Joined Cases T‑554/15 and T‑555/15
Hungary
v
European Commission
(State aid — Aid granted under the Hungarian Law No XCIV of 2014 on the health contribution of tobacco companies — Aid resulting from a 2014 amendment to the Hungarian Food Chain Act 2008 and the official control thereof — Taxes with progressive annual turnover rates — Decision to open the procedure provided for in Article 108 (2) TFEU — Simultaneous adoption of a suspension injunction — Action for annulment — Severable nature of the suspension order — Interest in bringing proceedings — Admissibility — Obligation to state reasons — Proportionality — Equal treatment — Rights of the defence — Principle of loyal cooperation — Article 11(1) of Regulation (EC) No 659/1999)
Summary — Judgment of the General Court (Ninth Chamber), 25 April 2018
State aid — Planned aid — Absence of notification — Implementation before a final decision by the Commission — Commission’s power to issue an order — Obligation to have recourse to that for every non-notified measure — None
(Art. 108(2) and (3) TFEU; Council Regulation No 659/1999, Arts 11(1) and 13)
Actions for annulment — Subject-matter — Partial annulment — Condition — Severability of the contested provisions — Commission decision to open a formal investigation procedure into a State measure together with an injunction suspending implementation of the measure — Severable nature of the injunction
(Arts 108 TFEU, 263 TFEU and 288 TFEU; Council Regulation No 659/1999, Arts 11(1) and 13)
Actions for annulment — Actions by the Member States, the Parliament, the Council and the Commission — Admissibility not conditional upon establishing a legal interest in bringing proceedings
(Art. 263, second para., TFEU)
Actions for annulment — Purpose — Application for annulment of a decision to open a formal investigation procedure into a State measure together with an injunction suspending implementation of the measure — Intervention of a decision closing the formal investigation procedure — Maintenance of the purpose of the action against the injunction
(Arts 108 (2) and (3) TFEU and 263 TFEU; Council Regulation No 659/1999, Arts 11(1) and 13)
State aid — Respective powers of the Commission and the national courts — Role of the national courts — Safeguarding of the rights of individuals when the obligation to give prior notice has been infringed — Obligation of the national courts to draw the appropriate conclusions from that infringement in accordance with national law
(Arts 107 TFEU and 108(3) TFEU)
State aid — Examination by the Commission — Adoption of an injunction suspending payment of an alleged aid — Conditions — Commission’s obligation to justify the nature of State aid of the measure at issue having regard to established practice or case-law — None
(Art. 108(3) TFEU; Council Regulation No 659/1999, Art. 11(1) and (2))
State aid — Meaning — Selective nature of the measure — Derogation from the general tax system — Differentiation between undertakings in a comparable factual and legal situation — Extent of the burden of proof
(Art. 107(1) TFEU)
State aid — Examination by the Commission — Adoption of an injunction suspending payment of an alleged aid — Conditions — Taking into account previous practice — Not included
(Art. 108(3) TFEU; Council Regulation No 659/1999, Art. 11(1))
State aid — Examination by the Commission — Adoption of an injunction suspending payment of an alleged aid — Discretion of the Commission — Judicial review — Scope
(Art. 108(3) TFEU; Council Regulation No 659/1999, Art. 11(1))
State aid — Examination by the Commission — Adoption of an injunction suspending payment of an alleged aid — Breach of principle of proportionality — None
(Arts 107 TFEU and 108(3) TFEU; Council Regulation No 659/1999, Art. 11(1))
State aid — Examination by the Commission — Adoption of an injunction suspending payment of an alleged aid — Obligation on the Commission to adopt such a decision — None — Obligation to give reasons for the choice not to adopt the decision — None — Infringement of the principle of equal treatment because of the adoption of such decisions in other Member States — None
(Art. 108(3) TFEU; Council Regulation No 659/1999, Art. 11(1))
State aid — Examination by the Commission — Compatibility of aid with the internal market — Discretion — Observance of coherence between the Treaty FEU on State aid and other provisions of the Treaty FEU covering the functioning of the internal market — Opening of the formal investigation procedure with regard to a measure covered by a procedure for failure to act — Lawfulness
(Arts 108 (2) TFEU, 110, first para. TFEU and 258 TFEU)
Acts of the institutions — Statement of reasons — Obligation — Scope
(Art. 296, second para. TFEU)
State aid — Examination by the Commission — Adoption of an injunction suspending payment of an alleged aid — Obligation to state reasons — Scope — Specific case of an injunction included in a decision to open the formal investigation procedure
(Art. 108(3) TFEU; Council Regulation No 659/1999, Arts 11(1) and 12)
State aid — Planned aid — Duty of prior notification and provisional suspension of the implementation of the aid — Scope
(Art. 108(2) and (3) TFEU)
State aid — Examination by the Commission — Adoption of an injunction suspending payment of an alleged aid — Inclusion in a decision to open the formal investigation procedure — Lawfulness — Condition — Infringement of the right to an effective remedy — None
(Arts 107 TFEU and 108 TFEU; Council Regulation No 659/1999, Art. 11(1))
The classification as unlawful State aid of a national measure that forms the subject-matter of a decision to initiate the formal investigation procedure laid down in Article 13 of Regulation 659/1999 laying down detailed rules for the application of Article 108 Treaty FEU requires the Member State to which that decision is addressed immediately to suspend the implementation of that measure. Such a decision follows automatically from the decision initiating the formal investigation procedure, in that the Member State is required itself to draw all the appropriate conclusions from that decision. In order to enable the Commission to counteract any infringement of the rules laid down in Article 108 (3) TFEU, it also has the power to require the Member State concerned to suspend immediately the payment of any aid which it considers to be unlawful, after giving that Member State an opportunity to submit its comments on the matter.
However, it does not follow from Article 11(1) of Regulation No 659/1999 that the Commission is obliged to require automatically the Member State concerned to suspend payment of aid which has not been notified in accordance with Article 108 (3) TFEU. The opposite outcome would render nugatory the legal obligation imposed on the Member State by Article 108 (3) TFEU not to implement planned aid before the Commission’s final decision and would have the consequence of reversing the roles of the Member States and the Commission.
(see paras 27, 29-31)
Where the Commission decides, by a single measure, to initiate a formal investigation procedure and adopt a suspension injunction, that injunction is severable from the remainder of the measure and may therefore, in itself, be the subject of an action for annulment. Even where they take place at the same time, the decision to initiate a formal investigation procedure provided for in Article 13 of Regulation 659/1999 laying down detailed rules for the application of Article 108 Treaty FEU and the suspension injunction of a measure which may constitute State aid under Article 11(1) of that regulation are two distinct measures governed by different provisions of Regulation No 659/1999. The EU legislature sought to give the suspension injunction the form of a ‘decision’ within the meaning of Article 288 TFEU, such a measure having to be regarded as a measure which produces binding legal effects and which, therefore, is capable of forming the subject-matter of an action.
(see paras 37-39)
See the text of the decision.
(see paras 42, 49)
Where actions are brought, first, against a decision to initiate a formal investigation procedure in relation to a national measure, and, secondly, against a final decision closing that procedure and declaring that the national measure under investigation constitutes State aid that is incompatible with the internal market, dismissal of the action against that latter decision results in the action brought against the decision initiating a formal investigation procedure becoming devoid of purpose. In that regard, where the Commission’s assessment contained in a final decision is upheld by the EU courts, including in relation to the classification of the national measure under investigation as new State aid, that measure must be abolished and the aid recovered ab initio. Therefore, in such a case, there is no longer any need to rule on whether or not it was right that that measure, which was to be suspended following the decision to initiate the formal investigation procedure, be suspended.
However, it is different as regards an action brought against a decision to initiate a formal investigation procedure and a suspension injunction under Article 11(1) of Regulation 659/1999 laying down detailed rules for the application of Article 108 TFEU. It cannot be ruled out that such an injunction may be vitiated by illegalities other than those linked to the erroneous classification of the measure examined by the Commission as unlawful State aid. If the adoption of a decision closing the formal investigation procedure were to result in the action brought against the suspension injunction becoming devoid of purpose, the judicial review of such illegalities would be impeded. In a community based on the rule of law, such as the Union, neither the Member States nor the institutions can avoid a review of the question whether the measures adopted by them are in conformity with the basic constitutional charter, the Treaty FEU.
(see paras 47, 50)
Articles 107 and 108 TFEU confer on the Commission the principal and exclusive role of holding aid to be incompatible with the internal market where this is appropriate, the role of national courts being to safeguard rights which individuals enjoy as a result of the direct effect of the prohibition laid down in the last sentence of Article 108 (3) TFEU. The powers granted to the national courts in the area of State aid control cannot therefore limit the powers of the Commission in this area. On the contrary, it is the power of the national courts which is limited where the Commission adopts a decision initiating the formal examination procedure.
(see para. 68)
No other condition other than that set in Article 11(1) of Regulation 659/1999 laying down detailed rules for the application of Article 108 TFEU needs to be satisfied in order for the Commission to be authorised to adopt such an injunction under that article, that article being a result of the legislature’s intention, and not its oversight. In particular, the adoption of a suspension injunction cannot be subject to the conditions laid down for the adoption of a recovery injunction within the meaning of Article 11(2) of Regulation No 659/1999, or to any conditions otherwise inspired by that provision.
Moreover, EU law does not preclude the possibility of recovering aid paid unlawfully before the Commission has taken a decision on its compatibility. First, in order to give full effect to the provisions of Article 108 (3) TFEU, it is for the national courts, in cases of infringement of that provision, to draw the appropriate conclusions, in accordance with their national law, with regard to both the validity of the acts giving effect to the aid and the recovery of financial support granted in disregard of that provision. In particular, a finding that aid has been granted in breach of the last sentence of Article 108 (3) TFEU may, depending on the circumstances, lead to its reimbursement in accordance with the internal rules of procedure, even if that aid is subsequently declared to be compatible with the internal market. Secondly, the EU legislature provided for the possibility for the Commission to adopt injunctions seeking to recover aid paid unlawfully before the end of the formal investigation procedure. However, as a result of the effect of such an injunction on the beneficiary’s situation, it made their adoption subject to strict conditions, set out in Article 11(2) of Regulation No 659/1999 laying down detailed rules for the application of Article 108 TFEU.
In the context of a decision requiring a Member State to suspend the implementation of a national measure, not notified and categorised as illegal State aid, the Commission is not required to refer to established practice or case-law in the light of which the State aid status of the national measure at issue cannot be in any doubt.
(see paras 71, 72, 77-80)
The Commission is not required to define a category of undertakings that are the only undertakings favoured by a tax measure in order to be able to classify that measure as State aid.
(see para. 82)
See the text of the decision.
(see para. 84)
The discretion granted to the Commission as regards the adoption of suspension injunctions is unlimited or that it is not subject to any control. First, the Commission’s compliance with those procedural and substantive conditions for the adoption of a suspension injunction in relation to the implementation of State aid under Article 11(1) of Regulation No 659/1999 laying down detailed rules for the application of Article 108 TFEU may be made subject to a review by the EU judicature by the Member State concerned. Second, that review is not limited only to the conditions provided for by that provision and may extend, inter alia, to the compatibility of the suspension injunction with the Treaty FEU and the general principles of law.
(see paras 85, 86)
See the text of the decision.
(see paras 94, 99)
The power to issue suspension injunctions in relation to the implementation of a State aid measure under Article 11(1) of Regulation No 659/1999 laying down detailed rules for the application of Article 108 TFEU does not mean that the Commission is obliged to require automatically the Member State concerned to suspend payment of aid which has not been notified in accordance with Article 108 (3) TFEU. Thus, the Commission is not required to state the reasons for its choice not to adopt a suspension injunction in any given case. Likewise, the mere fact that the Commission initiated formal investigation procedures concerning measures existing in some Member States without adopting suspension injunctions, whereas, when initiating formal investigation procedures concerning measures in other Member States, it did adopt such injunctions, cannot be sufficient to establish an infringement of the principles of non-discrimination and equal treatment.
(see paras 112, 113)
The differences between the conditions for applying the provisions of the Treaty FEU on the review of State aid and those relating to other aspects of the functioning of the internal market, on the one hand, and the scope of the Commission’s powers in their implementation, on the other, do not preclude a national measure from being governed both by the provisions of the first paragraph of Article 110 TFEU and by those relating to State aid, and from being the subject, on that basis, of two distinct proceedings, one brought under Article 258 TFEU and the other under the second paragraph of Article 108 (2) TFEU. It is clear that the Commission cannot be criticised for having initiated a formal investigation procedure, under Article 108 (2) TFEU, with regard to a national measure which it is examining at the same time in the context of a procedure provided for in Article 258 TFEU.
(see paras 115, 116)
See the text of the decision.
(see paras 127, 128)
As regards the standard of the statement of reasons for a suspension injunction and the categorisation of the measure as illegal State aid, since such an injunction is adopted before the Commission has made a final decision on the compatibility of the measure concerned with the internal market, in the light of the objective of such injunctions, that standard must be consistent with that required for decisions to initiate the formal investigation procedure. In that type of decision, it is permissible for the Commission merely to summarise the relevant issues of fact and law, include a preliminary assessment as to the aid character of the measure and set out its doubts as to the measure’s compatibility with the internal market.
As regards the statement of reasons relating to the need to adopt the contested injunctions, although it is clear from Article 11(1) of Regulation No 659/1999 laying down detailed rules for the application of Article 108 TFEU that the Commission must present the reasons leading it to consider that the national measure being implemented constitutes new State aid, that provision does not, however, require the Commission to justify specifically the appropriateness of adopting an injunction in any given case. The appropriateness of that measure is justified by the existence of a proven infringement, by a Member State, of Article 108 (3) TFEU. Nevertheless, in a situation in which the suspension injunction is inserted into a decision to initiate the formal investigation procedure, having regard to the Commission’s wide discretion under Article 11(1) of Regulation No 659/1999 and the specific legal effect produced by a suspension injunction under Article 12 of that regulation, the decision adopting such an injunction must make it clear why, according to the Commission, the Member State concerned was not going to comply with the obligation arising from Article 108 (3) TFEU and suspend the implementation of the measures examined following initiation of the formal investigation procedure.
(see paras 129, 134, 135)
See the text of the decision.
(see para. 149)
If a Member State continues to implement non-notified State aid, the Commission is authorised to serve a suspension injunction on that State under Article 11(1) of Regulation No 659/1999 laying down detailed rules for the application of Article 108 TFEU. That injunction may also be inserted into the decision to initiate the formal investigation procedure, provided that the Member State concerned has been given an opportunity to submit its comments in that regard prior to adoption of that decision.
Moreover, the use of those means laid down by the Union legislature to ensure observance of Articles 107 and 108 TFEU does not result in an infringement of the right to an effective legal remedy. Member States are entitled to bring an action before the Union courts, both against decisions to initiate the formal investigation procedure and against suspension injunctions. In the context of such an action, Member States may dispute both the classification of the national measure concerned as State aid and its classification as new aid subject to the suspension obligation, which enables them to demonstrate that that measure was not subject to the notification obligation or the suspension obligation. Member States may also, refrain from criticising the classification of the measure concerned as unlawful State aid and merely challenge the defects of the suspension injunction. However, in such a case, even if such an action were upheld, it cannot result in the suspension obligation ceasing to exist, given that that obligation also relates to the decision to initiate the formal investigation procedure.
(see paras 151, 153-155)