C-74/00

A - Facts I-7880

B — Contested decision 1-7882

IV — Procedure before the Court of First Instance 1-7884

V — Pleas at first instance and the judgment of the Court of First Instance 1-7885

VI — Appeal procedure before the Court of Justice 1-7887

VII — Legal assessment 1-7889

(a) Arguments of the parties I - 7898

(b) Appraisal 1-7898 (2) Infringement of the right to a fair hearing during the administrative procedure before the adoption of the decision 1-7899 (a) Arguments of the parties 1-7899

1 — Original language: German.

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FALCK AND ACCIAIERIE DI BOLZANO v COMMISSION

(b) Appraisal I-7900

(b) Appraisal I-7908

(aa) The appellants' interest in the application of the Second Code . . . I-7909

(bb) Application of the code in force when the aid was granted I-7910

(cc) Application of the code in force at the time of the Commission's

decision I-7912

(dd) Protection of legitimate expectations I - 7913

(aa) Arguments of the parties I-7917

(bb) Appraisal I-7918

(5) Failure to consider effects on intra-Communiry trade I - 7920

(a) Arguments of the parties I-7920 (b) Appraisal I-7920

I - 7877

OPINION OF MR ALBER — JOINED CASES C-74/00 P AND C-75/00 P

I — Introduction beginning of the 1980s) since it had not been notified and was incompatible with the common market. A further contentious issue is whether the aid should have been examined in accordance with the State aid codes applicable at the time when it was granted or at the time of the decision 1. In the present appeals Acciaierie di requiring its recovery. Bolzano SpA (hereinafter 'ACB') and Falck SpA (hereinafter 'Falck') challenge the judgment delivered by the Court of First Instance on 16 December 1999 in Case T-158/96. The Court dismissed ACB's application for the annulment of Commis- sion Decision 96/617/ECSC of 17 July 1996 addressed to the Italian Republic (hereinafter 'the contested decision'). 2This decision required Italy to recover the aid 2. As a manufacturer of special-steel prod- granted by the Autonomous Province of ucts, ACB is an undertaking within the Bolzano to the steel undertaking Acciaierie meaning of the ECSC Treaty. Until it was di Bolzano after 1 January 1986 (from the sold to Valbruna Sri on 31 July 1995, it had been controlled by the Falck steel group, which supported ACB as an inter- 2 — OJ 1996 L 274, p. 30. vener at first instance.

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FALCK AND ACCIAIERIE DI BOLZANO v COMMISSION

3 — Commission Decision No 257/80/ECSC of 1 February 1980 establishing Community rules for specific aids to the steel industry, OJ 1980 L 29, p. 5 (hereinafter the 'First Code'). 4 — Commission Decision No 2320/81/ECSC of 7 August 1981 establishing Community rules for aids to the steel industry, OJ 1981 L 228, p. 14. as amended by Commission Decision 5. According to Article 4(c) of the ECSC No 1018/85/ECSC of 19 April 1985, OJ 1985 L 110, p. 5 (hereinafter the 'Second Code'). Treaty, aid granted by the Member States is 5 — Commission Decision No 3484/85/ECSC of 27 November incompatible with the common market for 1985 establishing Community rules for aid to the steel industry, OJ 1985 L 340, p. 1 (hereinafter the 'Third coal and steel and prohibited. However, Code').

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OPINION OF MR ALBER — JOINED CASES C-74/00 P AND C-75/00 P

9. The definition of the circumstances in which derogations are permitted has 10. In its judgment the Court of First become increasingly narrow with the pas- Instance commented on the background sage of time. Under the First and Second to the dispute as follows: Codes general investment aid and, with qualifications, operating aid could still be authorised provided that it was granted within the framework of a restructuring plan. The Third and Fourth Codes, on the '8. By letter of 5 July 1982 the Commis- 6 — Commission Decision No 322/89/ECSC of 1 February 1989 sion notified the Italian Government establishing Community rules for aid to the steel industry, that it had decided to authorise the OJ 1989 L 38, p. 8 (hereinafter the 'Fourth Code'). 7 — Commission Decision No 3855/91/ECSC of 27 November system of regional aid created by Law 1991 establishing Community rules for aid to the steel No 25/81 of the Autonomous Province industry, OJ 1991 L 362, p. 57 (hereinafter the 'Fifth Code'). of Bolzano of 8 September 1981 on 8 — Commission Decision No 2496/96/ECSC of 18 December financial assistance for industry 1996 establishing Community rules for State aid to the steel industry, OJ 1996 L 338, p. 42 (hereinafter the 'Sixth ("Provincial Law No 25/81"). In that Code'). letter the Commission pointed out, 9 — See, for example, Article 6 of the Third Code and Article 6 of the Fifth Code. however, that it also had to rule on

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FALCK AND ACCIAIERIE DI BOLZANO v COMMISSION

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OPINION OF MR ALBER — JOINED CASES C-74/00 P AND C-75/00 P

Code, namely 31 December 1985, and which had been reached in the pro- as it was not renotified and approved cedure and, in particular, whether the by the Commission in accordance with Commission considered it necessary to the Third Code, it became an illegal hear the applicant's views or to obtain aid. information from the applicant.

11. On 21 December 1994, having 14. The Association of German Steel Pro- received a formal complaint, the Com- ducers (the Wirtschaftsvereinigung mission asked the Italian authorities for Stahl) and the British Iron and Steel information on the public measures Producers Association submitted their from which the applicant had bene- comments to the Commission by letters fited. The Italian Government dated respectively 19 and 22 January answered by letters of 6 April and 1996. The Commission forwarded the 2 May 1995. letters in question to the Italian auth- orities by letter of 20 February 1996.

12. By letter of 1 August 1995 the Com- mission notified the Italian Govern- ment of its decision to initiate the 15. By letter of 27 March 1996 the Italian procedure provided for in Article 6(4) authorities submitted their comments of the Fifth Code and requested it to to the Commission.' submit its comments. The decision opening the procedure was published on 22 December 1995 in the Official journal of the European Communities (OJ 1995 C 344, p. 8, hereinafter referred to as the "decision to open the procedure") and the other Member B — Contested decision States and other interested parties were invited to submit their comments.

a non-repayable grant of ITL 10 234 million; 14. What the Commission had to say in the grounds of the contested decision can be summarised as follows:

— by Decision No 7673 of 14 December 1987:

15. From 1982 until 1990 ACB received the following aid under Provincial Law No 25/81:

a loan of ITL 6 321 million;

— by Decision No 784 of 14 February 1983: — by Decision No 2429 of 2 May 1988:

a loan of ITL 5 600 million and a non-repayable grant of ITL 8 000 mil- a non-repayable grant of ITL 3 750 lion; million;

21. Falck and the Italian Republic applied for leave to intervene in support of the form of order sought by the applicant. Explain- ing its interest in the outcome of the action, 18. The Commission rejected the appli- Falck stated that, although it no longer had cation of the Second Code to aid granted a participating interest in ACB, having sold before 31 December 1985, but also empha- its shares to Valbruna Srl, it would be under a contractual obligation to refund the purchase price at an appropriate level 11 — In its comments on the intervention documents at first to the acquirer of ACB if the aid had to be instance (footnote 2) the Commission admitted that recovered. The Court of First Instance saw reference had mistakenly been made to the sum of ITL 5 600 million; the correct figure was ITL 6 500 million. these circumstances as sufficient justifi-

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FALCK AND ACCIAIERIE DI BOLZANO v COMMISSION

cation for the interest in the outcome of the Subsequently, Annex 5, Tables B, C and D action which an intervener must assert and (showing ACB's investments), Annex 6 granted Falck leave to intervene by order of (ACB's exports to Germany and the United 11 July 1997. Italy was granted leave to Kingdom) and Annex 7 (letter of 3 August intervene by the same order. 1995 from the Autonomous Province of Bolzano to the Italian authorities) were also distributed, and the procedure was again suspended for an hour.

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OPINION OF MR ALBER — JOINED CASES C-74/00 P AND C-75/00 P

aid was granted, and it had not observed Sixth plea: There was no statement of limitation periods. This was incompatible reasons explaining why the Commission with the principles of the protection of regarded 1 December 1985 as the date for legitimate expectations and legal certainty. the repayment. Nor had a comprehensible explanation been given for the setting of the interest rate.

Third plea: The Commission had infringed the principles of sincere cooperation and the protection of legitimate expectations by 25. The Court dismissed the objections requiring the recovery of the aid many subsequently raised by the Commission to years after it had been granted, although Falck's being granted leave to intervene and there were numerous factors from which reaffirmed the grounds already stated in the ACB might legitimately have deduced that order of 11 July 1997 for Falck's interest in the Commission would authorise the aid. intervening in the action in support of The decision transformed the belated ACB. 12 However, it dismissed the appli- recovery of the aid into a sanction and cation as such. infringed the principle of proportionality.

26. As regards the first plea, the Court stated that, as ACB was no more than an Fourth plea: The Commission had not interested party in the procedure, it could considered how far the aid had affected not claim to have the same right to a fair trade among the Member States despite hearing as the party against whom the ACB's limited production capacity. It had procedure had been instituted. ACB had assessed the facts wrongly by failing to had an opportunity to comment on the classify the measures in question as aid that facts ascertained and legal assessments might be authorised within the meaning of made by the Commission in the notice of the code. commencement of the procedure. 13

29. Where the fourth plea was concerned, the Court ruled that under Article 4(c) of the ECSC Treaty, unlike the aid provisions VI — Appeal procedure before the Court of the EC Treaty, affecting trade between of Justice the Member States was not the decisive factor. The Commission had assessed the aid correctly on the basis of the infor- mation available to it. It had been for the 32. By documents recorded in the register Italian Government and ACB to put for- of the Court of Justice on 2 March 2000, ward, during the administrative procedure, Falck (Case C-74/00 P) and ACB (Case any information needed to justify deroga-

16 — Paragraphs 111 to 142 of the contested judgment. 14 — Paragraphs 59 ro 69 of the contested judgment. 17 — Paragraphs 148 to 161 of the contested judgment. 15 — Paragraphs 83 to 99 of the contested judgment. 18 — Paragraphs 160 to 176 of the contested judgment.

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OPINION OF MR ALBER — JOINED CASES C-74/00 P AND C-75/00 P

C-75/00 P) brought appeals against the as to the status of the measure, set aside judgment of the Court of First Instance. the judgment of the Court of First One of their complaints is that the Court of Instance and refer the case to another First Instance committed a procedural error Chamber of the Court of First Instance, by failing to give them sufficient oppor- indicating the points of law upheld in tunity to examine the documents submitted the present appeal. during the hearing. They also enter other pleas which refer to errors by the Court in the legal assessment of the decision. The pleas are reproduced in conjunction with their legal assessment. In any event:

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FALCK AND ACCIAIERIE DI BOLZANO v COMMISSION

35. The Italian Republic supports the VII — Legal assessment appellants in its response. It claims that the Court of Justice should:

A — Admissibility of the appeal brought 1. Allow the appeals brought by ACB and by Falck (Case C-74/00 P) Falck, in any event grant the forms of order sought by the Italian Govern- ment at first instance and annul the contested judgment in its entirety. 37. The Commission expresses doubts about the admissibility of Falck's appeal on two grounds: firstly, it is questionable whether Falck was directly affected by the contested decision of the Court of First 2. In the alternative, grant the alternative Instance within the meaning of the second forms of order sought by ACB and sentence of the second paragraph of Falck. Article 49 of the ECSC Statute; secondly, it is doubtful that Falck was competent to bring an appeal since it was not an under- taking within the meaning of Article 80 of the ECSC Treaty. 3. Order the Commission to pay the costs.

36. The Commission opposes the substance of the appeals. In addition, it expresses (1) As regards Falck being directly affected doubts about the admissibility of the appeal brought by Falck. It also asks the Court of Justice to remove from the papers two internal documents possibly prepared by its services and an internal memorandum 38. Pursuant to the second sentence of the drawn up by its Legal Service. The Com- second paragraph of Article 49 of the mission claims that the Court should: ECSC Statute, private individuals who were interveners at first instance may bring appeals only where the decision of the Court of First Instance directly affects them. 1. Dismiss the appeals of Falck and ACB.

43. Not every natural or legal person having an interest in the outcome of the action, as required for leave to intervene, is directly affected by the Court's decision. Otherwise, the additional restriction of the 40. The Commission maintains, however, power of non-privileged interveners to that Falck has been affected by the judg- bring appeals would be superfluous. 20 ment no more than indirectly since the liability which Falck claimed it had to the company that had acquired ACB did not stem directly from the Court's judgment but from the private-law arrangements between the undertakings. 44. It is evident from Articles 115 and 116 of the Rules of Procedure that an intervener at first instance is automatically a party to an appeal procedure before the Court of Justice and may seek orders of his own in the response. 21 In particular, he may, as in an appeal of his own, apply for the annul- 41. Falck objects that, as the Court had ment of the Court's decision without hav- given it leave to intervene and so recognised ing to demonstrate that that decision its interest in the outcome of the action, it directly affects him. This shows, on the was directly affected by the judgment and one hand, that a former intervener who has might bring an appeal against it. not brought an appeal himself has extensive

19 — Judgment in VBA v Florimex and Others [2000] ECR I-2061. 20 — See Dauses/Henkel, 'Streithilfe durch natürliche oder juristische Personen in Verfahren vor dem EuGH und EuG', Europäische Zeitschrift für Wirtschaftsrecht 2000, 581, 585. 42. From the wording of the Statute it is 21 — For a detailed discussion of the role of the intervener at very difficult to determine when a decision first instance in the appeal procedure see the judgment in Case C-390/95 P Antillean Rice Mills v Commission of the Court directly affects an intervener [1999] ECR I-769, paragraph 20 et seq.

powers during the appeal procedure. On paragraph of Article 33 of the ECSC the other hand, he may assert these rights Treaty, which would be the correct stan- only if a third party has taken the initiative dard for comparison in this case, does not and brought an appeal. in any way presuppose that the applicant is directly affected. 23 The difference in the terms used also demonstrates that what is important in determining whether an appeal is admissible is the effect of the contested judgment and not primarily 45. The criterion of being directly affected whether the party concerned has been thus helps to limit the power to take the affected by the act of the body which is initiative and so serves much the same the subject of the dispute. purpose as the requirements set out in the fourth paragraph of Article 230 EC as regards the competence of private individ- uals to institute proceedings. It limits the circle of persons entitled to contest rulings to those who have some proximity to the Court's decision extending beyond the interest in the outcome of the action which 47. In the example given by the Commis- is sufficient for leave to intervene. sion the former intervener is undoubtedly directly affected by the decision of the Court of First Instance. 24 Where a favour- able decision is annulled by the Court, a party benefiting from that decision who intervened in support of the defendant may appeal since the annulment pronounced by 46. However, the terminology of the sec- the Court results directly in the removal of ond sentence of the second paragraph of the benefit enjoyed by that party. Article 49 of the ECSC Statute differs from that used in the fourth paragraph of Article 230 EC. For one thing, the criterion of being directly affected is missing: the former intervener is sufficiently individual- ised by his participation in the procedure at first instance. For another, the decision taken at first instance must 'directly affect' 48. The question is whether a judgment in the non-privileged intervener rather than which, as in the present case, the Court of 'be of direct and individual concern' to First Instance dismisses an action against a him. From this it can be inferred that the disadvantageous decision is capable of authors of the Statute did not want to having equivalent direct legal consequences attach the same importance to the criteria for the party intervening in support of the in each case. 22 It should also be remem- applicant. It might be argued that it is not, bered in this context that the admissibility of an action for annulment brought by a private individual pursuant to the second 23 — See the judgment in Case 30/59 Gezamenlijke Steenkolen- mijnen v High Authority [1961] ECR 1, 39. 24 — See, for example, Friden, 'Quelques réflexions sur la recevabilité d'un pourvoi contre un arrêt du Tribunal de première instance', Revue des Affaires Européennes 2000, 22 — See Dauses/Henkel (cited in footnote 20). 231, 233.

50. If, as a matter of principle, the inter- vener was denied the competence to appeal against a judgment dismissing an action on the ground that he could have eliminated the effects of the decision by bringing his 53. It follows from Article 8.01(i) of the own action for annulment, he would be contract between Falck and Valbruna Sri deprived of the possibility of independently asserting these infringements of his rights. The decision confirmed by the Court would 26 — The decision does not, however, provide from whom Italy must recover the aid. Depending on the form that national be conclusively incontestable, and no sub- legislation takes, it would even be conceivable for a claim sequent action could be taken to correct to be brought against Falck, since the aid might have increased ACB's value and, accordingly, the proceeds from any procedural errors to the intervener's the sale of Falck's shares. Ultimately, then, Falck would thus have been enriched by the aid. Falck also accepted disadvantage. liability to the acquirer for any changes to liabilities. For a similar set of circumstances see the judgment in Case C-305/89 Italy v Commission [1991] ECR I-1603, para- graph 38 et seq. However, there are no indications in the documents in the case that the Italian authorities intend to 25 — As Friden would probably agree (cited in footnote 24). make a claim directly against Falck.

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FALCK AND ACCIAIERIE DI BOLZANO v COMMISSION

54. Falck further asserts among other things that the Court of First Instance 57. As already stated, the judgment of the infringed the principle of the right to a fair Court of First Instance may entail intrusion hearing by failing to give Falck sufficient on the intervener's rights, and especially his opportunity to comment on the documents submitted by the Commission during the hearing. Assuming that the alleged infringe- 27 — To this end, the Commission refers to the judgments in ment of procedural rights is correct and had Case 12/63 Schlicker v High Authority (1963) ECR 187, Case 222/83 Municipality of Diffenlange v Commission an effect on the judgment, this alone would [1984) 2889, paragraphs 8 and 9, and order of the Court have constituted direct intrusion on Falck's of the Court of First Instance in Case T-70/97 Region wallonne v Commission [1997] ECR II-1513, paragraphs rights, entitling it to bring an appeal. 22 and 23.

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procedural rights. The competence to bring 60. The Commission has stated without an appeal does not therefore necessarily contradiction that Falck ceased to be a steel depend on the appellant also being com- undertaking on the sale of ACB on 31 July petent to bring an action pursuant to the 1995. It therefore needs to be asked when second paragraph of Article 33 of the Falck must still have been a steel undertak- ECSC Treaty. In this respect, the second ing in order to be able to complain in its sentence of the second paragraph of appeal about the Court's assessment of the Article 49 of the ECSC Statute gives a decision. separate definition.

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have been attached by ACB to its appeal as with the references to them in the Annex B and by Falck to its appeal as appeals. 29 The Commission could to this Annex B 4, 5 and 6 and requests their extent claim that its internal consultations removal from the papers relating to the were confidential. case.

65. As regards the two 'anonymous' docu- ments, it should be said that it has not been made entirely clear whether they were in fact drawn up by the Commission's ser- 63. ACB had already introduced the same vices. They reveal neither their authors nor documents at first instance as an annex to their quality. Nor have the appellants its written answers to the Court's ques- provided any more accurate information tions. One of these documents is an internal as proof of their origin. The documents do memorandum of 18 July 1990 from the not therefore allow of any conclusions with Legal Service, which was also attached to respect to any legal views which the Com- the letter of 27 March 1996 from the mission might have. Italian authorities to the Commission, while the other two are tables showing aid granted in the steel sector, their authors not being apparent from the documents themselves. The appellants maintain that the records originated from Commission 66. However, until it has been determined services. In their view, the documents show that they are in fact internal Commission in particular that the Commission has itself documents, the Commission cannot claim taken the position that the code applied to that they are confidential and demand their aid should always be that in force at the removal from the papers. Nor is there any time it was granted. need at all for their removal since the unclear nature of their authorship means that they lack all validity.

68. The memorandum from the Commis- sion's Legal Service differs from the 'anony- mous' documents in that the Commission may in principle require its removal from the papers relating to the case if it is not 71. The Court explicitly reaffirmed this obliged to disclose it and if it was not legal view in the Ghignane case with a published by the Commission itself or with reference to the Carlsen order and to its approval. Advocate General Jacobs's aforementioned Opinion and ruled that the Commission may therefore require the removal of opinions of the Legal Service from the papers of the proceedings. 32

freely if its opinion had to be made access- 75. Although the Commission refused ible to the public. Only if the aim is to before the Court of First Instance to prove through an inspection of internal disclose the memorandum itself, it did not documents that the Commission has demand that the copy submitted by ACB be abused its discretionary powers, which removed from the Court's papers despite has not, however, been argued in the having the opportunity to do so during the present case, might the obligation to dis- hearing. It thus accepted the fact that the close internal documents exceptionally go memorandum had found its way into the further. 33 papers of the proceedings at first instance. Even if this does not constitute explicit approval of publication by ACB, the Com- mission may no longer require during the appeal procedure the removal of a docu- ment which has already found its way into the papers of the proceedings at first instance without opposition and so become the basis of the judgment. 73. In principle, the Commission may therefore require the removal of a docu- ment of this kind from the court papers. Other rules apply only where it has forgone confidentiality by itself publishing the document, for example, or by agreeing to its publication by a third party. 76. If subsequent removal from the papers of the proceedings at first instance is ruled out, there is no reason for the same document, submitted anew during the appeal procedure, now to be removed from the papers of the Court of Justice. Pursuant to Article 111(2) of the Rules of Procedure, the Registry of the Court of First Instance transmits to the Court of Justice the papers in the case at first instance after an appeal 74. It may not be inferred solely from has been brought. It follows that the ACB's evident access to the document that contents of these files and thus the opinion the Commission has published the opinion of the Legal Service contained therein or otherwise forgone confidentiality, since already form part of the files relating to ACB has not explained how the document the proceedings before the Court of Justice. came into its possession. The possibility that it was made public without the Com- mission's consent — through the indiscre- tion of one of its officials, for instance — cannot therefore be ruled out. This is not to say, however, that ACB came by the document by dishonest means. 77. The Commission's request that the opinion of the Legal Service submitted by ACB also be removed from the papers 33 — See the order of 18 June 1986 in Joined Cases 142/84 and 156/84 BAT v Commission [1986] ECU 1899. should therefore be rejected.

81. Pursuant to the second sentence of Article 51(1) of the ECSC Statute, an appeal may be based on a procedural error (a) Arguments of the parties which has an adverse effect on the appel- lant's interests. Of particular importance in this respect is whether the procedural error resulted in an infringement of the appel- lants' right to a fair hearing. 34Although 79. The appellants assert that the Court of the Italian Government's letter of First Instance committed a procedural error 27 March 1996 is mentioned in paragraphs by not giving them sufficient opportunity to 126, 131 and 138 of the contested judg- examine and comment on the letter and ment, the appellants have not shown how attachments of 27 March 1996 from the Italian Government, which were not dis- closed until the hearing. The Court neither 34 —See the order of 25 January 2001 in Case C-111/99 P Lechstaklwerke v Commission [2001] ECR 1-727, para- re-opened the hearing nor reproduced the graph 36.

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relevant the documents submitted during (2) Infringement of the right to a fair the hearing were to the Court's decision. hearing during the administrative pro- Nor do they state what other arguments cedure before the adoption of the decision they could have advanced if they had been familiar with the documents in good time.

(a) Arguments of the parties

83. The complaint about the infringement of the right to a fair hearing during the 85. Although ACB had thus not been, in procedure before the Court should thus be the appellants' view, properly involved in rejected, there being no need for further the administrative procedure, the Court of consideration of whether the way in which First Instance accused it and Falck of not the documents were disclosed during the providing the Commission with infor- hearing was consistent with the proper mation on various points. If those con- conduct of proceedings. There is con- cerned had been consulted, the Commis- sequently no need during the appeal pro- sion's decision would have taken a different cedure for any procedural measures to form because ACB and Falck could then clarify further the course of the hearing have commented on the points in question before the Court of First Instance. during the administrative procedure.

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90. It should first be said that — contrary to the Commission's contention — Falck, following on from the corresponding com- plaint made by ACB, had already asserted 88. The only complaint voiced before the in its statement in intervention at first Court of First Instance had concerned the instance (paragraph 1(a) on page 2) that its right to a fair hearing had been 35 — The Commission refers to the judgment in Case C-367/95 P Commission v Sytraval and Others [1998] ECR I-1719, paragraph 60. 36 — OJ 1999 L 83, p. 1.

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infringed. This argument is therefore ments, the Commission finds that aid in a admissible. given case is incompatible with the provi- sions of this Decision, it shall inform the Member State concerned of its decision.'

(bb) Right to be heard 37

'If, after giving notice to the interested parties concerned to submit their com- 93. This question can, however, be left unanswered at this stage, since the Court of Justice has ruled in settled case-law that 37 — The parties and the Court of First Instance use the Italian Observance of the right to be heard is, in all term diritti della difesa'. The French and English versions of tile contested judgment refer, respectively, to 'droits de proceedings initiated against a person la défense' and 'right to a fair hearing'. These terms are usually translated into German as 'Anspruch auf rech- which are liable to culminate in a measure tliches Gehör', although the literal translation of the adversely affecting that person, a funda- German term would actually be 'droit d'être entendu' or 'right to be heard'. In the German version of the contested mental principle of Community law which judgment, however, the Court of First Instance considers an infringement of 'Rechte der Verteidigung'. It is not absolutely clear whether the different terms arc also based on different substantive concepts of tins procedural principle. In the following the wider term 'Anspruch auf 39 — For rulings by the Court of Justice on Article 88(2) EC sec rechtliches Gehör' i nthe sense of 'droit d'être entendu' or the judgments in Case 323/82 Intermitís v Commission 'right to be heard' will be used. 11984] ECR 3809, paragraph 16, and Case C-204/97 38 — The Sixth Code and the earlier codes contain correspond- Portugal v Commission [2001] ECR I-3175, paragraph 31. ing provisions. 40 — See paragraphs 140 and 141 below.

94. In paragraphs 44 and 45 of the con- tested judgment the Court of First Instance, referring to its decision in Joined Cases T-371/94 and T-394/94 (British Airways and Others), 42 states, on the one hand, that no provision requires the recipient of aid to be consulted and that the recipient cannot claim the right to be heard which is enjoyed by individuals against whom a procedure has been instituted. On the other hand, the 96. The right to be heard is an individual recipient has the right to be involved in the right to which everyone whose rights or procedure to the extent appropriate in the legally protected interests are affected by light of the circumstances of the case. the planned decision is entitled. Thus the Court of Justice has ruled in the judgments cited 43 that a fair hearing is to be granted to those who may be affected by a dis- advantageous decision adopted during the procedure. Although this ruling referred to the Member State to which such a decision 95. Viewed together with the British Air- was addressed, the recipient of aid con- ways judgment, this statement might be sidered by the Commission to be incom- taken to mean that only the party to whom patible with the common market is also the decision is addressed has a right to be affected, for if the Commission's initial heard, while informing other parties is a assessment is confirmed, the procedure kind of investigative measure that helps the usually culminates in a decision requiring Commission to glean further information the recovery of aid that leaves nothing to from the comments then made. If this the Member State's discretion. It directly approach is taken to its logical conclusion, affects the legal position of the recipient of the Commission might in certain cases the aid, who is therefore entitled to bring an action pursuant to Article 33(2) of the ECSC Treaty or the fourth paragraph of 41 — Judgment in Case 142/87 Belgium v Commission [1990] Article 230 EC, even though the decision is ECR 1-959, paragraph 46, {'Tubemeuse'); see also the not directed to him. judgments in Case 234/84 Belgium v Commission [1986] ECR 2263, paragraph 27, and Case C-288/96 Germany v Commission [2000] ECR I-8237, paragraph 99. 42 — Judgment in Joined Cases T-371/94 and T-394/94 British Airways and Others [1998] ECR II-2405, paragraph 60. 43 — See footnote 41.

100. It does not follow from the principle of a fair hearing, on the other hand, that the recipient of aid enters into a dialogue with the Commission or that he may 98. The right to be heard materialises in comment in inter partes proceedings on positive law in the fact that the recipient of the arguments of the Member State which aid concerned obtains the opportunity on has granted the aid or of other parties. The the opening of the review procedure pur- Court of First Instance may be taking 'hear' suant to Article 6(4) of the Fifth Code or of in paragraph 44 of the contested judgment the procedure defined in Article 88(2) EC to mean precisely such wider involvement to comment on these circumstances. The and therefore refusing to accept — rightly, Court of Justice refers explicitly to the if this is so — that the recipient of aid has procedural guarantees which Article 88(2) any entitlement in this regard. EC grants to the parties. 45 Advocate Gen- eral Tesauro also points out in his Opinion in the Cook case 46 that the formal pro-

44 —Case 70/72 Commission v Germany [19731 ECR 813, paragraph 19. 45 — Judgment in Commission v Sytravall (cited in footnote 34, 101. That a recipient of aid is not to be paragraph 40). 46 —Opinion of 31 March 1993 in Case C-198/91 on the involved in the procedure in the same way essentia! facts and the Commission's legal considerations as the Member State concerned follows, on (Cook v Commission [1993] ECR I-2487, I-2502, para- graph 14). the one hand, from the fact that the

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47 — With regard to Article 88(2) EC see the Opinion of Advocate General Lenz of 17 September 1993 in Case C-313/90 CIFRS and Others v Commission [1993] ECR 1-1125, 1-1148, paragraph 64. Article 6(4) of the Fifth 105. The communication printed in Offi- Code does not, however, explicitly provide for the cial Journal C 344 of 22 December 1995 Member State's involvement (see paragraph 140 below). Nor does it contain general procedural rules for the ECSC sphere equivalent to those found in Regulation No 659/1999. 48 — Judgment in Commission v Sytraval, cited in footnote 35, 49 — Judgment in Intermillsv Commission (cited in footnote 39, paragraph 45. paragraph 17).

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107. However, ACB appears to have mis- takenly assumed in its letters of 18 January and 28 March 1996 50 that it was entitled to participate in the continuing procedure. The question is what consequences the 110. The Court of First Instance was there- fore in the result right in finding that the Commission did not infringe ACB's and 50 — See paragraph 13 of the contested judgment, quoted in Falck's right to be granted a fair hearing. paragraph 10 above. The first plea should therefore be rejected.

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(dd) Consequences for the Commission's specific reasons, is not capable of sub- obligation to provide information and the stantiating a need for further information. admissibility of the submission of new facts before the Court of First Instance

113. The Commission's view is that the 1 1 1 . The p r o c e d u r e p u r s u a n t to appellants ought to have contested before Article 6(4) of the Fifth Code is intended the Court of First Instance their non-par- to make the Commission familiar with all ticipation in the administrative procedure. the elements of fact and all the legal As the Court of Justice ruled in its judg- arguments it needs to be able to take a ment of 14 December 1994, 52 a Member decision impartially and with due regard State may not rely in court on elements of for all points of view and to reason its fact which it had not put forward during decision accordingly. 51 the administrative procedure. This is equally true of interested third parties.

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115. Requiring them to explain themselves the Commission's use, without further fully during the administrative procedure explanation, of the Fifth Code as the legal for the sole reason that they have this basis of the contested decision rather than opportunity is unjustified. It must be the earlier codes in force at the time when remembered in this context that the only the aid was granted. The Court had focused source of information available to inter- on the limited period the codes were in ested third parties is the Commission's force and failed to recognise the fact that notice of commencement of the procedure. the system of the original prohibition under For this reason interested parties are not Article 4(c) of the ECSC Treaty had been therefore in principle prevented from put- transformed, following a practice of 20 ting forward new facts in court. However, years, into a lastingly regulated admissibil- the principle is that the Commission should ity of certain kinds of aid. Regardless of the take its decision on the basis of the facts procedural rules applicable when a decision known to it at the time of the decision was adopted, the code to be referred to in applies. 54 If the recipient of aid believes the terms of substantive law was the one in facts on which the Commission bases the force at the time when the aid was granted. notice of commencement of the procedure This was also the view of the law taken by to be incorrect, he has a duty to counter the Commission's Legal Service in its inter- these assumptions with substantiated argu- nal memorandum of 18 July 1990. The ments during the administrative procedure. retroactive application of the Fifth Code If he does not seize this opportunity, he infringed the principles of legal certainty cannot accuse the Commission during the and of 'tempus regit actum'. court proceedings of basing the decision on erroneous facts.

122. As the appellants had not participated in the administrative procedure, they could not now refer to the lack of a statement of reasons. The Commission denies that the conclusions drawn by the appellants can be drawn from the documents which it would 119. The Italian Government endorses the like to see removed from the documents of appellants' reasoning. the proceedings. Finally, the plea should be rejected if only because the aid could not have been authorised even if •—• as stated in the contested decision — the Second Code had been applied.

120. The Commission, on the other hand, takes the view that its power to authorise aid stems solely from the code applicable at the time concerned. The application of a code no longer in force at the time of a decision was out of the question. Signifi- cantly, the codes did not even mention the (b) Appraisal possibility of non-notified aid being auth- orised.

123. Deciding which code should be applied is particularly difficult because the codes do not contain any explicit pro- cedural rules for non-notified aid. The 121. The appellants could not rely on the legislature apparently assumed that aid is principle of legal certainty if only because always notified and examined while a code the aid had not been previously notified. is in force. In this case, the question of the Although it was indeed not entirely right applicable code is not at issue. The codes for Decision 91/176 to consider applying do not therefore contain any transitional the code in force at the time of disburse- rules indicating which code is to be applied

128. The Commission admittedly remarks 125. The appellants could not indeed suc- in passing in Section III of the contested cessfully claim that the code in force at the decision that the conditions for authori- time when the aid was granted rather than sation in accordance with Article 2(1) of the Fifth Code should be applied if the aid the Second Code have not been met. This could not have been authorised under that provision concerns restructuring aid. The code either. Commission did not, however, undertake a comprehensive review of the aid on the basis of the provisions of the Second Code. 55 — On the other hand, see, for example. Information from the Commission Community guidelines on State aid for It neither made a distinction between the environmental protection (OJ 2001 C 37, pp. 3-15), para- graph 82: Second and Third Codes nor applied the 'In the case of non-notified aid, the Commission will apply: specific provisions of these codes that (a) these guidelines if the aid was granted after their publication in the Official Journal of the European concern investment aid for energy and Communities; environmental protection measures (Ar- (b) the guidelines i n force when aid is granted in all other cases.' ticle 3 of the Second and Third Codes),

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131. As the Commission has therefore based its decision mainly on the Fifth Code 134. The successive codes, each one replac- and considered the application of the ing its predecessor, did not in any way lead Second Code only in the context of restruc- to a reversal of this rule-and-exception turing measures, it is not certain that the possibility of the aid being authorised 56 — See under I of the recitals of the First Code. under the Second and Third Codes was 57 — See Article 1(1) of the Fifth Code and the corresponding completely ruled out. provisions of the other codes.

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principle, as the appellants believe. Each even set, in some cases, time-limits for code in fact entailed a new version of the disbursement, which end before the code rules on derogations adapted to the tech- expires. 59 If not even the disbursement of nical and economic trend in the steel aid which has already been authorised is industry at the time. The legislature's permissible after the expiry of a code, specific intention was to ensure through authorisation under a code which is no the wording of the codes that the granting longer in force is certainly not permitted. of aid would not be permanent but remain a temporary exception tailored to a given situation.

58 —Judgment in Case 214/83 Germany v Commission [1985] 59 — See Article 5( 1 ), second indent, of the Second Code for ECR 3053, paragraphs 45 to 47; confirmed by the operating aid and Article 1(3), second sentence, in con- judgment in Case C-210/98 P Salzgitter v Commission junction with Article 5(1) of the Fifth Code for regional 12000] ECR I-5843, paragraphs 49 to 55. investment aid.

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mission is no longer empowered to auth- 141. It cannot be inferred from this, how- orise aid to the steel industry under the ever, that any aid must be declared incom- derogations provided. patible with the rules of the code solely because it has not been notified in time. It would be inconsistent with the basic idea of the Communities' aid legislation for the incompatibility of a measure with the aid rules to be deduced solely from its formal unlawfulness. 60 That compatibility with the substantive rules is ultimately the decisive factor is evident from Article 1(1) of the Fifth Code, according to which aid (cc) Application of the code in force at the 'may be deemed Community aid and there- time of the Commission's decision fore compatible with the orderly function- ing of the common market only if it satisfies the provisions of Articles 2 to 5.'

139. The Commission based its decision on the Fifth Code, which was in force when the decision was adopted. It thus applied 142. The fact that each code is linked to a this code to aid which had not been notified given situation might, however, argue before it was disbursed or before the expiry against the retroactive application of the of the time-limit specified in the third Fifth Code. As stated above, the codes sentence of Article 6(1) or in Article 6(2) represent a temporary response to a given of the Fifth Code. economic situation in the steel industry. If a later code is applied retroactively, rules based on a situation other than that obtaining when the aid was granted come into play.

144. It is not the Commission's task to cast its mind back to the time when the aid was granted and to assess only its effect at that time. The Commission must rather protect current competition by measuring the (con- tinuing) effect of the aid against the yard- stick that applies when the decision is adopted.

147. The appellants cannot, after all, deduce any legal positions at all from the internal memorandum drawn up by the (dd) Protection of legitimate expectations Legal Service. For one thing, the mem- orandum was not brought to the appel- lants' attention or published by the Com- mission. Even if this had been the case, it is clear from the document that it is not a conclusive opinion addressed to the public 145. In principle, the protection of a legit- at large, but merely the expression of an imate expectation in a particular practice of expert legal opinion by the Legal Service to the Commission comes into consideration the Commission services responsible for the only if the Commission, through that prac- adoption of the decision. tice, exercises a discretionary power con- ferred on it. Which code should be applied is, however, a question of law that must be 62 — It is indeed not only Decision 91/176 that the Commission conclusively assessed by the Court of Jus- has based on this view. Sec also, for example, Commission Decision 1999/720/EC, ECSC of 8 July 1999 (Gròditzer tice without the Commission having any Stahlwerke), OJ 1999 L 292, p. 27, paragraph 46: The investment aid relating to ECSC plant has to be assessed discretion in this respect. under Article 4(c) of the ECSC Treaty and the Steel Aid Code applicable at the time it was granted.' The Commis- sion's approach is not uniform, however. It proceeded in Decision 1999/227/ECSC of 29 July 1998 (Georgsmanen- luittel, OJ 1999 L 83, p. 72 and Decision 1999/196/ECSC 61 —See the ludgment in Case C-24/95 Akan [1997] ECR of 14 July 1998 (Stahlwalzwerke Rotzel), OJ 1998 L 63, I-1591, paragraphs 51 and 52. p. 63, as it has done in the contested decision.

149. In particular, sufficient grounds for the application of the Fifth Code can be deduced from the decision itself and from the context, which, according to the case- (4) Clarification of the facts and scale of the law of the Court of Justice, is similarly review important. 63 It is, for example, evident from the decision on the initiation of the procedure that the Commission has taken the Fifth Code as its basis because it was the only legal basis applicable at the time 152. In connection with various pleas the when the decision was adopted. appellants complain about the clarification of the facts by the Commission and the Court of First Instance and the extent to which the facts were assessed. They submit, firstly, that, in the contested decision, the Commission classified as incompatible with the common market a measure on which it 150. Although the Commission's other had already ruled favourably in Decision consideration that the Second Code is 91/176. Secondly, the appellants complain irrelevant because its provisions similarly that the existence of derogations from the ruled out authorisation seems substantively prohibition of aid had not been adequately examined.

63 — Judgments in Case C-56/93 Belgium v Commission [1996] ECR I-723, paragraph 86, and Case C-156/98 Germany v Commission [2000] ECR I-6857, paragraph 97. 64 — See paragraphs 128 to 131 above.

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(a) Inclusion of aid already covered by this measure corresponded to a 7-year loan Decision 91/176 of ITL 13 306 million at an interest rate of 3%, for which the application was made on 3 July 1986 and which was granted on 14 December 1987 by Order No 7673 and was disbursed in two instalments, one of ITL 6 321 million on 10 March 1988 and the other of ITL 987 million on 30 January (aa) Arguments of the parties 1989.

154. The Commission takes the view that the complaint is inadmissible because it 156. The Court of First Instance did not was not lodged during the administrative itself rule on the facts, merely pointing out procedure. Furthermore, it was a question that the Commission did not make an of fact on which the Court of First Instance obviously erroneous assessment of the facts ruled. As to the substance, the Commission from the information with which it was is of the opinion that the appellants had not familiar when the decision was adopted. As shown how far the two decisions concerned the Italian Government and the appellants the same aid. Decision 91/176 concerned a had not come forward with any infor- 12-year loan of ITL 6 500 million at an mation to the contrary during the adminis- interest rate of 4.5%, for which the appli- trative procedure, there had been no indi- cation was made on 2 January 1982 and which was granted on 14 February 1983 by Decision No 784. It was not clear how far 65 — Sec paragraph 115 ahove.

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cation that the facts presented were not the loan on 14 February 1983 and, accurate. Whether this allocation of the although they had notified the Commission burden of explanation was lawful is a point in good time, the loan had inadmissibly of law. been granted only after the Second Code had expired in 1987.

157. Only in paragraph 141 of the con- tested judgment does the Court of First Instance reflect in the context of an obiter dictum on how the facts in the two 160. The contested decision lists this aid decisions might be reconciled, but it does under 1(a) and other, different aid under not base its judgment on this. 1(b), which is based on Decision No 7673 of 14 December 1987. The measure to which Decision 91/176 relates is thus regarded in the contested decision and in the notice of commencement of the pro- cedure as not being identical with one of 158. The uncertainty as to whether the the aid measures decided on 14 December Commission decided on the same aid twice 1987. is due, among other things, to the not entirely clear description of the subject- matter of Decision 91/176, which reads, in Section I:

164. The appellants have not even attempted to explain the further complaint made in this connection that the Commis- sion miscalculated the amounts to be recovered. In particular, they have failed to explain the extent to which the judgment 162. Unfortunately, the Italian Govern- of the Court of First Instance is defective in ment did not take a position on this point this respect. in its response and did not contribute to clarifying it. Nor do the Commission's comments before the Court of Justice improve understanding of the complexities of the situation. It had begun by putting the total aid covered by Decision 91/176 at ITL 165. The first part of the complaint should 5 600 million, correcting this later to ITL therefore be rejected as a whole. 6 500 million. The loan is meant to run for 12 years at an interest rate of 4.5%. 67 The decision itself, on the other hand, gives completely different figures (6 000 million, 11 years and 3.5% interest).

(b) Deficient examination of the deroga- tions from the prohibition of aid

163. What is decisive, however, is that, when adopting the decision, the Commis- sion assumed from the information avail- able to it that two different measures were (aa) Arguments of the parties involved. As neither the Italian Govern- ment nor the appellants referred during the administrative procedure to the possibility 166. The appellants claim that, as the Commission did not consult them, it was 67 — These conditions appear to be the same as those actually only in court, rather than earlier, during the referred to in Decision No 784 of the Autonomous Province of Bolzano. administrative procedure, that they had

167. The Court of First Instance had noted the evidence submitted, but it had not drawn the necessary conclusions from it. If the evidence had been inadequate, the 171. As already pointed out, the appellants Court should have obtained an expert had sufficient opportunity during the opinion. The Court had also failed to take administrative procedure to present the account of the arguments advanced by facts which, as they saw it, proved the Falck during the hearing. compatibility of the aid with the code. In the notice of commencement of the review procedure the Commission made it clear that, according to the information before it, the aid did not meet the requirements for admissible research and development aid or for measures to protect the environment, conserve energy or improve product 168. The Italian Government objects to the quality. Italy and the appellants should Court's finding that the Italian Government have presented their contrary view at that should have put forward during the admin- stage and rendered it credible through istrative procedure all the elements that additional information, as the Court rightly demonstrated the admissibility of the aid. It states in paragraph 116 of the contested should rather have been for the Commis- judgment. Unless the Commission is sion, which had opened the procedure, to advised that the information available to ascertain the facts of the case. it is incorrect or incomplete, it has no need officially to examine the facts further.

169. The Commission takes the view that the Court had correctly indicated the limits 172. It is clear that the Commission did not to judicial review and correctly appraised assess the facts incorrectly. The Court of the evidence submitted. First Instance arrives at this conclusion by

174. The Commission was familiar with a number of factors from earlier procedures concerning aid granted to ACB and Falck. 176. If the Court of First Instance has no It was able to glean further information doubts about the Commission's assessment from the data provided by the Italian after considering these facts, it is not itself Government and the German and British required to investigate the circumstances associations of steel producers during the further and, for example, to obtain an administrative procedure. The facts and expert opinion. evidence which the appellants did not produce until the court proceedings had begun are, however, significant only inas-

68 — This view is also taken in the settled case-law of the Court of Justice. See the judgment in Case C-288/96 Germany v Commission (citcci in footnote 41, paragraph 26, with further references). 177. Thus the second part of the plea 69 — See the case-law cited in footnote 54. should also be rejected.

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(5) Failure to consider effects on intra- 180. The Commission, on the other hand, Community trade believes that, given the general prohibition of State aid in Article 4(c) of the ECSC Treaty, its effect on intra-Community trade does not matter. As the case-law of the Court of Justice showed, the EC Treaty was not, pursuant to Article 305 EC, applicable to ECSC products. 73 The judgment in Busseni had reached the limits of inter- (a) Arguments of the parties pretation and had also remained an isolated instance.

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182. As the Court of First Instance rightly Commission had not infringed any time- stated in paragraph 82 of the contested limits. They argue that the Commission's judgment, Article 4(c) of the ECSC Treaty commitment to a period within which it prohibits all aid without exception, the aim must exercise its powers stems from the being to ensure the creation, maintenance general principle of legal certainty. This and observance of normal conditions of had been confirmed by the Court of Justice competition, and aid is therefore 'deemed in particular in its judgment in the Geigy to be incompatible with the common case. 76 market without there being any need to establish or even to consider whether there is, in actual fact, any interference with the conditions of competition or it is liable to occur.' 185. The appellants also cite various exist- ing rules on limitation periods within the scope of the EC and ECSC Treaties in which the principle of legal certainty has materialised in positive law, viz. Article 43 of the EC Statute, 77 Commission Decision 183. Accordingly, the Court of First No 715/78/ECSC concerning limitation Instance was also right not to consider in periods in proceedings and the enforcement the present case whether competition has of sanctions under the Treaty establishing been distorted or intra-Community trade the European Coal and Steel Community 78 adversely affected by the aid granted to and Regulation (EEC) No 2988/74 of the ACB. This plea should consequently be Council of 26 November 1974 concerning rejected. limitation periods in proceedings and the enforcement of sanctions under the rules of the European Economic Community relat- ing to transport and competition. 79 On the other hand, they object to the Court's reference to Regulation No 659/1999 on the ground that it concerns only aid (6) Infringement of the rules on limitation covered by the EC Treaty. periods and of the principle of legal cer- tainty

187. Behind the issue generally discussed 189. The Court of Justice also derives from by the parties under the heading of 'limi- the principle of fair legal process, as tation period' there are in fact concealed a expressed in Article 6(1) EHRC, certain number of wholly different legal concepts. time-limits for the conclusion of judicial procedures. 82 It has also ruled that, where the Commission has been remiss in its conduct during the administrative pro- cedure, the recipient of aid can, in certain circumstances, legitimately expect the Commission no longer to order the recovery of the aid. 83 The conclusions to 188. A limitation period in the context of be drawn from the duration of the adminis- the enforcement of sanctions, as provided trative procedure should therefore be con- for in Article 4 of Decision No 715/78/ECSC, sidered separately in the context of the plea for example, is the period within which a that concerns the infringement of the creditor must have an already conclusively principle of the protection of legitimate identified claim enforced. In civil law expectations. limitation is a means that can be used to prevent the enforcement of an existing claim. A limitation period in proceedings 80 81 — See the Opinion of Advocate General Alber of 27 January limits the period in which the Commission 2000 in Case C-260/98 Commission v Greece [2000] ECR 1-6537, 1-6539, paragraphs 73 and 74. may impose sanctions for an infringement 82 — Judgment in Case C-1 85/95 P Baustahlgewebe P Commis- of the Treaty. Where sanctions are not sion [1998] ECR 1-8417, paragraphs 20 and 21. 83 — Judgment in Case 223/85 RSV v Commission [1987] ECR 4617, paragraph 17. The judgment of the Court of First Instance in Joined Cases T-194/97 and T-83/98 Branco v Commission [2000] ECR 11-69. paragraph 91, cited by the 80 — See Article 1 of Decision No 71J/78/ECSC. appellants similarly concerns this situation.

86 —Judgment in Case 111/63 Lemmerz-Werke v High Auth- 84 — Sec judgment of the Court of First Instance in Joined Cases ority [1965] ECR 893, under 1.3. T-126/96 and C-127/96 BFM andd EHM v Commission 87 — Judgment in Gcigv v Commission (cited in footnote 76, [1998] ECR II-3437, paragraph 48. paragraphs 20 and 21). 85 — Opinion in Case 111/63 Lemmerz-Werke v High Auth- 88 — See also the Opinion in Case C-260/98 (cited in footnote ority [1965] ECR 922, 938. 81, paragraph 75 et seq.).

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(7) Infringement of the principle of the that culminated in the adoption of Decision protection of legitimate expectations 91/176. After the adoption of Decision 91/176, when all the aid had already been disbursed, ACB had assumed that the Commission had no objections to any of the measures except the one about which a complaint had been made.

(a) Arguments of the parties

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which the Court of Justice had recognised 1988 has already been dismissed by the legitimate expectations worthy of protec- Court of First Instance through its contrary tion after a mere 26 months. finding of the facts, which cannot be reviewed during the appeal procedure.

201. The Commission recalls that the recipient of non-notified aid can rely on the protection of legitimate expectations only where extraordinary circumstances obtain, it normally being for the national courts to assess these circumstances. 91 As the prohibition of aid imposed by the ECSC (b) Appraisal Treaty is more general, even more stringent standards must be applied here than in the case of aid falling within the scope of the EC Treaty.

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the recovery of purely domestic payments for is observed when the aid is granted and and full account is taken of the Commu- that, where aid has been granted unlaw- nity's interests. 92 fully, the protection of legitimate expec- tations can be relied on only in exceptional circumstances. 96 Contrary to the findings of the Court of First Instance, however, they believe that such extraordinary cir- cumstances obtained. 206. Like the Court of First Instance in its judgment in Siemens v Commission, the Commission appears to infer from this that it is for the national courts alone to consider the protection of legitimate expec- tations. 93 209. Their argument that, in view of the original authorisation of the restructuring programme, ACB should have been able to expect the aid to be in order cannot succeed. The Commission took account of the uncertainty regarding the obligation to 207. This view cannot be accepted, how- notify aid disbursed before 1 January 1986 ever. In its judgment in RSV v Commis- and refrained from ordering the recovery of sion 94 the Court of Justice annulled a this aid. Under the Second Code, which decision of the Commission ordering the formed the legal basis of the authorisation recovery of aid on grounds relating to the of the restructuring programme, all aid protection of legitimate expectations. The should have been disbursed by 31 De- principle of the protection of legitimate cember 1985. For this reason alone any expectations is, recognised not only in expectation that aid disbursed at a later national law but also in Community law. 95 date was in order must be ruled out. Any The Commission must take account of this plans not implemented by that date should principle when adopting its decisions just as in fact have been notified and authorised the Court of Justice must do so when again under the following code. reviewing the lawfulness of such decisions.

statement of reasons for Decision 91/176 213. In view of the importance of the the Commission mentions only a subsidised notification of major aid projects, it is also loan of ITL 6 000 million granted in surprising that no correspondence between December 1987. In paragraph 94 of the ACB or Falck and the Bolzano authorities contested judgment the Court of First or the Italian government agencies on this Instance states that no evidence had been question was submitted. There would produced to prove that the Commission undoubtedly have been cause to believe knew more when adopting Decision that proper notification had been given if 91/176. The Court of Justice is bound by ACB had submitted copies of letters from this finding. Consequently, (tacit) authori- the Italian Government to the Commission sation of the other aid granted after 31 De- in which the aid had been notified. ACB cember 1985 cannot be inferred from should not, at any rate, have expected the Decision 91/176. aid to be in order merely because of the discussions with representatives of the Autonomous Province of Bolzano.

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aid may be retained.98 Only if the Com- was inactive or delayed the procedure mission had remained inactive for a lengthy unnecessarily. Consequently, the duration period even though it was aware of the of the administrative procedure was not circumstances might such expectations such as to arouse in the appellants the arise. 99 expectation that the Commission would not order the recovery of the aid.

216. There are no indications that, before 218. The plea concerning the infringement its request of 21 December 1994 to the of the principle of the protection of legit- Italian Government for information and imate expectations should therefore be the latter's reply of 7 April 1995, the rejected. Commission was aware of the aid whose recovery was ordered by the contested decision. According to the findings by the Court of First Instance referred to above, 100 the Commission knew only of the aid granted in December 1987 when it adopted Decision 91/176. The Commission cannot therefore be criticised for having (8) Incorrect rates of interest on the sum to done nothing about the other measures be recovered until 21 December 1994.

FALCK AND ACCIAIERIE DI BOLZANO v COMMISSION

220. The Italian Government endorses this 223. In principle, recovery must be accom- view and also emphasises that the contested plished in accordance with national pro- decision and the judgment of the Court of cedural law. 103 However, just as the Com- First Instance were not sufficiently sub- mission is empowered to order the recovery stantiated with respect to the setting of the of illegal aid to ensure the practical effec- interest rate. tiveness of the prohibition of aid, it may also leave it to the Member State to charge interest on the sums to be recovered and to set the interest rate to be applied.

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rate applied in Italy as the reference rate in take the rate used to calculate the grant the case of aid granted in Italian lire to an equivalent of regional aid as the market undertaking registered in Italy. interest rate'.

227. When this context is taken into 226. However, the decision itself does account, the object and purpose of charging nothing to explain the order concerning interest on the sums to be recovered are interest. As the Court of Justice has ruled, easy enough to understand. however, account must also be taken in the statement of reasons of the context in which the legal measure has been adopted. 105 Account may thus be taken of communications from the Commission 228. Although not required by the law, that were published before the adoption of however, there is something to be said for the decision, and especially the communi- the Commission making a few brief com- cation of 22 February 1995, 106 in which ments on interest also in the statement of the Commission informs the Member reasons for decisions requiring the recovery States as follows: of aid. The Member States, to which the decision is addressed, may have the necess- ary experience to understand the import- ance of and background to these rules. Since, however, as they also affect third parties, it would certainly be appropriate for a number of points to be clarified. This 'In the Commission's view, the financial is all the truer where — as in the present benefits illegally accruing to the recipient of case — the communication which also has the aid are more appropriately calculated to be taken into account has not been on the basis of the market interest rate published in the Official Journal. [rather than the legal rate] with a view to restoring the status quo ante.

235. To the extent that it should still be 232. Furthermore, the decision was, in the considered here, there are doubts about the appellants' view, in the nature of a sanction admissibility of the plea. because Falck was in fact liable for the repayment of the aid although it was no longer operating in the steel industry. The decision was therefore incapable of elimin- ating any distortion of competition. The Court of First Instance had not discussed this point at all. 236. Pursuant to Article 113(2) of the Rules of Procedure, the subject-matter of the proceedings before the Court of First Instance may not be changed in the appeal. Although Falck explains in its application for leave to intervene how far it is affected 233. The Commission considers this com- by the decision, ACB points out in general plaint inadmissible because it was first terms in its application that the decision made before the Court of Justice. It is also becomes punitive with the change of cir- unsubstantiated. If the appellants were cumstances and no longer serves the pur-

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pose of restoring the conditions of compe- and profiting from the fact that the aid has tition. 107 The Court of First Instance saw strengthened its competitive position. this primarily as a complaint about the infringement of the principle of propor- tionality and gave appropriate reasons for rejecting it in paragraph 92 of the contested judgment.

107 — Page 20 under IV(1)(e) of the application at first instance, 108 — Judgment in Tubemeuse (cited in footnote 41, paragraphs reproduced in paragraph 78 of the contested judgment. 65 and 66).

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241. Thus this plea too should be rejected. 243. Under Article 69(2) of the Rules of Procedure, which, pursuant to Article 118, is to be applied to appeals, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. The first sentence of Article 69(4) provides that Member States which intervene in the proceedings are to VIII— Costs bear their own costs. The Commission has applied for the appellants to be ordered to pay the costs. As they are unsuccessful in their pleas, they should be ordered to pay 242. Under Article 122(1) of the Rules of the costs of the appeal with the exception Procedure, the Court of Justice decides on of the costs of the Italian Republic, which the costs when an appeal is dismissed. should bear its own costs.

IX — Conclusion

243. In view of the above considerations it is proposed that judgment be given as follows: