C-57/00

OPINION OF MR MISCHO — JOINED CASES C-57/00 P AND C-61/00 P

OPINION OF ADVOCATE GENERAL MISCHO delivered on 28 May 2002 1

Table of contents

I — Introduction I - 9981

II — Analysis I - 9982

A — First plea in law, alleging infringement of Article 92(2)(c) of the Treaty I - 9982

4. Systematic interpretation I - 9993

5. The burden of proof on the Federal Republic of Germany I - 9999

6. Institutional balance I - 10001

B — Second plea in law, alleging infringement of Article 190 of the EC Treaty (now Article 253 EC) I - 10002 C — Third plea in law, alleging infringement of Article 92(3)(b) of the Treaty . . . I - 10009

D — Fourth plea in law, alleging infringement of Article 92(3) and Article 93 of the Treat y I -10010

E — Fifth plea in law, adduced by Volkswagen and VW Sachsen, on the partial discontinuance accepted by the Court of First Instance I-10019

6. The Commission also limited the com- bined effective aid intensity, expressed in gross grant equivalent, to 22.3% for Mosel II and 20.8% for Chemnitz II. 3. However, I note briefly that the origin of the present cases lies in Commission Decision 96/666/EC of 26 June 1996 con- cerning aid granted by Germany to the Volkswagen Group in Mosel and Chem- nitz 3('the contested decision'). 7. The actions brought by Freistaat Sachsen 2 — T-132/96 and T-143/96, [1999] ECU II-3663. and by Volkswagen and VW Sachsen in the 3 — OJ 1996 L 308, p. 46. Court of First Instance, seeking partial

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annulment of the contested decision, were tation of Article 92(2)(c) of the Treaty dismissed in the contested judgment. given by the Court of First Instance. 4

8. In their appeals, the appellants claim that the Court should annul the contested 11. That Court found as follows: judgment, allow the claims put forward at first instance, and order costs against the Commission. The Federal Republic of Ger- many intervenes in support of their claims.

'129 Under Article 92(2)(c) of the Treaty, aid compatible with the common market includes "aid granted to the 9. The Commission contends that the economy of certain areas of the appeal should be rejected, that its sub- Federal Republic of Germany affected missions at first instance, for the actions to by the division of Germany, in so far be rejected as unfounded, should stand, and as such aid is required in order to that costs should be ordered against the compensate for the economic dis- appellants. advantages caused by that division".

131 Having regard to the objective scope 134 In this case, the phrase "division of of the rules of Community law, the Germany" refers historically to the authority and effectiveness of which establishment of the dividing line must be preserved, it cannot therefore between the two zones in 1948. There- be assumed that that provision has fore, the "economic disadvantages become devoid of purpose since the caused by that division" can only reunification of Germany, as the Com- mean the economic disadvantages mission maintained at the hearing, caused by the isolation which the contradicting its own administrative establishment or maintenance of that practice (see, in particular, the frontier entailed, such as, for example, Daimler-Benz [ 5 ] and Tettau [ 6 ] the encirclement of certain areas (see decisions). the Daimler-Benz decision), the break- ing of communication links (see the Tettau decision), or the loss of the natural markets of certain undertak- ings, which therefore need support, either to be able to adapt to new conditions or to be able to survive that 132 It should, nevertheless, be emphasised disadvantage (on that point, but in that, since it is a derogation from the relation to the fourth paragraph of general principle laid down in Article 70 of the ECSC Treaty, see Article 92(1) of the Treaty that State Barbara Erzbergbau, p. 409). aid is incompatible with the common market, Article 92(2)(c) of the Treaty must be interpreted narrowly.

135 By contrast, the conception of the applicants and the German Govern- m e n t , a c c o r d i n g to which 133 Moreover, as the Court of Justice has Article 92(2)(c) of the Treaty permits emphasised, in interpreting a provi- full compensation for the undeniable sion of Community law it is necessary economic backwardness suffered by to consider not only its wording but the new Länder, until such time as also the context in which it occurs and they reach a level of development the aims of the rules of which it forms comparable with that of the original part (Case 292/[82] Merck v Haupt- Lander, disregards both the nature of zollamt Hamburg-Jonas [1983] that provision as a derogation and its ECR 3781, 3792; Case 337/82 5í. context and aims. Nikolaus Brennerei v Hauptzollamt Krefeld [1984] ECR 1051, 1062).

13. The appellants and the German Gov- ernment, however, hold to their view that this interpretation is mistaken and too restrictive.

138 It also follows from the above that the Commission did not make any error of law by stating generally, in the third paragraph of Point X of the [contested decision], that the derogation laid down in Article 92(2)(c) of the Treaty should not be applied to regional aid for new investment projects and that 14. Let us consider the various arguments the derogations provided for in which they put forward on this. Article 92(3)(a) and (c) of the Treaty and the Community framework were sufficient to deal with the problems 7 — Case C-156/98 Germany v Commission [2000] ECR I-6857, paragraphs 46 to 56. faced by the new Länder.' 8 — Emphasis added.

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18. The Commission maintains that, under Article 42(2) and Article 118 of the Rules of Procedure of the Court of Justice, which 21. The appellants also refer to a number prohibit new pleas in law in the course of of other documents to show that the the proceedings, the appellants are pre- cluded from relying on the Protocol on German Internal Trade. I do not share that 9 — Emphasis added.

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23. That said, I agree with the appellants and the German Government that there is a 25. What the Court of First Instance was close link between the existence of an seeking to contrast in paragraphs 134 and inter-German frontier and the existence of 135 of the contested judgment were, on the two differing politico-economic systems. one hand, the consequences of the estab- lishment of that politico-economic frontier and, on the other, the economic backward- 10 — Case C-432/92 [1994] ECR I-3087. 11 — Anastasiou and Others, paragraph 37. ness which resulted from the policy pursued 12 — OJ 1988 C 236, p. 4. by the governing bodies of the German 13 — OJ 1998 C 14, p. 180. Democratic Republic. I - 9986

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26. But it is that economic backwardness the territory of the new Länder before that which the appellants and the German division was ended'? This is how I believe I Government rely on in support of the may sum up the German Government's applicability of Article 92(2)(c) of the contention. Treaty.

27. That leads us to consider what is to be understood by the expression 'economic 31. For my part, I believe that to construe disadvantages caused by that division' 14 Article 92(2)(c) of the Treaty thus would which is found in that provision. substantially modify its scope. The causal link between the 'economic disadvantage' and the 'division of Germany' would become much too indirect.

28. The terms used clearly establish a causal link between the 'economic dis- advantages' and the 'division of Germany'.

32. Where a provision has, as the appel- lants and the German Government admit, become applicable to reunited Germany 29. However, it has to be admitted that, simply through the effect of the principle of after that division was ended, those the mobility of the territorial scope of words — retained by the treaties of Maas- treaties, that near-automatic extension tricht and Amsterdam — must now be alone cannot modify its scope or content. understood as referring to the consequences of that division.

34. If the position were otherwise, that 37. But it has to be one or the other. Either could make the division of Germany the 'the economic situation of East Germany in justification for aid granted to create a new 1996 [is] comparable in several respects to industry in the open countryside, in an area that of Greece or Portugal, for example'. 16 which has always been purely agricultural, In this case, I cannot see why the slightly for the reason that, if that area had been more restrictive criteria of Article 92(3)(c) part of the Federal Republic of Germany of the Treaty should be applied to Greece earlier, an industry would certainly have and Portugal and not to East Germany. The been established there long before. mere presence of the division clause in the Treaty would not be sufficient explanation: I can hardly imagine that the Treaty negotiators intended that clause to justify different treatment in two similar situ- ations.

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production plant and rail and road links, meaning of Article 92(2)(c) of the Treaty, is than to areas, handicapped by their the entire territory of the former German location at the periphery of the Commu- Democratic Republic, since the economic nity, which had never experienced any development of the whole of that territory industrial development. was backward. That would mean that any kind of aid granted to any kind of under- taking or entity located in that territory would now fall within the scope of the division clause.

40. Furthermore, in interpreting the actual words of Article 92(2)(c) of the Treaty, we cannot ignore the terms ''certain areas... affected' 18 which are found there.

44. However, upon being questioned, the German Government stated at the hearing before the Court of Justice that it did not support such a wide interpretation and that 41. In paragraph 135 of the contested the areas referred to were the areas of judgment, the Court of First Instance found Mosel and Chemnitz. In my opinion, this that the applicants and the German Gov- latter interpretation is the only one com- ernment had expounded 'the conception... patible with the wording of the clause. according to which Article 92(2)(c) of the Treaty permits full compensation for the undeniable economic backwardness suf- fered by the new Länder, until such time as they reach a level of development com- parable with that of the original Länder'. 18 45. Indeed, before reunification, it was never considered that all of the areas or undertakings of West Germany could rely on the division clause.

other areas of the former German Demo- 50. The appellants and the German Gov- cratic Republic (or at least from all those ernment support the observation by the areas not affected by the frontier in the Court of First Instance, in paragraph 131 of same way as them). the contested judgment, that the authority and effectiveness of the rules of Community law prevent Article 92(2)(c) being regarded as a provision that has become devoid of purpose since German reunification. 47. But the Mosel and Chemnitz areas are more than 100 km from the former inter- German frontier and, far from having been worse constrained in their economic deve- lopment than other areas, they have 'after the period from 1945 to 1949,... experi- enced a recovery which is remarkable if we 51. However, they claim that the interpre- compare it to the circumstances of the tation set out in paragraph 134 of the Communist economic system', 19 as the contested judgment is incompatible with German Government itself tells us. the fact that Article 92(2)(c) of the Treaty was maintained after reunification; this provision therefore cannot be intended, as the Court of First Instance states, to apply only to the disadvantages caused by the encirclement of certain areas, the breaking 48. On the basis of the considerations of communication links or the loss of above, I consider that the Court of First markets in the East. Instance did not misconstrue the wording of Article 92(2)(c) of the Treaty.

53. On this point, it should be noted, first, applied at all. The German Government that this provision has not become devoid acknowledges, moreover, that the instances of all scope: as the Court of First Instance where Article 92(2)(c) of the Treaty is pointed out in paragraph 131 of the con- applied will become increasingly rare. tested judgment, Article 92(2)(c) of the Treaty has been applied on two further occasions since the German reunification, namely the Daimler-Benz decision, adopted on 14 April 1992, and the Tettati decision, adopted on 13 April 1994. The provision, as the Court of First Instance has inter- 57. In fact, the principle of effectiveness preted it, has therefore continued to have cannot be regarded as an instrument practical effect even after German reunifi- intended to keep a provision in force where cation. the conditions for it to apply are such that, over time, no further cases fall within its scope. Effectiveness would otherwise become a pretext for attaching to a provi- sion a meaning which it has never had.

54. Certainly the provision was not applied between 1994 and 1997, the year in which the Treaty of Amsterdam was signed, but that does not prove as yet that the negoti- ators of the Treaty of Amsterdam kept a 58. In my opinion, the meaning of the now meaningless provision in the Treaty. division clause has never been that of a sort of regional-development clause, forming, as it were, a synthesis of Article 92(3)(a) and (c) of the Treaty, but now freed from the restriction laid down in subparagraph (c), so that the Commission can object to its use only in cases of manifest abuse. 55. In 1997, three years after the latest case arose, it was in fact conceivable that problems of that type might still present themselves, although the likelihood was very small.

(a) The Declarations of 1957

'As for the decision concerning the Saar- land, none of the parties have produced or 61. The appellants refer first to the declar- requested it in these proceedings. The ations by the Federal Government in 1957 applicants have failed to show that the regarding the Treaties establishing the latter decision reflected a different European Economic Community and the approach by the Commission in the past European Atomic Energy Community; and that such an approach, if it were among other things, we read here that established, would call into question the '[t]he Treaties take account of that require- validity of the legal assessments made in ment [to strengthen the internal and exter- 1996.' nal links of the Federal Republic with the Germans of the Soviet Zone and to support the position of Berlin) by means of a number of specific provisions benefiting Berlin and the areas affected by the division of Germany and also a protocol on German 64. On this, Volkswagen and VW Sachsen internal trade'. complain, first, that the Court of First I - 9992

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Instance infringed Article 64(2)(b) of its of the proceedings'. 22 Therefore, their Rules of Procedure, on the ground that it argument that the Court was obliged to failed to order the Commission to produce take such a measure cannot be accepted. a copy of that decision.

66. I feel that it is enough to note that the Court of First Instance is the sole judge of any need for the information available to it 68. Unlike what was the case during the concerning the cases before it to be supple- proceedings in the Court of First Instance, mented. 21 In addition, at no stage of the we now have the decision in question, proceedings at first instance did Volk- which has been submitted to this Court by swagen and VW Sachsen ask the Court the German Government as part of this for measures of organisation of procedure, appeal. It is in the form of a letter from the in this case consisting in the production of President of the Commission to the German the decision on the Saarland, although that Minister for Foreign Affairs; it is dated possibility was open to them 'at any stage 14 December 1964 and its subject is stated as: 'Aid to eliminate certain consequences 20 — Bulletin of the European Economic Community No 2-1965, p. 33. 21 — Case C-315/99 P Ismeri Europa v Court of Auditors 22 — Article 64(4) of the Rules of Procedure of the Court of First [2001] ECR I-5281, paragraph 19. Instance.

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of the division of Germany' ('Beihilfen zur — measures in favour of certain areas Beseitigung bestimmter Folgen der Teilung along the zone border [Zonenrand- Deutschlands'). The first part of the latter gebiete] (reduced-rate interest, acceler- reads as follows: ated depreciation, compensation for additional transport costs);

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Germany, insofar as such aid is required in the Saarland was going to be examined by order to compensate for the economic the Commission under Article 92(2)(c) of disadvantages caused by that divi- the Treaty or under Article 92(2)(b) of the sion"....'. 23 Treaty. These two legal bases are men- tioned as alternatives and, since the letter refers also to aid for 'certain areas along the zone border' ('bestimmte Zonenrand- gebiete') and the special circumstances of the Land of Berlin, it is possible that 69. The following observations should be reference was made to Article 92(2)(c) of made regarding this decision. We should the Treaty only in respect of those areas. note, first, that it is not a 'decision on the Saarland' properly so called because there are references to all the types of measures or aids that might relate to the con- sequences of the Second World War or the division of Germany. Nor, second, is it a decision within the meaning of Article 93 of the EC Treaty (now Article 88 EC), rather it puts into written form conclusions which the Commission has reached from discussions which it has had with the 72. I even think that this is likely: any aid German authorities. of this type granted to the Saarland was clearly not related to the division between the Federal Republic of Germany and the German Democratic Republic. Thus, for that aid to qualify under Article 92(2)(c) of the Treaty, one would have to consider that 70. Third, these conclusions are of a pre- the words 'division of Germany' in that liminary nature, for they refer to the provision refer not only to the division 'details available'. We are not told which between East and West but also to the particular aids have been planned to assist other division of Germany, that between the reintegration of the Saarland. Neither the Federal Republic of Germany and the in the written submissions nor at the Saarland. hearing has there been mention of aid which was actually granted to the Saarland as a whole or to certain areas or undertak- ings in that Land and which the Commis- sion did not dispute.

76. Finally, I feel that the comparison (c) Aid to the Zonenrand between the present case and that of the

24 — See, for example, Duroselle, J-B., Histoire diplomatique de 1919 à nos jours, Éditions Dalloz, 1957, in particular, pp. 556-557. 79. Finally, the appellants assert that, 25 — Emphasis added. contrary to what the Court of First Instance I - 9996

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states in the contested judgment, appli- 83. In finding that 'the "economic dis- cation of the division clause was by no advantages caused by [the] division" can means restricted, even in the past, to only mean the economic disadvantages compensation for mere technical dif- caused by the isolation which the establish- ficulties relating to access to areas situated ment or maintenance of that frontier immediately adjacent to the East/West entailed', 26 I do not believe that the Court frontier. intended to rule that only areas located within a very short distance from the inter-German frontier can benefit under Article 92(2)(c) of the Treaty.

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86. And it is indeed conditions such as the 89. That article reads as follows: encirclement of certain areas, the breaking of communication links or the loss of the natural markets of certain undertakings — which, according to the Court of First Instance, may w a r r a n t aid under Article 92(2)(c) of the Treaty — which 'The provisions of this Title shall not form can bring about this risk of desertification. an obstacle to the application of measures taken in the Federal Republic of Germany to the extent that such measures are required in order to compensate for the economic disadvantages caused by the division of Germany to the economy of certain areas of the Federal Republic 87. Finally, I think there is no need to dwell affected by that division.' on a remark by the German Government that the date 1948, which the Court of First Instance mentions as the year that the line of partition was drawn between the two zones, is historically inaccurate: there is no doubt that, at the time that the EEC Treaty 90. We should note, first, as does Erd- was signed, there was an East/West division menger, 27 that that article allows the of Germany and that it was the origin of Federal Republic of Germany to maintain the clause at issue. or to lay down national measures relating to transport policy ('nationale verkehrs- politische Maßnahmen'). It therefore applies to measures derogating from the Community's 'common transport policy'. But it does not apply to measures deroga- ting from the rules governing public aid to transport infrastructures. Like the Com- mission, I consider that such aid remains 4. Systematic interpretation covered by Articles 92 and 93 of the Treaty.

25. Regarding this, the contested judgment reads: 92. Second, the Commission rightly points out that the Court of First Instance did not limit the disadvantages caused by the division of Germany, within the meaning of Article 92(2)(c) of the Treaty, only to the consequences affecting communication 140 Moreover, as regards the question links. In paragraph 134 of the judgment, whether, apart from its character as those consequences were cited only as one aid for the economic development of example among other possible con- the Free State of Saxony, the aid in sequences, such as the encirclement of question is specifically designed to certain areas or the loss of natural markets. compensate for the disadvantages caused by the division of Germany, it should be borne in mind that a Member State which seeks to be allowed to grant aid by way of derogation from the Treaty rules has 93. Therefore, the appellants' argument a duty to collaborate with the Com- regarding Article 82 of the Treaty is not mission, requiring it in particular to convincing. provide all the information to enable the Commission to verify that the conditions for the derogation sought are fulfilled ([Case C-364/90] haly v Commission [[1993] ECR I-2097], paragraph 20).

5. The burden of proof on the Federal Republic of Germany 141 On that point, there is nothing in the documents before the Court to show that the German Government or the 94. Volkswagen and VW Sachsen, with the applicants put forward specific argu- support of the German Government, con- ments during the administrative pro- cedure in order to prove a causal link between the situation of the motor- 28 — See Council Regulation (EEC) No 3572/90 of 4 December vehicle industry in Saxony after Ger- 1990 amending, as a result of German unification, certain Directives, Decisions and Regulations relating to transport man reunification and the division of by road, rail and inland waterway (OJ 1990 L 353, p. 12). Germany.

101. The German Government also adds that the Court of First Instance was wrong in not regarding a number of documents a n n e x e d t o its a p p l i c a t i o n in C a s e 98. It confounds two successive stages of C-301/96 that it had also submitted to that the reasoning: first, the definition of the Court in connection with its intervention in scope of Article 92(2)(c) of the Treaty and, the case at first instance. These are a letter second, once that definition has been of 9 December 1992 from the Federal established, whether in actual fact the aid Chancellor to the President of the Com- at issue fulfils the conditions in that provi- mission and also two communications, of sion. At this latter stage, as is apparent 15 October 1993 and 19 September 1994, from the judgment in Italy v Commission, and a memorandum, of 13 May 1996, all the Member State has a duty to provide all sent to the Commission.

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102. The German Government says that, Article 92(2)(c) of the Treaty as interpreted had the Court of First Instance appraised by that Court, and that they only put those documents, it would not have been forward arguments for a different inter- able to state that there was nothing in the pretation of that provision. documents before the Court to show that the Federal Republic of Germany had put forward arguments on the applicability of the division clause.

106. Lastly, Volkswagen and VW Sachsen 104. There is no question here of the Court allege that the Court of First Instance of First Instance distorting the sense of the compromised the institutional balance by facts: on reading the documents to which finding, in paragraph 136 of the contested the German Government refers, it is clear judgment, that the 'disadvantages suffered that there is no information in them by the new Länder as a whole have not intended to show that the aid in dispute been caused by the division of Germany satisfies the conditions laid down by within the meaning of Article 92(2)(c) of the Treaty. As such, the division of Ger- many has had only marginal consequences 29 — Sec Joined Cases C-280/99 P to C-282/99 P Moccia Irma and Others v Commission [ 2 0 0 1 ] ECR I - 4 7 1 7 , on the economic development of either paragraph 78. See also Case C-390/95 P Antillean Rice zone, which, moreover, it affected equally Mills and Others v Commission [1999] ECR I-769, paragraph 29, Case C-119/97 P Ufex and Others v at the outset, and it has not prevented the Commission [1999] ECR I-1341, paragraph 66, and Case economies of the original Länder from C - 2 6 5 / 9 7 P VBA v Florimex and Others [2000] ECR I-2061, paragraph 139. developing favourably thereafter.'

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107. They claim that there is nothing to be was sufficient to render Article 92(2)(c) of found about this subject in the contested the Treaty applicable, by stating that, in its decision. The Court of First Instance there- opinion, there was no causal link between fore assumed the role of the Commission in that situation and the division of Germany. making factual findings as to the applica- bility of that provision.

150 In this case, the [contested decision) 153 The arguments put forward by the contains only a brief summary of the German Government in that regard grounds for the Commission's refusal were rejected in various letters or to a p p l y t h e d e r o g a t i o n in decisions of the Commission [sec, in Article 92(2)(c) of the Treaty to the particular, the Commission notice facts of the case. pursuant to Article 93(2) of the EEC Treaty to other Member States and other parties concerned regarding the proposal by the German Government to award State aid to the Opel group in support of its investment plans in the new Lander (OJ 1993 C 43, p. 14); the Commission notice pursuant to Article 93(2) of the EEC Treaty to other Member States and interested 151 Nevertheless, [that decision] was parties concerning aid which Germany adopted in a context that was well proposes to grant Rhône-Poulenc known to the German Government Rhotex GmbH (OJ 1993 C 210, and the applicants and forms part of a p. 11); Commission Decision consistent line of decision-making 94/266/EC of 21 December 1993 on practice, particularly in relation to the proposal to award aid to SST- those parties. Such a decision may be Garngesellschaft mbH, Thüringen supported by a summary statement of (OJ 1994 L 114, p. 21); the Mosel 1 reasons (Case 73/74 Papiers Peints v decision; [ 3 0 ] and Commission Commission [1975] ECR 1491, paragraph 31; Case T-34/92 Fiatagri and New Holland Ford v Commission 30 — Commission Decision 94/1068/EC of 27 July 1994 con- cerning aid granted to the Volkswagen Group for invest- [1994] ECR II-905, paragraph 35). ments in the new German Lander (OJ 1994 I. 385, p. 1).

154 In that respect, particular importance should be accorded to the Mosel I decision, in which the Commission declared some of the aid in question, amounting to DEM 125.2 million, incompatible with the common mar- ket after excluding, on grounds ident- 115. The appellants, supported by the ical to those used in the [contested German Government, maintain that the decision], the possibility that that aid contested judgment infringes Article 190 of might be covered by Article 92(2)(c) of the Treaty in that it unlawfully reduces the the Treaty. It should be noted, more- requirements of the obligation to state over, that neither the applicants nor reasons. They allege that the contested the German authorities have brought decision does not in fact enable either them any action against that earlier or the Court of First Instance to know the decision. reasons for which the Commission refused to apply Article 92(2)(c) of the Treaty.

In so far as it considered that the contested decision did not indicate sufficiently pre- cisely the conduct with which Mr Daffix 121. The Commission rightly points out was charged and that hence Article 190 of that the Court of First Instance referred to the Treaty and Article 25 of the Staff those decisions — which had all been Regulations had been infringed, the Court published and which the appellants cannot of First Instance committed an error of therefore claim to have been unaware of — law". 32 as part of its description of the context of the contested decision, which, as the Court- has consistently held, contributes to the statement of reasons for a decision. 34

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123. The appellants also claim that it is not 126. In the present case, by contrast, the sufficient for the persons with an interest in Court of First Instance established that, a decision to be able to deduce the reasons during the administrative procedure, the for it by comparing the decision in question applicants had not put forward any specific with similar earlier decisions. or new argument, 37 particularly as to the existence of a causal link between the position of the motor-vehicle industry in Saxony after German reunification and the division of Germany, that would have made it possible to distinguish this case from the earlier decisions. 124. In this connection, they refer to the judgment in Control Data Belgium v Com- mission 35 where, in paragraph 15, the Court held that '... it is not sufficient that the Member States as addressees of the decision, are aware of the reasons as a result of their participation in the prelimi- nary procedure and that the applicant the 127. In those circumstances the Court was person directly and individually concerned, fully entitled to consider that the contested is able to deduce these reasons by compar- decision formed part of a consistent line of ing the decision in question with similar decision-making practice and so could be earlier decisions. It is further necessary that supported by a summary statement of the applicant should be enabled in practice reasons. 38 to defend its rights and the Court should be able effectively to exercise its power of review on the basis of the statement of reasons....'

131. The appellants also submit that the wording used in the contested decision is too terse for its reasons to be understood. 135. It is difficult to understand their explanation that that decision did not adversely affect them — which would have explained their refraining from bring- ing an action — because, in the Mosel I decision, the Commission declared aid 132. It is enough to note that the Court of amounting to DEM 125.2 million to be First Instance essentially took its lead from incompatible with the common market. the context and, more particularly, from the existence of a constant line of decision- making practice which, as has been said, can contribute to the statement of reasons for a decision.

136. Moreover, as a Member State the Federal Republic of Germany did not have to demonstrate a legal interest in bringing an action for annulment 39 and could thus 133. However, the appellants also dispute seek annulment of the Mosel I decision that the decisions to which the Court of solely on the ground that its legal basis was First Instance referred in paragraphs 153 wrong. and 154 of the contested judgment are able to constitute a constant line of decision- making practice from which the reasons of 39 — Case 41/83 Italy v Commission [1985] ECR 873, the contested decision may be understood. paragraph 30.

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137. Similarly, the appellants' argument might see how strict were the terms on regarding the fact that the Mosel I decision which the Commission held the conditions related to the refusal of certain aids for the for applying the provision to be fulfilled renewal of plant and to cover losses, and how it interpreted the concept of whereas the contested decision related to "division of Germany".' the refusal to authorise aid granted for new investment, does not seem relevant.

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C — Third plea in law, alleging infringe- 147. It should first be noted that the Court ment of Article 92(3)(b) of the Treaty did not refer to the whole of the territory of a Member State but to the whole of the economy of the Member State concerned.

144. The appellants, supported by the German Government, complain that the Court of First Instance misinterpreted 148. Second, as the Commission judi- Article 92(3)(b) of the Treaty. ciously observes, unlike subparagraphs (a) and (c) in Article 92(3) of the Treaty, subparagraph (b) refers not to 'areas' but to serious disturbance in the economy 'of a Member State'.

caused a serious disturbance in the econ- of assessment by the Commission. How- omy of the Federal Republic of Germany ever, since the appellants do not offer any involves complex assessments of an econ- evidence of clear distortion of the facts by omic and social nature... which fall within the Court, their argument must be rejected. the exercise of the wide discretion which the Commission enjoys...' 43 and that 'the applicants have not put forward any con- crete evidence capable of establishing that the Commission made a manifest error of assessment in taking the view that the unfavourable repercussions of the reunifi- cation of Germany on the German econ- 154. For all these reasons, I therefore omy, however real, did not in themselves propose that the appellants' third plea be c o n s t i t u t e a g r o u n d for applying rejected. Article 92(3)(b) of the Treaty to an aid scheme'. 44

D — Fourth plea in law, alleging infringe- 152. Undeniably, the assessment of the ment of Article 92(3) and Article 93 of the total impact of reunification on the econ- Treaty omy of the Federal Republic of Germany does involve complex assessments of an economic and social nature. The German Government is therefore wrong in asserting that merely referring to the provision, in the context of a known factual situation, 155. In their fourth plea, the appellants, was sufficient to show that the conditions supported by the German Government, were fulfilled for applying Article 92(3)(b) complain that the Court of First Instance of the Treaty. infringed Article 92(3) and Article 93 of the Treaty in ruling as follows:

204 By referring, in the Nineteenth Out- having received its approval (see line Plan adopted pursuant to the Joint paragraph 18 above); and by the fact Task Law, [45] to a number of specific that each of the 1991 [decisions] states sectors in which each of the projects to that it is "subject to the authorisation be supported remained subject to the of the Commission". The applicants need for prior authorisation from the are wrong in arguing that such a Commission (see paragraph 7 above), reference is devoid of purpose having Germany acknowledged that approval regard to the authorisation already of the regional aid envisaged by that obtained by virtue of the approval of outline plan did not extend to the the Nineteenth Outline Plan; that sectors in question and, in particular, approval does not extend to the the motor-vehicle industry, to the motor-vehicle industry, as has just extent that the cost of a support- been pointed out in paragraph 204 operation exceeded 12 million ecus. above. The applicants are also incor- rect in arguing that the production of the letters referred to above, in an annex to the rejoinder, was out of time and inadmissible. In the first- place, those letters are cited both in Point II of the [contested decision] and in the decision to initiate the investi- gation procedure. Moreover, they were produced in response to an assertion made for the first time in 205 That is confirmed, in particular, by the the reply. Commission's letter of 2 October 1990 approving the regional aid scheme laid down for 1991 by the N i n e t e e n t h Outline Plan (see paragraph 7 above) and by its letter of 5 December 1990 approving the application of the Joint Task Law to the new Länder (see paragraph 11 above), in which the Commission expressly drew the attention of the German Government to the need to take account, when implementing the 206 In the light of the factors described measures contemplated, of the Com- above, the fact that application of the munity framework existing in certain Community framework [46] was sus- sectors of industry; by its letters of pended between January and April 14 December 1990 and 14 March 1991, even if established, cannot have 1991, insisting that the aid for Volk- the legal consequence that the aid to swagen's new investments could not the motor-vehicle industry is to be be implemented without having first regarded as covered by the approval of been notified to the Commission and

157. In support of their view, the appel- lants argue as follows.

209 In that respect, it should be empha- sised that, although the rules of the Community framework, as "appropri- ate measures" proposed by the Com- mission to the Member States on the basis of Article 93(1) of the Treaty, 158. The aid in dispute is part of the system are entirely devoid of binding force of regional aid planned for 1991 in the and bind Member States only if the Nineteenth Outline Plan adopted in accord- latter have consented to them (Case ance with the Joint Task Law, and that C-292/95 Spain v Commission, para- system was approved by the Commission I - 10012

FREISTAAT SACHSEN AND OTHERS v COMMISSION

163. This has two consequences, according to the appellants. First (in formal terms) there was no need to notify the aid in dispute. Second (in material terms) the 160. However, they maintain that, during appellants consider that, since this was the period from January to April 1991, the existing aid, examination by the Commis-

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sion was limited to whether the individual 167. In other words, the Court reached the aid was covered by the general scheme and conclusion that, whether the Framework whether the conditions laid down in the applies or not, aid to the motor vehicle decision approving the general scheme had sector is, in any event, not covered by the been met. approval for the regional aid scheme pro- vided in the Nineteenth Outline Plan.

164. However, the appellants' argument 168. That conclusion is based on the fails to convince. Court's assessment of the documents to which it refers in paragraphs 204 and 205 of the contested judgment.

165. That argument is based entirely on the idea that Commission approval of regional 169. This is an assessment of fact by the aid schemes under the Nineteenth Outline Court of First Instance, and it cannot be Plan is limited only to the extent that the called into question in this appeal unless Community Framework applies. If the those facts have been distorted. latter does not apply, then the approval is general and thus covers all aid under that scheme, including the aid at issue.

175. That Court was therefore entitled to rule, in paragraph 207 of the contested judgment, that the aid at issue was subject to the duty of prior notification to the 173. Nor did the German Government Commission, and that it could not be construe it otherwise, as is shown by the implemented before the procedure had led text of the Nineteenth Outline Plan, which to a final decision. (at Part I, point 9.3, p. 43) indicates that the Commission 'has taken decisions which prohibit the implementation of State aid granted in certain sectors even if it were granted in the context of approved pro- grammes (regional aid for example), or 176. My examination could stop here. which make its implementation subject to the need for prior authorisation of each of the projects which it is intended to benefit... 47 — See the contested judgment, paragraph 7.

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177. The arguments used by the appellants rightly ruled that '... there is nothing to as part of the fourth plea in law are prevent the Commission from examining essentially intended to show that the Com- the aid which must be notified to it in the munity Framework did not apply between light of [the rules of the Community January and April 1991. Framework] when exercising the wide dis- cretion which it enjoys for the purposes of applying Articles 92 and 93 of the Treaty.'

178. Yet, as we have just seen, that issue is not relevant to the solution of the present dispute. 182. As the Court of Justice ruled in Case C-288/96, 48 'it should be borne in mind that the Commission may adopt a policy as to how it will exercise its discretion in the form of measures such as the Guidelines, in so far as those measures contain rules indicating the approach which the institu- tion is to take and they do not depart from 179. That being said, the argument used by the rules of the Treaty'. the appellants to show that the Community Framework did not apply during that period is not convincing.

' 1 . From 1 May 1990, the Federal Republic of Germany shall notify to the Commission 185. As the Commission correctly pursuant to Article 93(3) of the EEC Treaty observes, the validity of that decision was all aid measures to be granted for projects unlimited and, unlike the validity of the costing more than ECU 12 million under Community Framework, was thus not the aid schemes set out in the Annex hereto limited to 31 December 1990. to undertakings operating in the motor vehicle sector as defined in sub-section 2.1 of the Community framework for State aid to the motor vehicle industry. Such notifi- cation shall be effected in conformity with t h e r e q u i r e m e n t s laid d o w n in sub-sections 2.2 and 2.3. The Federal Republic of Germany shall, moreover, 186. However, the appellants reply that the provide annual reports as required by the fact that the Community Framework was framework. made binding on the Federal Republic of Germany from 1 May 1990, following a procedure initiated under Article 93(2) of the Treaty, cannot make it binding with no time-limit beyond the expiry date originally provided for it.

2. Further to the list of aid schemes set out in the Annex to this Decision (which list is not exhaustive), the Federal Republic of Germany shall also comply with the obli- gations of Article 1(1) with regard to all other aid schemes capable of benefiting the 187. According to the appellants, it would motor vehicle industry. be contrary to the principle of equal treat- ment of Member States if the Community Framework could continue to apply only in 50 — OJ 1990 L 188, p. 55. Germany when it had expired in the other 51 — See the contested judgment, paragraph 6. Member States on 31 December 1990.

191. It follows therefore that the Court of First Instance observed very acutely, in paragraph 208 of the contested judgment, that the question whether or not the 195. As the appellants rightly point out, the Community framework had binding force question whether there was or not a duty to vis-à-vis Germany in March 1991 was of notify aid must be considered at the date of no relevance for the present proceedings. the decision granting that aid. I - 10018

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196. By contrast, the question of which E — Fifth plea in law, adduced by Volks- circumstances of fact and law the Commis- wagen and VW Sachsen, on the partial sion must take into account when adopting discontinuance accepted by the Court of its decision is another matter entirely. First Instance Furthermore, that question arises only if the question whether aid must be notified was answered yes. The answer to that first question, therefore, cannot determine the 200. Volkswagen and VW Sachsen object answer to be given to the latter. to paragraph 1 of the operative part of the contested judgment taken together with paragraphs 309 and 65 of the judgment.

201. In paragraph 309 of the contested 197. Furthermore, we see both from the judgment, the Court stated that '[u]nder heading which precedes paragraph 192 and Article 87(2) of the Rules of Procedure, an from paragraph 219 of the contested judg- unsuccessful party is to be ordered to pay ment that the Court of First Instance the costs if they have been applied for in the regarded the appellants' arguments con- successful party's pleadings. Under cerning the need for an investigation ex Article 87(5) of the Rules of Procedure, a ante and the inapplicability of the Com- party who discontinues or withdraws from munity framework as two separate argu- proceedings is to be ordered to pay the ments. costs if they have been applied for in the other party's pleadings.'

'At the hearing on 30 June 1999, the applicants in Case T-143/96 asked the Court to hold that the action had become devoid of subject-matter in so far as it sought the annulment of the first indent of Article 2 of the [contested decision], declar- 206. The appellants emphasise that they ing investment aid in the form of special consider it important to establish that they depreciation on investment incompatible did not discontinue their action in respect with the common market, and to apply of special depreciation. Therefore, they say, Article 87(6) of the Rules of Procedure in costs cannot be ordered under Article 87(5) that respect. The Court also took formal of the Rules of Procedure. notice of the fact that, in the Commission's submission, that request must be inter- preted as a partial discontinuance and entail the application of Article 87(5) of the Rules of Procedure.' 207. According to the Commission, the appellants' submission is incorrect. An action becomes devoid of subject-matter for the purposes of Article 87(6) of the Rules of Procedure only if the applicant's complaint has been remedied out of court, 204. Volkswagen and VW Sachsen com- so that there is no longer any need for a plain that, without stating any other decision and the bringing of an action. In grounds, the Court accepted the Commis- the present case, the action would have sion's submission. been devoid of subject-matter only if the dispute at issue between the Commission and the applicants had ceased to exist after the case had been brought, for example because of a partial revocation of the contested decision. But that did not happen. 205. They point out that they had made clear at the hearing that, following a recent modification in German tax legislation, they would no longer be allowed to effect special depreciation retrospectively, even if their case succeeded (and the Commission 208. For my part, I consider that the issued authorisation). Since they could no request from Volkswagen and VW Sachsen I - 10020

210. None the less, I consider that the plea raised by Volkswagen and VW Sachsen 215. In addition, the Court has consistently must still be rejected. The two observations held that '... where all the other pleas put following need to be made. forward in an appeal have been rejected, any plea challenging the decision of the Court of First Instance on costs must be rejected as inadmissible by virtue of the second paragraph of Article 51 of the EC Statute of the Court of Justice...'. 52 211. Firstly, had the Court of First Instance accepted the argument that there was no need to adjudicate, the costs would none 52 — Joined Cases C-302/99 P and C-308/99 P Commission and France v TFI [2001] ECR I-5603. paragraph 3 1 . See also the less have been at the Court's discretion, Case C - 3 9 6 / 9 3 P Henrichs v Commission [1995] ECR I-2611, paragraph 66, the order of 6 March 1997 under Article 87(6) of the Rules of Pro- in Case C-303/96 P B e r n a r d i v P a r l i a m e n t [1997] cedure. The interest of the appellants in ECR I - 1 2 3 9 , p a r a g r a p h 4 9 , a n d the o r d e r of 13 December 2000 in Case C-44/00 P Sodima v Commis- raising that point is therefore not clear. sion [2000] ECR I-11231, paragraph 93.

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I I I— Conclusion

216. Having regard to the foregoing considerations, I propose the Court should:

— dismiss the appeals;