C-409/00

SPAIN v COMMISSION

OPINION OF ADVOCATE GENERAL ALBER delivered on 10 September 2002 1

I — Introduction against that decision in Case C-351/98. The Opinion in that matter, which, apart from the first plea, has many parallels with the present case, was delivered on 7 May 2002. 4The Court of First Instance has 1. This application by the Kingdom of dismissed another application lodged Spain seeks the annulment of Commission against Decision 98/693 by Confederación Decision 2001/605/EC of 26 July 2000 on Española de Transporte de Mercancías the aid scheme implemented by Spain for (CETM) in its judgment of 29 September the purchase of commercial vehicles via the 2000. 5 Cooperation Agreement of 26 February 1997 between the Ministry of Industry and Energy and the Official Credit Institute (hereinafter, the 'Agreement'). 2The Com- mission has declared aid linked to the withdrawal of old vehicles from the market to be largely unlawful and incompatible with the common market and ordered its recovery. II — Facts of the case and contested decision

4. Under the Agreement the Official Credit the Agreement entered into force with Institute (Instituto de Credito Oficial, here- retrospective effect from 1 January 1997. inafter the 'ICO') opens a line of credit of The Commission sent a request for further ESP 35 billion (EUR 210 million). The information to the Spanish Government on Ministry for Industry and Energy compen- 3 April 1997. After the Spanish authorities sates the ICO up to a maximum of 4.5 had asked on five occasions between percentage points for the difference 30 April and 9 October 1997 for additional between the interest rate for funding under time to forward the information requested, the aid scheme and the normal market rate and as the information requested had still of interest. The aid budget is for a total of not been received by 10 November 1997, ESP 3 billion (EUR 18 million). the Commission began a preliminary inves- tigation of the measure on the basis of the information available to it.

5. The interest-rate subsidy was granted to fund the acquisition of vehicles in the 8. By letter of 20 November 1997 the following six categories: tractor units and Commission informed the Spanish Govern- lorries weighing over 30 tonnes (Category ment of its decision to initiate the pro- A); commercial vehicles weighing between cedure provided for in Article 88(2) EC. 6 12 and 30 tonnes (Category B); commercial The Spanish Government submitted its vehicles weighing between 3.5 and 12 comments on the opening of the formal tonnes (Category C); car-based vehicles, investigation procedure to the Commission vans and lorries weighing up to 3.5 tonnes by letter of 22 February 1999. (Category D); buses and coaches (Category E); trailers and semi-trailers (Category F).

All other financial aid granted under the Cooperation Agreement of 26 February (1) annul the Commission decision of 1997 to natural persons registered for 26 July 2000 and Spanish tax on economic activities or to SMEs is incompatible with the common market.

(2) order the Commission to pay the costs of the proceedings.

11. The Commission asks the Court to:

Article 4 (1) dismiss the claim and

1. Spain shall take all necessary measures to recover from the recipients the aid referred to in Article 2 made available to (2) order the Kingdom of Spain to pay the them unlawfully. costs of the proceedings.

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— the infringement of Article 87(3)(c) EC 17. In putting forward these arguments the (compatibility of aid to facilitate the Commission is responding to the objection

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as to the indeterminate nature of the Under Spanish law on road transport contested decision. To be comprehensible, licences, however, distinction is only drawn however, Spain's arguments on this plea between light commercial vehicles (with a must first be made clear. The inadmis- total permissible weight of between 2 and 6 sibility arguments will therefore be exam- tonnes or with an additional load of up to ined at a later juncture, in conjunction with 3.5 tonnes) and heavy commercial vehicles. the parties' arguments on the first plea set Since 2 January 1998 all local and regional out below. licences for the operation of light commer- cial vehicles by non-professional carriers have automatically been converted to licences with national validity.

A — The admissibility of the proceedings and the first plea in law: The indeterminate nature of the contested decision 20. Because of its indeterminate nature, the decision has not taken full effect. 7 It logically follows from the indeterminate nature of the group of beneficiaries who come within Article 1 of the contested (1) Arguments of the parties decision that Article 2 must also be con- sidered indeterminate.

24. In its reply the Spanish Government also criticises the inadequacy of the state- ment of reasons. In the statement of reasons 22. The Spanish authorities had pointed for the decision, to which the Commission out this fact in its letter of 29 January 1999. refers to explain the distinction drawn, no In disregarding the arguments set out in mention is made of the fact that the group that letter, the Commission had infringed of recipients covered by Article 1 cannot be Spain's right to a fair hearing. Even after determined from the road licences. the decision was received, the Spanish Government brought the difficulties in distinguishing between the groups of bene- ficiaries covered by Article 1 and Article 2 to the attention of the Commission in its letter of 6 November 2000. (b) Commission

29. Spain is basing its claim on an illusory problem. The statement of reasons in the 27. Alternatively, the Commission argues decision shows that the Commission took that Article 1 of the contested decision does as its basis for delimitation the actual not require the existence of a definitive activity of the recipients and not the exist- geographically restricted licence; it requires ence of certain licences. On receiving the the actual activity to be confined to a local contested decision Spain could have or regional area. The mere fact that there approached the Commission to discuss the have only been licences with national significance of licences to the issue of validity since 1998 shows that licensing as determination of the parties against whom a criterion is unsatisfactory. Experience has recovery was to be effected. 1 1 Reference shown that not all Spanish SMEs operate could have been made to information transport services nationwide. provided by financial institutions or to details provided by the recipients them- selves in order to establish which recipients were actually covered by the exemption. It would also have been quite possible to use the existence of a local or regional licence as an indication since those licences were 28. The plea is also inadmissible for not converted into national licences until another reason. This plea is tantamount 1998, that is to say after the incentive to arguing that it would be impossible to period had come to an end. implement the order to effect recovery because of the alleged indeterminate nature of the decision. If a Member State encounters such difficulties it is obliged, according to case-law,9 to work with the Commission to find a solution in a spirit of genuine cooperation; it must not simply fail 30. The Commission opposes the argument to implement it. The large number of that Spain had attempted, by its letter of recipients does not make recovery imposs- 6 November 2000, to overcome the dif- ible, in any event. 10 Since the applicant has ficulties in connection with the meaning or implementation of the contested decision in a spirit of genuine cooperation with the 9 — The Commission cites the judgments in Case 94/87 Com- Commission. In that letter the Spanish mission v Germany [1989] ECR 175, paragraph 9, and Case C-348/93 Commission v Italy [1995] ECR I-673, paragraph 16. 10 — The Commission cites the judgment in Case C-75/97 Belgium v Commission [1999] ECR I-3671, paragraphs 86 11 — The Commission refers to the judgment in Case C-404/97 and 90 — Maribel. Commission v Portugal ]2000] ECR I-4897, paragraph 4 3 .

31. As already stated, the Commission's argument that Spain does not have any reason to challenge the provision in its favour contained in Article 1 of the con- tested decision essentially relates to the requirement on Spain to have an interest in bringing proceedings in order for the action 34. The abstract question of the extent to to be admissible. which a Member State must prove an interest in bringing proceedings is only of significance to the resolution of the present case and only ultimately requires clarifica- tion if it is at all possible for the rule 32. The extent to which Member States, as favourable to Spain contained in Article 1 privileged applicants under the second of the contested decision to be assessed paragraph of Article 230 EC, are under separately from its other provisions. any obligation to prove an interest in bringing proceedings as a requirement for admissibility is not established beyond all doubt in current case-law. The Court of Justice has stated 'that Article 173 of the EEC Treaty draws a clear distinction between the right of action available to the Community institutions and the Member States on the one hand and that 35. The provision in Article 2 unfavourable available to natural or legal persons on the to Spain applies to 'all other financial other. The first paragraph of Article 173 aid' — that is to say, financial aid that gives each Member State, inter alia, the does not come within the scope of Article 1. right to bring an action for annulment in The aid prohibited under Article 2 cannot order to challenge the legality of any therefore be determined until the aid Council directive without making the exer- covered by Article 1 has been defined. If cise of that right conditional on proof of an Article 1 does indeed contravene the prin- interest in bringing proceedings'. 12 ciple of certainty, that error in law also has repercussions on Article 2. The two provi-

37. The decisive factor is that the Spanish Government is primarily relying on an infringement of the principle of legal cer- 39. It should be stated, first of all, that the tainty. If such an error in law were to have Spanish Government is not precluded from been made, the decision would have to be objecting to the indeterminate nature of the annulled without the Spanish Government contested decision in these proceedings being under an obligation to enter into even if it did not include that argument in consultations with the Commission before connection with Decision 98/693. The two bringing an action for annulment. In view actions are quite independent of each other of the limitation period of two months laid and based on different decisions. Where down in paragraph five of Article 230 EC, provisions are identical the applicant is not the admissibility of an action for annulment obliged to plead the same arguments in cannot depend on whether an attempt has both actions. been made to implement the decision and, if difficulties then arise, on whether the Commission has been consulted.

40. As the Court of Justice has already ruled, the principle of legal certainty, which is part of the Community legal order, 38. Nevertheless, neither the instigation of requires that any act of the administration proceedings per se nor the allegation made that has legal effects must be definitive, in

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43. The Commission did not take the scope of the aid recipients' transport licences as

45. Nor has there been any infringement of 14 — Judgment in Joined Cases C-287/95 P and C-288/95 P the principle of a right to a fair hearing. Commission v Solvay [2000] ECR I-2391, paragraph 49. 15 — Judgment in Case C-355/95 P TWD v Commission [1997] The Commission was not obliged to take ECR I-2549, paragraph 21. up Spain's suggestion that the distinction

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should be drawn with reference to vehicle 47. The first plea is therefore not well- categories under the Spanish licensing sys- founded. tem. The principle of a right to a fair hearing only requires the party concerned to be given an opportunity to make repre- sentations — the Commission does not have to accept the changes suggested. It should also be noted that the Commission followed the classification undertaken by the Spanish authorities in the Agreement B — The second plea in law: Non-selective itself by referring in Article 1 of the aid decision to vehicles in Category D.

(1) Arguments of the parties

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measure is not selective and hence does not improved road safety and only excludes constitute State aid. 17 The Court of Justice large undertakings in furtherance of the has therefore considered a measure not to objectives of the scheme. be selective merely because it favours u n d e r t a k i n g s t h a t employ manual workers. 18

(b) Commission

50. The Spanish Government points out that, pursuant to Article 2.1(b) of the Agreement on Subsidies and Countervail- ing Measures (WTO-GATT 1994), 1 9 a subsidy is not deemed to be specific if it is 52. The Commission refutes the argument linked to neutral and horizontally appli- that the Agreement does not constitute cable requirements and if the authorities financial aid purely because it is directed are not given any discretionary power, as in at an abstract group of possible recipients. the case of the Agreement. Mr Advocate This is so with any programme of financial General Darmon also referred to the GATT aid. concept of subsidies in the Sloman Neptun case. 2 0

53. Unlike the case on subsidies to employ 51. These criteria correspond to the rule manual workers cited by the applicant, under Community law that selectivity does certain sectors were excluded from benefit not exist where the benefit arises from the in the present case right from the outset, nature or internal structure of the under- namely those service undertakings that did lying system. 21 The Agreement covers all not need commercial vehicles. This was, in SMEs that were intended to be favoured reality, a sectoral measure favouring road under the very structure of the scheme for transport. The size of the undertakings was reasons of environmental protection and a further criterion distinguishing the group of recipients.

certain criteria and pursues certain objec- 58. If the Spanish Government's approach tives. were taken to its logical conclusion, statu- tory aid schemes or aid programmes would never be regarded as State aid since they typically define no more than abstract criteria for determining those who are to benefit. In fact, only subsidies granted on the basis of such general schemes could be 55. Nor does the fact that the authorities measured against the standard set by are not afforded any discretion in the Article 87 EC. The Court of Justice, how- implementation of the measure preclude ever, has been repeatedly confronted with selectivity. Discretion is exercised at a aid programmes and statutory aid schemes higher level when determining the criteria without expressing any doubt about their for incentives. The monitoring of aid is also selectivity because the potential recipients not based on the WTO Agreement cited by were defined only by means of abstract the applicant but on Community law, criteria, not specifically named. 22 which has more far-reaching objectives than WTO law.

(2) Analysis

63. The question is whether these distinc- 60. The subsidy under the Agreement tions are justified by the nature or internal would not be selective within the meaning structure of the general system of which the of Article 87(1) EC only if it benefited all measure forms part. The Court of Justice domestic undertakings without distinc- first developed this idea in the case of Italy tion. 24 v Commission. 25This argument has since been frequently discussed, especially in connection with tax concessions and reduc- tions in social security contributions. 26

61. As the Commission rightly emphasises, only undertakings needing commercial 64. The facts in the present case differ from vehicles for their economic activities may the circumstances in the cases cited in that claim the subsidy. Certain branches of the the benefit consists not in exemption from economy, such as the liberal professions, a general burden but simply in the prefer- are thus almost entirely excluded from the ential treatment accorded to certain under- subsidy. takings on environmental and transport policy grounds.

62. The Agreement also results in different 65. The fact that the Spanish Government levels of benefit to different industries. As pursues specific policy objectives with the there is no limit to the number of vehicles Agreement does not make the measure a subsidised per applicant, undertakings can general system within which certain dis- benefit from the programme to different degrees depending on the significance of 25 — Judgment in Case 173/73 Italy v Commission [1974] ECR 709, paragraph 33/35. 26 — See, for example, the judgment in Adria-Wien Pipeline 24—Judgment in Adria-Wien Pipeline (cited in footnote 22, (cited in footnote 22, paragraph 42 et seq.) and Maribel paragraph 35). (cited in footnote 10, paragraph 34 et seq.).

68. It should be noted, with regard to the third plea, that the Commission did not raise any objection in the contested 69. The Spanish Government opposes the decision regarding discrimination against finding in the contested decision that the recipients according to nationality. The subsidies distort competition and threaten passage cited by the Spanish Government to impair trade between Member States in in its application does not come from the that they relieve carriers (both professional and non-professional) in competition with firms from other Member States from the 27 — See also the judgment in CETM (cited in footnote 5, paragraph 53). normal burden of costs.

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(2) Analysis (b) Commission

72. The Commission maintains that the 'de minimis' rule is not applicable in the trans- 74. Article 87(1) EC prohibits State aid that distorts or threatens to distort compe- tition and affects intra-Community trade. 28 — The Spanish Government cites the Community guidelines on State aid for small and medium-sized enterprises of 20 May 1992 (OJ C 213, p. 2) as amended by the Commission notice on the 'de minimis' rule for State aid 29 — The Commission refers, in particular, to the CETM (OJ 1996 C 68, p.9), which has now been replaced by the judgment of the Court of First Instance (cited in footnote SME Community guidelines of 1996 (OJ C 213, p. 4). 5, paragraphs 90, 92 and 93).

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75. In an examination of the assessment ings that provide transport services for hire that the Commission has undertaken in or reward, i.e. transport undertakings in respect of these premises in the contested the narrower sense. It also benefits under- decision, it must be borne in mind that it takings operating mainly in other sectors of enjoys substantial freedom of assessment in the economy and using commercial vehicles the application of Article 87 EC. The Court of their own for their own account in doing of Justice must not therefore substitute its so. own assessment for the Commission's, but confine itself to considering whether the assessment contains a manifest error or constitutes a misuse of power. 30

77. However, only some of those who benefit from the Agreement are undertak- 79. As regards what is meant by own- account transport, point 4 of Annex I to the First Council Directive of 23 July 1962 on 30 — Judgments in Case C-169/95 Spain v Commission [1997] the establishment of certain common rules ECR I-135, paragraph 34, Case C-288/96 Germany v Commission [2000] ECR I-8237, paragraph 26, and Case for international transport (carrying of C-310/99 Italy v Commission [2002] ECR I-2289, para- graph 46. goods by road for hire or reward), 32 as 31 — In this respect, however, certain reservations persist where amended by Council Regulation (EEC) the detail is concerned. Although the subsidy per vehicle is small, the aid per applicant under the Agreement does not No 881/92 of 26 March 1992 on access appear to be restricted to a specific number of vehicles. In to the market in the carriage of goods by theory it would therefore be possible for the aid to exceed the limit of ECU 100 000 in three years in certain cases. A further question is how far the Agreement precludes the accumulation of more than one type of aid, as the 'de minimis' communication requires. 32 — OJ, English Special Edition, 1959-1962, p. 2 3 7 .

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road within the Community to or from the aid does not exceed ECU 100 000 in three territory of a Member State or passing years, it is assumed that it does not have across the territory of one or more Member any appreciable impact on trade or com- States, 33 contains an accurrate definition of petition between Member States. Below that concept. 34 this ceiling, Article 87(1) of the Treaty is deemed not to be applicable. 36

80. In its communication on 'de minimis' aid, to which the 1996 SME Community guidelines refer, 35 the Commission adopted a rule on the interpretation of Article 87(1) EC. Put simply, the rule states 82. The judgment in CIRFS also reveals the following: where the total amount of that the Commission must comply with any guidelines it adopts. 38 But that case con- cerned 'aid discipline' in the synthetic fibre 33 — OJ 1992 L 9 5 , p. 1. industry, which had been adopted with the 34 — The definition cited reads as follows: ' 4 . Carriage of goods in motor vehicles [is exempt from approval of the Member States as an any Community authorisation and from any carriage authorisation] provided that the following conditions are fulfilled: (a) the goods carried must be the property of the undettaking or must have been sold, bought, let out 36 — Advocate General Léger points out that there appears to be on hire or hired, produced, extracted, processed or some inconsistency between the 'de minimis' communi- repaired by the undertaking; cation and the Court's ruling that even the smallest (b) the purpose of the journey must be to carry the goods amount of aid may affect intra-Community trade (see to or from the undertaking or to move them, either paragraphs 115 and 116 below) (Opinion in Case inside the undertaking or outside for its own require- C-382/99 Netherlands v Commission [2002] ECR I-5163, ments; paragraph 45). (c) motor vehicles used for such carriage must be driven 37 — Judgment in Case C-310/99 Italy v Commission (cited in by employees of the undertaking; footnote 30, paragraph 52); see also the judgment in Case (d) the vehicles carrying the goods must be owned by the C-288/96 Germany v Commission (cited in footnote 30, undertaking or have been bought by it on deferred paragraph 62). terms or hired...; 38 — J u d g m e n t in Case C-313/90 CIRFS and Others v Com- (e) carriage must be no more than ancillary to the overall mission [1993] ECR I-1125, paragraphs 34 and 36; see activities of the undertaking.' also the judgment in Case C-311/94 Ijssel-Vliet [1996] 35 — See the references in footnote 2 8 . ECR I-5023, paragraph 42.

39 — See the Report of the Hearing in Case C-313/90 [1993] ECR I-1127 f. 40 — See the Opinion of Advocate General Léger in Case C-382/99 Netherlands v Commission (cited in footnote 36, 87. In the contested decision and in the paragraph 50). 41 — See the judgment in Case C-310/99 Italy v Commission procedure before the Court of Justice the (cited in footnote 30, paragraph 52). Commission has given as the reason for the

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exclusion of the transport sector that in this decision that it would not be economically sector, with its many small undertakings, viable for undertakings engaged in own- even relatively small amounts of aid might account transport using vehicles weighing have an impact on intra-Community com- up to 3.5 tonnes at local or regional level to petition and trade. The exclusion therefore entrust a transport company with the takes account of the specific conditions in provision of such services. Hence the meas- the transport market. ures favouring those recipients in Article 1 of the contested decision are not classified as State aid within the meaning of Article 87(1) EC.

92. An SME that already undertakes own- 42 — See the settled case-law of the Court of Justice on Article 82 account transport with a vehicle of its own EC: judgment in Case C-7/97 Bronner [1998] ECR I-7791, paragraph 33, with further references). has at some stage opted in principle for this

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form of organisation with due regard for its from all rules on Community authorisation specific needs and invested in a vehicle. It and other carriage authorisation with will be at pains to use this vehicle to make which compliance is otherwise necessary the investment and running costs worth- for access to the intra-Community carriage while. It will consider assigning the work of goods by road. 43 concerned to a third party only if general conditions have so changed that a depar- ture from the original decision to operate a vehicle itself seems advantageous. A small subsidy to buy a new vehicle, such as that for which provision is made in the Agree- ment, is hardly likely to influence that 95. Given an appropriate interpretation of decision to a material extent. the 'de minimis' rule, it should not apply only in the event of concessions made to transport undertakings providing commer- cial transport services for hire or reward. Only such undertakings operate in the transport services market, which is char- acterised by a large number of undertakings and in which even small amounts of aid may lead to a distortion of competition.

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(iii) Interim conclusion (b) Competition distorted and trade affected within the meaning of Article 87(1) EC (second part of the fourth plea)

97. The Commission's error in the appli- cation of the 'de minimis' rule leads to the 100. Should the Court of Justice come to complete annulment of the contested the conclusion that the Commission was decision. right to regard the 'de minimis' rule as inapplicable, it is necessary to consider whether its contention that concessions under the Agreement distort or threaten to distort competition and affect intra- Community trade under Article 87(1) EC is free from manifest errors of assessment. 98. A partial annulment of the decision, limited to the part which concerns aid to undertakings engaged in own-account transport, is not an option open to the Court of Justice. By partially annulling the decision, the Court of Justice would be anticipating a correct, new definition of the 101. To ascertain what influence the meas- market and so substituting its assessment ures have on competition, the market for the Commission's. It is for the Com- affected by the subsidies first needs to be mission to reassess the measure as a whole defined. with the 'de minimis' rule applied correctly. What must be considered in this context is whether the subsidy received by non-pro- fessional carriers meets the requirements of the 'de minimis' rule and, in particular, whether compliance with the value limit is ensured and cumulation with other aid is excluded. (i) Definition of the relevant market

108. The Agreement gives transport sector SMEs established in Spain an advantage over large undertakings and undertakings with registered offices in other Member States which, in practice, can only theor- etically apply for subsidies on the same terms as Spanish undertakings. Unlike those Spanish undertakings, undertakings from other Member States will not gen- erally have at their disposal commercial 105. Thus the contested decision should vehicles registered in Spain which can be also be annulled because of the erroneous withdrawn from the market and replaced definition of the relevant market. with new subsidised vehicles.

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113. It should be stated, firstly, that it is not only the 1992 and 1996 SME Com- 110. Although the subsidy contributes munity guidelines that exclude the trans- towards an acquisition, it must be classified port sector from their scope of application. as operating aid. As it is to be used for the The 'de minimis' communication, to which acquisition of a new vehicle to replace a the 1996 SME Community guidelines refer, commercial vehicle at least ten years old, also clearly states that it does not apply to the recipients are relieved of costs which that sector. they would normally have to bear in the course of their usual business activities. The acquisition is not accompanied by a re- 44 — See the judgment in Case C-288/96 Germany v Commis- sion (cited in footnote 30, paragraphs 89 and 90) and the alignment or expansion of operations that judgment of the Court of First Instance in Case T-459/93 Siemens v Commission [1995] ECR II-1675, paragraph 48, gives rise to unusual financial requirements. confirmed by the judgment of the Court of Justice in Case Operating aid is deemed in settled case-law C-278/95 P Siemens v Commission [1997] ECR I-2507, paragraph 20 et seq. to distort competition because it improves 45 — See the judgments in Case C-730/79 Philip Morris Holland the financial position and scope for action v Commission [1980] ECR 2671, paragraph 11, and Case C-156/98 Germany v Commission (cited in footnote 22, of the recipient undertakings as compared paragraph 33).

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114. However, the Spanish Government's cation of Article 87(1) EC is that minor argument appears to be based on the amounts of aid do not have any appreciable assumption that the 'de minimis' rule is a effect on competition and trade between general principle of Community law on aid Member States. that applies irrespective of such Commis- sion communications.

116. The cautious wording used by the Court of Justice (does not rule out the possibility of intra-Community trade being affected; minor amounts of aid may affect (3) Conclusion trade) certainly indicates that not all small amounts of aid necessarily affect intra- Community trade and hence come under the prohibition in Article 87(1) EC. If this were correct, the 'de minimis' communi- cation would be inconsistent with the Treaty since, in the 'de minimis' communi- 118. As the Commission has wrongly failed cation, the reason given for the non-appli- to apply the 'de minimis' rule to aid to undertakings which effect transport oper- ations solely for their own account, the 46 — Germany v Commission (cited in footnote 22, paragraphs 38 and 39, with further references. See also the judgment fourth plea is well-founded. The erroneous in Case C-310/99 Italy v Commission (cited in footnote definition of the market would also result 30, paragraph 86). 4 7 — Judgments of the Court of Justice in Case 259/85 France v in the annulment of the decision in the case Commission [1987] ECR 4393, paragraph 24, and Case considered in the alternative of the 'de C-303/88 Italy v Commission [1991] ECR I-1433, para- graph 27. minimis' rule being inapplicable.

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E — Fifth plea: Infringement of categorised as investment aid rather than Article 87(3)(c) EC (compatibility of aid operating aid, it should have been allowed to facilitate certain economic activities) under Article 87(3)(c) EC.

1. Arguments of the parties 121. It is apparent from case-law and from the practice of the Commission that even operating aid is not always unlawful. However, the Commission did not consider whether this might be allowable operating aid. It also only assessed the measure from the aspect of environmental protection and not in relation to improved road safety. (a) Kingdom of Spain

126. As explained above, the Commission may adopt a policy as to how it will exercise its discretion in the form of (2) Analysis guidelines, provided that they are compat- ible with Community law. 52 It has taken advantage of this option by adopting the Community guidelines on State aid for environmental protection.

124. According to Article 87(3)(c) EC, aid to facilitate the development of certain economic activities or of certain economic areas may be regarded as compatible with the common market, where such aid does not adversely affect trading conditions to an extent contrary to the common interest. 127. The Commission has classified the Aid schemes may therefore pursue certain Agreement as a measure within the mean- objectives that are in conformity with ing of Article 87(3)(c) EC, but refused an Community policy, such as enhanced pro- exemption having regard to the Commu- tection of the environment and road safety, nity guidelines on State aid for environ- for example. mental protection. It should be considered whether its assessment of the Agreement is free from manifest discretionary errors.

49 — Judgment in Maribel (cited in footnote 10, paragraph 55) and judgment in Case C-303/88 Italy v Commission (cited in footnote 4 7 , paragraph 34). 50 — See the judgment in Joined Cases C-278/92, C-279/92 a n d C-280/92 Spain v Commission [1994] ECR I-4103, para- 125. In the application of this derogation, graph 5 1 . the Commission enjoys a wide discretion, 51 — Judgments in Case C-310/99 Italy v Commission (cited in footnote 30, paragraph 46), Case C-169/95 Spain v the exercise of which involves assessments Commission [1997] ECR I-135, paragraph 34, and Case C-288/96 Germany v Commission (cited in footnote 3 0 , of an economic and social nature which paragraph 26). must be made within a Community context 52 — See paragraph 81 above.

129. The Commission also correctly applied the criteria laid down in the Community guidelines in basing its decision on the fact that the subsidy is not linked to compensation for the additional costs caused by environmental protection nor conditional on exceeding mandatory environmental standards, as provided in paragraph 3.2.3, A and B of the Commu- nity guidelines. It should be borne in mind that the Community guidelines apply under a derogation from the prohibition on aid 131. However, the fact that aid has such pursuant to Article 87(1) EC and should positive effects is not, in itself, sufficient to therefore be interpreted narrowly. 53 allow an exemption. Indeed, the principle of proportionality requires that the subsidy should not be higher than is necessary in order to achieve the environmental pro- tection objectives. Only then is interference in competition and intra-Community trade justified. In the present case, however, the amount of the subsidy is guided only by the purchase price and is not linked to the 130. The Agreement offers a financial additional costs of buying a new commer- incentive to replace vehicles at least ten cial vehicle caused by environmental fac- tors or special costs due to exceeding existing environmental standards. The 53 — Thus, with regard to derogations pursuant to Commission was therefore right to refuse Article 87(2)(c) EC: judgment in Case C-156/98 Germany v Commission (cited in footnote 22, paragraph 49). exemption.

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133. The subsidies are to be classified as operating aid in accordance with case-law, 135. In contrast to the scheme that formed as they facilitate replacement investment the subject of Decision 98/693, the Agree- which is necessary in any event, 54 although ment excluded the possibility of vehicles the acquisitions may be brought forward withdrawn from the market being replaced because of the subsidies. The Court of by vehicles in a higher category. Although Justice has ruled that operating aid cannot the aid might not lead to an expansion in as a rule be exempted pursuant to overall capacity and only maintain the Article 87(3)(c) EC. 5 5 Accordingly, the status quo, in a market beset with over- Commission rightly stated in the contested capacity this could still be contrary to decision that the aid is contrary to the Community interests, as the Commission common interest. rightly established, since it would further

54 — See the case-law cited in footnote 44. 56 — There is some doubt whether the Community guidelines 55 — Judgments of the Court of Justice in Case C-86/89 Italy v are compatible in this respect with Article 92(3)(c) EC [sic] Commission [1990] ECR I-3891, paragraph 18, Case and its interpretation by the Court of Justice with respect C-301/87 France v Commission [1990] ECR I-307, para- to operating aid. This issue does not need to be considered graph 50, and, in particular, Case C-288/96 Germany v further here, however, since the requirements for exemp- Commission (cited in footnote 30, paragraphs 89 and 90). tion as operating aid are not in any case satisfied.

139. It is therefore proposed that the Court should give judgment as follows:

(1) Commission Decision 2001/605/EC of 26 July 2000 on the aid scheme implemented by Spain for the purchase of commercial vehicles via the Cooperation Agreement of 26 February 1997 between the Ministry of Industry and Energy and the Official Credit Institute is annulled.

(2) The Commission shall bear the costs of the proceedings.

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