C-17/99

OPINION OF MR ALBER — CASE C-17/99

OPINION OF ADVOCATE GENERAL ALBER delivered on 11 January 2001 1

I — Introduction II — Legal framework

1. By this action for annulment, France is contesting the Decision of 4 November 3. At the time that the measures which are 1998 2 in which the Commission declared the subject of this dispute were taken, the aid granted by a Member State to the Commission applied the following guide- textile company Nouvelle Filature Lainière lines 3published in 1994: de Roubaix in 1996 to be for the most part incompatible with the common market.

4. Point 3.2.2 of the Guidelines stated inter alia that: To fulfil the viability criterion, the restruc- turing plan must be considered capable of putting the company into a position of covering all its costs including depreciation and financial charges and generating a 'Subject to the special provisions for minimum return on capital such that, after assisted areas and SMEs ["small and med- completing its restructuring, the firm will ium-sized enterprises", author] set out not require further injections of State aid below, for the Commission to approve aid and will be able to compete in the market a restructuring plan will need to satisfy all place on its own merits. Like rescue aid, aid [author's emphasis] the following general for restructuring should therefore normally conditions: only need to be granted once.

(ii) Avoidance of undue distortions of (i) Restoration of viability competition through the aid

The sine qua non of all restructuring plans is that they must restore the long-term viability and health of the firm within a reasonable time scale and on the basis of realistic assumptions as to its future oper- ating conditions. Consequently, restructur- ing aid must be linked to a viable restruc- turing/recovery programme submitted in all (iii) Aid in proportion to the restructuring relevant detail to the Commission. The costs and benefits plan must restore the firm to competitive- ness within a reasonable period. The improvement in viability must mainly result from internal measures contained in The amount and intensity of the aid must the restructuring plan and may only be be limited to the strict minimum needed to

7. By letter of 19 September 1996, the Tribunal de Commerce de Roubaix/Tour- coing sent the Commission its judgment of 17 September 1996 concerning approval of (v) Monitoring and annual report a recovery plan. Under that plan the company was to be sold to a newly created public limited company with a capital base of FRF 510 000 named 'Nouvelle Filature ...' Lainière de Roubaix'. In accordance with

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the Tribunal's judgment, the shareholders its purposes and the extra rent cost FRF 2.2 were all natural persons. According to million. The adaptation to a smaller area information from the French Government, cost FRF 2.5 million. Under-productivity of they were mainly current and former the company in the first six months was employees ('cadres') of the company. Under reported to have cost FRF 10 million. the judgment the business (stock, tangible Further costs had been incurred as a result movable assets and intangible assets) was of making a large proportion of the sold to the above company on 1 October employees of the former company redun- 1996 for FRF 4 278 866. (The total capital dant, although apparently costs should resources were thus FRF 4.8 million.) have been incurred only in respect of the remaining 248 employees. It is also claimed that costs were incurred as a result of the necessary reorientation of production. In addition, provision was made, following the takeover, for an investment programme amounting to some FRF 22 million for the purchase of new machinery and the devel- opment of new products. 8. It is also clear from that judgment that in addition to the successful recovery bid, another bid was made by employees of the company; however, the Tribunal did not consider it to be viable. According to the judgment, the French authorities had guar- anteed aid to the amount of FRF 40 million for either of the recovery bids. 4

11. Subsequently, at the request of the under Article 93(2) of the EC Treaty (now Commission, France submitted additional Article 88(2) EC) with respect to the aid. 5 information regarding the said aid mea- That decision contained a full statement of sures. By letter of 22 November 1996, a the facts and a preliminary assessment in document entitled 'Restructuring Pro- the light of the guidelines for rescue aid. In gramme' was submitted. This made provi- that context the Commission also referred sion, inter alia, for several investment to the information which it would still need projects amounting to FRF 22.5 million in in order to make a final assessment and in total. Various balance sheet projections of particular to approve the aid. It expressly 22 November 1996, 2 April 1997 and referred to the absence of a restructuring 30 October 1998 (only for 1999) envisaged plan which meets the relevant require- the results (in FRF million) set out in the ments. Finally, the Commission expressly table above. invited France 'to present any other infor- mation [it] might consider relevant for the assessment of the aid in question'.

13. France submitted its comments in a letter dated 24 September 1997 and also sent additional information on 8 May, 21 July, 16 and 30 October 1998. Those documents show, inter alia, that the com- pany had made an operating loss of FRF 0.9 million in 1997. Moreover, the French authorities were not able to say exactly what the aid was being used for. 12. By letter of 18 August 1997, the Com- mission informed the French Government of its decision to initiate the procedure 5 — Published in OJ 1997 C 392, p. 6.

Article 4

(1) France shall take all necessary measures Article 2 to recover from the recipient, Nouvelle Filature Lainière de Roubaix, the aid referred to in Article 2 which has already been illegally paid. The aid in the form of an investment premium granted by France to Nouvelle Filature Lainière de Roubaix amounting to

(2) Repayment shall be made in accordance 6 — Cited in footnote 2. with procedures and provisions of French 7 — These FRF 7.77 million (= 35% of the investment premium of FRF 22 million) have been approved as regional aid law. The amounts to be repaid shall bear (author's note). interest from the date on which the aid was

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paid to the recipient until the date on which 16. At the hearing of 23 November 2000, it is effectively recovered. The interest shall the representative of the French Govern- be calculated on the basis of the reference ment announced that Nouvelle Filature rate used to calculate the net grant equiva- Lainière de Roubaix had since become lent of regional aid. bankrupt and had been wound up by judicial decision.

— order the French Republic to pay the recipient undertaking was not required to costs. give any normal market consideration in return for the amount of FRF 22 million and that the premium granted risks distort- ing competition in the common market. As regards the equity loan, a special feature of the aid — as the Commission argued in its 19. The submissions of the parties are grounds for the decision — is that the loan considered in greater detail below. was granted at an interest rate well below the reference rate of 8.28%.

V — Comments

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more, it examines whether, in its legal A —Restructuring plan assessment of those facts, the Commission has not made any manifest errors of assessment which have affected the out- come and whether the exercise of its discretionary powers is contrary to the objective and purpose of Article 92 of the EC Treaty. 10 25. First, the parties are in dispute as to whether the Commission's finding that the French authorities had not submitted an adequate restructuring plan is justified.

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correct (2) and finally what grounds there 29. It points out that in Boussac13 the are for that finding must also be examined. Court had essentially held that it is in the interests of protecting the rights of Member States that the Commission requires them to provide all the necessary information before it makes a final decision on the basis of the material at its disposal. It has also given more precise details on that obliga- tion in Pleuger.14 Moreover, France claims that the Commission infringes the rules which it has recognised itself in its publica- tion 'Competition law in the European (1) Procedure Communities, Volume IIB, Explanation of the rules applicable to State aid, as at December 1996'. Finally, the decision at issue also conflicts with its own decision- making practice, as can be seen, for exam- ple, from Decision 96/179/EC.15

Pleas in law and arguments of the parties

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decision reveals that the decision was based ment of the owners of the company had on the lack of substantive conditions for been weighed up against the aid from approval of aid and not merely on the lack public funds and had been found to be of information. disproportionate. Since it had failed com- pletely to fulfil two of the four criteria stipulated in the Guidelines, in no circum- stances could the aid granted be approved as restructuring aid. Therefore, there had been no need at all to have recourse to the argument that France had failed to provide sufficient information. 31. As to whether the aid may be approved as restructuring aid, the Commission had pointed out inter alia the importance of a credible restructuring plan for a positive decision on aid. At the hearing, the Com- mission representative emphasised that, according to the judgment of the Tribunal de Commerce, the French authorities had been ready to support a recovery plan 33. In the alternative, the Commission which that French court already believed contends that the first complaint is also was not viable. It followed that the French based on an erroneous interpretation of the authorities had certainly not made the aid rules concerning the procedure for moni- dependent on a restructuring plan which toring aid. was in accordance with the Guidelines.

in Articles 92 and 93 of the EC Treaty as a 36. Moreover, by that decision the Court result of their behaviour. However, in did not seek to alter its consistent case-law accordance with those measures the Com- which requires Member States to provide mission must also protect the legitimate the Commission with all the information it interests of the Member States. Accord- needs in order to take a decision in their ingly, the Commission is empowered — favour in cases where they were intending not compelled — to take interim mea- to grant a company aid. 18 sures. If a Member State refuses to give the Commission the assistance it needs in order to take its decision, the Commission may terminate the procedure and take a final decision on the basis of the available information. 37. In the further alternative, the Commis- sion argues that the publication referred to by France is not an official opinion but the work of a lawyer which is not binding in any way upon the Commission. Nor is the decision inconsistent with its habitual deci- sion-making practice. It sends formal demands for information, such as that requested from France, only to those States which have refused to cooperate in clarify- ing the facts of a case.

Assessment 35. In Plenger 17 the Court merely exam- ined the requirements as to the statement of reasons on which Commission decisions are based. Furthermore, the situation that gave rise to that case is not comparable with that which is to be decided in this case. 38. It needs to be examined whether, in First, in that case, unlike the present one, making a final decision on the French aid in the Member State did not cooperate with the present case without first formally the Commission at all. Second, the decision requesting France to provide a restructur- ing plan which fulfils the relevant require- concerned the existence of an aid pro- ments, the Commission has infringed the gramme and not the Commission's assess- rules concerning the procedure for asses- ment of compatibility with the common sing aid. market.

40. A final decision on State aid based solely on the fact that the Member State concerned has not provided the Commis- sion with sufficient information would therefore be unlawful. If the Commission 39. The Commission has infringed proce- does not consider that it is in a position to dural rules if its only ground for the make a final assessment on the permissi- decision is that France has failed to submit bility of the aid on the basis of available sufficient information. In particular, the material, it may initially only take interim Commission can base a decision on aid on measures. However, it must also request the insufficient information from Member Member State to forward the missing States only under very strict conditions. information. Since there were no written rules on the procedure for monitoring aid at the time when the decision was made, recourse must be had to the case-law developed by the Court. In its judgment in Boussac, the Court held that, once it has been estab- lished that aid has been granted or altered 41. However, the decision to be assessed in without notification, the Commission has this case is not based solely on France's the power to issue an interim decision failure to make the necessary information requiring the Member State concerned to available. It also states that France did not suspend immediately the payment of such submit a restructuring plan. However, that aid pending the outcome of the examina- claim is followed by detailed arguments tion of the aid and to provide the Commis- concerning the substantive compatibility of sion, within such period as it may specify, the aid with Article 92(3)(c) of the EC with all such information and data as are Treaty. It is clear that, in the Commission's necessary in order that it may examine the view, the absence of a restructuring plan compatibility of the aid with the common was merely one of several reasons why the market. Where a Member State has com- aid was incompatible with Community law. plied in full with the Commission's order, the Commission is obliged to examine the compatibility of the aid with the common market, in accordance with the procedure laid down in Article 93(2) and (3) of the EC Treaty. If the Member State, notwith- standing the Commission's order, fails to 42. Moreover, the Guidelines state that the provide the information requested, the existence of a restructuring plan is a Commission is empowered to terminate the procedure and make its decision, on the basis of the information available to it, on 19 — Boussac (cited in footnote 13, at paragraph 19 et seq.).

condition for the lawfulness of aid. In sion had been obliged to issue an additional referring to the absence of such a plan, interim decision requiring France to for- the Commission is not primarily arguing ward the missing information. that it does not have the information necessary for the assessment of the aid. Rather, the absence of the restructuring plan means that the aid was not granted on the basis of an adequate plan drawn up in advance by the French Government. How- ever, the Guidelines state that this is a condition for the lawfulness of restructur- ing aid. 20 Since all aid runs the risk of altering conditions of competition in the common market to the detriment of other 45. From its decision in Boussac, 21 the competitors, the risks involved must be Court has imposed on the Commission the minimised, if possible in advance. Only an obligation to obtain the facts of the case in adequate restructuring plan can fulfil that full before it makes a final decision. It can requirement. be deduced indirectly from that judgment alone that the Commission is obliged to clarify the facts of a case in full. The Court permits the procedure to be terminated without clarification of the facts only if the Member State concerned does not provide the requested information. The Commis- sion's obligations as regards obtaining the 43. Accordingly, by basing its decision (also) on the absence of a restructuring facts are explained in greater detail in plan, the Commission has not infringed Pleuger. 22 In that judgment the Court first procedural rules. of all refers to its comments in Boussac on the requirement for interim measures. Then, it continues, it is only if the Member State, notwithstanding the Commission's order, fails to provide the information requested, that the Commission is empow- ered to terminate the procedure and to make its decision, on the basis of the information available to it, on the question whether or not the aids are compatible with (b) Absence of a Commission decision on the common market. If the Commission the presentation of missing information intends to base its decision on realistic assumptions which the Member State con- tests, the Court also requires the Commis- sion to exhaust all the means available to it to verify those assumptions. One way of 44. However, there would have been an doing this is to issue an interim decision in infringement of procedure if the Commis- order to obtain specified items of informa¬

46. Such a measure limits the effect of the general rule that Member States must demonstrate that aid granted by them is 48. Furthermore, a restructuring plan can- compatible with the common market by not be submitted after the event, at the submitting all the necessary information.23 Commission's request, but must, as its Such a limitation is justified only if, when function suggests, be the basis of aid and establishing the facts of the case, the must already exist when such aid is Commission for its part intends to deviate granted. 25 from the facts it has received in favour of assuming, for instance, that an aid pro- gramme exists, in line with the information provided by the Member State. On the other hand, if the Commission makes an assessment of the facts it has received and the Member State concerned does not agree with that assessment, the Commission is in principle not obliged, prior to a final 49. Moreover, the decision to initiate the decision, to approach the Member State Article 93(2) procedure was a Commission again with a request for additional infor- decision expressly drawing the attention of mation. the French authorities to the lack of necessary information — in particular a restructuring plan — and requesting that all the relevant information be sent. 26 In the proceedings which led to the judgment in Pleuger,27 however, the Commission did not request further information as part of the decision to initiate the Article 93(2) procedure; it merely requested comments 47. The decision at issue does not contain from the Member State concerned and any realistic assumptions but rather the from other interested parties. Nor did it finding that the French Republic did submit attach particular weight to the contested information to the Commission, but not an allegation — emphasised by the Court — adequate restructuring plan. The question that the aid which was the subject of the whether the information provided consti- tutes an adequate restructuring plan is not a fait accompli but the subject of an assess- 24 — See in that regard point 53 et seq. below. 25 — See point 42 above. 26 — See point 12 above. 23 — Case C-364/90 (cited in footnote 18, at paragraph 20). 27 — Cited in footnote 14.

52. No procedural irregularity can there- 50. Lastly, it should be noted that the fore be found to exist as regards the argument put forward by the French absence of a restructuring plan. Republic is contradictory. On the one hand, it asks for a mandatory decision expressly ordering it to provide information. On the other it claims that the French authorities had endeavoured throughout the adminis- tration procedure to cooperate fully with the Commission. In particular it had reg- ularly provided detailed answers to all (2) Assessment of the information provided 28 — In this regard the notice published in OJ 1989 C 309, p. 3 contains even less information than the Commission's letter of 3 May 1989 to the Member State concerned. 29 — This conforms to the Commission's recent practice; sec Decision 2000/194/EC of 14 July 1999 on aid granted by Germany to Weider Leder GmbH (Weida), Thuringia (notified under document number C(1999) 3441), 01 2000 L 61, p. 4, No 52 and Decision 1999/589/EC 53. It must therefore be examined whether of 22 December 1998 on aid granted by the Republic of Austria to Ergee Textilwerk GmbH (notified under docu- the Commission was justified in concluding ment number C(1998) 4568), OJ L 227, p. 1, section 1. that the information available to it did not 30 — Cited in footnote 15. contain an adequate restructuring plan.

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Pleas in law and arguments of the parties assessment is not to be found in the case- law. In Nolle the Court did, however, hold, in connection with the issue of anti-dump- ing regulations, that evidence is required to establish that a manifest error has occurred. 54. The French Government takes the view If such evidence cannot be furnished, the that the information it provided constitutes fact that it cannot damages the case of the a restructuring plan within the meaning of person who claimed that the regulation was the Guidelines. unlawful.31 This in principle appears to be applicable in this instance.

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are arrived at. The only known actual position to arrange for their defence. When results for 1997 remain considerably below the Commission contended that France had the projected figure. not provided it with sufficient information for it to assess the aid, it had merely been trying to divert attention from the numer- ous insufficiencies in the statement of reasons in the case of this decision.

59. Thus, it is not established that the French authorities actually submitted an adequate restructuring plan. To that extent, therefore, the Commission cannot be found 61. The Commission replies that in accor- to have committed a manifest error of dance with consistent case-law the scope of assessment. On the contrary, the fact is the requisite statement of reasons depends that, under the Guidelines, there is no basis on the nature of the act concerned and the for approving the aid. That deficiency circumstances of its adoption, in particular alone would be sufficient to justify the on the content of the act and the interest Commission's decision. which those concerned may have in obtain- ing a detailed explanation of the reasons for adopting it. On the other hand, the statement of reasons is not required to go into all the relevant facts and points of law. In this respect, the act concerned may not be considered in isolation; it must also be (3) Statement of reasons understood in relation to the circumstances surrounding its adoption. The decision at issue here meets those requirements.

Pleas in law and arguments of the parties

B — Long-term viability

63. Substantive deficiencies in statements of reasons are not covered by Article 190 of 66. First of all, it should be pointed out the EC Treaty. The obligation to state that, under the Guidelines, the restoration reasons is a formal requirement which does of long-term viability requires that under- not apply to substantive deficiencies. No takings be in a position to cover all their procedural requirement is therefore costs and generate an appropriate mini- infringed if the acting authority has disre- mum return. garded factors which it rightly or wrongly considered irrelevant to the proceedings. 33

64. Against that background, the fact that (1) Procedure the Commission relied inter alia on the absence of a restructuring plan cannot be regarded as a failure to state the reasons, as required by Article 190 of the EC Treaty, because the reasons for the Commission's finding are clearly set out. 61. The pleas in law and arguments of the parties concerning the procedural issues relating to the Commission's finding that a 32 — Case C-367/95 P Commission v Sytravel and Brink's restructuring plan did not exist also by France [1998] ECR 1-1719, paragraph 63 with further extension cover the Commission's findings references there. 33 — Case 41/69 Chemiefarma [1970] ECR 661, paragraphs 79 on the long-term viability of the under- to 81. taking.

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(2) Assessment of the information in this case

Pleas in law and arguments of the parties 71. Secondly, France considers that the Commission also made an error of assess- ment in finding that the profit and loss figures for an essential part of the operation 69. France considers that the Commission fell considerably short of expectation. The made a manifest error of assessment in fact that a completely secondary area of considering that the undertaking is not production was discontinued does not viable. mean that the entire undertaking was uncompetitive. On the contrary, the very swift reaction to that product's lack of 34 — Cited in footnote 13. success suggests competitiveness rather 35 — Cited in footnote 14. than the reverse.

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75. On the second point, the Commission contends that the arguments to the effect that it assessed the viability of the under- taking as a whole exclusively on the basis 74. The Commission argues first that it is of its assessment of a non-essential part of clear that, in terms of net results, the the operation are disproved by the wording undertaking was in 'free fall' up to 1999 of the actual decision. The Commission had and could never have survived without the stated in that decision that the earlier FRF 22 million subsidy. Even on the view statements in respect of the undertaking France apparently espouses, the financial as a whole were reinforced by the informa- results were still decreasing steadily: the tion concerning the individual part of the company had lost FRF 513 000 in 1996, operation. Furthermore, the part of the FRF 2.3 million in 1997, FRF 2.4 million in operation in question was not entirely 1998 and FRF 2.65 million in 1999. subordinate. It still made up 17% of the

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new undertaking's turnover. The slump in Assessment sales in that part of the operation amounted to 84% in respect of that part alone and 14% in respect of the undertaking as a whole. Thus, not only had the market niche 78. It must first be observed once again strategy failed in an important area; the that, on account of the nature of Arti- turnover as a whole had likewise fallen cle 92(3) of the EC Treaty as a derogation, short of expectations. the Commission is not required to show that the aid is incompatible with the common market; on the contrary, it must be established unequivocally that the aid is compatible with it. The Commission's statements are to be assessed in that light.

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admissible to consider and assess, as the 83. If, as the Commission does in its Commission has done, the trend shown by defence, we base the assessment on the individual parts of the undertaking as well complete set of figures, provided by France, as the said figures. concerning the undertaking's projected eco- nomic results, the picture that emerges as regards the long-term viability of the under- taking is a more mixed one. Thus, the financial results dropped steadily from 1996 whilst the operating profit and loss, as the Commission correctly points out, was more uneven. Whether or not that indicates a reasonable return on the capital invested is open to question. 81. On the basis of that information, the Commission first of all stated in the contested decision that the net profit for 1996 which amounts to FRF 20 million is exclusively due to the aid. It added that the net profit dropped steadily by 60% to 70% from 1996 to 1999. There was in fact a drop by the percentage indicated. However, 84. Moreover, the value of those figures is in the preceding sentence the Commission doubtful since the overall company result criticises those very net figures at least in for 1997 — the only one known at the respect of 1996 since, in its view, they were time of the Commission's decision — affected by the subsidy. Those very figures clearly falls short of the projected figures. nonetheless form the basis of the drop in profit calculated by the Commission. To that extent, I would have to agree with the French Government's claim that the Com- mission's statements are ambiguous if not positively contradictory.

operating plan and were not a 'burden of part of the operation increases doubt as to the past' inherited from the former firm. viability. France has thus been unsuccessful Only if that were the case could I agree in demonstrating that the Commission with France that closing down that part of committed a manifest error of assessment the operation was a sign of long-term in finding that the restoration of the under- viability. In the circumstances of this case, taking's long-term viability was not the closure seems to suggest a failure, at ensured. least in part, of the restructuring strategy. The internal measures taken for the pur- pose of restructuring, which are required by the Guidelines, simply failed to make the desired contribution to a successful restruc- turing process. 88. The Commission's assessment is also confirmed by the fact that the undertaking became bankrupt in the interim, although the bankruptcy has no legal implications for these proceedings.

86. On the other hand, the Commission's conclusion that the high prices for Lycra wool indicated a lack of competitiveness on the part of the undertaking in that market segment does not appear to be convincing. France explains that that pricing policy was part of a specific market strategy, a point which the Commission does not contest. It (3) The statement of reasons is not clear from the documents in this case whether or not the undertaking is now achieving success with its strategy.

Pleas in law and arguments of the parties

90. The Commission contends that, as far as prices for Lycra wool are concerned, the passage quoted by France was taken out of context. On the failure to take account of the information provided on 30 October 1998, it should be noted that the decision was adopted on the basis of the figures 93. Nevertheless the grounds for the deci- provided by France on 16 October 1998. sion are not without their defects on this The letter of 30 October 1998 could not very matter of the undertaking's long-term have altered the outcome in any way. viability. I have already gone into the contradiction in the description of the trend in the profit and loss figures. 38 Further- more, the Commission expressly states that 'the French Government did not forward a restructuring plan which would allow the Commission to assess restoration of the recipient company's long-term viability and the need for the aid'. 39 It nonetheless makes observations on that matter which are in fact designed to justify its decision. Assessment

(4) Interim result

98. France takes the view that where the purchasers of an undertaking are natural persons — employees of that undertak- ing — and the money contributed reflects 95. Since long-term viability is a sine qua their personal economic circumstances, non for the approval of restructuring aid, their commitment within the context of the Commission was entitled to refuse to the restructuring plan must be considered approve the aid for that reason alone. to be significant within the meaning of the Guidelines.

99. Furthermore, it claims that the decision contains three errors of assessment in that regard. C — Aid in proportion to the contribution made by the beneficiaries of restructuring

100. First, the Commission had failed to 96. As regards the aid granted in propor- take into account the fact that the recipient tion to the contribution made by the is an SME and is in an 'objective 2' zone, beneficiaries of restructuring, the dispute is confined to the Commission's assessment 40 — Judgment of the Court of First Instance in Case T-149/95 of that matter. Ducros, cited in footnote 10, at paragraph 61.

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103. The Commission considers, first, that it no longer matters, basically, whether 106. As regards the purchasers' contribu- France's complaint on this score is justified tion in proportion to the State funds, in since, even if it was, the actual form of accordance with the Guidelines that con- order sought could not be granted, as the tribution must be set against the overall costs involved in restructuring and in this instance the contribution constitutes 12% 41 — For the amounts concerned, see point 7 above. of those costs.

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108. As regards aid in proportion to restructuring costs and benefits, it is appar- ent from Point 3.2.2.(iii) of the Guidelines that the amount and intensity of the aid must be limited to the strict minimum needed to enable restructuring to be under- taken and must be related to the benefits anticipated from the Community's point of 110. The Commission should therefore view. Therefore, aid beneficiaries will nor- also take account of a situation in which mally be expected to make a significant the proprietors of the undertaking have contribution to the restructuring plan from only limited resources as employees of the their own resources or from external com- former undertaking and invest all such mercial financing. resources in an attempt to keep their operation running. In particular, a straight- forward comparison of contributions in proportion to the costs of restructuring is impossible in such circumstances. This is shown by Commission practice. In the

42 — See also the 1999 Guidelines, cited in footnote 3, at 109. That criterion is intended to avoid paragraphs 40 et seq. and Commission Decision of 13 June 2000 on the State aid implemented by Germany in favour providing the company with surplus cash of Wildauer Kurbelwelle GmbH (notified under document which could be used for aggressive, market- number C(2000)(1660), OJ 2000 L 287, p. 51, paragraph distorting activities not linked to the 43 — Cited in footnote 3, at paragraph 40.

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decision concerning the aid granted to the base of FRF 510 000 and a purchase price Italian company Seleco, the Commission of FRF 4.3 million was a substantial private considered that a contribution from the contribution to restructuring compared proprietors' own funds amounting to 40% with FRF 40 million in State aid. 46 of the total funds invested still did not constitute a sufficiently substantial private contribution. 44 However, in its decision concerning aid granted to the German company Wildauer Kurbelwelle GmbH, the Commission regarded a private contri- bution of just 19.5% as a substantial (and adequate) proportion of the restructuring costs. 45

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capacity reductions to offset the effect on ment contests both the Commission's competition and, in the case of small and assessment and the statement of reasons. medium-sized enterprises, reporting obliga- tions, aspects which are not dealt with in the Commission's decision.

(1) Assessment of the information available 115. Contrary to the view taken by France, it was not necessary to include the redun- dancies and closures in the comparison either. Under the Guidelines, such measures are of no importance in assessing the criterion at issue. 118. In the French Government's view, the Commission's assessment, that the under- taking's relatively small market share on the European market is still in itself no reason for ruling out the possibility of a distortion of competition, does not take account of the facts communicated to the 116. Consequently, there is likewise no Commission on 30 October 1998. Had the manifest error of assessment in the Com- Commission taken account of those facts, it mission's finding that the aid granted is might have come to the conclusion that disproportionate to the costs and benefits there was no question of distortion of of restructuring because the company's competition. Instead, the Commission purchasers did not make a substantial seemed to rely solely on the very generally contribution to restructuring. held opinions of various competitors.

119. In contrast, the Commission observes D — Prevention of distortions of competi- that the French position is in complete tion contradiction to the wording of the con- tested decision. In that decision, the Com- mission gave detailed consideration to the undertaking's viability and the aid in pro- portion to cost and benefit. In the light of the finding that the aid failed to meet two 117. As regards the prevention of distor- out of the four criteria contained in the tions of competition, the French Govern- Guidelines, it was no longer even remotely

125. Under Article 69(2) of the Rules of 123. Since the Commission took the view Procedure, the unsuccessful party is to be that it was no longer necessary to consider ordered to pay the costs if they have been this criterion after its earlier examination of asked for in the successful party's pleading. others contained in the Guidelines, there France is therefore ordered to pay the costs.

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V I I— Conclusion

126. In the light of the foregoing considerations, I propose that the Court should:

(1) dismiss the application