely impossible to recover aid. I refer, in particular, to Case C-280/95 (Commission v Italy) where the defendant State had invoked the absolute impossibility of pro- ceeding to recover aid granted in the form of tax reductions, claiming that such a 25. In the case now under consideration, I recovery would have required 'the number consider that the Belgian authorities have of beneficiaries to be determined (around not provided convincing evidence that it 100 000), and then each individual situa- was absolutely impossible to proceed to tion would have to be examined over one recovery of the Maribel bis/ter aid. In or more years... . [and then] checking the practice, they have merely reported the tax credit actually used, the allocation of existence of difficulties of a technical and the total credit used by each beneficiary to administrative nature in such recovery, the different tax headings, preparing the essentially stemming from the large number documents in support of each recovery of undertakings concerned (about 1 200) demand and the demand itself, on the basis and from the need to determine the amount that each department is to recover the taxes of aid (quarter by quarter) on the basis of within its area of competence, both by the number of workers actually employed reference to geographical territory and to the type of tax'. 13 But the Court rejected those arguments on the basis of the con- 11 —Judgment in Case C-280/95 Commission v Italy |1998| sideration that, 'even if recovery of the tax ECR 1-259, paragraphs 13 and 14. On this see also (among many others) the judgments cited there: in Case C-348/93 credit does present difficulties from an Commission v Italy (1995] ECR I-673, paragraph 16, in administrative point of view, that fact is Case 94/87 Commission v Germany [1989] ECR 175, paragraph 10 and m Case C-183/91 Commission v Greece [1993] ECR I-3131, paragraph 20. 12 — Opinion of Advocate General Eennelly in Case C-280/95, point 13. 13 — Paragraph 18.

27. In this instance, therefore, even if the Belgian authorities did actually — in the course of unsuccessful attempts ·—· encounter serious difficulties in recovering the Maribel bis/ter aid, they should at all events have 'propos[ed] to the Commission any alternative arrangements for imple- menting the decision which would have enabled the alleged difficulties to be over- 28. But what is of greater importance in come'. 15 However, it does not seem to me this case is that the alleged impossibility of that such a proposal was made in this calculating exactly the amount of the instance. At all events, I do not consider Maribel bis/ter aid seems in reality to be that one can so regard the hypothesis, put refuted by the facts. This is shown first of forward in extremely vague terms by the all by the commitment given by the Belgian Belgian authorities, of a flat-rate calcula- authorities in the letter of 1 July 1999 (in tion of the aid to be recovered. Indeed, as response to the Commission's further par- far as can be seen, the Belgian Government ticulars on the 'draft protocol') to calculate offered the Commission no indication to the sum to be recovered on the basis of the explain what this criterion consisted of and, number of workers actually employed in in particular, which elements had to be the recipient undertakings at the time the taken into account on a 'flat-rate' basis. contribution reductions were granted; and That is, it did not explain whether the flat- it is shown even more clearly by the rate calculation had to relate to the amount statement by the Belgian Government that, of aid received by each undertaking after the Law of 24 December 1999 was (regardless of the number of workers adopted, it had proceeded within a few actually employed) or whether it had to months to recover the aid from three- relate to other elements, as for example the quarters of the undertakings concerned. But, if it is true that in such a short space of time it was possible to recover a large part 14 — Paragraph 23. of the aid concerned, I do not see how it 15 — Paragraph 14. could be validly claimed, until a short time

Duty of sincere Cooperation 32. First, because the problems regarding recovery of the aid unlawfully granted would simply not have arisen if the Belgian State had fulfilled the obligation of giving 30. In my view it also follows from the prior notice under Article 93(3) of the EC above that the Belgian Government has not Treaty. The judgment in Belgium v Com- met its obligation to cooperate sincerely mission (Case C-75/97), cited above, also with the Commission to seek, within the shows that, shortly after adoption of the period set, an acceptable solution to the Maribel bis/ter scheme, the Commission problem of recovery. had sought clarification from the Belgian authorities regarding this operation and had stressed 'that any aid granted unlaw- fully was liable to be the subject of a demand for repayment', so that 'the Bel- gian Government must have been aware of 31. In truth, the Belgian Government the possibility that the unlawful aid would claims that in this case it is not itself but be required to be recovered' (para- the Commission which has breached its graphs 77 and 79). In these circumstances, obligation under Article 5 of the EC Treaty it seems obvious to me that the Kingdom of (now Article 10 EC) to cooperate sincerely. Belgium had a particular responsibility for And indeed it is true that, in the case-law of removing the distorting effects of the aid this Court, 'relations between the Member unlawfully granted, by adopting all mea- States and the Community institutions are sures to overcome the relevant difficulties. governed, according to Article 5 of the EEC Treaty, by a principle of sincere cooperation' and that 'that principle not 16 — Order in Case C-2/88 IMM Zwartveld and Others [1990] only requires the Member States to take all ECR I-3365, paragraph 17. To the same effect, see also the judgment in Case 230/81 Luxembourg v Parliament the measures necessary to guarantee the 11983] ECR 255, paragraph 37.

35. Therefore, since the Belgian Govern- ment has not within the period prescribed proposed any concrete proposal to over- come the difficulties created by recovery of the Maribel bis/ter aid, it certainly cannot charge the Commission with lack of coop- eration in seeking a solution for those 34. It is for these very reasons, as has been problems. On the other hand, the docu- said, that the case-law of the Community ments in the case show that the Commis- has made it clear that if serious difficulties sion has carefully followed the problems are encountered in recovering unlawful aid revealed by the Belgian authorities, from under a Commission decision, the national time to time expressing its own evaluation authorities are obliged to propose alterna- of them. It is also clear that the Commis- tive arrangements for compliance with that sion has repeatedly requested those autho- decision to make it possible to overcome rities to submit concrete proposals, without those difficulties. And they cannot escape which its own contribution could only be that obligation by putting onto the Com- marginal. mission the burden of independently iden- tifying a solution for the problems raised by recovery. It is clear that only a concrete proposal from the national authorities enables the Commission to collaborate constructively in seeking a solution that

(1) By failing to comply within the period prescribed in Commission Decision 97/239/EC of 4 December 1996 on aid granted under the Maribel bis/ter scheme, the Kingdom of Belgium has failed to fulfil its obligations under the fourth paragraph of Article 189 of the EC Treaty (now the fourth paragraph of Article 249 EC);

(2) The Kingdom of Belgium is ordered to pay the costs.

I-5121