Introduction
This article reviews two judgments of the Court of Justice: On the Greenhouse Gas Emissions Guidelines and on a structural funds regulation.
No Member State has ever succeeded in challenging the Commission’s State aid guidelines. In the first judgment, a group of undertakings tried to dispute the legality of a set of guidelines. Not surprisingly, they failed.
The second judgment concerns the interpretation of a structural funds regulation. It is of relevance to State aid because the Court of Justice clarified a concept linked to regional aid and whether repayment of State aid violates the right to property.
Case I: Joined Cases C-73/22 P and C‑77/22 P, Grupa Azoty and Others v European Commission [13 July 2023][1]
The appellants sought to set aside the orders of the General Court in cases T‑726/20 & T‑741/20, by which the General Court dismissed as inadmissible their respective actions for the annulment in part of the Commission’s Guidelines on Greenhouse Gas Emission Allowances [published in OJ C 137, 25 September 2020].
The appellants were manufacturers of nitrogen compounds and fertilisers. The sector of nitrogen compounds and fertilisers was included in the list of eligible sectors in the previous Guidelines that were applicable until 31 December 2020. They were eligible to receive State aid because they were exposed to the risk of carbon leakage due to indirect emission costs. However, that sector was dropped from the list in Annex I of the current Guidelines.
The General Court had declared the actions inadmissible on the grounds that the appellants were not addressees of the Guidelines. Therefore, they were not directly concerned, in the meaning of the fourth paragraph of Article 263 TFEU, because the Guidelines did not directly affect their legal situation.
The General Court had also stated that, even the appellants could also face the risk of carbon leakage, Member States could still notify to the Commission aid measures in favour of undertakings which were active in sectors other than those listed in Annex I.
Disagreement with the opinion of the Advocate-General
First, the appellants disputed the findings in the opinion of the Advocate-General [AG]. The Court of Justice responded, in paragraphs 24-28 of the judgment, that according to the rules of procedure of the Court, parties are not allowed to debate the findings of the AG. Moreover, the Court is not bound by the opinion of the AG. Therefore, the fact that they may disagree with the AG does not entitle them to request reopening of the oral procedure before the Court.
Next, the appellants claimed that the General Court failed to provide sufficient reasons for rejecting their request for annulment of the Guidelines. The Court of Justice, in paragraphs 37-44, rejected that claim. The Court found that the General Court did explain with sufficient clarity its reasoning.
New guidelines may deviate from previous guidelines
The main plea of the appellants was that the Commission should not have dropped their sector from the list of eligible sectors in the Guidelines.
The Court of Justice began its analysis by reiterating established case law that “(58) the adoption of […] guidelines forms part of the exercise by the Commission of its exclusive competence to assess the compatibility of aid measures with the internal market under Article 107(3) TFEU. In that regard, the Commission enjoys broad discretion”.
“(59) By establishing, by means of guidelines, the conditions under which aid measures may be considered to be compatible with the internal market, and by announcing, by publishing those guidelines, that it will apply the rules contained therein, the Commission imposes a limit on the exercise of that discretion, in that, if a Member State notifies proposed State aid which complies with those rules, the Commission must, in principle, authorise that proposed aid. It cannot, as a general rule, depart from those guidelines, at the risk of being found to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations”.
Who is directly concerned?
Then the Court of Justice recalled that “(60) the fourth paragraph of Article 263 TFEU provides that a natural or legal person may institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.”
“(61) The appellants cannot be characterised as being addressees of the guidelines at issue. Consequently, in the light of the wording of the fourth paragraph of Article 263 TFEU itself, the appellants’ standing to bring proceedings was, at the very least, conditional on those guidelines being of direct concern to them”.
“(62) According to settled case-law, that condition [of direct concern] requires two cumulative criteria to be met, namely, first, that the act in question must directly affect the legal situation of that person and, second, it must leave no discretion to its addressees who are entrusted with the task of implementing it, since it is purely automatic and results from the EU rules alone without the application of other intermediate rules”.
“(63) The effect of the guidelines at issue, […], is that where planned State aid is notified that is in line with the criteria laid down in those guidelines, including the list of eligible sectors contained in Annex I thereto, the Commission must, as a rule, authorise that plan.”
“(64) Since the appellants operate in a sector that does not fall within that annex, an obligation of that kind on the Commission can be of no benefit to them.”
“(65) That said, as the General Court stated, in essence, […], those guidelines do not have the legal effect of depriving the appellants of the possibility of being eligible for the grant of the State aid”.
Member States may notify measures that fall outside the scope of the guidelines
The Court of Justice went on to reiterate that Member States may, if necessary, notify to the Commission State aid measures that do not conform with the guidelines and request the Commission to assess them directly on the Treaty.
“(66) It must be borne in mind, in that regard, that the adoption of guidelines does not relieve the Commission of its obligation to examine the specific exceptional circumstances on which a Member State may rely, in a particular case, for the purpose of requesting the direct application of Article 107(3) TFEU. Member States retain the right to notify the Commission of proposed State aid which does not meet the conditions set out in guidelines and the Commission may authorise such proposed aid in exceptional circumstances”.
“(67) Accordingly, there is nothing in the ETS that prevents a Member State from notifying proposed aid to the Commission for undertakings in an economic sector not referred to in Annex I to the guidelines at issue, which seeks, […], to reduce a real risk of carbon leakage to which that sector is, in its view, subject, and from setting out the circumstances capable of justifying the approval of that proposed aid under Article 107(3)(c) TFEU, despite the fact that the Commission has not identified that sector as being exposed to such a risk in those guidelines.”
“(68) It follows, […], that the guidelines at issue, […] do not, by themselves, have a decisive influence on their eligibility for such aid and do not therefore directly affect their legal situation.”
“(69) Contrary to what is claimed by the appellants, the fact that they cannot seek a direct legal remedy against the guidelines at issue does not deprive them of effective judicial protection. In fact, EU procedural law permits any natural or legal person to raise a plea alleging that guidelines are unlawful in order to support an action directed against an act, adopted in the light of those guidelines, that affects that person in a manner which satisfies the conditions laid down in the fourth paragraph of Article 263 TFEU”.
“(70) Moreover, in so far as the appellants raise the possibility of Member States deciding not to grant any aid […], with the result that the Commission makes no decision to authorise or refuse planned aid in the light of the guidelines at issue, it must be held that, in such a situation, the appellants cannot thereby find themselves at a competitive disadvantage in comparison with other undertakings whose economic activity is in the same sector as theirs.”
“(71) In that regard, it is settled case-law that individuals are entitled to effective judicial protection of the rights they derive from the EU legal order […] However, the right that individuals derive from the rules of EU law on State aid is the right not to be subject to distorted competition”.
In addition, the Court could have said at this point that individuals or undertakings do not have a right to State aid under EU law.
Since the Court of Justice rejected all pleas of the appellants, it dismissed the appeal in its entirety.
Case 2: C-313/22, Achilleion Anomymi Xenodocheiaki Etaireia v Elliniko Dimosio [13 July 2023]2
A Greek court submitted a request for a preliminary ruling concerning the interpretation of Regulation 1260/1999 on the structural funds.
Achilleion, a Greek undertaking, disputed a decision concerning the partial recovery of financial aid that had been granted to it for the modernisation of a hotel and the creation of three new jobs. One of the reasons for the partial recovery decision was that the hotel had been sold to a new owner.
Maintenance of aided assets
Achilleion had benefitted from regional State aid at a higher rate of intensity in compliance with Regulation 70/2001 that was a block exemption regulation for State aid to SMEs.
Most of the questions put by the referring court to the Court of Justice were about the interpretation of structural fund rules. The referring court also asked whether the sale of the hotel affected the legality of the aid because Regulation 70/2001 required that aided assets and jobs were maintained for a certain period of time in the assisted area.
That provision was similar to the requirements of the current Article 14(5) and Article 14(9)(c) of the GBER for assets and jobs, respectively.
On this issue the Court of Justice provided the following answer. “(83) Under Article 4(3) of Regulation No 70/2001, in order to benefit from higher regional aid ceilings and continue to be exempted from the notification requirement, the investment concerned must be maintained in the beneficiary’s region for at least five years. It is clear that that provision […] does not prevent the transfer of the fixed assets of the subsidised undertaking to another undertaking, provided that the investment concerned is maintained in the region of the beneficiary of the funding at issue.”
Article 14(5) of the GBER requires that the investment is “maintained in the recipient area for at least five years, or at least three years in the case of SMEs, after completion of the investment. This shall not prevent the replacement of plant or equipment that has become outdated or broken within this period, provided that the economic activity is retained in the area concerned for the relevant minimum period”. On the basis of the findings of the Court of Justice, it may be inferred that sale of aided assets to another company is allowed as long as the assets are operated in the assisted area for at least five years from the date the investment was completed.
Repayment of aid and the right to property
In addition, Achilleion argued, among other things, that repayment of the funds would violate its right to property, which is protected by Article 17 of the Charter on Fundamental Rights.
The Court of Justice, first, observed that Member States are obliged by the structural funds regulation to make financial corrections. Then it held that the beneficiary’s “(91) obligation to repay that funding cannot be treated in the same way as an infringement of the right to property, recognised in Article 17 of the Charter.”
“(92) It follows unambiguously from Article 30(4) and Article 39(1) of Regulation No 1260/1999 that such repayment […] result[s] from failure to comply with the durability requirement of that operation, which constitutes a condition for its eligibility.”
“(93) Consequently, a beneficiary who is obliged to repay funding granted to it, as a mere consequence of the failure to comply with the eligibility conditions of the subsidised operation at issue, cannot rely on the protection conferred by Article 17 of the Charter”.
“(94) Given that, in the present case, there is no question of a limitation on the exercise of the right to property recognised in Article 17 of the Charter, there is no need to analyse such an obligation or its scope in the light of Articles 52 and 53 of the Charter”.
Article 52 & 53 of the Charter regulate how the right to property may be limited. There must be overriding reasons of public interest, the limitation must be laid down by law and it must not be absolute.
[1] The full text of the judgment can be accessed at:
[2] The full text of the judgment can be accessed at:
