C-394/01

FRANCE v COMMISSION

OPINION OF ADVOCATE GENERAL MISCHO delivered on 11 June 2002 1

1. The French Republic requests the Court with the common market if it complies to a n n u l C o m m i s s i o n D e c i s i o n with the terms laid down for that purpose 2001/882/EC of 25 July 2001, on the State by OECD Working Party No 6 in its aid implemented by France in the form of Agreement concerning the interpretation development assistance for the cruise vessel of Articles 6 to 8 of the Understanding Le Levant built by Alstom Leroux Naval referred to in paragraph 6 of this Article or for operation in Saint-Pierre-et-Miquelon2 with any later addendum or corrigendum (hereinafter 'the contested decision'). to the said Agreement.

The Commission must be given prior I — Legal background notification of any such individual aid proposal. It shall verify the particular development content of the proposed aid and satisfy itself that it falls within the scope of the Agreement referred to in the first subparagraph.' 2. Article 4(7) of Council Directive 90/684/EEC of 21 December 1990 on aid to shipbuilding3 states that:

'Aid related to shipbuilding and ship con- II — The contested decision version granted as development assistance to a developing country shall not be subject to the ceiling. It may be deemed compatible

1 — Original language: French. 2 — OJ 2001 L 327, p. 37. 3. The key points of the contested decision, 3 — OJ 1990 L. 380, p. 27. which sets out the factual background to

I - 8248

FRANCE v COMMISSION

by a group of private investors who put assistance in 1996 under an aid it into joint ownership on the initiative scheme (the Loi Pons) approved in of... The vessel was then leased to CIL, 1992. which is a subsidiary of the French company îles du Ponant, registered in Wallis and Futuna. The investors were authorised to deduct their investment from their taxable income. These tax concessions [of an estimated aggregate value of FRF 78 million] enabled CIL 117) Under Article 4(7) of Directive to operate the vessel on attractive [90/684], aid granted as development terms. The investors have the right assistance to a developing country and obligation to sell back their shares may be deemed compatible with the to... after five years, i.e. at the begin- common market if it complies with ning of 2004. CIL in turn has the right the terms laid down for that purpose and obligation to buy the shares from... by OECD Working Party No 6 in its at a price which will enable the value of Agreement concerning the interpre- the aid to be passed on to it. As a tation of Articles 6 to 8 of the condition of the aid, CIL is required to Understanding on Export Credits for operate the vessel for a minimum of Ships or with any later addendum or five years, essentially to and from corrigendum to that Agreement (here- Saint-Pierre-et-Miquelon, and for 160 inafter referred to as "the OECD days a year. criteria"). The Commission must verify the particular development content of the proposed aid and satisfy itself that it falls within the scope o f t h esaidAgreement

(22) However, the development criterion is a total of 12 stopovers at the port of not met in this case. The key point is Saint-Pierre in 2001 compared with that the French estimates of the econ- the 50 initially estimated. omic benefits are based on the assumption that the vessel will call in at Saint-Pierre-et-Miquelon 50 times per season (over the 160 days from late May to the end of October during which climatic conditions in the area permit cruising).... (25) On the basis of the figures for 1999 and 2000, the Commission has con- cluded that the assumptions under- lying the calculation of the economic benefits for Saint-Pierre-et-Miquelon were wrong. It has therefore recalcu- lated the estimated economic benefits, using the French figures but taking into account the much lower number of port visits. (23) The reality is very different. Accord- ing to information submitted by the French authorities in their letter of 30 April 2001, nine cruises were undertaken in 1999 and 11 in 2000 which included Saint-Pierre-et-Mique- lon in their itinerary (as starting/ *(26) With regard to the direct economic finishing point). Since the cruises benefits, the French estimates are that either departed or arrived in Saint- spending linked to operation of the Pierre, there were only 11 stopovers in vessel would be FRF 10.8 million per the port of Saint-Pierre in the 1999 annum. Local spending by passengers and 2000 seasons combined, and not is estimated at FRF 1.2 million per 100 as initially estimated by the annum. In both cases, the data are French authorities. based on 50 port visits a year. How- ever, as indicated above, the vessel visited the port only 5.5 times a year in 1999 and 2000. It plans to make 12 visits this year.

(31) The claims concerning other indirect benefits (the development of infra- structure and the possibility of other (29) For 2001, the benefits can be esti- cruise operators visiting the islands) mated at 24% of FRF 12 million, i.e. have not been and probably cannot be FRF 2.88 million. For the next two quantified. Moreover, they are not years, the cruise schedule is not directly relevant to the development known. Taking the figure for 2001, character of this particular project or the total economic benefit to Saint- to the proportionality of the aid Pierre-et-Miquelon over the five years involved. It is therefore not necessary

I - 8251

OPINION OF MR MISCHO — CASE C-394/01

to take them into account in this mon market. It must therefore be assessment. recovered with interest.

(32) Finally, the Commission cannot accept the argument put forward by the French authorities to the effect that a longer period than five years should be taken into account since Has adopted this decision: there is no obligation on CIL to continue operating the vessel to or from Saint-Pierre-et-Miquelon after that period.

Article 1

2. Recovery shall be effected without delay and in accordance with the procedures of IV — Analysis national law provided that they allow the immediate and effective execution of this decision. The aid to be recovered shall include interest from the date on which it 6. The French Republic has developed only was at the disposal of the beneficiaries until one plea in law, relating to the assessment the date of its recovery. Interest shall be of the 'development' component of the aid calculated on the basis of the reference rate at issue. It considers that the finding of the used for calculating the grant equivalent of Commission that the aid did not constitute regional aid. development assistance could have been reached only by reason of errors of fact and of law and manifest errors of assessment, which ought to lead to annulment of the contested decision.

..."

7. The French Government accepts that the Court has recognised that the Commission has a degree of discretion in the matter. It refers in this regard to paragraph 20 of the judgment of the Court in Germany v Commission, 5where it was held that:

III — The application

'First, by providing that the aid in question "may" be deemed compatible with the common market if it complies with the 4. By application dated 8 October 2001, provisions of the abovementioned OECD the French Republic claims that the Court should annul the contested decision and order the Commission to pay the costs. 5 — Casc C-400/92 [1994] LCR I-4701.

I - 8253

10. According to the French Government, — for the vessel to be entitled to fly the 17 crew members were recruited in the French flag it is a requirement in this

I - 8254

FRANCE v COMMISSION

case that the captain, the bridge during the administrative procedure. These officers and the engineers should be matters, which are not supported by the French, and that at least one half of the documentation relied on in the application, crew should be French sailors; must therefore be held to be new matters on which the French Government cannot be allowed to rely before the Court.

— while the requirement to employ French nationals arising from the use of the French flag means that it cannot be guaranteed that these will be from Saint-Pierre, the shipowner undertook to give preference to people from there 15. The Commission adds that the French and participates in this respect in the Government's claim that 17 members of retraining scheme for redundant the crew were recruited in the West Indies employees in the fishing sector (four is irrelevant in a case where the 'develop- sailors were undergoing training to ment' component has consistently been serve on the Le Levant); presented as relating only to the develop- ment of Saint-Pierre-et-Miquelon, to the exclusion of all other eligible countries within the meaning of Directive 90/684.

— the 11 to 12 indirect posts created on land were part-time jobs relating to reception and transfer.

19. As the Court held at paragraph 34 of its judgment in Germany v Commission, 6'... it must be borne in mind that, according to settled case-law, the legality of a decision concerning aid is to be assessed in the light 22. Suffice it to record in this regard that of the information available to the Com- the French Government's argument refers mission when the decision was to difficulties which are alleged to arise in adopted...'. 7 relation to recovery of the aid. Where these difficulties make the proper implemen- tation of the decision completely imposs- ible, they are a defence available to a Member State in an application by the Commission under Article 88(2) EC for failure to fulfil a Treaty obligation. 9

20. It follows that, when challenging a 8 — See Joined Cases C-278/92 to C-280/92 Spain v Commis- decision of the Commission concerning sion [1994] ECR I-4103: '... The Kingdom of Spain cannot rely on that element since it was put forward for the first time in the application to the Court rather than in the course of the pre-litigation procedure laid down in Article 93 of the Treaty' (paragraph 31). 6 — Case C-288/96 [2000] ECR I-8237. 9 — Cases C-350/93 Commission v Italy [1995] ECR I-699, 7 — See also Case 234/84 Belgium v Commission [1986] ECR paragraph 16, Case C-404/97 Commission v Portugal 2263, paragraph 16, and Case C-241/94 France v Commis- [2000] ECR I-4897, paragraph 39, and Case C-261/99 sion [1996] ECR I-4551, paragraph 33. Commission v France [2001] ECR I-2537, paragraph 23.

I - 8256

FRANCE v COMMISSION

23. On the other hand, difficulties of this the years 1999 and 2000 without commit- kind do not affect the validity of a decision ting an error of law. This is all the more so relating to State aid, as is the issue in the because the two original figures were present case. The fact that a decision may affected by technical problems with the be difficult to implement does not make it vessel. unlawful.

(29) For 2001, the benefits can be esti- mated at 24% of FRF 12 million, i.e. FRF 32. On the other hand, it does observe in 2.88 million. For the next two years [the the latter that the figure of 100 visits during years 2002 and 2003], the cruise schedule is the years 1999 and 2000 was not put not known. Taking the figure for 2001, the forward by it, but by the Commission. In a total economic benefit to Saint-Pierre-et- letter to the Commission dated 12 May Miquelon over the five years 1999-2003 1999, the French Government had would be 1.32 + 1.32 + 3 x (2.88), i.e. FRF restricted itself to a figure of 50 calls. It 11.28 million. Since the total value of the states that each stopover comprises two aid is FRF 78 million, this is almost seven calls, one on arrival and the other on times greater than the economic value of departure of the vessel. the benefit to the islands.' 10

33. The Commission takes the view that 29. It therefore follows unquestionably this argument has no substance and is, in from paragraph 29 of the statement of any event, inadmissible. It points out that reasons of the contested decision that in the in their letter of 12 May 1999, the French absence of information relating to the authorities include in the operating cruise schedule for 2002 and 2003, the expenses of the vessel 'costs of stopovers Commission based its calculations for these (50 calls)', amounting to FRF 750 000. years on the figure estimated for 2001 and not on the figures for 1999 and 2000.

34. As regards the suggestion made by the 30. I therefore agree with the Commission French Government in its reply that each when it states that the argument of the stopover comprises two calls, the Commis- French Government relating to extra- sion submits that it is contrary to the polation is based on an incorrect reading concept of a stopover, as defined in dic- of the contested decision. tionaries of the French language. It main- tains that the terms 'stopover' and 'call' are synonymous, and accordingly that one 10 — Emphasis as in the original. stopover comprises one call and not two.

40. In this letter, the French Government provided an estimate of 50 'calls' (a year). Paragraph 23 of the statement of reasons of the contested decision shows that the 37. This complaint was made for the first Commission understood these 50 'calls' to time in the reply. It cannot be treated as a mean 50 'stopovers' a year, that is to say development of the complaint relating to 100 stopovers for the years 1999 and 2000. extrapolation made by the French Govern- ment in its application. In the application, the French Government does not question (as it does in its reply) the number of stopovers estimated for 1999 and 2000 r e c o r d e d by the Commission in paragraph 23 of the statement of reasons of the contested decision, but restricts itself to stating (wrongly, as has just been 41. If the argument put forward by the pointed out), that the figures relating to French Government in its reply were cor- economic benefits in 1999 and 2000 could rect, this would mean that the Commission not serve as a basis for calculating the should have not have based its calculations economic benefits for the years 2002 and on an estimate of 50 visits a year but on one 2003. of only 25 visits a year, as according to the

I - 8259

OPINION OF MR MISCHO — CASE C-3 94/01

French Government each visit comprises to say more than EUR 1 600 000 for the two calls. first three years of the vessel's operation.

42. It suffices to confirm that the Commis- sion was not in any way wrong in inter- 45. The Commission's response is that preting the 50 'calls' relied on by the French these figures post-date the contested Government as meaning 50 'stopovers'. As decision and are therefore inadmissible. the Commission rightly states, there is no linguistic or other reason for holding that 'call' should not mean the same as 'stop- over'.

49. It follows that these figures cannot affect the legality of the contested decision. 53. The Commission replies by saying that As has just been pointed out, that is a the fact that it has previously accepted question to be addressed having regard to other projects of a similar kind relating to the information available to the Commis- overseas territories has no bearing on the sion at the time the contested decision was aid in question. It simply shows that the made. Commission is not innately opposed to this kind of assistance where the conditions laid down in Article 4(7) of Directive 90/684 are met.

57. The Commission submits that this claim is contrary to the facts and circum- 61. In its reply, the French Government stances of the case and based on an incor- accepts that the figure of 160 days is rect reading of the contested decision. incorrect and is a clerical error for which it offers apologies to the Commission and the Court. It states that the true position is one of 120 to 130 days, corresponding to the period of operation starting at the end of May and ending in the beginning of October.

58. The Commission states that the only information provided on this matter by the French authorities at the time of the preparatory enquiries leading to the adop- tion of the contested decision is to be found 62. In its rejoinder, the Commission takes in their letters of 12 May 1999 and 14 June note of the fact that the French Govern- 2000, both of which clearly refer to an ment accepts that it had referred to 160 operating period of 160 days a year. days instead of 130. It rejects the excuse

I - 8262

FRANCE v COMMISSION

given, namely that a clerical error was statement of reasons of the contested involved. decision. Its third argument is accordingly not well founded.

63. It is sufficient in this regard to note that the French Government itself accepts that it informed the Commission that the period of operation was one of 160 days a year. The fourth argument

I - 8263

OPINION OF MR MISCHO — CASE C-394/01

ployment and economic diversification. of the 'richest' of the countries listed in the This was supported by the list annexed to United Nations development programme. the Decision on the association of the overseas countries and territories (OCTs) with the European Community of 27 No- vember 2001 12 and by the European Development Fund which ranks Saint- Pierre-et-Miquelon amongst the OCTs con- sidered to be the least developed. 72. The Commission submits that the report of the Institute of Broadcasting for the Overseas Territories referred to by the French authorities was not mentioned dur- ing the administrative procedure and, in any event, does not affect its assessment of the economic benefits resulting from the aid. It refers to other passages of the report which cast doubt on the picture given by 70. The Commission points out that the the French Government. analysis used in the contested decision takes into account information provided by the French authorities relating to employment and to the direct economic benefits arising from the operation of the vessel.

73. Should the French Government's argu- ment be accepted?

77. As the Commission rightly observes, these difficulties are not sufficient for assistance linked to shipbuilding and ship conversion to be qualified as 'development assistance to a developing country' within the meaning of Article 4(7) of Directive 90/684.

80. It follows in my opinion that in restricting itself to showing that Saint- Pierre-et-Miquelon is in a difficult econ- omic and financial situation, the French 78. Not only must the country in question Government has again failed to show that be in a situation requiring development, but the assistance in question should be held to the relevant assistance must also make an be 'development assistance' within the effective contribution to that development. meaning of Article 4(7) of Directive 90/684 or that in basing its decision on the absence of any real effect on the development of the islands, the Commission's assessment was wrong.

79. The contested decision is based on the fact that the second element is lacking. This is clear from paragraph 33 of the statement of reasons, which states that:

81. In my view, the French Government's 'In light of the foregoing, the Commission fourth argument is therefore also not well therefore concludes that it has not been founded.

I - 8265

OPINION OF MR MISCHO — CASE C-3 94/01