C-278/00

GREECE v COMMISSION

OPINION OF ADVOCATE GENERAL GEELHOED delivered on 25 September 2003 1

I — Introduction I I — Facts of the case and legislative background

2. As is evident from the application and the contested Commission decision, the agricultural cooperatives at issue are legal persons governed by private law whose 1. In this case the Greek Government has members are jointly liable for any debts. applied to the Court to annul in its entirety The members are for the most part produ- the decision of the Commission of the cers of primary agricultural products. They European Communities on the aid schemes operate together in the cooperative to implemented by Greece in favour of the cultivate, process and market their pro- settlement of debts by the agricultural ducts. cooperatives in 1992 and 1994 including the aids for reorganisation of the dairy cooperative AGNO 2 (hereinafter 'the deci- sion'), the schemes implemented by Greece in 1992 and 1994 to settle the debts of a number of agricultural cooperatives having been declared incompatible with the com- mon market. In the alternative, the Greek Government has applied for the annulment 3. These cooperatives are governed by a of Article 2 of the aforementioned decision, special legal arrangement. They are in which Greece is instructed to recover, required, for example, to take all their with interest, the aid declared unlawful. members' produce, and they are used by the Greek Government as intermediaries in the achievement of the objectives of its social 1 — Original language: Dutch. and other policies. The Greek legislation 2 — Commission decision of 1 March 2000 on the aid schemes referred to below — in paragraphs 6 and 7 implemented by Greece in favour of the settlement of debts by the agricultural cooperatives in 1992 and 1994 including — reveals that the agricultural cooperatives the aids for reorganisation of the dairy cooperative AGNO (notified under document number C(2000) 686, may act as instruments of policy over a OJ 2002 L 159, p. 1). wide area.

9. The same letter reveals that the Greek Government, in applying this provision, entered into a commitment to compensate the ABG for some of the outstanding payments for 61 agricultural cooperatives, 6. Article 32(2) of the aforementioned law the amount being GRD 91.769 billion out establishes that the Greek State may assume of a total of GRD 266.126 billion. and settle debts to the Agricultural Bank of Greece (hereinafter 'ABG') incurred by primary, secondary and other tertiary cooperative associations, cooperatives and undertakings between the years 1982 and 10. The second Greek statutory arrange- 1989, provided and to the extent that they ment of interest here concerns Article 5 of were incurred owing to the implementation Law No 2237/94. This law was passed to of social or some other intervention policy implement Council Regulation (EEC) on the instructions and on behalf of the No 2079/92 of 30 June 1992 instituting a State. Community aid scheme for early retirement from farming. 3It includes a number of provisions concerning the debts of agricul- tural cooperatives. According to Article 5 of this law, the ABG may, within specified parameters, assist agricultural cooperatives with the payment of outstanding debts. Article 5 applies to any debt outstanding at 7. Article 32(3) of the law establishes that 31 December 1993 which is attributable to the assumption and settlement of the said 'objective and external circumstances'. debts shall be subject to the essential prerequisite that the cooperative associa- tion, cooperative or company shall be deemed viable. 3 — OJ 1992 L 215, p. 91.

12. According to the aforementioned law, assistance to cooperatives is subject to the previous submission of a development/ modernisation feasibility study, demon- I I I — The contested decision strating that the cooperatives are able to repay the rescheduled debts. Furthermore, debt rescheduling may be conditional on the fulfilment of certain conditions, such as the modernisation of organisation, the 15. In its decision, of which the Greek reduction of personnel and the disposal of Permanent Representative was notified on 5 own capital. May 2000, the Commission ruled inter alia that Article 32(2) of Law No 2008/1992 constituted State aid which was incompa- tible with the common market. It also ruled that Article 5 of Law No 2237/1994 con- stituted State aid which did not satisfy the conditions of the rules governing 'restruc- turing aid'. With a view, in part, to refuting the arguments advanced by the Cheek authorities, the Commission investigated 13. In the Commission decision contested the individual case of the settlement of the by the Greek Government Act No 1620 of debts of the A G N O cooperative. This the Governor of the Bank of Greece of 5 investigation confirmed the Commission's October 1989 also plays a part. This act assessment of the two aforementioned aid authorises credit institutions in Greece to schemes (Article 1 of the decision). regularise their debts pursuant to any type Prompted by these findings, the Commis- of loans in GRD or foreign currencies, t h e sion invited the Cheek authorities to take all

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17. On 13 July 2000 the Greek Govern- ment applied for the annulment of the decision under Article 230 EC. In its application it requests the Court to annul 2 1 . In its detailed decision the Commission the decision in its entirety or, in the discusses three separate procedures initiated alternative, Article 2 of the decision. pursuant to Article 88(2) EC.

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22. First, by letter SG (97) D/10773 dated 26. From the investigation prompted by 19 December 1997, the Commission this complaint it emerged that A G N O had informed Greece of its decision to initiate benefited from the following aid, all pro- a procedure in respect of the settlement of vided by the ABG: debts of cooperatives on the basis of Article 32(2) of Law No 2008/92.

— GRD 851 million under Article 32(2) of Law No 2008/92 and GRD 529.89 million under Article 19(1) of — non- 23. By letter of 7 June 1993 the Greek notified — Law No 2198/94 as com- Minister for Agriculture had already pensation for losses due to the Cher- informed the Commission of the intention nobyl nuclear disaster; to apply the aforementioned provisions of Law No 2008/92 to write off the debts of several types of cooperatives to the ABG.

— GRD 10.145 billion under Article 5 of — non-notified — Law No 2237/94 in the form of a consolidation loan linked to a debt due to considerable delays in the implementation of an investment 24. Initially, the Commission regarded this project; letter as a notification within the meaning of Article 88(3) EC. However, when the Commission was subsequently informed that aid provided for in Article 32(2) of Law No 2008/92 had already been granted, at least to the dairy cooperative AGNO, without its prior approval, it decided to — GRD 1.899 billion under the — non- register these legal provisions as non- notified — Act of the Governor of the notified aids. Bank of Greece of 5 October 1989 allowing public and private banks to consolidate loans to clients.

28. Subsequently, Greece made a request to the Council to agree to the last of these m e a s u r e s p u r s u a n t to the t h i r d subparagraph of Article 88(2). By decision of 15 December 1998, the Council agreed 31. The latter aspect is reflected in the very to this request. 4In paragraph 10 of its comprehensive application submitted by contested decision the Commission states the Greek Government, in which numerous that Articles 14 to 17c of Law No 2538/97 pleas are presented to contest almost every are 'consequently' not covered by its aspect of the decision. decision. In the application here at issue, however, the Greek Government derives arguments from the Council's decision of 15 December 1998. Even though it is not covered by the contested decision, the third procedure therefore retains some relevance to the assessment of the application. 32. As an aid to the clarity of this Opinion, the pleas presented are grouped and assessed below as follows:

29. In the contested decision the Commis- sion focuses on the compatibility of the — the pleas directed against the Commis- generic provisions of Article 32(2) of Law sion's ruling on Article 32(2) of Law No 2008/92 and Article 5 of Law No 2008/92 (VI); No 2237/94 with Article 87 EC. It also investigates and assesses the aid which

4 — Decision No 1620, not published; see, however, Commu- nication from the Commission concerning State aid C 32/98 (ex NN 22/98) involving aid for debt settlement and — the pleas directed against the Commis- consolidation of agricultural cooperatives and other enter- prises through the Agricultural Bank of Greece (OJ 1999 C sion's ruling on Article 5 of Law 120, p. 16). No 2237/94 (VII);

34. The Greek Government's pleas arc directed in particular against the following recitals of the decision: 33. The Greek Government has essentially presented four pleas against the Commis- sion's ruling that Article 32(2) of Law No 2008/92 is incompatible with Article 87 EC and that State aid granted under that provision should be recovered: '(a) As regards the applicability of Arti- cle 87(2)(b) EC

(155) Firstly, the Commission took note — the Commission was wrong to regard of the fact that Article 32(2) of the scheme concerned as a generic aid Greek law No 2008/92 is primarily scheme and omitted to assess the intended to write off debt of information forwarded by the Greek agricultural cooperatives incurred Government on the individualised by the execution of the social and application of the scheme; intervention policy on behalf of the

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(159) According to its existent practice, the Commission considers that, where aid is paid only several years after the occurrence of the event in question, there is a real danger that the p a y m e n t of such aid will produce the same economic effects as operating aid. Therefore, in the absence of a specific justification, resulting for example from the nature and extent of the event, or the delayed or continuing nature of the damage, the Commission does not approve national aids which are submitted more than three (157) Secondly, an analysis of the 116 years after the occurrence of the evaluation sheets indicating the event. The existing practice has reasons for debt write-offs for recently been codified in point individual cooperatives sent by 11.1.2 of the Community guide- the Greek authorities shows that lines for State aid in the agriculture in none of the cases is the damage sector. The administrative difficul- caused by natural disasters or ties invoked by the Greek autho- adverse climatic conditions. Only rities cannot be considered an six cooperatives (including the acceptable justification, since the dairy cooperative AGNO) bene- law, adopted in 1992, foresees fited from write-offs linked to the already the settlement of damage nuclear disaster at Chernobyl. predating to 1982.

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(166) The remarks of the Greek autho- (168) The Commission communication rities confirm that the objective of of 1988 on the method for the the measure is to relieve the bene- application of Article 87(3)(a) and ficiaries of their debt burden, and (c) to regional aid provides in point that there is no reciprocity on the 1.6 that in recognition of their part of the beneficiaries which special difficulties the Commission might be considered to benefit the may, by way of derogation, development of certain economic authorise certain operating aid in activities or certain regions. To this these regions under specific condi- extent, a mere statement of the tions which are enumerated in sub- "viability" of the cooperative can- points (i) to (v). Sub-point (ii) of not be considered as reciprocity. these conditions specifies that "the The fact that cooperatives are aid should be designed to promote statutorily bound to take up the a durable and balanced develop- entire production of their members ment of economic activity and not is not liable to modify this conclu- give rise to sectoral overcapacity at sion, as acceptance of a coopera- the Community level such that the tive statute is not mandatory. resulting Community sectoral pro- Having regard to the principles blem produced is more serious that laid down in the case-law, the the original regional problem; in Commission is therefore bound to this context, a sectoral approach is conclude that the measure cannot required and in particular the benefit from the derogation under Community rules, directives and Article 87(3)(c) of the Treaty. guidelines applicable to certain industrial (steel, shipbuilding, syn- thetic fibres, textiles and clothing) and agricultural sectors, and those concerning the industrial enter- prises involving the transformation of agricultural products are to be observed."

35. The Greek Government accuses the Commission of wrongly regarding Arti- cle 32(2) of Law No 2008/92 as providing for a general aid scheme. When, in 1997, the Commission had finally investigated the matter, the application of Article 32 had already been concluded in individual cases. 38. The Commission contends that Arti- Article 32 concerned the granting of aid cle 32(2) of Law No 2008/92 concerns not intended to compensate for damage result- the granting of aid in individual cases but a ing from events which had occurred at general aid scheme. The authority to assess, various times before the adoption of Law approve or prohibit general aid schemes No 2008/92. It was therefore aware of the had been explicitly recognised by the Court. number and identity of the undertakings As a regime, the provisions of Article 32(2) which had received aid. made for a general or abstract scheme with an indeterminate number of beneficiaries. Given the general nature of the scheme, the Commission's decision could concern only that scheme. It did not therefore concern the individual cases in which Article 32(2) had been applied. The Commission goes on to say that a general aid scheme can be regarded as compatible with the EC Treaty 36. The Commission had, moreover, used only if it is sufficiently certain that its the information on the various cooperatives application in individual cases is also which had been forwarded to it by the compatible with the EC Treaty. Approving Greek Government by letter of 9 June aid schemes which were not transparent in 1 9 9 7 . This was evident from p a r a - terms of the number of beneficiaries, the graphs 147 to 160 of the contested deci- scale and intensity of the aid and the sion. The statements made therein were objectives would be tantamount to giving obviously based on a study of the 116 a blank cheque to the Member States evaluation sheets which had also been concerned and might diminish the effective- forwarded. ness of Articles 87 and 88 EC.

42. It has been undisputed since the Court's judgment in Italgrani 6 that the Commission has the power to assess generic aid schemes as such. The use of this power has meanwhile become established policy practice. As the Commission rightly com- ments, it is also necessary policy practice. It is the only way in which it is able to 40. The applicant's view that each case in monitor the application of national aid which the scheme was applied should be schemes as the Treaty requires. assessed would result in the Commission's relevant services being overburdened and paralysed. This did not rule out the possibility of individual instances of appli- cation being notified and assessed, but in that hypothesis such instances would have to be notified separately. This followed from the case-law on Article 88(3) EC, which had now been incorporated in 43. In the present case the question which Regulation (EC) No 659/1999. 5 In the then arises is whether the Commission present case, however, the Commission could regard Article 32(2) of Law took the view that the procedure concerned No 2008/92 as a generic aid scheme. Given the assessment of the aid scheme as such. the wording and purport of this scheme, there is no doubt about this:

5 — Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 6 — Case C-47/91 Italy v Commission ('Italgrani') [19941 ECR I- of the EC Treaty (OJ 1999 L 83, p. 1). 4635.

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— its scope in terms of beneficiaries is ficiaries and the administrative practice by generic (primary, secondary or tertiary which it is applied must be sufficiently clear cooperatives, associations or under- from the notified scheme. The scheme must takings having in common the fact be, in other words, transparent and 'water- that they are in debt to the ABG); tight'.

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48. On the basis of this information alone, 51. Secondly, the applicant continues, the which it received partly as early as 1993 Commission had wrongly found that there and partly later, in 1997, the Commission were no causal links between the reschedul- could have arrived at the conclusion that ing of the cooperatives' debts and damage the scheme provided for in Article 32(2) of caused by unusually adverse climatic con- Law No 2008/92 was not, as such, capable ditions. According to the applicant, such of being approved as a generic aid scheme. links did indeed exist where the Greek State had required the cooperatives to take action to the benefit of primary producers in such cases. The applicant explains these links by referring to the action taken by the AGNO cooperative after the Chernobyl nuclear disaster. AGNO had at that time supported the prices which the producers received for their milk because the market B — The second plea: the compatibility of for it and for other dairy products had the aid with Article 87(2) (b) EC completely collapsed. There had thus indeed been a causal link between the natural disaster or exceptional occurrence, the cooperative's debt and its rescheduling on the basis of Article 32(2) of Law No 2008/92. 1. Arguments of the parties

administrative and budgetary constraints cers or whether the compensation received when the lapse of time between the therefor in the form of products taken at circumstances causing the damage and the fixed prices was adequate. The application c o m p e n s a t i o n for t h a t d a m a g e was of Article 87(2)(b) EC therefore lacked the assessed. Such constraints had indeed necessary transparency. This, according to occurred in the present case. the Commission, is also reflected in the manner in which the cooperatives spent the aid: in some cases the resources were used for investments, in others as production subsidies. This is far removed from the limited and precise tenor of the prohibition 53. The Commission essentially presents of State aid imposed in Article 87( 1 ) EC. two arguments against this. First, it was clear from the wording of Article 87(2)(b) EC that the derogation from the general prohibition for which it provided applied only to aid measures that sought to compensate for damage which was a direct consequence of natural disasters or other 55. Secondly, the lapse of time between the exceptional occurrences. In the present case circumstances which caused the damage there was no such direct link, since it was and the compensation therefor under Law not the assisted cooperatives who had No 2008/92 makes it difficult, in the suffered damage but the primary producers Commission's view, to assume a direct whose products or production had suffered and compelling link between the two. as a result of the natural disasters con- Rather than compensation for damage cerned. The fact that the cooperatives had caused by exceptional occurrences, the suffered damage through having for social financial assistance provided after a con- reasons to continue to take from the siderable delay may be deemed to be a primary producers at the current target production or investment aid, which may prices products which were greatly reduced seriously affect the conditions of competi- in value was, at best, indirectly linked to tion. those occurrences. The 'damage' they suf- fered emanated directly from the obliga- tions imposed on them by the Greek authorities. In the application of Article 32 (2) of Law No 2008/92 to the cooperatives no reference whatever is to be found to the damage actually suffered by the primary producers. 2. Assessment

acceptability of the contested aid as a — provided by the authorities to compensate generic — derogation from the prohibition for that damage. Taking account of finan- of State aid under Article 87(2)(b) EC. cial burdens which are indirectly or tenu- ously linked to the occurrences causing the damage might increase the number of potential beneficiaries of such financial assistance to an almost unlimited degree, along with the 'damage' qualifying for compensation. Secondly, the Greek Gov- 57. It is clear from the manner in which ernment does not refute the Commission's this measure was applied that in some cases contention in paragraph 140 of the decision there was no link whatever to a previous that evidence of a causal link to a natural natural disaster or exceptional occurrence. disaster or exceptional occurrence was to be In other cases it was applied to settle debts found in only six of 116 evaluation sheets which the cooperatives had incurred for submitted. Finally, the Greek Government investments or the financing of certain fails to show why it had been necessary for activities in their operations, such as the so much time to elapse between the promotion of exports or the storage of circumstance causing the damage and the products. There is no evidence of any causal compensation for that damage. Its explana- link between natural disasters or excep- tions are confined to a few generalities, tional occurrences as circumstances causing which are by definition unequal to the task damage and the activities for which debts of explaining why, in each specific case, so were incurred. In yet other cases such much time had to elapse between the causality does emerge, but the link is no circumstance causing the damage and the more than indirect. This diversity of appli- compensation therefor. cation is simply inconsistent with the conclusion that Article 32(2) of Law No 2008/92 is, as a generic scheme, compatible with the specific ground for derogation set out in Article 87(2)(b) EC. For this reason alone the Greek Govern- ment cannot rely on this ground for derogation. C — The third plea: the compatibility of the aid with Article 87(3) (a) EC

64. The Commission had omitted to refei- to the favourable implications of the rescheduling of the cooperatives' debts for economic regional development. In view of the fundamental role played by the coop- 61. The rescheduling of the debts of 116 eratives in the weaker, primarily agricul- cooperatives was necessary to repair the tural areas of Greece, these implications damage resulting from various exceptional had been substantial. There was little occurrences, such as the nuclear disaster at employment outside the agricultural sector C h e r n o b y l . Where these debts corre- in those areas. The economic position of sponded to the various investments effected agriculture was of the utmost importance by the cooperatives, these investments had for their development. Omitting to resche- been necessary, according to the Greek dule the cooperatives' debts would have authorities, under their policy of the reor- meant their bankruptcy, which would have ganisation, restructuring and economic and had catastrophic consequences for the social modernisation of the cooperative development prospects of the areas con- sector. cerned.

62. The Greek authorities had agreed to the rescheduling of the debts of only 116 cooperatives because they were important 65. This being the case, the Commission for the economic development of the areas should have weighed up the favourable in which they were operating (underdeve- implications of the aid for regional eco- loped areas with high unemployment). The nomic development against the adverse requirement that the cooperatives be viable effects it might have on international trade, must also be seen in that light. It extended the conditions of competition and the to ensuring that the debt rescheduling organisation of agricultural markets. It contributed to regional development. had neglected to do so.

68. In reply, the Commission contends that 70. Nor, according to the Commission, can Article 32 of Law No 2008/92 cannot come the applicant's second argument be under the Commission communication on accepted. In the present case the Commis- the method for the application of Article 92 sion had to assess the aid scheme as such. It

7 —Joined Cases C-278/92, C-279/92 and 280/92 Spain v 8 — OJ 1988 C 212, p. 2. Commission [1994] ECR I-4103, paragraph 49. 9 — See also recital 151 of the decision.

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was not a question of assessing each may be permitted in certain cases. Where separate application of the scheme. For there are special or persistent problems, that, the individual cases would have had to production aid may also be permitted by be notified under Article 88(3) EC. way of exception.

2. Assessment

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74. I would also point out in this context provides if a Member State shows that the that a regional aid programme in the aid meets the criterion of regional specifi- agricultural sector cannot simply qualify city. 13 An ad hoc assessment in unaccep- for the derogations defined in Article 87(3) table here for two reasons: firstly, because EC. Although Articles 87 to 89 EC are — as I have stated in paragraphs 41 to 43 entirely applicable to the sectors governed — the Commission was able to regard the by a common organisation of the market, aid scheme as a generic aid scheme and application continues to be subject to the assess it as such. An assessment of all the provisions of the regulations concerned. In individual cases of aid already granted and other words, any reliance on the grounds provided is therefore out of the question for derogations given in Article 87(3)(a) or here. Secondly, it is unacceptable because (c) for aid to an economic activity governed the Greek Government has not demon- by an organisation of the agricultural strated that the aid scheme meets the market should be assessed primarily in the criterion of regional specificity. Under light of that organisation of the market. In Article 32(2) of Law No 2008/92 coopera- that assessment the Commission has some tives are the beneficiaries, regardless of the discretionary power. The Greek Govern- area in which they are operating. ment has not demonstrated that the Com- mission's view that the contested scheme undermines the effect of the common organisation of the market was manifestly unfounded. 12

77. The Greek Government criticises the 80. Secondly, the Greek Government refers Commission for regarding the aid as to the judgment in RSV v Commission, 1 4in unlawful. As early as 7 June 1993 the which the Court annulled the Commission applicant had informed the Commission of decision concerning the recovery of incom- its intention to apply Article 32(2) of Law patible aid because of the Commission's No 2008/92 with a view to writing off the delay of 26 months in giving the contested debts which various kinds of cooperatives decision. The Court considered that such a owed to the ABG for the period from 1982 delay could in the case in point establish a to 1989. legitimate expectation on the part of the recipient of the aid so as to prevent the Commission from requiring the national authorities to order the refund of the aid. The Greek Government takes the view that the situation in the present case is no different from that in the case of RSV v Commission.

78. It was, however, not until 19 December 1997, four and a half years after the letter had been forwarded, that the Commission informed Greece of its decision to initiate the procedure provided for in Article 88(2) EC with respect to the scheme for the writing off of debts of cooperatives under Article 32(2) of Law No 2008/92.

82. The Commission believes that there is a patibility of an aid measure with the clear difference between the judgment in common market is to be determined, under RSV v Commission and the present case. the Court's supervision, by means of an The Greek Government had never formally appropriate procedure, for whose applica- notified the Commission of the aid granted tion the Commission is responsible. as it was required to do by Article 88(3) EC. That aid neither stemmed from nor was associated with a previous aid scheme which had already been approved by the Commission. 85. Where new aid measures are con- cerned, this procedure is set out in Article 8 8 (3) EC. The details of the application of that procedure are elaborated in extensive rul- 83. The Greek Government's reliance on ings of the Court, which were codified in a the case of RSV v Commission is, according Council regulation in 1999. 15 As the acts to the Commission, not legitimate since the and events relevant in this case occurred conditions applying in the case of RSV v before that regulation entered into force, Commission are not satisfied in the present they must be examined primarily in the case. Not only had the Commission not light of the Court's rulings on the applica- been formally notified in the present case of tion of Article 88(3). the aid granted, but that aid differed from that granted in the earlier case in that it was not related to the additional costs of an operation for which aid already approved by the Commission had been granted. 86. In its judgment in the Lorenz case, 16 confirmed in subsequent case-law, 17 the Court stated that the introductory phase of the investigation alluded to in Article 88(3) EC was intended to enable the Commission to form an initial opinion on the question whether the intended aid measures of which 2. Assessment it had been notified were fully or partly compatible with the Treaty. The aim of this

provision, preventing the introduction of 88. Thus two conditions must be satisfied aid measures inconsistent with the Treaty, before the consequences of the Lorenz means that the prohibition laid down in the judgment occur. The aid is governed by last sentence of Article 88(3) EC remains in the rules on existing aid measures and may force throughout the introductory phase. In be granted by a Member State if (a) the view of the interest which the Member Commission does not initiate the opposi- States have in knowing at an early date tion procedure provided for in Article 88(2) where they stand in areas where interven- within two months of notification and (b) tion may be urgently needed, the Commis- the Member State concerned informs the sion should therefore set to work with Commission beforehand of its intention to vigour. If, after being notified by a Member implement the notified aid measure. In the State of an intended aid measure or an present case the Greek Government did not intended change to an aid measure, the satisfy the second condition. After the Commission omits to lodge an objection by notification of an aid measure and after a initiating the procedure provided for in period of two months a Member State may Article 88(2), the Member State concerned not grant the aid concerned without may, after a reasonable period, set at two informing the Commission. It thus acted months by the Court, grant the intended aid contrary to the obligations arising from the provided that it gives the Commission prior third sentence of Article 88(3). The aid notification, whereafter that aid is governed must therefore be regarded as unlawful. by the rules on existing aid measures.

Treaty, the Commission should not have of 7 April 1998 2 1 that the Commission did been permitted to require the national not at that time have all information authorities concerned to recover the aid. It necessary to assess conformity of the State is my view, however, that this ruling must aids granted with the provisions of the be interpreted in the light of the specific Treaty. By letter dated 31 October 1993 to circumstances of the case. the Greek authorities, the Commission therefore requested additional information on the measures foreseen. Furthermore, by letter dated 5 February 1997, the Commis- sion reminded the Greek authorities of the previous letter. In its last letter, the Com- mission informed the Greek authorities that 90. The Commission had been formally failure to provide the additional informa- notified of the aid granted in the case of tion requested might oblige the Commis- RSV v Commission, albeit after it had been sion to open the procedure provided for in paid to the beneficiary. The aid was related Article 88(2) of the Treaty. On 19 Decem- to the additional costs of an operation for ber 1997 the Commission actually initiated which aid approved by the Commission the procedure after the Greek Government had already been granted. It concerned a had failed to respond for three and a half sector to which aid approved by the years. The Greek Government itself is Commission had been granted by the therefore primarily to blame for the length national authorities since 1977. The assess- of the procedure, at least until 19 December ment of its compatibility with the common 1997, since it did not provide the Commis- market had not required a thorough inves- sion with adequate information. tigation. The Court deduced from this that in those circumstances the applicant could have assumed that the aid would no longer meet any opposition from the Commission.

96. The Greek Government's pleas are directed in particular against the following recitals of the decision: VII— Article 5 of Law No 2237/94

'(129) The Commission noted that there are legal provisions authorising all banks in Greece to execute debt rescheduling arrangements. The 95. The Greek Government has essentially terms and conditions according to entered three pleas in opposition to the which these debt reschedules are Commission's view that Article 5 of Law done is left the discretion of every No 2237/94 is incompatible with Article 87 bank according to its commercial EC and that State aid granted under that banking practices. The adoption of law should be recovered: Article 5 of Greek law No 2237/94 allows the ABG to perform the same type of operations, but in more specific conditions. The 22 — Cited in footnote 14. Commission can then presume that

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(133) Furthermore, the Greek argument according to which it would be financially more advantageous to the ABG to reschedule the coop- eratives' debts than to force coop- eratives, for example AGNO, into bankruptcy, does not withstand (131) Consequently, the Commission closer examination. The Commis- considers that this measure is sion considers this should be selective and distorts competition assessed on a case-by-case basis. conditions in the internal market. It gives benefiting cooperatives com- petitive advantages not compatible with the private creditor principle. 23 — OJ 1993 C 307, p. 3.

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(134) As to the case of the dairy coop- the overall value of the securities erative AGNO, it received support provided (GRD 44.23 billion) from the Greek Government in the exceeds the amount of debt to be form of debt write-offs or settle- restructured, the Commission ments through the ABG at least in noted that most of these securities four i n s t a n c e s (Greek law come from the member's joint N o 2 0 0 8 / 9 2 , G r e e k law liability (GRD 30.55 billion) or N o 2 1 9 8 / 9 4 , G r e e k law claims (GRD 4.84 billion). By No 2237/94 and Greek law definition, these types of securities No 2538/97). Any private investor may prove extremely difficult to would at a certain point call into mobilise 2 5 or uncertain, depending question its participation in a on the exact nature of these claims. cooperative in order to limit further losses.

(138) Therefore, the Commission consid- ers that all the conditions for the (136) Secondly, the Greek authorities application of Article 87(1) of the failed to demonstrate that the Treaty are fulfilled.' private banks were executing the same operations on the same con- ditions to relieve the debt of the agricultural cooperatives.

101. As compensation for the damage resulting from the Chernobyl disaster was not paid until 31 August 1993, the coop- eratives had incurred major debts. These 98. Firstly, the Greek Government accuses were only partly covered by the measures the Commission of wrongly holding that based on Law No 2008/92. The interest on regularising debts under Article 5 of the the remaining debts was extensive, partly aforementioned law does not comply with because the interest rate was high in the the private investor principle. Secondly, it period concerned. Consequently, a consid- disputes the Commission's view that the erable financial burden weighed on the ABG performs a specific function. The third cooperatives as a result of the interest and argument concerns the fact that the ABG repayment obligations associated with the had not been required to reschedule debts outstanding debts. In addition, marketing and did not honour all applications for debt opportunities had been reduced by the rescheduling. Finally, the Greek Govern- collapse of the Soviet Union, while market- ment maintains that the State did not ing costs had risen steeply because the compensate the ABG for any costs asso- normal transit routes had been blocked by ciated with the action it had taken. the conflicts in the former Yugoslavia. Finally, the general climate in Greece was unfavourable owing to the restrictive finan- cial and monetary policies pursued by the Greek Government to ensure the conver- gence of the Greek economy with those of the other European Union countries.

105. The ABG's role in the agricultural sector in Greece obliges the ABG to take account of major sectoral parameters in its 103. The decisions taken by the ABG on decisions, such as the long-term viability of the rescheduling of the cooperatives' debts its clients and the protection of its reputa- had thus been in total accord with the way tion as a financier in this sector. The in which a private bank would have acted Commission infers from this that the ABG in similar circumstances. The ABG had performs a specific function in the agricul- examined all applications for debt resche- tural sector. The applicant disputes this and duling on the basis of commercial criteria refers in this context to the Commission and approved them only if the cooperatives communication on the application of Arti- satisfied the ABG's general conditions with cles 92 and 93 of the Treaty and of Article 5 respect to debt rescheduling. For this of Commission Directive 80/723/EEC to purpose, the ABG laid down requirements public undertakings in the manufacturing for these settlements in circulars No 150/94 sector, 26 which states that it should be and No 22/95 (see paragraph 87 of the accepted that a 'mother company may also, decision). Various cooperatives did not during a limited time, carry the losses of a satisfy the criteria, and their applications subsidiary in order to allow this latter to were therefore rejected. The ABG was, withdraw from the sector under the most moreover, virtually the only bank to favourable conditions. Such decisions can operate in an agricultural sector. be motivated not only by the possibility to get a direct profit, but also by other concerns such as maintaining the image of the whole group or to redirect its activities. However, when the new injections of capital are divorced from all possibility of profitability, even in the long term, these injections must be considered as aid'.

107. In view of the foregoing, the applicant believes that the Commission's decision should be annulled because it is based on an incorrect interpretation of the applicable provisions, on an incorrect interpretation of the facts and on an inconsistent and 110. The Commission takes the view that inadequate statement of reasons. the ABG performs a specific function. It gives two reasons for this. Firstly, there are no private banks which grant loans to cooperatives. This implies that the ABG performs a special task in the agricultural sector which differs from the performance of a task under normal market conditions. Secondly, the ABG is interested not only in 108. In reply the Commission argues that the probability of making a direct profit but Article 5 of Law No 2237/94 concerning also in other elements, such as the con- the consolidation of debts of agricultural tinuity of the undertakings concerned. The cooperatives does indeed constitute an aid Commission communication to which scheme within the meaning of Article 87(1) Greece refers when contesting this point is EC. Notwithstanding the existence of gen- not applicable in this context, since the eral provisions giving banks the option of disputed case concerns not the injection of rescheduling their clients' debts, Article 5 of capital but the rescheduling of debts. Law No 2237/94 provides for the special treatment of the cooperatives by the ABG. More specifically, it is clear that Article 5 of Law No 2237/94 establishes very favour- able conditions for the cooperatives, namely a term of not more than 15 years, a grace period of three years and an interest 111. The applicant has maintained that rate 50% of the normal market rate for Article 5 of Law No 2237/94 does not such loans. The Commission therefore provide for State aid since the ABG has not considers it likely that some cooperatives would not have qualified for debt resche- duling under normal market conditions. 27 — Case C-295/97 Piaggio [1999] ECR I-3735.

2. Assessment 114. The Greek Government has argued that, as it has not paid any compensation to the ABG, there can be no question of State aid being involved. This argument cannot 112. Article 5 of Law No 2237/94 stipu- be accepted. lates that the ABG may, within certain limits, help agricultural cooperatives to pay outstanding debts. This arrangement applies to all debts outstanding on 31 December 1993 which are due to objective and external circumstances. This means 115. It follows from the Court's case-law that debts arising, for example, from that Article 87( 1 ) EC covers all the financial mismanagement do not qualify for restruc- means by which the authorities may actu- turing. Under this law no interest need be ally support undertakings, irrespective of paid during the first half of the term of the whether or not those means are permanent- rescheduled loan. Thereafter interest assets of the State. Consequently, even equivalent to 50% of the normal market though the sums involved in the measure rate is payable on such loans. The term of concerned are not permanently held by the the loans is set at 10 years. However, the Treasury, the fact that they constantly ABG has the option, in exceptional cases remain under State control, and therefore where the deficits are particularly serious, available to the competent national autho- of extending the repayment period to 15 rities, is sufficient for them to be categorised years, with a grace period of three years, or as State aid. 28 reducing the interest rate to less than 50% of the market rate. Assistance to coopera- tives is subject to the prior submission of a development/modernisation feasibility 28 — See Case C-83/98 P France v Ladbroke Racing and Commission [2000] ECR I-3271, paragraph 5 0 .

117. Equally unacceptable is the Greek Government's argument that Article 5 of Law No 2237/94 cannot be equated with State aid because Article 5 does not impose 120. The Greek Government has stated in any obligation on the ABG to reschedule its comments that the ABG is required to the debts of cooperatives or grant the take account in its decisions of such major cooperatives any right to require the ABG sectoral parameters as the long-term viabi- to reschedule their debts. The same is true lity of its clients and the protection of its of the Greek Government's argument that own reputation as a financier in this sector. Article 5 does not provide for aid because The Commission infers from this that the not all applications for debt rescheduling ABG performs a specific function, partly have been honoured. because the ABG is virtually the only bank operating in the agricultural sector. The Greek Government disputes this view by referring to the Commission communica- tion on the application of Articles 92 and 93 of the Treaty and of Article 5 of Commission Directive 80/723 to public undertakings in the manufacturing sec- 118. I endorse the argument advanced by tor. 29 The recital to which it refers con- the Commission in its comments that the cerned the situation in which a mother absence of an obligation to honour all company might carry the losses of its applications for rescheduling is inherent in subsidiaries for considerations other than an aid measure. The Greek Government's the pursuit of profit. argument contains a contradiction in terms. Aid measures are, after all, by nature selective. This specificity is also one of the main elements of the term 'aid measure'. 29 — Cited in footnote 23.

122. It is my opinion that the ABG does indeed perform a specific task, firstly 125. In the judgment in Belgium v Com- because the ABG is virtually the only bank mission 31the Court considered that 'by operating in the agricultural sector. In virtue of Article 92(1) of the Treaty, the contrast, the Greek Government itself also provisions of the Treaty concerning State states that the ABG has such a function aid apply to aid granted by a Member State since it emphasises in its comments that the or through State resources in any form only question is whether a private bank whatsoever. It follows ... that no distinction would have rescheduled the debts of the can be drawn between aid granted in the agricultural cooperatives on the same terms form of loans and aid granted in the form of as the ABG. Secondly, the Greek Govern- a subscription of capital of an undertaking. ment has said that the ABG should take Aid taking either form falls within the account of major sectoral parameters. prohibition contained in Article 92 where Through its public undertakings the State the conditions set out therein are fulfilled. is able to pursue other than commercial An appropriate way of establishing whether objectives, as the eleventh recital of the such a measure is a State aid is to apply the preamble to Directive 80/273 points out. criterion ... of determining to what extent From this too it must be inferred that the the undertaking would be able to obtain the ABG performs a specific function. sums in question on the private capital markets. In the case of an undertaking whose capital is almost entirely held by the public authorities, the test is, in particular, whether in similar circumstances a private shareholder, having regard to the foresee- ability of obtaining a return and leaving 123. Finally, it must be considered whether the Greek Government is justified in com- plaining that the Commission was wrong to rule that Article 5 of Law No 2237/94 does 30 — Case C-303/88 Italy v Commission [1991] EXR I-1433, paragraph 20. not comply with the private investor paragraph 20. 31 — Case 234/84 Belgium v Commission [1986] ECR 2263, principle. paragraphs 13-14.

B — The second plea: the compatibility of the aid with Article 87(2) (b) EC or Arti- cle 87(3) (a) EC

127. The ABG does not bear comparison with a private investor. If a private bank rescheduled debts in this way in similar 1. Arguments of the parties circumstances, on the basis of expected profitability and aside from any considera- tion of a social nature or of regional or sectoral policy, no State aid would be 129. The arguments presented by the forthcoming. For it is assumed that a Greek Government in its second plea in private lender acts in its own commercial support of its contention that Article 5 of interest. The ABG, on the other hand, is Law No 2237/94 is compatible with the required to take account of interests which common market under Article 87(2)(b) EC differ from those of a private bank. It does or Article 87(3)(a) EC are very similar to not act solely on the basis of its own those which it advanced in its comments on

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Article 32(2) of Law No 2008/92. For the lates that aid to facilitate the development substance of these argument I refer, for of certain economic activities or of certain brevity's sake, to paragraphs 49 to 52 and economic areas may be declared compatible 59 to 67. It follows that the Commission's with the common market, where such aid defence is virtually the same; see para- does not adversely affect trading conditions graphs 53 to 55 and 68 to 70. to an extent contrary to the common interest.

132. The information from the Commis- 2. Assessment sion concerning Community guidelines on State aid for rescuing and restructuring firms in difficulty 32 shows that restructur- ing aid may be approved if the following 130. For the same reasons as those given in conditions are satisfied: paragraphs 56 to 58 and paragraphs 71 to 74 of this Opinion with respect to the examination of the second and third pleas against the Commission's ruling on Arti- cle 32 of Law No 2008/92, I consider the Greek Government's arguments mutatis (i) restoration of viability; mutandis to be untenable and not to form a ground justifying Article 5 of Law No 2237/94.

(v) monitoring and annual report. 135. It follows from this analysis, accord- ing to the Greek Government, that the rescheduling of the debts and the operation of the agricultural cooperatives in the less prosperous areas on a better economic basis is beneficial to the activity and economic development of agriculture there. This could not be achieved by the market itself. The market, however, did not play any part in the agricultural sector since, as in all EC 133. Greece accuses the Commission of countries, the specific features of this sector having incorrectly assessed the last four of had led to extensive regulation of agricul- these conditions. According to the Greek tural production in all EC countries (see Government, the second condition has also Articles 33 and 42 EC). indeed been satisfied since the restructuring scheme applies primarily to small coopera- tives and in some cases loss-making activ- ities have had to be abandoned or cut back. The third condition has similarly been satisfied. From the list of the 388 agricul- tural cooperatives which have qualified for a debt rescheduling scheme it is clear that most of the aid corresponds to the costs and 136. According to the applicant, the Com- benefits of the restructuring. In the decision mission has also contravened Article 158 the Commission argued that it could not be EC, which stipulates: 'In order to promote guaranteed that the approved aid was its overall harmonious development, the limited to the strict minimum needed in Community shall develop and pursue its every case. Greece ascribes this conclusion actions leading to the strengthening of its to the fact that the Commission has not economic and social cohesion'. According examined each case individually. If the to the Greek Government, a higher Com- Commission had done so, it would have munity objective, the strengthening of come to the conclusion that they satisfied economic and social cohesion, is pursued the third condition. The last two conditions by Article 5. had similarly been satisfied, the ABG having intervened whenever necessary. Monitoring had also been carried out and annual reports drawn up.

138. Nor was the applicant able to justify the absence from the law of a criterion relating to the required minimum contribu- tion from the cooperatives to the restructur- ing costs. Even more important was the fact 140. Article 87(3) EC gives the Commis- that the application of the law was not sion a discretion the exercise of which confined to small and medium-sized under- involves economic and social assessments takings, making it a priori impossible for which must be made in a Community the ground for derogation given in Arti- context. 34 In the present case there is cle 87(3)(c) EC to apply in the case of the nothing to show that, in stating that the contested scheme in its present form. aid scheme concerned docs not qualify for the derogation provided for in Article 87(3) (c) EC, the Commission exceeded this discretionary power. In paragraphs 158 to 191 of the contested decision the Commis- sion devotes sufficient attention to all the elements of Article 87(3)(c) EC. In particu- 139. The applicant believes that the Com- lar, it considers in this context the require- mission should have assessed the various ments which the general Community guide- cases individually. The Commission dis- lines entail for the restructuring of under- putes this. Where a Member State notifies takings in difficulty. 35 This examination an aid scheme in a general and abstract has led to the conclusion that the scheme form, the Commission assesses it on the provided for in Article 5 of Law basis of its general and abstract features. No 2237/94 does not satisfy the require- This means that the scheme must include ments of the guidelines in various respects. sufficient guarantees that all requirements The arguments advanced by the Greek relating to compatibility with Article 87 EC Government do not present any facts or are met. In the absence of such guarantees circumstances to show that the Commission the scheme concerned must be considered based its view on incorrect information. incompatible with the common market. Nor do they demonstrate that the Commis- This does not, however, rule out the sion associated manifestly incorrect conclu- possibility of individual cases of the grant- sions with it. This plea is therefore unac- ing of aid being notified and being exam- ceptable. ined and assessed on their own merits in isolation from the general scheme. 34 — Philin Morris v Commissum (cued m footnote 12, para- graph 24), Denfil v Conwmsitm (cued in footnote 12, paragraph 1«) and Case C-169/95 Spain v Commission 33 — Information from the Commission (cited m footnote 32, [1997] ECU I-135, paragraph 18. point 3.2.3). 35 — Information from the Commission (cited in footnote 32).

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143. The Greek Government also takes the 146. The Commission points out that the view that the compensation for the losses aid granted to AGNO under Article 19 of incurred by A G N O as a result of the Law No 2198/94 (GRD 529.89 million) Chernobyl nuclear disaster was not exces- covered interest on compensation paid sive. The amount granted, GRD 1.38 belatedly for losses caused by the Cherno- billion, comprised the direct loss of GRD byl nuclear disaster. This aid was prohib- 851 million and the interest on that loss in ited operating aid, and there had been no the amount of GRD 529.89 million. The direct link with an exceptional occurrence. actual interest on the loss amounted to As this aid was granted for the same reason GRD 959.79 million. The ABG therefore as the aid granted under Article 32(2) of argued that the rescheduling of GRD Greek Law No 2008/92, the same conclu- 529.89 million in interest was not excessive sion must be drawn in this case. c o m p e n s a t i o n for the losses actually incurred and that the rescheduling of this debt must therefore be regarded as compa- tible aid under Article 87(2)(b) EC.

2. Assessment

1. Arguments of the parties 149. In paragraphs 56 to 58 I have already referred to the absence of any direct causal link between natural disasters or excep- tional occurrences as loss-inducing circum- stances and the activities for which the 151. Firstly, the Greek Government main- debts were incurred under Article 32(2) of tains that the Commission has made an Law No 2008/92. In the specific case of incorrect assessment of the facts which AGNO there is no more than an indirect played a part in AGNO's treatment in link. It cannot therefore be argued that the 1995. In its decision the Commission took specific aid granted to AGNO should ben- account of subsequent facts and informa- efit from the derogation from the prohibi- tion of which the ABG could not have been tion of State aid under Article 87(2)(b) EC. aware at the time of its transactions with AGNO. It could not therefore have taken those facts and that information into account. The Commission's conclusion that AGNO received aid on as many as four occasions and that any private investor would have reconsidered his continued financial involvement in AGNO was not therefore sustainable.

jointly liable for debts would be mean- rate to the rescheduling of AGNO's debt. ingless. The Commission applied the reference rate when determining the amount of regional aid, for example. The banks did not use the reference rate when granting loans to their clients. The Commission had not explained why the ABG should use reference rates. These reference rates, which reflected the average bank rate in the capital market, as 153. Thirdly, the Commission had made had been established in consultations an incorrect assessment of the cost-benefit between the Commission and the Greek analysis undertaken by the ABG before the authorities, were not applied in the case of rescheduling of AGNO's debts. The objec- actual loan transactions between banks and tive value of AGNO's assets was not GRD clients. 4 billion but almost twice that figure. If A G N O had failed and its activities had ceased, the value of its assets would have been reduced by 5 0 % and its inventory by 7 0 % . In addition, AGNO's obligations towards the ABG had matured on 31 December 1994. Those obligations formed the basis of the debt rescheduling and 155. In the Commission's view the Greek amounted to GRD 8.061 billion; conse- Government's contention that it had taken quently, the Commission should have taken account of later facts which could not be account of AGNO's entire debt to the ABG, known to or assessed by the ABG at the a sum of GRD 16.7 billion, more than half time of the acceptance of debt rescheduling of which had matured at the time when the is unfounded. The Greek Government had debt rescheduling occurred in 1995. The not actually considered the Commission's real securities, such as the mortgage and reasons for declaring the aid incompatible claims against third parties to the benefit of with the common market. As Article 5 of the ABG, which amounted to almost GRD Law No 2237/94 and Act No 1620 of the 9 billion, must be regarded as an adequate Governor of the Bank of Greece did not security for the ABG or any other bank. satisfy the conditions set out in the Com- Consequently, the ABG's assessment clearly munity guidelines, they were incompatible showed that the securities provided by with the common market, as were the A G N O were sufficient in relation to the transactions which had been effected on debts incurred. the basis of those provisions.

157. In the cost-benefit analysis carried out by the ABG AGNO's own assets of GRD 4 billion were compared to its debt to ABG (GRD 16.7 billion) and its obligations to 2. Assessment private banks (GRD 698 million). This analysis revealed that there were virtually no private investors. What was even more important was that it showed there to be no real securities for the loan provided by the ABG. Most of the securities consisted of the 159. Did the ABG act like a private joint liability of the cooperative's members. investor when rescheduling debts in 1995? Mobilising such securities was extremely I am not convinced by the arguments difficult in practice. In these circumstances presented by the Greek Government in this it could not be maintained that a private respect. The mere fact that the ABG needed investor would have continued to finance to assist AGNO on three occasions within a AGNO without real securities easily mobi- period of something more than five years lised in the market. makes it unlikely that the ABG acted like a private investor when called upon to provide a financial injection on the fourth occasion. This is true a fortiori where the financial risks to the ABG inherent in this fifth operation were substantial and the recovery options offered by AGNO in the event of its insolvency were insufficient and 158. The Commission explains, finally, unsound when compared to the ABG's why it compared the interest rate agreed claims. The latter aspect is undoubtedly by the ABG and AGNO (21.5%) for the true of recovery from AGNO's members. 1995 debt rescheduling with the reference As partners in this cooperative, they were rate (26.47%). The reference rates were liable for its debts. The security requirement regularly calculated by the Commission in agreed at the time of the debt rescheduling consultation with the Member States' adds little or nothing to this. Effecting such authorities on the basis of the available recovery from the primary producers would data on the national capital markets. They meet with serious social resistance, and the reflected the average current interest for possible yield should not be overrated. In loans to the business community. The this hypothesis, after all, vulnerable pri- Member States must take account of the mary producers who had already lost their

161. I can be brief regarding the Commis- sion's use of the reference rate when assessing Act No 1620 of the Governor of 163. The Greek Government's other pleas the Bank of Greece. That rate is used to can be grouped as follows: calculate the element of aid present in subsidised loan schemes. 36It corresponds to the average level of interest in the various Member States for medium- to long-term loans (five to ten years) for which the usual — the Commission infringed the principle of e q u a l i t y by d e c l a r i n g L a w 36 — Commission notice on the method for setting r e f e r e n c e No 2237/94 incompatible with the and discount rates (OJ 1997 C 273,p. 3). common market;

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— the Commission incorrectly ruled that 15 December 1998 the Council of the Greek Laws Nos 2237/94 and 2198/94 European Union stipulated, under the third and Act No 1620 of the Governor of subparagraph of Article 88(2), that the aid the Bank of Greece affect trade measures referred to in Articles 14 to 18 adversely; and Article 21 of Greek Law No 2538/97 were compatible with the common market up to a maximum of GRD 158.672 billion. 37That law repeatedly refers to the provisions of Law No 2237/94. The appli- cant believes that the Council thus impli- — the Commission has not presented an citly validated all previous aid measures. adequate statement of reasons for the decision;

— the Commission's order that the aid granted be recovered is inconsistent with the principles of proportionality 165. In its decision of 15 December 1998 and legal certainty; finally, the Council approved Greek Law No 2538/97. In the situation thus created Greek farmers or agricultural cooperatives could not foresee that the amounts involved in earlier aid operations would subse- quently have to be repaid. — it is absolutely impossible for the aid granted to be recovered.

168. The Commission dismisses the Greek Government's contention that the recovery 170. The Council of the European Union of the aid granted under Laws No 2008/92 may d e c i d e , u n d e r the s e c o n d and No 2237/94 will result in the recipient subparagraph of Article 88(2) EC, that an undertakings being placed at a disadvan- aid measure is compatible with the common tage compared to the undertakings which market if exceptional circumstances justify have benefited from Law No 2538/97, such a decision. The Council's discretion in which the Council has approved. First of this respect is very specific in nature and an all, that contention rebounds on the Greek exception to the exclusive discretion which Government itself. It did, after all, encou- the Commission has in principle when rage the Council to approve Law assessing national aid measures. The Coun- No 2538/97. The unequal treatment that cil's discretion extends to declaring specific- was the direct consequence of this cannot aid measures compatible or incompatible. be taken as an argument for extending the The scope of the decisions taken by the Council's approval of aid granted in a few Council therefore extends no further than cases to include all cases in which aid has the aid measures to which those decisions previously been granted to the cooperatives explicitly relate. If this were not so, the contrary to Community law. Commission's primary competence would be eroded. The Council decision of 15 December 1998 (No 14015) declares Articles 14 to 18 and Article 21 of Law No 2538/97 to be compatible, in deroga- tion from Article 87 EC, with the common market up to a maximum of GRD 158.672 billion. The scope is thus exhaustively and 169. The arguments derived from the accurately defined. Any further extension of alleged inability of the farmers who bene- that scope with a reference to the principle fited from the earlier aid schemes to under- of equality is incompatible with the dis- stand why the aid granted to them must be tribution of powers under Articles 87 and recovered are untenable for the same 88 EC. It might, moreover, lead to the reasons. The Greek Government might erosion of the prohibition laid down in have known that the Council decision Article 87(1) EC. This plea cannot therefore which it encouraged could have this effect. serve any useful purpose.

173. The applicant also refers to the information from the Commission of 23 December 1994, 38 which states that aid that is too small in amount to have a 2. Assessment significant effect on inter-State trade is not prohibited. This de minimis figure has been

176. It is settled case-law that the relatively 38 — Cited in footnote 32. small amount of aid or the relatively small

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size of the undertaking concerned does not 178. It is clear from the guidelines con- as such exclude the possibility of infra- cerning undertakings in difficulty and from Community trade being affected. 39 Other the fourth paragraph of the notice on the de factors may be decisive when assessing the minimis rule, however, that the de minimis effect of aid on trade, such as whether the rule does not apply to sectors governed by aid is cumulative and whether the under- special Community rules on State aid, takings that receive it are operating in a including, in particular, agriculture and sector that is particularly exposed to fisheries. The Greek Government cannot competition. 4 0 The agricultural sector is therefore rely on these Commission policy exposed to such competition among the rules in the present case. producers of the Member States whose products are traded within the Community. Greek agricultural production in 1998 accounted for 4 . 1 % of overall European production, and Greece exports substantial quantities of products to other Member 179. In view of these considerations the States. 4 1 In such circumstances even small arguments presented by the Greek Govern- amounts of aid may affect trade between ment in support of this plea must be Member States. dismissed.

182. The obligation to provide a statement of reasons is an essential formal require- ment that must be distinguished from the question of the correctness of that state- ment, which concerns the material lawful- ness of the contested act. The statement of D — The fourth plea: recovery of the aid reasons must be appropriate to the act at granted is inconsistent with the principles of issue and must disclose in a clear and proportionality and legal certainty unequivocal fashion the reasoning followed by the institution which adopted the mea- sure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the Court to carry out its review. It is not necessary for the reasoning to go into all the 1. Comments of the parties relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in 184. The applicant maintains that the question. 43 Commission's order to recover the aid granted with interest from the date on which the aid was made available to the beneficiaries is disproportionate. The agri- cultural cooperatives acted in good faith, they knew that the Commission had been notified of the aid in 1993, and after a 183. In the present case the Commission period of seven years recovery of the aid unambiguously states in its decision why and interest would be inconceivable. the contested aid cannot be deemed con- sistent with Articles 87 and 88 EC. The Commission has considered very thor- oughly in its assessment of the contested

187. However, reliance on the good faith of the cooperatives was possible, since the Greek Government had not met the require- ments of Article 88(3) EC when applying Article 32 of Greek Law No 2008/92. Good 189. This plea, in which the applicant faith could certainly not be invoked in the contests the Commission's order to recover case of aid which was granted under the aid granted, is similarly untenable. It is Article 5 of Greek Law No 2273/94, since settled case-law that recovery of unlawful that scheme had never been notified. aid is the logical consequence of the finding that it is unlawful. 45 Consequently, the recovery of State aid unlawfully granted for the purpose of re-establishing the pre- viously existing situation cannot in princi- ple be regarded as disproportionate to the objectives of the Treaty in regard to State aids. 46 The same is true of the demand for 188. Recovery could, however, be rejected interest over the period between the date of on the ground that five years had elapsed the award of the aid and that of its actual repayment.

44 — In Joined Cases 205/82 to 215/82 Deliache Milchkontor 11983] ECR 2633, paragraph 30, the Court ruled that the principles of the protection of legitimate expectation and 45 — See inter alia Case C-142/87 Belgium v Commission assurance of legal certainty are part of the legal order of the (Tubemeuse) [1990] ECR I - 9 5 9 , paragraph 66, Case Community. The fact that national legislation provides for ( 1 8 3 / 9 1 Commission v Greece [1993] ECR I - 3 1 3 1 , the same principles to be observed in a matter such as the paragraph 16, and Case C-39/94 SFEI and Others recovery of unduly paid Community aids cannot therefore [1996] ECR I - 3 5 4 7 , paragraph 68. be considered contrary to that same legal order. 46 — Tubemeuse (cued in footnote 45, paragraph 66).

191. Article 2 of the contested decision 193. The Greek Government then states does not therefore infringe the legitimate that, if Article 5 of Law No 2237/94 and expectation of the undertakings which Act No 1620 of the Governor of the Bank received the aid. of Greece are regarded as providing for aid that cannot have any legal consequences for individual cases of debt rescheduling. The 47 — If this were permitted, Articles 87 and 88 would be set at rescheduling of the debts of the agricultural naught, since national authorities would thus be able to rely on their own unlawful conduct in order to deprive cooperatives by the ABG was based on loan decisions taken by the Commission under those provisions agreements between parties governed by of the Treaty of their effectiveness. Case C-5/89 Commis- sion v Germany [1990] ECR I-3437, paragraph 17. private law. The logical consequence of this

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197. I would further point out that, as the Court has already ruled, a Member State which, in giving effect to a Commission decision on State aid, encounters unfore- 195. If the applicant's argument that reco- seen and unforeseeable difficulties or vering the aid was impossible because it becomes aware of consequences overlooked was based on agreements concluded by by the Commission must submit those autonomous parties was accepted, any problems to the Commission for considera- Member State could avoid applying the tion, together with proposals for suitable rules on State aid by granting aid under amendments to the decision in question. In private-law contracts through an intermedi- such cases, the Commission and the Mem- ary. ber State must, by virtue of the rule imposing on the Member States and the Community institutions a duty of genuine cooperation which underlies, in particular, Article 5 of the Treaty, work together in good faith with a view to overcoming the difficulties whilst fully observing the Treaty provisions and, in particular, the provisions 2. Assessment on aid. 50

48 — Case C-52/95 Commission v France [1995] ECR I-4443, paragraph 38. 196. According to the Greek Government, 49 — See also Case C-280/95 Commission v Italy [1998] recovering the aid would give rise to social, ECR I-259. 50 — Case C-348/93 Commission v Italy [1995] ECR I-673, economic and political problems. However, paragraph 17.

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198. In conclusion, it must thus be said X — Costs that the Commission's action has not infringed any procedural rules, that it was proportionate and that it did not contra- vene the principle of the protection of 199. The Commission has concluded that legitimate expectation. the appeal should be dismissed as unfounded and that the applicant should be ordered to pay the costs of the proceed- ings. As I conclude that the Greek Govern- ment's appeal should be declared unfounded, it should be ordered to pay the costs.