C-321/99

1. Portugal's accession and the common organisation of the sugar market . . I-4296

2. State aid and the sugar production sector I - 4298

3. The legislation concerning Community aid from the Guidance Section of the EAGGF I-4299 4. National measures to implement Regulation No 2052/88 and Regulation No 866/90: plans, programmes and implementing regulations I - 4303

5. The investment project I - 4304

II — The Decision of 11 January 1996 I-4306

III — Proceedings before the Court of First Instance and the contested judgment I-4307

1. The economic relationships I-4315

2. Approach to the pleas in law I-4315

B — The admissibility of the appeal I-4316

C — The approval decision of 3 July 1991 I-4317

D — The first three pleas in law of ARAP cs I - 4320

1. The first plea in law I - 4320

1. The present case concerns an appeal Republic and DAI — Sociedade de Desen­ brought by Associação dos Refinadores de volvimento Agro-Industrial SA, interveners Açúcar Portugueses (ARAP), Alcântara in support of the Commission . In its Refinarias — Açúcares SA and RAR — response the Commission also claims that Rafinarias de Açúcar Reunidas SA (here­ the Court should — partially — set aside inafter known collectively as 'ARAP c.s.'). the contested judgment. They claim that the Court should set aside the judgment of the Court of First Instance of 17 July 1999. 2The other parties to the proceedings are the Commission of the European Communities — defendant at first instance —, and the Portuguese

2 — Case T-82/96 ARAP and Others v Commission [1999] ECR 2. The case concerns the grant of invest­ II-1889. ment aid by Portugal and the European

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The principal question in the case is whether the cumulative application of the 4. Production substantially exceeds various aid measures — which total over demand also in the Community. In 75% of the investments eligible for aid — 1998/1999 18.1 million tonnes of sugar requires a separate and explicitly reasoned were produced, of which 14.2 million assessment by the Commission of its effects tonnes fell within the production quota, on the conditions of competition on the 2.2 million tonnes fell outside that quota, relevant sugar market. and 1.7 million tonnes related to refined cane sugar from preferential imports. In the same year consumption amounted to around 12.7 million tonnes. However, the surplus had no impact on prices within the Community because of the price support mechanism and the export programme of the common organisation of the market described below. I — The economic and legislative back­ ground

A — The economic background

5. The common organisation of the market provides sugar beet growers with a good return per hectare which is considerably 3. The world market in sugar is characte­ higher than that of other growers. It rised by a production capacity which is stabilises the price level and guarantees

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supplies of sugar. These characteristics B — The legislative background make it very attractive — both for sugar beet growers and sugar producers — to produce sugar under the allocated quota.

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No 1785/81 of 30 June 1981 on the com­ (d) an import programme for cane sugar at mon organisation of the markets in the preferential rates; sugar sector. 4The features of this common market organisation are as follows:

(e) production levies to recover from the sugar industry the cost of the export (a) a production quota scheme applied to refunds (less an amount equivalent to the finished product (white sugar) the preferential sugar imports) and rather than the basic agricultural prod­ storage levies to recover the payments ucts (beet and cane). The main quotas made to companies storing sugar. are the so-called 'A' quotas. There are additional 'B' quotas to which lower reference prices apply. Quotas are set for five to seven years by the Council on a proposal from the Commission;

14. This provision is elaborated further in 12. For some time the sugar quota allo­ Article 46 of the regulation. It authorises cated to Portugal by the Act of Accession Italy and France to grant adaptation aid in remained unused on account of a lack of the sugar sector under certain well-defined processing capacity in that country. Sugar conditions. This article does not refer to the beet cannot be transported over long dis­ grant of aid for the setting up of a refinery tances. Therefore, beet sugar refineries in Portugal. must preferably be set up in or close to areas of production. The file shows that the attempts by the Portuguese authorities to induce the two sugar refineries established in Portugal to set up a beet sugar refinery were ultimately unsuccessful.

15. In accordance with the Guidelines for state aid in connection with investments in the processing and marketing of agricul­ tural products of 2 February 1996 (here­ inafter: 'the guidelines'), 7all State aid for investments in the sugar sector is excluded 2. State aid and the sugar production sector with the exception of inter alia investments for utilisation of the sugar quota allocated to Portugal under the Act of Accession. These guidelines are consistent with Com­ mission Decision 94/173/EC of 22 March 13. Under Article 42 of the EC Treaty 1994 on the selection criteria to be adopted (now Article 36 EC), the general rules on for investments for improving the process­ competition apply to production of and ing and marketing conditions for agricul­ trade in agricultural products only to the tural and forestry products and repealing

8 — OJ 1994 L 79, p. 29. 9 —SG (91) D/13312. 10 — OJ 1988 L 185, p. 9.

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5. (a) speeding up the adjustment of with the provisions of the Treaties, with the agricultural structures, and instruments adopted pursuant thereto and with Community policies, including those concerning the rules on competition, the award of public contracts and environ­ mental protection'.

(b) promoting the development of rural areas

21. Council Regulation (EEC) No 4256/88 of 19 December 1988 laying down provi­ sions for implementing Regulation (EEC) (hereinafter referred to as "Objective No 2052/88 as regards the EAGGF Guid­ 11 5(a) and 5(b)").' ance Section sets out the criteria which the EAGGF must take into account in financing activities which come under objectives 1 and 5(a) and (b) of Regulation No 2052/88. Under Article 10(1), the Council must lay down detailed rules on the forms of and the conditions for the Under the annex to this regulation Portugal EAGGF contribution to measures to as a whole is regarded as a region which improve the conditions under which inter comes under Objective 1. alia agricultural products are processed and marketed.

'(a) helping to guide production in keeping (e) helping to improve the quality, presen­ with foreseeable market trends or tation and preparation of products or encouraging the development of new encouraging a better use of by-prod­ outlets for agricultural products, in ucts, particularly by recycling waste.' particular through facilitating the production and marketing of new products or of high-quality products, including organically-grown products;

In the annex to this decision all investments in the sugar sector are excluded, with the — in general the rules closely follow the exception of those which provide for: guiding principles of the common agri­ cultural policy;

— as regards the sugar sector in particu­ lar, they are almost congruent with the restrictive rules applicable to State aid in connection with the common organi­ — utilisation of the quota provided for in sation of the sugar market which were the Act of Accession of Portugal (for highlighted above. These restrictive mainland Portugal, 60 000 tonnes of rules are also reflected in the Guide­ sugar).' lines for state aid in connection with investments in the processing and mar­ keting of agricultural products;

25. According to the guidelines referred to at paragraph 15 above, when applying Articles 87 EC, 88 EC and 89 EC, the — as regards more specifically the excep­ Commission is to apply by analogy the tional position of Portugal, the rules limitations of a sectoral nature relating to concerning Community co-financing the co-financing of such investments by the by the Guidance Section of EAGGF Community. According to those guidelines, and those concerning State aid in con­ nection with the sugar sector are also largely congruent. This is not the case 14 — OJ 1994 L 79, p. 29. with the rules concerning the common

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organisation of the sugar market. They 29. On 4 March 1994, the Commission do not grant Portugal special status in approved the operational programme for respect of State aid. Portugal which was required for the grant of actual assistance. The section of that programme relating to agriculture makes express provision for the establishment of a refinery to process sugar beet with a view to exploiting the sugar quota allocated to Portugal.

28. On 9 July 1993, the Portuguese auth­ orities submitted their development plan. Pursuant to Article 8(5) of the abovemen- 31 . Under Article 16(3) of Regulation tioned regulation, the Commission No 866/90, the Member States must responded, by decision of 25 February 15 'undertake to participate in financing the 1994, by establishing the Community investments selected by the Commission for support framework for structural assist­ assistance from the [EAGGF], to at least ance for Portugal covering the period 5% of the eligible costs'. On 25 September 1994-1999. This Community support 1995, the Portuguese authorities notified framework also covered the development the Commission of their measures to priorities for the agricultural sector. implement inter alia this provision. In that respect they referred to Article 93(3) of the EC Treaty (now Article 88(3) EC). Since 15 — Commission Decision 94/170/EC of 25 February 1994 on the establishment of the Community support framework these measures were to form the statutory for Community structural assistance for the Portuguese basis for the national contributions regions concerned by Objective 1, namely the whole country (OJ 1994 L 78, p. 38). towards investment projects which might

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be eligible for co-financing by the Commu­ 5. The investment project nity — in this case the Guidance Section of the EAGGF — and were not therefore an independent basis for State aid, the Com­ mission found that the notified measures 34. After the negotiations with Alcântara contained no elements of State aid within Refinarias — Açúcares SA and RAR — the meaning of Articles 92 and 93 of the Rafinarias de Açúcar Reunidas SA over EC Treaty (now Articles 87 EC and 88 the setting up of a beet sugar refinery had EC). It informed the Portuguese authorities become deadlocked, the Portuguese Gov­ accordingly. ernment entered into talks with another potential candidate, DAI — Sociedade de Desenvolvimento Agro-industrial SA (here­ inafter: 'DAI').

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Portuguese Government amended the 37. Earlier, in December 1995, the Por­ statutory measures which it had notified tuguese authorities had decided to notify to the Commission inter alia pursuant to the planned aid for DAI to the Commission Regulation No 866/90 to include aid for pursuant to Article 93(3) of the EC Treaty. 16 investments in the sugar sector. The Portuguese authorities stated that addi­ tional financial aid would be granted under 17 Decree-Law 95/90.

38. Contacts between the Commission and the Portuguese Government following this notification resulted in the following for­ 16 — See paragraph 32 of this Opinion. mulation of the project and the public aid 17 — See paragraphs 16 and 17 of this Opinion. to be granted for it.

I. Investments

— Total investments PTE 16 125 000 000

Total under (1) PTE 8 285 000 000 64 . 97 %

2. Tax relief PTE 1 275 290 000 10 . 00 % (Decree-Law 95/90)

Total (1 and 2) PTE 9 560 290 000 74 . 97 %

3 . Training aid PTE 380 000 000 2 . 98 %

Total PTE 9 940 290 000 77 . 95 %

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III— Proceedings before the Court of First B — The contested judgment Instance and the contested judgment

47. The Court of First Instance began by considering the admissibility of the claim for annulment.

A — The proceedings before the Court of First Instance

48. The claim was dismissed as inadmiss­ ible in so far as it was directed against the 'decision' of 19 March 1996. The Court of First Instance held, at paragraphs 29 and 30 of the contested judgment, that the letter 44. By application lodged with the Registry addressed to ARAP c.s. was purely of the Court of First Instance on 29 May informative and did not therefore consti­ 1996 the applicants brought an action, tute a measure against which proceedings which was registered as Case T-82/96. may be instituted under Article 173 of the EC Treaty (now Article 230 EC).

52. The applicants put forward three pleas in law to challenge the tax reliefs. First, they alleged that the decision of 3 July 1991 was illegal under Article 184 of the EC Treaty (now Article 241 EC). Second, they claimed that those tax reliefs in any event represented new aid which the Por­ 50. Lastly, the Court of First Instance tuguese Government was required to notify rejected the second objection of inadmis­ under Article 93(3) of the EC Treaty. sibility raised by the Portuguese Govern­ Third, that aid was contrary to the com­ ment in so far as the application concerned mon agricultural policy. the part of the contested decision relating to the Portuguese general tax relief scheme. The Portuguese Government submitted that the applicants were not directly and individually concerned. The Court held that where the Commission decides not to initiate the procedure provided for by Article 92(2) of the EC Treaty, the appli­ 53. According to the Commission and the cants can, as third parties, secure com­ interveners, the applicants should have pliance with the procedural guarantees brought an action to challenge those tax granted by this provision only if they are reliefs before the national court since the able to challenge that decision before the application of an — approved — aid Court. Moreover, the applicants could scheme is at issue here. They should then appraise the extent to which their interests have relied on Article 184 of the EC Treaty were affected only after this decision had in order to preclude implementation of the been adopted. decision of 3 July 1991. Consequently, the applicants' first plea challenging the tax reliefs was inadmissible.

considered that the interest in affording 3 July 1991 under Article 93(3) of the EC effective protection to the applicants' rights Treaty without initiating the procedure could be assured only if they had an under Article 93(2), which alone upholds opportunity to raise an objection alleging the right of interested parties to be heard. the irregularity of that decision in proceed­ The legitimate interests of third parties ings challenging the Commission decision were thus not respected. This part of the relating to the individual aid. Such a plea was rejected by the Court of First measure alone allowed them to determine Instance at paragraphs 61 to 63 of the precisely the extent to which their interests contested judgment. The Court held that were affected. the lack of notification of State aid by the Member State concerned and the Commis­ sion's examination under Article 93(3) of the EC Treaty, together with its decision not to initiate the Article 93(2) procedure, could not be likened to a lack of trans­ parency in the system for examining State 55. In the first part of the first plea the aid. The summary examination of State aid applicants claimed that a general scheme of forming part of the preliminary stage under national aid cannot be approved without Article 93(3) of the EC Treaty is fully the imposition of the express condition that justified by the need to avoid delay where any application of it to the agricultural the measure notified by the Member State sector must, in all cases, be preceded by its concerned or complained about by a third notification to the Commission under party does not constitute State aid or Article 93(3) of the EC Treaty. At para­ constitutes aid compatible with the com­ graphs 55 to 57 of the contested judgment, mon market. The Court went on to state the Court of First Instance rejected that that the procedure also incorporates suffi­ part of the plea. It held that the applicants cient guarantees since the rights of third had not demonstrated that compliance with parties are protected by the possibility of the rules applicable to the sugar sector had their instituting proceedings, if appropriate, not been ensured by the conditions laid against the Commission's decision not to down in the approval decision. Fur­ initiate the Article 93(2) procedure. thermore, the aid granted in the sugar sector under the general scheme of tax reliefs at issue did not thereby escape Commission control, since the Commission may at any time verify the compatibility of individual aid with the approval decision and in particular with the rules applicable to the sugar sector.

58. In the second plea the applicants alleged that the Commission failed to carry out the, in their view, mandatory examin­ 59. The third plea concerning tax reliefs, ation of the individual tax reliefs for DAI in based on the alleged incompatibility of the light of Articles 92 and 93 of the EC such reliefs with the common agricultural Treaty. The Court of First Instance rejected policy, was rejected by the Court of First this plea at paragraphs 72 to 75 of the Instance at paragraphs 84 to 94 of the contested judgment. In that regard, it contested judgment. By way of preliminary 1 referred to the Italgrani 8 judgment in observation, the Court recalled that the which the Court of Justice held that once Commission had the power and the duty to a general aid scheme has been approved by examine only the propriety of the tax reliefs the Commission, the individual implement­ granted in this case to DAI in the light of ing measures do not need to be notified to it the conditions it imposed in its approval unless reservations to that effect were decision and, in particular, of the rules expressed in the approval decision. Indeed, applicable in the sugar sector. The Court direct examination of each individual aid in went on to verify whether the tax reliefs, the light of Article 92 of the EC Treaty which were intended to facilitate the deve­ would entitle the Commission to go back lopment of certain economic regions in on its approval decision and would be accordance with Article 92(3)(c) of the EC contrary to the principles of protection of Treaty, were compatible with the aims legitimate expectations and legal certainty. pursued by the rules applicable to the sugar In the light of those principles, the Court of production and processing sector. First Instance then held that an individual aid granted in implementation of a general aid scheme cannot in principle be regarded as an unforeseeable application of that scheme. In the case at issue, the Court of First Instance held finally that the decision of 3 July 1991 imposes no obligation to notify individual grants of aid in the sugar 60. The Court of First Instance held, fol­ sector. It followed that the Commission lowing an analysis of those rules, that the was not entitled to examine the tax reliefs tax reliefs, which were intended to promote granted to DAI directly in relation to the setting up of a beet sugar refinery in mainland Portugal, conformed with the aims pursued and the rules laid down, in 18 — C-47/91 Italy v Commission [1994] ECR I-4635 (known connection with the common agricultural as the 'Italgrani' judgment). policy, by Regulation No 1785/81. It also

61. Finally, the Court of First Instance held 63. The applicants put forward two pleas that the file contained no persuasive evi­ to challenge the part of the decision of dence casting doubt on the viability of the 11 January 1996 relating to investment aid beet sugar refinery receiving the aid at under Regulation No 866/90. In the first issue. plea they submitted that State aid satisfying the conditions laid down by that regulation to qualify for Community co-financing was nevertheless subject to the application of Articles 92 and 93 of the EC Treaty. In the second plea they submitted that co-financ­ ing aid for the Portuguese beet sugar sector was incompatible with the common agri­ 62. At first instance, the applicants put cultural policy under Regulation forward a single plea in law to challenge No 866/90. the aid for vocational training, namely infringement of Article 92(3)(c) of the EC Treaty. The Court of First Instance rejected this plea at paragraphs 98 to 101 of the contested judgment. The Court first held that each of the three types of aid examined in the contested decision was covered by different sets of legal provisions and must therefore be examined individually in the light of those rules and the aims which they 64. At paragraphs 111 to 120 of the pursue. Secondly, it observed that it is contested judgment, the Court of First settled case-law that, in its review of legal­ Instance rejected the first of those pleas. ity, the Court must restrict itself to deter­ The Court considered that the plea was mining whether the Commission has essentially based on 'Article 44 of Regu-

65. The Court of First Instance went on to observe that even if Article 44 of Regu­ lation No 1785/81 could be interpreted as 66. Lastly, at paragraph 124 of the con­ specifically providing for the application of tested judgment, the Court of First Instance Articles 92, 93 and 94 of the EC Treaty to held that the applicants' second plea in law every aid measure concerning sugar was based essentially on the argument that production and trade, it must, in any event, the investment aid at issue was excluded by be applied having regard to the aims of the Regulation No 866/90 because it was common agricultural policy, whose preced­ incompatible with the common agricultural ence over the application of the Treaty policy and could not be based on Decision provisions relating to competition is 94/173, which was itself incompatible with enshrined in the EC Treaty itself, namely that policy. The Court merely pointed out in Article 42 thereof. in that regard that aid granted with a view

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to utilising the quota allocated to mainland — annul the decision of 11 January 1996 Portugal was not incompatible with the addressed to the Portuguese Govern­ aims of the common agricultural policy. ment or, in the alternative, refer the That plea could not therefore be upheld. case back to the Court of First Instance in accordance with Article 54 of the EC Statute of the Court of Justice;

67. The Court of First Instance ruled that the action for annulment must be dismissed — order the Commission to pay the costs as unfounded in its entirety. of both proceedings.

and 72. DAI contends that the Court should:

— dismiss the appeal as manifestly inad­ — dismiss the appeal as inadmissible with missible and/or unfounded without respect to the first and second limbs of opening the oral procedure and order the first plea, the second and third the appellants to bear the costs; limbs of the second plea, the fourth plea and the sixth plea;

or — dismiss the remainder of the appeal as unfounded; and

— dismiss the appeal and order the appel­ lants to bear the costs. — order the appellants to pay the costs of both proceedings,

71. The Portuguese Republic contends that the Court should: or, in the alternative:

— dismiss the appeal in its entirety as — uphold the contested judgment; unfounded; and

76. As has already been noted above, the Community legislature was fully aware of this economic relationship. It can be seen in 73. In analysing and appraising the pleas Regulation No 1785 / 81 , which was by ARAP cs . and the Commission set out amended on two occasions, first on Por­ below, it should be borne in mind that the tugal's accession and then again in 1996. It set of facts to which they relate is char­ is also evident from the system of the rules acterised by an unmistakable internal rela­ which govern the actions of the Guidance tionship. Section of the EAGGF as regards Commu­ nity policy to strengthen economic and social cohesion (Articles 130a to 130e of the EC Treaty, now Articles 158 EC to 162 EC) and from the quasi-statutory guidelines for examining State aid for investments for the processing and marketing of agricul­ 74. The case essentially concerns invest­ tural products, as set out in paragraphs 19 ment in a sugar refinery intended for the to 25 above. production of a quota of 70 000 tonnes of beet sugar which was allocated to mainland Portugal in tranches of 60 000 tonnes (by the Act of Accession) and 10 000 tonnes (by Regulation No 1599/96) respectively. Around 75% of the eligible investments were financed using public funds which originate in part from the Community in 2. Approach to the pleas in law the form of investment contributions from the Guidance Section of the EAGGF and in part from a system of national aid meas­ ures. (See for more details paragraph 38 77. To avoid losing sight of the legislative above.) and substantive economic relationships

B — The admissibility of the appeal 79. The fifth and sixth pleas of ARAP cs . raise questions of law concerning the inter­ pretation and application of Regulation No 866/90. 82. The Commission and DAI claimed that the Court should declare the appeal inad­ missible in its entirety. They contend that the pleas put forward do not clearly indicate the contested parts of the judgment or the legal arguments on which they are based. They contend that in reality they 80. The fourth plea of ARAP cs . raises the merely repeat the pleas in law raised at first question of principle, set out at paragraph 2 instance and seek a re-examination of the above, as to whether, where various, application submitted to the Court of First already approved, national aid schemes Instance. are allocated in combination to a project to which a Community contribution has also been made, their cumulative effect must be examined separately and reasons must be stated. In analysing and assessing this question of law certain elements which 83. The Commission's contention is based arise from the assessment of the other pleas on judgments in which the Court has held of ARAP cs . may appear important. There­ that an appeal is not admissible where it '... fore, the fourth plea will be considered last. confines itself to repeating or reproducing

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word for word the pleas in law and 85. Since in the present case the appeal arguments previously submitted to the states clearly which aspects of the contested Court of First Instance, including those judgment are criticised and the legal argu­ based on facts expressly rejected by that ments which specifically support the Court; in reality, such an appeal amounts appeal, this appeal is admissible in its to no more than a request for a re-examin­ entirety. ation of the application submitted to the Court of First Instance, a matter which falls outside the jurisdiction of the Court of 1 Justice....' 9

84. As Advocate General Jacobs stated in 86. Central to the first three pleas is the 20 Commission's approval decision of 3 July his Opinion in Salzgitter v Commission, this formula must be applied cautiously. It 1991. The first plea raises the question is apparent from the case-law that it is whether the approval decision ought to intended only to ensure that an appeal is have been given in this form. The appli­ formulated correctly and does not aim in cants consider that the Court of First reality at a retrial of the case. The repetition Instance was wrong to hold that the general of several arguments already used at first condition attached to this decision, that is instance does not of itself imply that the to say that the application of Decree-Law appeal fails to comply with those require­ 95/90 must comply with the provisions of ments. That is particularly true in cases Community law relating to certain indus­ such as the present where the Court of First trial, agricultural and fisheries sectors, also Instance upholds decisions of a Community adequately safeguards compliance with the institution on the basis of the same or rules applicable to the sugar sector. The similar interpretation of Community law as second and third pleas are directed at the defending institution. If in such a case certain conclusions which the Court of an appellant could not rely in its appeal on First Instance drew in this case from its arguments already used when challenging view that the imposition of a general the initial decision, the appeal procedure condition could be sufficient. would be deprived of its meaning. The Court confirmed, at paragraphs 42 to 44 of the judgment in the abovementioned case, the abovementioned understanding of Advocate General Jacobs. 87. However, before I come to an assess­ ment of these three pleas and the arguments 19 — Order of 24 April 1996 in Case C-87/95 P CNPAAP v of the parties and interveners in that Council [1996] ECR I-2003, paragraph 30, and order of 25 March 1998 in Case C-174/97 P FFSA and Others v regard, I would like to make a preliminary Commission [1998] ECR I-1303, paragraph 24. comment in the light of the contested 20 — Opinion in Case C-210/98 P Salzgitter v Commission [2000] ECR I-5843, paragraphs 49 and 50. judgment and the case-file at first instance.

91. There are good grounds for concluding from the characteristics of the sugar sector 89. The file at first instance shows that the set out above at paragraphs 4 to 7 that it is decision, which was notified to the Por­ an extremely sensitive sector. This finding tuguese Government on 11 January 1996 is confirmed in Articles 44 and 46 of and in which inter alia approval was given Regulation No 1785/81 which show that for the aid to DAI under Decree-Law the Community maintains, in respect of the 95/90, was taken by the Commission on sugar sector, a very restrictive aid scheme 20 December 1995. I therefore conclude which in principle permits no aid for the that this decision on the application of processing of sugar beet and sugar cane Decree-Law 95/90 still comes within the other than under Article 46 of that regu­ lation. It does not actually mention State aid for the establishment of a sugar refinery 21 — Italics added. in Portugal.

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95. Although the parties at first instance 98. Moreover, the context and scope of the also disregard the abovementioned particu­ provision, and the circumstances of the lar condition in their pleas and arguments, case, indicate that the Court should con­ the Court of First Instance should have duct an examination of its own motion. considered it of its own motion. This condition attached to the approval decision touches upon the powers of the Commis­ 22 — Case C-47/91 Italy v Commission (Italgrani), cited in sion which it exercises pursuant to footnote 18, paragraphs 24 to 26. 23 — Case C-210/98 P Salzgitter v Commission, cited in foot­ Articles 92 and 93 of the EC Treaty. note 20, paragraph 56.

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— After all, a provision is concerned 100. In my appraisal of the second plea in which by its nature seeks to serve an law below, I will examine in more detail essential Community objective, namely how the relevant provision of the approval to safeguard uniform conditions of decision of 3 July 1991 must be interpreted competition on the common market. in this case and the conclusions which must This objective is particularly vulnerable be drawn from the non-compliance there­ in the case of State aid in sensitive with. sectors.

— The provision also seeks to protect the interests of third parties. They are almost always at issue in the case of D — The first three pleas in law of aid in sensitive sectors. ARAP cs.

— The non-compliance with the provision is manifest. Both the Court and third 1. The first plea in law parties can see without difficulty that it has been infringed.

104. It is established that the Commission may approve general aid schemes as part of the review of State aid granted by Member 102. They contest the view, expressed by States which it is required to carry out the Court of First Instance at paragraph 56 under Articles 92 and 93 of the EC Treaty. of the contested judgment, that the power In accordance with a consistent policy it of the Commission under Article 93(1) of has examined and approved a large number the EC Treaty provides sufficient safe­ of such general aid schemes over the years. guards to ensure that the application of The legal consequences of such approval the approved general aid scheme is com­ have been considered in the case-law of the patible with the rules applicable to the Court on several occasions. 24 In this case- sugar sector. The Commission's powers law the Commission's power to declare a under Article 93(1) of the EC Treaty can­ general national aid scheme compatible not be regarded as an appropriate alter­ with the Treaty has always been upheld. native to the procedures provided for by Article 93(2) and (3) of the EC Treaty. Article 93(1) of the EC Treaty makes no provision for suspending implementation of a general aid scheme. Moreover, the position of third parties is substantially weaker in the case of 'constant review' under Article 93(1) of the EC Treaty than it is in the case of the application of 105. Nor is there any doubt that the Article 93(2) and (3) of the EC Treaty. Commission, where it approves general national aid schemes, may attach general or more specific conditions to them in order to ensure that the individual appli­ cation of the relevant aid measures is consistent with Community law and policy in the relevant sector and in the relevant field of policy. It is thus ensured that Community policy pursuant to Articles 92 103. The Commission agrees with para­ and 93 of the EC Treaty remains consistent graphs 55 to 57 of the contested judgment. with the policy pursued by the Community It considers that it is entitled to approve in other areas. general national aid schemes. The distinc­ tive feature of such a general aid scheme is that the individual aid measures can be 24 — See, inter alia, Case C-47/91 Italy v Commission (Ital- grani), cited in footnote 18; Case C-311/94 IJssel-Vliet adopted by the Member States without Combinatie v Minister van Economische Zaken [1996] prior notification to the Commission under ECR I-5023; C-278/95 P Siemens v Commission (1997] ECR I-2507; and Case C-169/95 Spain v Commission Article 93(3) of the EC Treaty. (1997) ECR I-135.

107. I note here that the protection of vulnerable interests or sensitive sectors does not per se require that specific conditions 109. When choosing one of the methods centering on such interests or sectors be described above for examining the imple­ attached to the approval of a general aid mentation of approved general national aid scheme. If, with that in mind, the Commis­ schemes, considerations of legislative econ­ sion considers that it is sufficient to lay omy — as emphasised by the Portuguese down one or more general conditions, it Government — or effectiveness of imple­ must ensure that the conditions laid down mentation can play a role. However, as are complied with in such a way that no long as it is probable that the method harm comes to the vulnerable interests or selected will adequately ensure that the sensitive sectors protected by the Commu­ individual aid measures are compatible nity rules to which the general conditions 2 with Community rules to protect vulner­ refer. 5 able interests, such as environmental inter­ ests, or sensitive sectors, such as the sugar sector in this case, it will not be contrary to the relevant Community law.

108. Naturally, the Commission may also attach to its approval of a general national aid scheme specific conditions aimed at protecting such vulnerable interests or

112. In the case of obligatory notification of individual cases of the application of an 114. In the light of the foregoing, I con­ approved general aid scheme, third parties clude that the applicants' first plea in law can indeed make their objections known must be dismissed as unfounded. prior to the actual application of that measure, whereas they have no such oppor­ tunity where only the general condition requiring conformity with existing sectoral Community rules is attached to the appro­ val of a general aid scheme. However, in 115. With reference to my comments at that case too they are able to assert their paragraphs 86 to 100, I should also point interests. They can complain to the Com­ out that this plea is actually misplaced since mission about the application of an it gives the impression that only the con­ approved national aid scheme which they tested general condition was attached to consider to be contrary to the Community the approval decision of 3 July 1991. rules referred to in the general condition. However, this does not alter the conclusion Moreover, they can bring an action against that the plea is unfounded. such application before the national courts on the ground that the national authorities have failed to comply with the relevant Community provisions.

2. The second plea in law

113. This change in the procedural position of possible third parties occurs whenever the Commission decides to approve a general aid scheme. As such it does not (a) Arguments of the parties frustrate the Commission's policy, which has existed since the early 1970s, of approving general forms of national aid with the result that, where the Commission 116. In their second plea the applicants has granted approval, no prior notification complain that the Court of First Instance

121. I agree with the Commission that it 28 118. The applicants submit that in this case follows from Italgrani, which was con­ the individual application of the approved firmed inter alia by Siemens v Commis- general aid scheme to the aid granted to

27 — Cited in footnote 18. 26 — Cited in footnote 18. 28 — Cited in footnote 18.

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123. Nevertheless, I consider that in the present case the application of Decree-Law 95/90 in connection with the grant of fiscal assistance to DAI should, in any event, 126. A reasonable interpretation of the have been notified to the Commission on conditions attached to the approval the basis of the approval decision. decision of 3 July 1991 would be, in respect of the sugar sector, that it follows from the general condition that the aid 29 — Cited in footnote 24. measures must be in conformity with 'the 30 — Cited in footnote 18. rules and guidelines laid down by Commu­ 31 — Cited in footnote 18. nity law in relation to [agriculture]' that in

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principle no aid for investment in the sugar 130. According to the general conditions sector was permitted. If the Portuguese attached to the approval decision, cases in Government had nevertheless wished to use which tax relief of between 10 and 20% is Decree-Law 95/90, it should have notified granted under Decree-Law 95/90 must its intention to do, as it related to a always be notified. In the present case, 'sensitive' sector. pursuant to the decree-law, DAI was granted aid in the form of a 10% tax relief. Therefore, notification would appear, prima facie, not to be necessary.

127. This conclusion is not altered by the exemptions made in respect of investment in the Portuguese sugar sector in Decision 94/173 and in the guidelines of 1996. The 131. However, it is evident from the out­ Commission could not have taken them line of the total public, Community and into account when adopting the approval national aid set out at paragraph 38 above decision in 1991. Moreover, although these that the total amount of national Por­ decisions provide some guidance as to the tuguese aid for DAI's investment amounts possible permissibility of public aid for the to around 25 % of the eligible aid, albeit investment concerned, they contain no that 15% of this total amount was granted indication of any exemption from the under national rules other than Decree-Law obligation to give notice attached to the 95/90. approval decision.

136. Furthermore, I would like to draw attention to the following. The Portuguese Government has observed that the appli­ cation of Decree-Law 95/90 to the grant of 134. Lastly, I consider that the combined investment aid to DAI should be regarded application of national aid schemes, which as an aid measure which is 'subject to result in aid granted in an individual case conditions or rules concerning granting being considerably higher than the maxi­ which differ from those provided for in mum which may be given under an this Regulation, or, where the amounts of approved general aid measure without aid exceed the ceilings specified herein' notification, is contrary to what was within the meaning of Article 16(5) of 32 intended in Italgrani. According to that Regulation No 866/90. Under this article, judgment, cases of individual aid measures the Member States may take such aid which are implemented entirely within the measures on condition that they comply margins of previously approved general aid with Articles 92, 93 and 94 of the Treaty. schemes are not subject to the procedure In order to have that established by the provided for in Article 93(2) and (3) of the Commission in this case, it notified to the EC Treaty. However, the protection of Commission its intention to apply Decree- legal certainty and legitimate expectations Law 95/90. of the persons concerned in the case of an unamended application of the approved scheme cannot go so far as to exempt from closer examination by the Commission individual cases of State aid in which the total of the aid granted in each case — far — exceeds the bounds of that scheme. 137. Article 16(1) to (4) of Regulation No 866/90 lays down the rates of Commu­ nity aid and the rules governing its grant for projects eligible for financing by the Guidance Section of the EAGGF. They fix 135. Therefore, the Court of First Instance inter alia ceilings for Community contribu­ should have held that, since Decree-Law tions, the minimum level of national co- 95/90 was applied in combination with financing, the minimum contributions from recipients and the form in which contribu­ tions or subsidies are to be granted. 32 — Cited in footnote 18. Article 16(5) supplements them.

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143. In support of this plea they put graphs 89 and 91 of the contested forward the following arguments: judgment, that the grant to Portugal of a sugar quota establishes an entitle­ ment to grant State aid for the setting up of a sugar refinery in mainland Portugal;

33 — Act concerning the conditions of accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the 144. On the basis of these arguments the European Union is founded (OJ 1994 C 241, p. 21, and OJ 1995 L 1,p. 1). applicants submit that, in the abovemen-

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tioned paragraphs, the Court of First and decision. Having regard to that bal­ Instance incorrectly interpreted and applied ance, Portugal could reasonably be entitled the provisions of the Treaty relating to to grant aid for the setting up of a sugar agriculture (Article 39 of the EC Treaty refinery to process the sugar quota allo­ (now Article 33 EC)) and to aid (Article 92 cated by the Act of Accession. of the EC Treaty (now Article 87 EC)) and Regulation No 1785/81.

(b) Appraisal

145. The Commission contests the appli­ cants' first argument, stating that in the present case no argument against the appli­ 147. The applicants essentially argue that cation of Decree-Law 95/90 can be derived the restrictive provisions of Regulation from the differences between the Por­ No 1785/81 relating to State aid in the tuguese Act of Accession, on the one hand, sugar sector mean that any national aid is and the Finnish and Austrian Act of per se contrary to Community law on the Accession, on the other. The legal basis sugar sector, even where it is expressly for the applicability of the decree-law is the permitted under other provisions of Com­ approval decision of 3 July 1991, which in munity law, in this case Regulation turn is based on Article 92(3)(a) of the EC No 866/90 and Decision 94/173. Treaty.

market laid down in Regulation second paragraph of Article 130a of the EC No 1785/81 in any event precludes Treaty provides that the Community is, in national aid for the setting up of a sugar particular, to aim at reducing disparities refinery in Portugal, are also untenable. between the levels of development of the various regions, 'including rural areas'. Under Article 130b of the EC Treaty, the Community must take into account the objectives set out in Article 130a in formu­ lating and implementing its policies and in 150. The characteristics of the common implementing the internal market. market in sugar do in fact justify the pursuit by the Community legislature of a very restrained policy on State aid for the sugar sector. However, it cannot be inferred either from Article 39 of the EC Treaty or Regulation No 1785/81 that any aid not covered by the cases set out in Article 46 of this regulation is impermis­ sible. Nor can any argument be derived from that provision to challenge the lawful­ 153. Accordingly, it was possible for Regu­ ness of detailed Community rules which, in lation No 866/90, which is based on a restrictive number of cases including the Articles 42 and 43 of the EC Treaty and present one, authorise investment aid. also forms part of the body of Community rules to implement the policy of strengthening economic and social cohe­ sion, to provide that public — Community and national — aid may be granted for projects to improve the processing and 151. The contrary view fails to appreciate marketing of agricultural products. The that the common agricultural policy seeks balance between sectoral and regional to attain more objectives than the establish­ interests which must be struck in that ment and maintenance of balance on the respect, as reflected in Decision 94/173, is relevant product markets. Article 39(2) of likewise not contrary to Community law the EC Treaty (now Article 33(2) EC) applicable to the sugar sector. stipulates that this policy must take account of the particular nature of agricultural activity, which results inter alia from the structural and natural disparities between the various agricultural regions.

159. Furthermore, the applicants stress 1. The fifth plea in law that neither Regulation No 1785/81 nor Regulation No 866/90 contain any provi­ sion which supports the conclusion that the applicability of Articles 92 and 93 of the EC Treaty, which was expressly provided for by Regulation No 1785/81, has been revoked by Regulation No 866/90. More­ (a) Arguments of the parties over, it cannot be assumed that Regulation No 866/90 excludes the applicability of Articles 92 and 93 of the EC Treaty to State aid co-financed by the Community. In the absence of a clear position in that 156. In their fifth plea, the appellants regard on the part of the Council, which contend that the Court of First Instance expressly provided for the applicability of erred in law by deciding that aid eligible for Articles 92 and 93 of the EC Treaty to the Community co-financing was not subject to sugar sector in Regulation No 1785/81, the the application of Articles 92 and 93 of the Court's reasoning by contrary inference at EC Treaty. paragraphs 113 and 114 of the contested

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judgment, which is based on Article 16(5) Treaty State aid in the sugar sector which of Regulation No 866/90, is not well was eligible for Community co-financ­ founded. A decision of such significance ing. and importance requires the legislature to adopt an express position.

It follows therefore be read in relation to each other. from Article 42 of the EC Treaty that The Commission concludes from the rela Articles 92, 93 and 94 of the EC Treaty tionship between Article 44 of Regulation apply to agricultural products only in so far No 1785/81 and Article 16(5) of Regu as the Council so determines. Since the — lation No 866/90 that the Council has later — Regulation No 866/90 declares provided that the provisions of the Treaty Articles 92, 93 and 94 only applicable to relating to State aid do indeed apply to the aid measures defined in Article 16(5) of State aid which goes beyond the framework that regulation, it must be concluded, laid down in Regulation No 866/90, but according to the Court, that these articles not to the measures for which Regulation No 866/90 makes express provision.

However, since this clause can relate grammatically only to Article 44 of Regulation No 1785/81, it should have reproduced the content of that provision, which reads as follows: 'Save as otherwise provided in this Regulation, Articles 92, 93 and 94 of the Treaty shall apply to the production of, and trade (b) Appraisal in, the products listed in Article 1(1).' It is clear from the reproduction of the applicants' arguments at paragraph 104 of the contested judgment that they rely on Article 44 of Regulation No 1785/81. Therefore, the summary thereof at paragraph 111 is incorrect and confusing. The same error occurs in the English (the language of the

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168. In the light of the foregoing, I propose — the investment concerned does not that the Court should declare this plea in satisfy the requirements laid down in law unfounded. Article 11 of the abovementioned regu­ lation for investments to be eligible for Community aid;

2. The sixth plea in law

— the requirements under Article 12(1) and (3) of the regulation, according to which 'sufficient evidence must be given that the investments will be (a) Arguments of the parties profitable' and 'in particular, having regard to the specific nature of each sector, they must guarantee the pro­ ducers of the basic products an 169. In their sixth plea, the applicants adequate and lasting share in the complain that the Court of First Instance resulting economic benefits', are not incompletely reproduced, at paragraphs fulfilled; 121 to 125 of the contested judgment, the arguments which they put forward at first instance alleging that the aid concerned did not, in this case, satisfy the procedural and substantive requirements of Regulation No 866/90, and did not consider them in its statement of reasons. — Article 13 of Regulation No 866/90 excludes investments in the processing of products from third countries, including cane sugar imported into Portugal. This implies that Community 170. It is clear from the file at first instance co-financing of a beet sugar refinery in that the applicants put forward the follow­ Portugal would aggravate the already ing five arguments inter alia in support of unfair competitive situation for the their contention that the aid is incompat­ cane sugar industry in Portugal; ible with Regulation No 866/90:

173. The arguments reproduced at para­ 171. The Commission considers that the graph 170 above are not set out specifically arguments which the applicants put for­ in the relevant paragraphs of the contested ward in this plea are for the most part judgment. In so far as these are arguments reiterations of their general claim that the which were rejected either implicitly or aid in question is contrary to the common explicitly in previous parts of the contested agricultural policy. The Court of First judgment, this plea cannot be upheld. Nor Instance rejected this claim at paragraphs did the Court have to examine specifically 89 and 90 of the contested judgment. Since contentions which are devoid of any factual 35 the Court referred to these paragraphs at or legal basis. paragraph 124 of its judgment, the Com­ mission considers that it can be concluded that the Court also dismissed, at least implicitly, the specific arguments which the applicants based on Regulation No 866/90. 174. In the contested judgment the Court of First Instance did not explicitly consider the first of the five arguments summarised.

(b) Appraisal It is based on two specific questions of law:

172. It is clear from the contested judgment that the Court of Justice merely rejected one of the arguments put forward at first — must the investments to be co-financed instance in support of the plea that the aid by the Community be defined project measure in question was incompatible with by project in the Community support Regulation No 866/90, namely that the framework and if so, investment aid at issue could not be based on Decision 94/173. That decision is claimed to be unlawful in that it does not 35 — See order of 12 December 1996 in Case C-49/96 P comply with the conditions for co-financ­ Progoulis v Commission [1996] ECR I-6803.

176. In this connection I note, however, that the applicants' argument is incorrect. It must be concluded from Article 8 of

177. The second argument in no way 36 —Council Regulation (EEC) No 2082/93 of 20 July 1993 demonstrates why the aid for investment amending Regulation (EEC) No 4253/88 laying down ptovisions rot implementing Regulation (EEC) in a sugar refinery in mainland Portugal No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and might be contrary to Article 11 of Regu­ with the operations of the European Investment Bank and lation No 866/90. On the contrary, under the other existing financial instruments (OJ 1993 L 193, p. 20). Article 11(1) thereof, investments relating

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OPINION OF MR GEELHOED — CASE C-321/99 P

to the 'processing of agricultural products' 179. The fourth argument is directed at are eligible for aid. A contention based on Article 13 of Regulation No 866/90 which grounds which are so obviously incorrect excludes from Community aid investments need not be expressly refuted by the Court. in the processing of products from third countries. The fifth argument is, in some­ what different terms, a reiteration of the first three arguments, namely that the aid in question must not be contrary to Regu­ lation No 866/90 and the common agricul­ tural policy.

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F — The fourth plea in law 183. It may in itself be true that the aid for vocational training examined at the above- mentioned paragraphs of the contested judgment does not affect trade between Member States in such a way that it harms the general interest, but, taken together with the other aid measures in this case, 1. Arguments of the parties DAI is granted aid totalling over 60% of the total investments and over 75 % of the eligible investments. In the view of the applicants, it is self-evident that such aid does, in its entirety, indeed have a consider­ able effect on the competitive situation on 181. In this plea the applicants contend the relevant market in sugar. that the Court of First Instance erred in law at paragraphs 98 to 100 of the contested judgment by failing to take account of the overall effect of the aid measures taken together when it assessed the lawfulness of the contested decision of 11 January 1996 and the way in which the Commission exercised its discretion.

186. In assessing this plea I recall my observations at paragraphs 75 and 76 of this Opinion, namely that the business and micro-economic effects of a body of aid measures are determined by the totality of '98 The three types of aid examined in the those measures. Even though each of the contested decision, namely the tax measures complies individually with the reliefs, aid for vocational training and specific provisions applicable thereto, any investment aid under Regulation examination which goes no further does No 866/90, are covered by different not, by definition, go far enough. It fails to sets of legal provisions and must there­ appreciate that the interests and objectives fore be examined individually in the protected by the Treaty and secondary light of those rules and the aims which Community legislation do not permit a they pursue, subject, if appropriate, to fragmented assessment of action whose verification of their compatibility with effects are determined by the sum total of the specific rules applicable in the sugar those affects. Any other view may have processing and marketing sector. The consequences which contravene the rel­ aid for vocational training must there­ evant Community law, in this case fore be considered separately in the Articles 92 and 93 of the EC Treaty and light of Article 92(3)(c) of the Treaty. Regulations Nos 2052/88 and 1785/81.

99 In that connection, it is settled case-law that, as regards the application of 187. Therefore, when examining national Article 92 of the Treaty, the Commis­ aid in relation to Articles 92 and 93 of the sion enjoys a wide discretion, the EC Treaty the Commission tends, as a exercise of which involves assessments consistent policy, always to lay down a of an economic and social nature ceiling below which national aid must which must be made within a Commu­ remain. With regard to cases of combined nity context. In its review of legality, national aid in which the accumulated aid

exceeds the specified ceilings, it tends to be International it must be concluded that strict even where the individual aid meas according to Article 3(g) of the EC Treaty ures viewed in isolation do in fact comply (now, after amendment, Article 3(1)(g) 38 with the provisions applicable to them. I EC), Article 92 of the EC Treaty consti have already explained the legal and econ tutes a fundamental provision which is omic reasons for this consistent policy in essential for the accomplishment of the my appraisal of the second plea at para tasks entrusted to the Community and, in

189. By analogy with the judgment of the total amount of aid granted in a specific Court in Eco Swiss China Time v Benetton case, the Commission must always bear that in mind when exercising the powers granted to it and express its view in that 38 — The Court has already had to rule on cases relating to an accumulation of national aid. See Case C-355/95 P TWD v regard explicitly together with a statement Commission [1997] ECR I-2549. of reasons. 39 — These reasons are also expressed in Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid (OJ 1998 L 142, p. 1), in particular the sixth recital in the preamble thereto: 'Whereas it is appropriate that the Commission, when it adopts regulations exempting categories of aid from the obligation to notify provided for in Article 93(3) of the 191. In the light of the foregoing, I consider Treaty, specifies the purpose of the aid, the categories of beneficiaries and thresholds limiting the exempted aid, the that the reasoning of the Court of First conditions governing the cumulation of aid and the conditions of monitoring, in order to ensure the com patibility with the common market of aid covered by this Regulation'. This recital is developed further in Article 1(2) of the 40 — Case C-126/97 Eco Swiss China Time v Benetton Inter- regulation. national [1999] ECR I-3055.

Instance at paragraph 98 of the contested Article 253 EC) must be adapted to the act judgment is fundamentally untenable at issue and disclose in a clear and because it could undermine the safeguards unequivocal fashion the reasons of the which Article 92 of the EC Treaty provides institution which adopted the measure in for conditions of competition on the com­ question in such a way as to enable the mon market. persons concerned to ascertain the reasons for the measure and to enable the Court to carry out is review. It is also clear from this case-law that such reasoning does not necessarily have to set out all the relevant 192. I find the Commission's defence facts and points of law to meet the equally unacceptable. According to the requirements of Article 190 of the EC 41 settled case-law of the Court, the Com­ Treaty. The question whether the statement mission enjoys a wide discretion as regards of reasons meets the requirements must be the assessment of national aid, the exercise assessed not only on the basis of its content of which involves assessments of an econ­ but also of the context of the decision and 42 omic and social nature. Since complex of all the legal rules governing the matter in economic assessments are involved, such as question. Moreover, the requirement relat­ the examination of the compatibility of aid ing to the statement of reasons must be with the common market, when reviewing assessed in the light of the circumstances of the Commission's actions the Court must the case, the content of the decision in confine itself to verifying whether the question, the nature of the pleas put relevant rules governing procedure and forward and the interest which those to the statement of reasons were complied whom the decision is addressed and others with, whether the facts on which the directly and individually concerned may contested decision was based are correct, have in securing a more detailed interpre­ and whether the Commission has exceeded 44 tation. The requirement which the Court the scope of its discretion by a manifest laid down in a recent judgment, namely error of assessment or by misuse of that a contested decision must be supported 43 powers. by the relevant lines of reasoning, defines more closely the content of the obligation 45 to state reasons.

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Regulation No 2081/93, the measures furthermore, the conditions of competition financed by the Structural Funds, thus also are vulnerable to distortion, either the those financed by the EAGGF Guidance sectoral plans or the decisions granting Section, must be in conformity with Com­ the aid concerned must state reasons for the munity policies, including 'those concern­ level of that aid. Even if there were good ing the rules on competition'. The Com­ grounds for considering the projects con­ munity legislature had to take account of cerned eligible for contributions from the this principle when laying down the rules Structural Funds together with comple­ governing the behaviour of the Structural mentary national aid, it does not auto­ Funds. This is evident inter alia from matically follow that the maximum per­ Article 16 of Regulation No 866/99 which missible aid may be granted to those lays down maximum amounts for total projects. The Commission's observation, public aid from the Community and the made in response to the applicants' sixth Member States and minimum contributions plea, that the profitability of the investment from the recipient producers. This principle concerned was assured, within the limits of also applies to the drafting of the relevant the quota, by guaranteed fixed prices and sectoral plans, as is evident inter alia from guaranteed sales, immediately raises the Article 4 of Regulation No 866/90. Under question as to why this investment had to this provision, the sectoral plans must also be subsidised on such a massive scale. contain information on the situation in the Having regard to the genuine risk of serious sector, especially 'the existing capacity of disturbances of competition, a statement of the undertakings concerned'. explicit reasons would therefore not be superfluous.

express reasons why public aid is necessary paragraphs 35 to 37 of the contested and justified by reference to a certain judgment. In the Commission's view, these relative and absolute extent. paragraphs reveal an error of law in so far as the Court holds therein that a letter from the Commission containing information that an individual aid is covered by an existing aid scheme already approved by 201. In this regard I consider that the the Commission always constitutes an act reasons stated in the letter of 11 January susceptible to legal review under 1996 regarding the Community contribu­ Article 173 of the EC Treaty (now tion and the complementary national con­ Article 230 EC). The Commission takes tribution are insufficient because they in no the view that at first instance the appellants way show why the Commission considers could not have had a legal interest in that a contribution of approximately 65% seeking annulment of the letter of 11 Janu­ of the total eligible investment is necessary ary 1996 since it related to the application and justified in this case. This omission is of Decree-Law 95/90 by the Portuguese all the more glaring since the Commission Government when aid was granted to DAI. has, precisely in the sugar sector, always Since the letter had no legal effects in taken consistent action against distortions respect of such application, it could not be of conditions of competition which are, in regarded as constituting a decision. precisely this sector, vulnerable to distor­ tion either as a result of State aid or the anti-competitive behaviour of sugar pro­ 48 ducers.

of 11 January 1996 is not in the nature of a 207. The appellants submit that the parts decision but rather a statement of facts in of the judgment contested by the Commis­ so far as it relates to the application of sion do not reveal an error in law. They Decree-Law 95/90 to aid for setting up a submit that it is precisely the answer to the sugar refinery in mainland Portugal. In the question whether or not the application of view of the Commission, the reasoning Decree-Law 95/90 was covered by the followed by the Court of First Instance approval decision of 3 July 1991 which is might result in third parties always being decisive in determining whether or not the able to force a 'decision' where a general action against it is admissible. aid scheme, which has already been approved, is applied. If the applicants were then permitted to bring an action against such a decision before the Court of First Instance, they would be provided, as it were, with a springboard to contest the approval decision underlying this decision. 208. As regards the Commission's request The Commission considers that such a in the alternative, the appellants state that course of action is incompatible with the they do not believe that the Court of First principles of legal certainty and legitimate Instance intended to rule that the point of expectations which, according to the case- view of a complainant alone can constitute law of the Court, the Member States and a ground for the admissibility of a request. the recipients may derive from the approval 49 of a general aid scheme.

the Court rules that it is linked with the doubts exist in that respect, its reasoning substance of the action for annulment and does not hold true. If the application in this 'will be examined in relation thereto'. This case of Decree-Law 95/90 should in fact specific question of admissibility is in fact have been notified or if there were serious dealt with separately later in the judgment doubts in that regard, a statement by the at paragraphs 44 to 50. Therefore, there Commission concerning that application can be no question of any contradiction in could indeed have far-reaching legal con­ the reasons stated claimed by the Commis­ sequences. It might express an implicit sion. This argument must therefore be approval of individual measures which dismissed. were otherwise subject to notification or an implicit opinion as to whether or not this aid measure was subject to notifi­ cation, depending on the conditions on which the general aid scheme, whose application it constitutes, was approved. 210. The second to sixth arguments are all based on the presumption that the appli­ cation in this case of Decree-Law 95/90 was effected entirely in accordance with the conditions imposed by the approval decision.

have no interest in bringing proceedings for paragraphs 33 to 37 of the contested annulment of the contested decision judgment are entirely correct, this defect because even if it were annulled the tax is not, in my view, such that it must reliefs at issue, constituting as they do therefore be concluded that the relevant existing aid, would be maintained, cannot part of the judgment must be set aside. The be upheld.' decision of the Court of First Instance to reject the objection of non-admissibility resulted in the examination, which was necessary in this case, of whether the application of Decree-Law 95/90 to the aid granted to DAI was compatible with the conditions attached to that application in the approval decision of 3 July 1990. 215. However, the reasons stated by the Court of First Instance at paragraph 36 of the contested judgment could give rise to misunderstanding. Contrary to the Court's view at paragraph 36 of the contested 217. The Commission's alternative plea judgment, I consider that it is not the can be dealt with swiftly. In the relevant applicants' interest in securing annulment passage of paragraph 36 in which the of the contested decision in which the words 'in their view' appear, the Court of Commission raised no objections to the First Instance puts forward the idea that the tax reliefs granted to DAI which is, as such, aid granted to DAI is not covered by the decisive as regards the admissibility of the approval decision because it might be action. What is more important is whether 'incompatible with the rules of the common or not the approved general aid scheme was agricultural policy'. To render this supposi­ applied in accordance with the conditions tion, use is made in the French and Dutch attached thereto. Consequently, the key versions of the conditional which, in question as regards admissibility was keeping with the scope of the argument, whether or not the Commission could emphasises its hypothetical nature. The use decide that the individual aid measure of the words 'in their view' in English, the concerned satisfied the conditions laid language of the case, places the stress down in the approval decision and that somewhat differently in that it appears to question required an examination of the emphasise the subjective view or opinion of substance of the pleas put forward by the the applicants. If this impression is correct, applicant. The objection of inadmissibility I agree with the Commission's objection to raised by the Commission should have been it because the answer to the question rejected for those reasons. whether or not a claim is admissible in law cannot be made contingent on the subjective views of an applicant as to the alleged inconsistency of an aid measure with the rules of the common agricultural policy. Therefore, the words 'in their view' must be removed from paragraph 36 of the contested judgment. Even without these 216. Although — on different grounds words the conditional nature of the passage from those of the Commission — I do in question is adequately expressed in the not consider that the reasons stated at language of the case.

By virtue of the first paragraph of Article 122 of the Rules of Procedure there is no need for a decision as to costs.

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

— set aside the contested judgment;

— refer the case back to the Court of First Instance; and

— reserve the decision as to costs.

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