C-242/00

1 — Original language: French. 2 — OJ 2001 L 97, p. 27. 3 — OJ 1998 C 74, p. 9.

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ing the compatibility of national regional per capita gross domestic product (GDP), aid with the common market under measured in purchasing power standards Articles 92(3)(a) and 92(3)(c) of the EC (PPS), not exceeding 75% of the Commu- Treaty.' Its purpose is to revise 'all the nity average. criteria currently applied' and to replace the Commission's eight previous 'docu- ments' with a single text with the aim of 'transparency, up-to-dateness and simplifi- cation'.

7. The method of determining the total population figure under Article 92(3)(c) of the Treaty is not, however, fixed. Annex III of the guidelines states that the figure is 4. The document is neither signed nor obtained by deducting from the overall dated. During the proceedings to which ceiling for the Community the population this Opinion relates, the Commission stated of t h e r e g i o n s e l i g i b l e u n d e r that the text had been drawn up in close Article 92(3)(a). It is then distributed cooperation with the Member States and between the Member States, taking account adopted by the College on 16 December of regional socio-economic disparities 1997. within each Member State, assessed within the context of the Community. This takes place in two stages.

9. Secondly, 'the results thus obtained are corrected, if necessary, in order: I I— Facts of the dispute

— to guarantee to each Member State that 10. The facts of the dispute are particularly the population assisted under the important in this case in regard to the 92(3)(c) derogation is at least equal to admissibility of the action. For this reason 15% and does not exceed 50% of its they must be set out in considerable detail. population not covered by the 92(3)(a) derogation,

11. On 24 February 1998, the Commission sent a letter to the Federal Republic of — to attain, in each Member State, a Germany, the purpose of which was sufficient level to include all the regions defined as follows: 'Proposal relating to which have just lost 92(3)(a) status and appropriate measures regarding State the areas with a low population den- regional aid under Article 93(1) of the EC sity, Treaty.'

— to limit the reduction in the total coverage (under the two Article 92(3) 12. In this letter, the Commission first regional derogations) of a Member forwarded the Guidelines to the Federal State to 25% of its previous coverage.' Republic of Germany.

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14. It justified that reduction, firstly, on account of the improvement in the econ- omic and social situation in certain regions — that it was proposing that Member which meant that they were no longer States should notify it, in accordance eligible under Article 92(3)(a) of the with Article 93(3) of the Treaty and Treaty, and, secondly, on account of its before 31 March 1999, of the method wish to ringfence more strictly the aid used to determine from 1 January 2000 under category (c), concentrating it on the eligible regions, the map of eligible regions most in need, in order to ensure regions and the amount of the aid and that aid granted should not unfavourably the level applicable of the ceilings on affect intra-Community trade, whilst pre- combination. serving its effectiveness and coherence within the Structural Funds policy. Finally, the prospect of Community enlargement during the period 2000-2006 was invoked in order to justify realignment of the system. 17. Finally, the Commission informed Ger- many that if it failed to respond or was unable to accept the relevant measures, it reserved the right to commence proceedings under Article 93(2) of the Treaty.

15. The Commission went on to say that, 'in its opinion', during the period 2000 to 2006, 35.7% of the population of Germany might benefit from regional aid under 18. By letter of 23 April 1998, the German Article 92(3) of the Treaty, with 17.4% Government informed the Commission under category (a) and 18.3% under cat- that, whilst it accepted the principle of the egory (c). guidelines, it was not in a position to approve all aspects thereof, and that it was, therefore, unable to approve the 4 — In the course of these proceedings, it was ascertained that a 'appropriate measures' proposed by the ceiling was also set on 16 December 1997. Commission.

24. By letter of 17 August 1999, the Com- mission stated that the draft presented for areas under category (a) was compatible with the Common market, but initiated the procedure under Article 88(2) EC for the 21. By letter of 24 August 1998, however, regions under category (c). 5 the Federal Republic of Germany approved the appropriate measure which involved altering existing systems of aid as from 5 — OJ 1999 C 340, p. 8.

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27. Following further communications and exchanges of letters, the Federal Republic of Germany, by letter dated 2 February 2000, declared it was prepared, for the time III— Forms of order sought being ('zunächst'), to restrict the regions receiving support under Article 87(3)(c) EC to the area agreed on by the Commission so as to prevent aid to structurally weak regions being halted in the absence of 30. In its application, lodged with the authorisation from the Commission. Court registry on 16 June 2000, the Federal I - 5610

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Republic of Germany, as applicant, claims IV — Analysis that the Court should:

Admissibility — annul the Commission Decision of 14 March 2000 concerning the rede- finition of areas proposed under the A — First plea of inadmissibility by the joint programme 'Improvement of Commission on the basis that there is no regional economic structures' in Ger- act which adversely affects the Federal many for the period 1 January 2000 to Republic of Germany 31 December 2003 — West Germany and Berlin, on the grounds that it finds that the proposals notified by Germany regarding regional aid for those areas covered by Article 87(3)(c) EC and 32. As its principal argument, the Commis- which represent 23.4% of Germany's sion maintains that the contested decision population are not compatible with the does not adversely affect the Federal Common market; Republic of Germany and that the action by Germany is, for that reason, inadmiss- ible.

— order the defendant to pay the costs. 33. The Commission contends that the application is based on the mistaken notion that the contested decision includes a certain number of positive provisions (authorisation of the map of the eligible 31. As defendant, the Commission, in its regions representing 17.7% of the German defence lodged on 16 June 2000 with the population) and a certain number of Court registry, contends that the Court negative provisions (refusal to recognise should: that the additional 5.7% of the German population is eligible). It is the Commis- sion's view, however, that the contested decision contains only the positive provi- sions cited above.

30 March 1999 which the Commission of 2 February 2000. To this effect, refer- considered to have been amended by the ence may be made to paragraph 35 which letter of 2 February 2000. In that letter, states: 'Germany's notification of 2 Feb- according to the Commission, Germany ruary 2000, amended in relation to the submitted a map of the eligible regions Article 87(3)(c) areas, is examined in the which no longer covered 23.4% of the light of Article 87(3)(c) of the EC Treaty German population as in the notification of and, in particular, in the light of the 30 March 1999, but 17.7%. As the Com- guidelines', and to paragraph 49 which mission approved the amended map, the states: 'During the course of the procedure, contested decision does not adversely affect so as to bring the notification into line with the Federal Republic of Germany. the guidelines, Germany provided a list of regions that was reduced to the population ceiling set by the Commission ...' and paragraph 74 which provides: 'In any case, Germany has amended its list of assisted 35. The German Government, on the other regions eligible under Article 87(3)(c) of the hand, considers that the contested decision EC Treaty ... .' does indeed contain the negative provisions mentioned above. It states that it has always adhered to its notification of 30 March 1999, which was not amended and did not become void by virtue of the letter of 2 February 2000. In Germany's view, therefore, the contested decision 38. Furthermore, it cannot be denied that contains negative provisions in so far as the Commission explicitly limited the scope the decision did not state that the regions of of the contested decision to the contents of the total area submitted by it were com- the letter of 2 February 2000. This is clear patible. Since the contested decision does from paragraph 9 which reads: 'This Com- adversely affect it, the German Govern- mission Decision relates only to the assisted ment concludes that the action is admiss- regions and permitted maximum aid inten- ible. sities which fall under the derogation of Article 87(3)(c) of the EC Treaty according to the German proposal as amended by the German Government during the formal investigation procedure.' 36. Starting with this first plea of inadmis- sibility, I shall first examine the contents of the contested decision.

The Bund and the Länder therefore intend henceforth to designate the assisted regions under Article 87(3)(c) of the EC Treaty at 17.73% of the population (14 546 097 inhabitants) (category C, see Annex 1 ...).' 'The German Government states firstly that the Federal Republic of Germany continues to adhere to its legal position that a reduction in the percentage of regions eligible under Article 87(3)(c) of the EC Treaty from 23.4% of the population of Germany, a figure initially set by the European Commission, to 17.6% of the 41. So, whilst the German Government population is not compatible with the adheres to its position that a reduction of principle of equal treatment. The German the ceiling from 23.4% to 17.6% or Government also believes, as previously 17.73% is in breach of the principle of stated, that the relevant provisions of the equal treatment, it states, nevertheless, that EC Treaty need not prevent a small-scale it is prepared for the time being ('zunächst') exchange of regions ("adjustments" of to restrict the area of the regions eligible to assisted regions). the level accepted by the Commission.

The Federal Republic of Germany is never- 42. It is difficult to interpret that passage as theless prepared, for the time being, 6to anything other than a request to the Com- restrict the percentage of assisted regions mission to authorise 'for the time being' the under Article 87(3)(c) of the EC Treaty to list attached as Annex 1 to the letter in the level accepted by the European Com- which it appears. At the risk of being mission and not to make adjustments to excessively formalistic, therefore, I am those regions, thus avoiding support for bound to conclude that the Commission structural reforms in structurally weak did not make an error of interpretation in holding that the letter of 2 February 2000 amended the communication of 30 March 6 — Emphasis added. 1999.

43. It is certainly true that the letter of decision, I am compelled to conclude that 2 February 2000 also contained an Annex 3 that decision contains only one provision entitled 'List of eligible regions under the which is entirely positive, the acceptance of joint project agreed by the competent a map of the eligible regions representing Bund/Länder planning committee on 17.73% of the German population, and 25 March 1999 which could not be part that, on the other hand, the decision does of the assisted regions under Article 87(3)(c) not contain an implicit refusal to recognise of the. EC Treaty with a ceiling set of the eligibility of additional regions repre- 17.73% of the German population (5.67% senting 5.63% of the German population. of the population).' However, it cannot be inferred either from the title of that annex nor from the contents of the letter of 2 February 2000 that the German Gov- ernment was asking the Commission, as in the case of the list attached in Annex 1, to authorise 'for the time being' the list in 46. It must be acknowledged that Ger- Annex 3 as falling under Article 87(3)(c) many's request for authorisation for a more EC. restricted area in accordance with the Commission's view was considered by Germany simply as the first stage of a process. The reason behind that request was a laudable concern for legal certainty and sound administration, in order as rapidly as possible to bring about clarity with regard to the point that was undis- 44. It might even be said that the opposite puted between itself and the Commission, is true. Under point 1.1.1 of the same letter and to avoid an interruption in aid to the Federal Republic of Germany makes regions experiencing particular difficulties. clear its intention to implement in those regions types of aid to which Article 87(1) EC does not apply (promotion of infra- structure) or is considered inapplicable (de minimis aid). Germany, moreover, has expressed its wish to be able to grant those regions aid under the Community regime of State aid to small and medium-sized enter- 47. On the other hand, I cannot support prises and is asking the Commission to Germany's intention to use its application grant it the corresponding authorisation. against that limited authorisation to obtain For this reason, it states that it is attaching a judgment by the Court on the rest of its the list of regions in Annex 3. claims.

50. As the Commission rightly points out, 53. In the alternative, the Commission we are clearly concerned here with the submits that the action was brought out 'decisions' of 16 December 1997 and of time. If the contested decision was 16 December 1998 in which the Commis- nevertheless to be considered as refusing sion set a ceiling of eligible regions under authorisation for eligible regions up to a Article 87(3)(c) EC of 18.3% and 17.6% ceiling of 23.4% of the German popu- respectively of the German population. I lation, that decision, according to the shall have the opportunity under the second Commission, only confirms the decision plea of inadmissibility to consider the legal of 16 December 1997 communicated to the merit of those stances, in particular, the German Government by letter of 24 Feb- issue of whether, as the Commission main- ruary 1998 and the decision of 16 De- tains, those decisions were definitive cember 1998 forwarded to the German decisions such that the Federal Republic Government by letter of 30 December of Germany should have commenced pro- 1998. 7As the Federal Republic of Ger- ceedings against them within a period of many did not contest those decisions within two months. the time-limit, the action must be declared inadmissible.

51. Meanwhile, in relation to the first plea of inadmissibility invoked by the Commis- sion, it may be concluded that both the 54. The German Government contests this letter of the German Government of 2 Feb- second plea of inadmissibility, claiming ruary 2000 and the text of the contested that the decisions of 16 December 1997 decision make clear that the decision refers only to the list in Annex 1 of that letter. It 7 — It should be pointed out that the Commission has submitted does so in a positive manner, in accordance one copy only of those letters in these proceedings and no with the request of the German Govern- copy of those decisions. Germany, however, has not claimed any discrepancy between the contents of the decisions and ment. the letters.

58. I do not see how that paragraph can 61. The parties agree that the guidelines do attribute powers to the Commission to set not have binding legal effect on Member binding conditions which certain types of States and that they may therefore not be I - 5616

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contested autonomously. The Commission Vliet that it 'recognised that a "discipline" recognises this explicitly in its rejoinder. of the same legal nature as the Guidelines, whose rules were accepted by the Member States, 11 was binding.' 12

11 — Emphasis added. 8 — Case C-311/94 [1996] ECR I-5023. 12 — IJssel-Vliet cited above, paragraph 42. 9 — OJ 1988 C 313, p. 21. 13 — Emphasis added. 10 — Case C-313/90 [1993] ECR I-1125, paragraph 35. 14 — Case C-288/96 [2000] ECR I-8237.

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fisheries and aquaculture sector, 15 the all the national rules applicable to regional Court ruled, with reference to CIRFS and aid so that the rules are compatible with the Others v Commission and IJssel-Vliet, that guidelines adopted by the Commission as 'those rules bind the Commission and the from 1 January 2000. The Commission, German Government.' 16 however, claims that its proposal regarding an appropriate measure concerned the existing aid regimes only.

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74. That is not to say, naturally, that the No 2082/93 of 20 July 1993, 21 (here- Commission is not entitled to set itself inafter 'the coordination regulation'), guidelines. 'those guidelines contribute to ensuring that, when the Commission takes decisions pursuant to [Article 24 of the coordination regulation], the Member States or the authorities designated by them benefit from identical 'treatment in comparable situ- ations. Also, such guidelines are likely to strengthen the transparency of individual 7 5 . I n d e e d , as the Court ruled in decisions addressed to Member States.' 22 paragraph 62 of Germany v Commission, '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- 77. In Spain v Commission, the Court, tion is to take and they do not depart from however, also ruled on the legal effect of the rules of the Treaty.' those internal guidelines, stating:

81. Those facts do not, however, prove that 78. The same is to my mind true of the in this case the Commission adopted a guidelines in issue here. They too must be decision which had legal effect. Indeed, the regarded as internal guidelines which fact that the Commission adopts an act simply reflect the Commission's intention acting collegiately and terms it a 'decision' to follow a particular line of conduct in the is not sufficient for it to be understood to exercise of the power granted to it by be a decision which has legal effect, if the Article 88(2) EC in making any decision on Commission clearly does not have the an aid project notified by a Member State. powers to adopt a decision of this kind. In themselves, those guidelines produce no legal effect in respect of Member States. Only a decision made in accordance with Article 88(2) EC may have legal effect.

82. Finally, it may be noted that in its letter of 17 August 1999 initiating the procedure set out in Article 88(2) EC, the Commission 'expresses doubts' as to the compatibility 79. Therefore, given that Annex III of the with the last sentence of point 3.10 of the guidelines has no binding effect in respect guidelines of a list of regions covering of the Federal Republic of Germany, the 23.4% of the German population. It states measures taken to implement that annex, that that ceiling may not, 'in its current the decisions of 16 December 1997 and state', be regarded as compatible with the 16 December 1998, cannot have binding common market. It does not, however, effect. Their legal effect cannot go beyond state that that ceiling signifies a failure to the act which those decisions are intended respect a decision made by the Commis- to implement. sion.

86. As it is clear, in my view, that the Commission has never made a definitive statement — neither in the 'decisions' of 16 December 1997 and of 16 December 89. I first propose to consider the plea of 1998 nor in the contested decision — on breach of the principle of equal treatment. the matter of Germany's application for authorisation for aid to regions covering 23.4% of its total population (instead of 17.73%), it could still submit a supplemen- tary list of regions covering 5.67% of its population. It would then be for the Com- 90. Indeed, from the time of the German mission to open the formal review pro- Government's first answer to the Commis-

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sion's notification of the decision of 16 De- 93. The Commission replies that the figure cember 1997, in its letter of 23 April 1998, of 23.4% was not a fixed ceiling to be it made clear that the ceiling of 17.6% set applied immediately to the Federal Repub- for regions under Article 93(3)(c) of the lic of Germany, but represented only an Treaty was, in its opinion, incompatible interim, provisional result in the process of with the principle of equal treatment. determining the ceiling to assign the Fed- eral Republic of Germany on the basis of all the rules in Annex III of the Guidelines.

95. It should be noted, in this respect, that even though Article 87(3)(c) EC 'gives the Commission power to authorise aid intended to further the economic develop- ment of areas of a Member State which are disadvantaged in relation to the national 92. The German Government points out in average', 25 the Commission was also this regard that the ceiling of 23.4% entitled, in establishing the method used initially calculated by the Commission to calculate the ceiling, to take into con- was done so on the basis of objective sideration the situation across the whole of economic data corresponding to the actual the Community. Under Article 87(3) EC, difficulties of those regions. To adjust that 'the Commission has a discretion the exer- ceiling subsequently in such a way as to affect only the Member States not con- cerned by corrections constitutes a breach 25 — Case 248/84 Germany v Commission [1987] ECR 4013, of the principle of equal treatment. paragraph 19.

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cise of which involves economic and social reduction in the total coverage of a assessments which must be made in a Member State should not exceed 25% of Community context.' 26 its previous coverage.

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101. It would have been possible to recon- 104. On the contrary, the Commission cile the objective requirements of the Ger- itself recognises that 'it is certainly possible man regions in issue and the need for to define "the corrections" using par- transitional measures either by increasing ameters other than those used by the the overall Community ceiling, as Germany Commission ...', whilst questioning proposed in its first reply to the Commis- whether 'in this case, that would have sion, or by lowering proportionally all the provided a different result more favourable national ceilings as the German Govern- to the Federal Republic of Germany.' ment proposed in its application.

105. But even if the result would not have been more favourable to the Federal Republic of Germany if a different method of calculation had been used, that would not justify using a method that contravenes 102. The Commission continues to claim the principle of equal treatment. that to distribute the burden of the correc- tion across all the Member States would have negated the purpose of the correc- tions, given that, for the Member States concerned, they constitute minimum guar- antees.

106. It is therefore my opinion that the Commission infringed Article 87(3)(c) EC since, in exercising its power of discretion, it followed internal guidelines, that is to say point 9 of Annex III, which contravene the principle of equal treatment.

103. That argument, however, cannot be upheld. It rests on the supposition that the corrections and the percentage rates repre- sent the minimum which the Member 107. There being no need to analyse in States concerned should be able to receive, further detail the other pleas by the Ger- taking account of Article 87(3)(c) EC. But man Government, I therefore conclude, if there is, in my opinion, nothing to confirm the action were to be considered admiss- that that supposition is true. ible, that it is well founded. I - 5624