|Date of ruling||20 September 2019|
|Case name (short version)||FVE Holýšov I s. r. o. and Others v European Commission|
|Key words||State aid — Market for electricity generated from renewable sources — Measures setting a minimum purchase price for electricity generated from renewable energy sources or granting a bonus to producers of that electricity — Amendment of the initial measures — Decision declaring the aid scheme compatible with the internal market at the end of the preliminary examination stage — Article 107, paragraph 3(c) TFEU — Beneficiaries of the aid and shareholders of the beneficiaries — Legitimate expectations — State resources — Commission’s competence to examine the compatibility of the measures with other provisions of EU law than State aid|
|Basic context||By its application, FVE Holýšov I s. r. o. and the other applicants seek the annulment of part of the Commission’s Decision C(2016) 7827 final on State aid SA.40171 (2015/NN) concerning the promotion of electricity production from SER, a summary of which was published in the Official Journal of the European Union (OJ 2017 C 69, p. 2) by which the Commission declared the aid scheme notified as being compatible with the internal market on the basis of Article 107(3)(c) (‘the contested decision’).|
|Points arising – admissibility||–|
|Points arising – substance||The first plea in law, alleging that the 2004 letter constitutes a final decision which is still in force
47 It is necessary to indicate, at the outset, that, according to settled case-law, it is in principle those measures which definitively determine the position of the Commission upon the conclusion of an administrative procedure, and which are intended to have legal effects capable of affecting the interests of the applicants, which constitute in principle decisions within the meaning of Article 288 TFEU, and not intermediate measures whose purpose is to prepare for the final decision, which do not have those effects (see, to that effect, judgment of 17 July 2008, Athinaïki Techniki v Commission, C‑521/06 P, EU:C:2008:422, paragraph 42 and the case-law cited).
48 As the applicants claim, it is, in principle, irrelevant to the categorisation of the act in question whether or not it satisfies certain formal requirements, namely that it is duly named by its author, that it be sufficiently reasoned, and that it mentions the provisions providing the legal basis for it. It is therefore irrelevant that the act may not be described as a ‘decision’ or that it does not refer to Article 4(2), (3) or (4) of Regulation No 659/1999, then applicable. It follows that, to determine whether an act in matters of State aid constitutes a decision within the meaning of Article 4 of that regulation, it is necessary to ascertain whether, taking account of the substance of that act and the Commission’s intention, that institution has, at the end of the preliminary examination stage, definitively established its position — by way of the act under consideration — on the measure under review and, therefore, whether it has decided that that measure constituted aid or not, that it had no doubts as regards its compatibility with the internal market, or that it did have such doubts (see, to that effect, judgment of 17 July 2008, Athinaïki Techniki v Commission, C‑521/06 P, EU:C:2008:422, paragraphs 44 and 46 and the case-law cited). That question must be assessed in accordance with objective criteria, such as the contents of that measure, taking into account, as appropriate, the context in which it was adopted and the powers of the institution which adopted the measure (see judgment of 13 February 2014, Hungary v Commission, C‑31/13 P, EU:C:2014:70, paragraph 55 and the case-law cited, judgment of 25 October 2017, Romania v Commission, C‑599/15 P, EU:C:2017:801, paragraph 59).
49 In the first place, as regards the content of the 2004 letter, it should be noted that it does not support the conclusion that that letter was of the nature of a decision. Although it is true that certain passages of that letter indicate that the Commission’s services ‘found’ that there were insufficient grounds for continuing the investigation or that the measure at issue did not involve State resources, it must be stated that those services specified, first, that their assessments were made ‘on the basis of the information available’, namely, inter alia, a ‘draft law’, and, secondly, at the end of the letter, that they invited the applicants, if they were to have new particulars that might demonstrate an infringement of the State aid rules, to inform them as soon as possible. It follows that those services reserved the right to alter their position if new information were to be provided, which also shows that the letter in question was not of a decisional or definitive nature. That is further confirmed by the fact that there is no operative part capable of producing binding legal effects. Such a letter must therefore be regarded as a mere legal opinion, with an invitation to provide the Commission’s services with new information, which is not capable of producing legal effects (see, by analogy, judgment of 25 October 2017, Romania v Commission, C‑599/15 P, EU:C:2017:801, paragraph 62). Moreover, it should be noted that it is clear from a letter from the Commission of 9 February 2010, produced in Annex A 17.b of the application (see footnote No. 1), that the Commission ‘has never formally expressed its opinion on the measure [at issue] in the form of a decision.’
50 In the second place, as regards the Commission’s competencies, the 2004 letter follows a complaint lodged by two associations on 16 December 2003, in which they relied on the incompatibility with the rules of EU law on State aid, in particular of a draft law on the promotion of electricity generated from RES. It is apparent from the wording of that letter that it therefore concerned only a draft law. It is also common ground that the measures which were the subject of the draft law were, at the time when that letter was sent, neither notified by the Czech authorities nor implemented.
57 In the third place, as regards the context in which the 2004 letter was addressed to the applicants, it must be stated, as was pointed out in paragraph 50 above, that that letter followed a complaint concerning measures contained in draft law which had not been notified by the Czech authorities or put into effect. In that regard, at the hearing, the Commission stated, without being contradicted on that point by the applicants, that the dispatch of that letter was part of a common practice on its part which, in compliance with the principle of sound administration, was intended to give a useful answer to the applicants in a context, such as that of the present case, in which it was not empowered to adopt a decision. Moreover, as the applicants themselves concede, following the letter in question, the Commission’s services contacted the Czech authorities on several occasions and asked them for additional information and clarification about the initial scheme, which also shows that that letter was not of a decisional or definitive nature.
The second ground of appeal, alleging infringement of the principles of the protection of legitimate expectations and legal certainty
66 According to the case-law, for a plea relating to infringement of the principle of the protection of legitimate expectations to be upheld, the individual concerned must prove that an EU institution, by giving him precise assurances, has led him to entertain justified expectations. Information which is precise, unconditional and consistent, in whatever form it is given, constitutes such assurances (judgment of 12 October 2016, Land Hessen v Pollmeier Massiveholz, C‑242/15 P, not published, paragraph 63).
67 In their second plea, the applicants submit, inter alia, that the 2004 letter, irrespective of whether or not it is a decision, gave rise to legitimate expectations on their part that there was no aid as regards the initial scheme. Since the case-law referred to in paragraph 66 above does not require that the ‘assurances’ provided by the institution in question, in order to be capable of giving rise to legitimate expectations, are of a decisional nature, stating, on the contrary, that the form of those assurances is irrelevant, the Commission’s objection must be rejected.
68 The Commission also argues that, in the area of State aid, a plea based on the principle of the protection of legitimate expectations can concern only the recovery of the aid, whereas, in the present case, the contested decision does not order the recovery of the aid in question. However, it must be stated that no rule of EU law limits reliance on the principle of the protection of legitimate expectations in relation to State aid solely to the question of the recovery of aid which is unlawful and incompatible with the internal market. The principle of the protection of legitimate expectations is a general principle of EU law (judgment of 19 May 1992, Mulder and Others v Council and Commission, C‑104/89 and C‑37/90, EU:C:1992:217, paragraph 15), which, as such, is applicable in any context falling within the scope of EU law. In the present case, the applicants may therefore rely on that principle in order to argue that the Commission caused them to entertain legitimate expectations that the initial scheme did not constitute State aid.
The third plea, alleging that the initial scheme does not constitute State aid
The second part of the third plea
97 It must be stated at the outset in that regard that, while categorisation as State aid within the meaning of Article 107(1) TFEU presupposes that four conditions are met, namely, that there is an intervention by the State or through State resources, that the intervention is liable to affect trade between Member States, that it confers a selective advantage on the beneficiary and that it distorts or threatens to distort competition (see judgment of 19 December 2013, Association Vent De Colère ! and Others, C‑262/12, EU:C:2013:851, paragraph 15 and the case-law cited), the second part of the third plea concerns the first of those conditions only.
98 For it to be possible to classify advantages as State aid within the meaning of Article 107(1) TFEU, first, they must be granted directly or indirectly through State resources and, secondly, that grant must be attributable to the State (judgment of 16 May 2002, France v Commission, C‑482/99, EU:C:2002:294, paragraph 24; of 30 May 2013, Doux Élevage et Coopérative agricole UKL-ARREE, C‑677/11, EU:C:2013:348, paragraph 27, and of 19 December 2013, Association Vent De Colère ! and Others, C‑262/12, EU:C:2013:851, paragraph 16).
99 As regards, in the first place, the condition that the measure must be attributable to the State, it is necessary to examine whether the public authorities must be regarded as having been involved in the adoption of that measure (see judgment of 19 December 2013, Association Vent De Colère ! and Others, C‑262/12, EU:C:2013:851, paragraph 17 and the case-law cited).
100 In that regard, it must be noted that the initial scheme was established by a law passed in 2005 (see paragraph 2 above) and that the RES levy was imposed under the ERO decrees and price decisions referred to in paragraphs 89 and 90 above and that they must therefore be considered to be attributable to the State.
101 As regards, in the second place, the condition that the advantage must be granted directly or indirectly through State resources, it is to be recalled that measures not involving a transfer of State resources may fall within the concept of aid (see judgment of 19 December 2013, Association Vent De Colère ! and Others, C‑262/12, EU:C:2013:851, paragraph 19 and the case-law cited).
102 The concept of ‘intervention through State resources’, is intended to cover, in addition to advantages granted directly by the State, those granted through a public or private body appointed or established by that State to administer the aid (see judgments of 17 March 1993, Sloman Neptun, C‑72/91 and C‑73/91, EU:C:1993:97, paragraph 19; of 19 December 2013, Association Vent De Colère ! and Others, C‑262/12, EU:C:2013:851, paragraph 20 and the case-law cited, and 28 March 2019, Germany v Commission, C‑405/16 P, EU:C:2019:268, paragraph 52).
103 The distinction made in that provision between ‘aid granted by a Member State’ and aid granted ‘through State resources’ does not signify that all advantages granted by a State, whether financed through State resources or not, constitute aid but is intended merely to bring within that definition both advantages which are granted directly by the State and those granted by a public or private body designated or established by the State (judgments of 13 March 2001, PreussenElektra, C‑379/98, EU:C:2001:160, paragraph 58; and of 30 May 2013, Doux Élevage and Coopérative agricole UKL-ARREE, C‑677/11, EU:C:2013:348, paragraph 26).
104 EU law cannot permit the State aid rules to be circumvented merely through the creation of autonomous institutions charged with allocating aid (judgments of 16 May 2002, France v Commission, C‑482/99, EU:C:2002:294, paragraph 23; of 9 November 2017, Commission v TV2/Danmark, C‑656/15 P, EU:C:2017:836, paragraph 45; and of 28 March 2019, Germany v Commission, C‑405/16 P, EU:C:2019:268, paragraph 54).
105 It also follows from the case-law of the Court of Justice that it is not necessary to establish in every case that there has been a transfer of State resources for the advantage conferred on one or more undertakings to be capable of being regarded as State aid, within the meaning of Article 107(1) TFEU (judgments of 16 May 2002, France v Commission, C‑482/99, EU:C:2002:294, paragraph 36; of 30 May 2013, Doux Élevage and Coopérative agricole UKL-ARREE, C‑677/11, EU:C:2013:348, paragraph 34; and of 28 March 2019, Germany v Commission, C‑405/16 P, EU:C:2019:268, paragraph 55).
106 Article 107(1) TFEU covers all the financial means by which the public authorities may actually support undertakings, irrespective of whether or not those means are permanent assets of the public sector. Therefore, even if the sums corresponding to the measure in question are not permanently held by the Treasury, the fact that they constantly remain under public control, and therefore available to the competent national authorities, is sufficient for them to be categorised as ‘State resources’ (judgments of 16 May 2002, France v Commission, C‑482/99, EU:C:2002:294, paragraph 37; of 30 May 2013, Doux Élevage and Coopérative agricole UKL-ARREE, C‑677/11, EU:C:2013:348, paragraph 35; and of 28 March 2019, Germany v Commission, C‑405/16 P, EU:C:2019:268, paragraph 57).
107 It has also been held that funds financed through compulsory charges imposed by the legislation of the Member State, managed and apportioned in accordance with the provisions of that legislation, may be regarded as State resources within the meaning of Article 107(1) TFEU even if they are managed by entities separate from the public authorities (see, to that effect, judgments of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraph 35; of 19 December 2013, Association Vent De Colère! and Others, C‑262/12, EU:C:2013:851, paragraph 25; and of 28 March 2019, Germany v Commission, C‑405/16 P, EU:C:2019:268, paragraph 58).
108 The decisive factor, in that regard, consists of the fact that such entities are appointed by the State to manage a State resource and are not merely bound by an obligation to purchase by means of their own financial resources (see judgment of 28 March 2019, Germany v Commission, C‑405/16 P, EU:C:2019:268, paragraph 59 and the case-law cited).
111 First, it is thus apparent that the RES levy charged, by virtue of the law, to end customers, the compulsory nature of which has been noted in paragraphs 90 to 95 above, has, in essence, the nature of a parafiscal charge levied on electricity on the basis of an objective criterion, namely the quantity of kilowatts/time being transported. The amounts collected from that levy therefore have their origin in a State resource (see, by analogy, judgment of 17 July 2008, Essent Netwerk Noord and Others, C‑206/06, EU:C:2008:413, paragraph 66).
117 It should, moreover, be borne in mind that, according to the case-law referred to in paragraph 107 above, ‘funds financed through compulsory charges imposed by the legislation of the Member State, managed and apportioned in accordance with the provisions of that legislation, may be regarded as State resources within the meaning of Article 107(1) TFEU even if they are managed by entities separate from the public authorities’, which applies to the present case.
126 The applicants claim, moreover, that some DSOs are private entities. In that regard, first, while it is true that some DSOs are private entities, the fact remains that the TSO is wholly owned by the State and that the largest of the DSOs, namely ČEZ, is itself predominantly owned by the State and owns in its turn five of the eight initial DSOs. Second, and in any event, as is apparent from the case-law cited in paragraphs 102 and 107 above, the question whether the TSO and the DSOs are bodies governed by public or private law is not in itself decisive. What matters is whether those bodies have been ‘appointed’ or are ‘under a mandate’ from the State to manage aid (see, to that effect, judgment of 19 December 2013, Association Vent de Colère! and Others, C‑262/12, EU:C:2013:851, paragraphs 20 and 30). That is the case here: the TSO and the DSOs are appointed and are under a mandate from the State to manage the collection of the RES levy and the redistribution of the funds accordingly raised under the control of the State. In the light of all of the foregoing, it must be held that the Commission did not err in considering that the initial scheme entailed the use of State resources.
The fourth plea, alleging overreaching requirements imposed by the Commission in its compatibility assessment of the measures at issue with the internal market
133 For the sake of completeness, the applicants’ argument that the review mechanism is ‘overreaching’ is to be rejected, since it goes beyond the requirements laid down in the 2008 Guidelines. That argument is based on a partial reading of those Guidelines. In that regard, it should be noted that point 107 of those Guidelines states that operating aid for the production of renewable energy may be justified in order to cover the difference between the cost of producing energy generated from RES and the market price of the type of energy in question. That applies to the production of renewable energy for the purposes of subsequently selling it on the market as well as for the purposes of the undertaking’s own consumption. Member States may grant aid for renewable energy sources according to three methods. It is common ground, in the present case, that the Czech Republic put in place the first of those methods, set out in point 109 of those Guidelines. According to point 109(a) of the 2008 Guidelines, Member States may grant operating aid in order to offset the difference between the cost of producing energy from RES, including the depreciation of additional investment for the protection of the environment, and the market price of the type of energy in question. That operating aid may then be granted until the plant has been fully depreciated according to normal accounting rules. Any further energy produced by the plant will not qualify for any assistance. However, the aid may also cover a normal return on capital. According to paragraph 109(b) of the 2008 Guidelines, in order to determine the amount of operating aid, any investment aid paid to the undertaking in question in accordance with subparagraph (a) for the completion of its new installations must be deducted from the production costs. When notifying aid schemes to the Commission, Member States must state the precise support mechanisms and in particular the methods of calculating the amount of aid.
134 Simply reading paragraphs 107 and 109 of the 2008 Guidelines shows that the amount of the operating aid must not lead either to overcompensation resulting from the payment of amounts exceeding the difference between production costs and market price, while taking into account the normal profitability of the installation (paragraph 109(a) of those Guidelines), or overcompensation resulting from the combination of operating aid and investment aid.
135 Lastly, as regards the alleged failure to observe ‘regulatory stability’ and the principle of the protection of legitimate expectations arising from the introduction of such a review mechanism, it should be noted that the applicants cannot base a legitimate expectation on the fact that EU law guarantees them that they will benefit from overcompensation under the aid scheme at issue.
The fifth plea alleging a procedural irregularity
140 As regards the second head of claim in the fifth plea, relating to infringement of the right to be heard, it must be stated that, in the context of the procedure for the review of State aid, the beneficiaries of the aid or the shareholders of such aid, as the applicants are in the present case, cannot rely on actual rights of defence. It should be noted that the procedure for the control of State aid is a procedure initiated with regard to the Member State responsible for granting the aid. That procedure not being initiated against the recipient of the aid, the latter may not rely on the rights of the defence. Interested parties have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case (judgments of 24 September 2002, Falck and Acciaierie di Bolzano v Commission, C‑74/00 P and C‑75/00 P, EU:C:2002:524, paragraphs 81 and 83, and of 15 September 2016, FIH Holding and FIH Erhvervsbank v Commission, T‑386/14, EU:T:2016:474, paragraph 99).
141 It has been held that the Charter of Fundamental Rights is not intended to alter the nature of the review of State aid established by the FEU Treaty or to confer on third parties a right of scrutiny which Article 108 TFEU does not provide (judgment of 13 December 2018, Transavia Airlines v Commission, T‑591/15, EU:T:2018:946, paragraph 50).
The sixth plea alleging that the Commission infringed Article 5(1) TEU
152 In that regard, it must be borne in mind that the Commission, as guardian of the Treaties, is undoubtedly within its role and within the limits of its powers where, ruling in a particular field of EU law, in the present case the examination of measures capable of constituting State aid, it concludes to the incompatibility of certain aspects of those measures (or other related or envisaged measures) with provisions of EU law other than those governing the matter before it. Indeed, it follows from the general scheme of the Treaty that the procedure at issue must never produce a result which is contrary to the specific provisions of the Treaty (see, to that effect, judgment of 15 June 1993, Matra v Commission, C‑225/91, EU:C:1993:239, paragraphs 41 and 42 and the case-law cited).
153 It is in the light of the case-law cited in paragraph 152 above that it is necessary to examine whether the Commission infringed Article 5 TEU by setting out the third and fourth assertions summarised in paragraph 146 above.
154 As regards, first, the applicants’ argument that the Commission did not have the power to rule on the observance of the principle of the protection of legitimate expectations by the Czech Republic, it must be stated that, in paragraph 134 of the contested decision, the Commission noted that the measures which are the subject of its examination were the implementation of the obligations of that Member State under EU law, in particular Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity generated from renewable energy sources in the internal electricity market (OJ 2001 L 283, p. 33) and of Directive 2009/28, and that, consequently, the general principles of EU law applied to the measures examined.
155 In paragraph 135 of the contested decision, the Commission observed that, according to the case-law, traders are not protected against future changes to an ongoing situation, and the immediate application of the new rule of law is the general rule for the application in time of new rules. In accordance with those principles, it took the view, like the Ústavní soud (Constitutional Court, Czech Republic), that the amended scheme was not retroactive and did not infringe the principle of the protection of legitimate expectations. In its view, that is all the more true since the initial scheme did not guarantee a certain purchase price or green premium, but only a simple return on the investment over a period of 15 years. Consequently, the levy on producers of photovoltaic energy has been calculated so as to ensure such simple return on investment and nothing more.
156 In paragraph 149 of the contested decision, the Commission added that the Czech Republic had not infringed the principles of the protection of legitimate expectations and equal treatment either under national law or under EU law. In its view, since EU law is a component of the law applicable under both the ECT and the German-Czech Treaty on bilateral investments, the principle of the protection of legitimate expectations, in accordance with the condition relating to fair and equitable treatment in those Treaties, must be interpreted in conformity with the content of that principle as it exists in EU law.
157 It follows that, in paragraphs 134, 135 and 149 of the contested decision, the Commission examined whether the Czech Republic, by granting the State aid in question and acting in that manner within the scope of EU law, had complied with the general principles of that law, including the principle of the protection of legitimate expectations. In accordance with the case-law cited in paragraph 152 above, the Commission is acting within the limits of its powers where, ruling in the field of State aid, it examines whether the measures at issue comply with other provisions of EU law than those governing the matter before it. Indeed, the Commission cannot authorise a measure which is contrary to the specific provisions of the Treaty and the general principles of EU law. It follows that, in examining whether the Czech Republic had infringed the principle of the protection of legitimate expectations established in EU law, when it granted the aid at issue, the Commission did not infringe Article 5 TEU.
160 As regards, thirdly, the applicants’ argument that the third and fourth assertions summarised in paragraph 146 above constitute an abuse of power, it must be borne in mind that, according to settled case-law, a decision is vitiated by misuse of power or of procedure only if it appears, on the basis of objective, relevant and consistent factors, to have been taken for purposes other than those stated (judgments of 12 November 1996, United Kingdom v Council, C‑84/94, EU:C:1996:431, paragraph 69, and of 16 September 1998, IECC v Commission, T‑133/95 and T‑204/95, EU:T:1998:215, paragraph 188). In addition, where more than one aim is pursued, even if the grounds of a decision include, in addition to proper grounds, an improper one, that would not make the decision invalid for misuse of powers, since it does not nullify the main aim (see judgment of 21 September 2005, EDP v Commission, T‑87/05, EU:T:2005:333, paragraph 87 and the case-law cited).
|Intervention||By documents lodged at the Court Registry on 17 July, 1, 2 and 9 August 2017, respectively, the Kingdom of Spain, the Slovak Republic, the Czech Republic and the Republic of Cyprus applied for leave to intervene in the present case in support of the form of order sought by the Commission. By order of 17 November 2017, the President of the Seventh Chamber of the General Court granted them leave to intervene. The interveners lodged their statements in intervention and the main parties lodged their observations thereon within the periods prescribed.|
|Interim measures||25 June 2018
|Case duration||2 years and 5 months|
|Notes on academic writings||–|
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